Associated British Foods plc (ASBFY) 2023 Earnings Call Transcript

Associated British Foods plc (OTCPK:ASBFY) 2023 Earnings Call Transcript November 7, 2023 4:00 AM ET

Company Participants

George Garfield – Chief Executive Officer

John Bason – Chief Financial Officer

Conference Call Participants

Richard Chamberlain – RBC

Anne Critchlow – Societe Generale

Warwick Okines – BNP Paribas Exane

Nick Coulter – Citigroup

Warren Ackerman – Barclays Bank

William Woods – Bernstein

Adam Cochrane – Deutsche Bank

Anubhav Malhotra – Liberum

Gary Martin – Davy

James Grzinic – Jefferies

Paul Rossington – HSBC

George Garfield

Thank you all for coming this morning for this review of ABF’s Annual Results for the 52 weeks ending the 16th of September 2023.

Let me start by just saying that we are thrilled with where this year has ended up. Roll the clock back a year and we thought that we were going to be in a very different place indeed. We’ve also delivered these results in a year, which has been characterized by a lot of headwinds, and a significant number of shocks across our businesses and we think we’ve managed our way through both really, really well. So, strong performance in demanding times.

There’s real momentum, as we come into this year across retail. The revenues were well ahead in the year supported by selective pricing, well received ranges. There was a method to the pricing. We knew that the margin was going to come down. We’ve opened another 27 stores, so the rollout continues. And then we’re all really pleased with the consequences and the developments in the digital capability in Primark. Turning on to foods, there was significant growth in ingredients, I’ll come back to that, of course, good growth in grocery led by international brands, but also the US focused businesses delivered very well for us. Sugar sales are well ahead. Profitability was somewhat ahead, but there were shocks in supply chains and crops in that part of the business.

Agriculture had a tough year. It was a difficult year in the agricultural sector. We invested just 1.2 billion pounds back into the business and some of that investment was around our ESG priorities and I will talk about those later. We completed — what we’ve completed since the year end, the 500 million pound share buyback. We’ve announced today another 500 million pound program of share buybacks and also a special dividend on top of the normal dividend. We will be returning something like 600 million pounds to shareholders this year on top of a CapEx program that’s going to be even larger than the one we completed this year.

And with that, John, own over to you.

John Bason

Thank you, George. And first of all, just to say I’m delighted to be here to present my first set of full year results for ABF. And as George said, it was a strong year in circumstances — I’m going to cover these financial highlights in the following slides, but as you can see, we made progress in pretty much all of our financial KPIs with strong growth in revenue, good growth in adjusted operating profit and adjusted earnings per share, free cash inflow despite the step up in investment that George mentioned, and a significant increase in the total dividend. So we’re going to take you through the detail of these different indicators.

So I’m going to start with the summary of performance by business, which George is going to obviously go through in a little bit more detail. So just on a top line basis, you can see that revenue was ahead in each of our food businesses, grocery, sugar, agriculture and ingredients. The increase in revenue was largely due to price increases across our businesses to mitigate the high levels of inflation. Grocery revenues are well ahead of last year and good progress on profit. Our ingredients businesses had a very good year with revenues and profits significantly ahead, particularly in our AB Mauri division. Agriculture had a more challenging year with declines in compound feed and markets in the UK and China. And sugar had a good year considering the impact of challenging weather in both Europe and in Africa.

Full year revenues of retail rose significantly, actually increased by 15% on a constant currency basis. Adjusted operating profit for the division was resilient, actually, despite the high levels of inflation that we saw in the year. As expected, if you take it from a group perspective, the adjusted operating profit margin for the group declined from 8.4% last year to 7.7% this year as a result of the overall inflation. Performance by geography actually is set out in appendix in your presentation, have noted the increase in adjusted operating profit in North America, which is driven by the success of both our ingredients businesses and the grocery businesses there.

So let me just walk you from adjusted operating profit of 151 3 million to adjusted earnings per share. And as a reminder, adjusted operating profit rose 5% on an actual basis. This includes a translation gain of about 17 million pounds primarily driven by the strengthening of the US dollar, particularly in the first half of the year. Financing income and other financial income, both increased, as a result of higher interest rates and a higher surplus in our group’s UK — in the group’s UK defined benefit pension scheme, respectively. These interest increased as a increased number of Primark stores with the rollout and as a result, on an adjusted basis, profit before tax was up just over 8%. The tax rate was up, I’m going to come back to the tax in a separate page, but adjusted earnings per share, however, was still — it still increased by 8% to a record 141.8 pence per share, benefiting from the reduction in the weighted average number of shares from the buyback. So now comparing that to basic earnings per share, overall profit before taxes of 24.5%, benefiting from a lower level of exceptional items in 2023 of 109 million versus the 260 million charge last year. The exceptional items this year include a non-cash exceptional item of charge of 41 million in our grocery division and for our Don business in Australia, which has been impacted by a number of different headwinds, a 15 million pound impairments for our China sugar business and a 35 million pound impairment in sugar in Mozambique for write down following the damage done from the severe flooding earlier in the year.

In retail we also recognize exceptional impairment charges of 18 million pounds relating to the German stores that were impaired last year, or sorry, in the previous year. Profit on the sale of non-current assets includes the disposal of one of our grocery sites, previous grocery sites in the UK. Total tax charge for the year was 272 million pounds. It’s much reduced from the prior year. As we discussed at the half year, this includes a 58 million pound tax credit, non-cash tax credit, relating to Primark Germany. So, earnings attributable to equity shareholders was therefore significantly higher and basic earnings per share were up 52% at 134.2 pence.

So look, I’m going to just cover tax and pensions in a little bit more detail. Firstly, tax, this year’s adjusted effective tax rate increased to 23.5% from 22.2% last year. This was largely driven by the increase in the UK Corporation Tax Rate from 19% to 25% enacted in April 2023. And the tax rate also benefited from the resolution of some previous UK tax audits as well. And this is actually reflected in the significant reduction in the provision for certain tax provisions at the year end. Looking ahead, we expect the group’s effective tax rate in FY 2024 to be broadly in line with FY 2023 at this stage. This includes the full year effects of the increase in the UK corporation tax rate. At this stage, the group is not projecting the same level of one-off benefits from the resolution of tax positions. However, given our profit outlook, which George will talk to, we do expect to benefit from the mix of profits by jurisdiction.

Cash tax increase in the year just gone largely in line with profit before tax with the increase in profit before tax. However, we expect a much reduced level of cash tax in 2024 due to overpayments from prior years and the full CapEx expensing claims. So, on pensions, I mean, there’s pensions is really is a very good new story. From an accounting perspective, the aggregates surplus increased by 5%. The story for the primary UK defined benefit pension scheme is very positive. As you may recall, it saw a significant increase in the surplus in the prior year driven by the increase in bond yields, which reduces the liability valuations. The most recent triennial actuarial evaluation of the scheme was then carried out in April this year, and therefore showed a substantial funding surplus of actually just over 1 billion pounds. So as a result, we’ve agreed with the pension trustees an abatement of our UK employee — UK employer pension contributions on both the defined benefit and the defined contribution schemes and, accordingly, the group will receive a cash benefit of approximately 70 million pounds per year, which has taken effect at the beginning of this financial year.

So let me go into cash flow in a little bit more detail. As you’ll see, we’re now using a new simple measure of free cash flow. And pleasingly there was a cash inflow in the year totaling 269 million pounds. Let me go through the key components driving this. Obviously the higher profits we’ve already discussed. Let me zero in on working capital next. The two main factors driving the increase in working capital in the year were one the impact of inflation across all our food businesses and two higher inventories, particularly in our sugar, Primark business. As a reminder, Primark inventories increase as a result of the demand volatility and uncertainty in logistics and supply chain seen last year. So we now expect a working capital inflow in 2024, as Primark inventory levels normalize.

You see the step up in capital investments that we mentioned earlier. I’ll cover the detail of the gross investment by segments in the next slide. As already mentioned, cash tax increased in the year driven by the increase in profit before tax and all of this adds up to the net free cash inflow. Below free cash flow there was a chorus to cash outflow of 448 million relating to the share buyback. So as we discussed, this a new slide, gross investment stepped up 1.2 billion in the financial year. The increase of the investment in the food business primarily related to projects to build capacity and these include the building of a new sugar factory in Tanzania, completion of a new animal feed mill in Western Australia, the initiation of investments in a production facility in Nigeria for Ovaltine to serve markets across West Africa, and the build of a new powder packing line for AB Enzymes in Finland. In Primark, the increase reflects, of course, the acceleration of our new store program and expenditure to extend our capabilities in both warehouse automation and in technology. And we’ve made a small number of acquisitions for a total amount of 94 million, and that’s predominantly in the agriculture segments to expand the strength and breadth of our offer to the dairy sector. Overall, for the group, we do expect that this higher level of gross investment to increase a little over the medium term.

So finally, to the group’s capital structure and its strong balance sheet position. As mentioned, during the financial year, we executed 445 million of the 500 million pound share buyback program and with the remaining amount completed recently, we ended the year with cash of just under 1.4 billion pounds with very strong levels of liquidity, particularly when added to our 1.5 billion undrawn revolving credit facility. The Board has proposed a final dividend of 33.1 pence per share, which along with the interim dividend of 14.2 pence results in total ordinary dividends of 47.3 pence per share for the year. So as a reminder, our capital allocation policy is for the group’s financial leverage expressed as the ratio of net debt — total net debt-to-adjusted EBITDA to be well under 1.5 times. And when financial leverage is consistently below one times that may indicate a surface capital position. So at the end of the financial year, we had financial leverage of just under one times. So the group continues to prioritize investments in its businesses. And as I said, we expect to increase the spends in each of the next few years to slightly above last year’s level. Nevertheless, the Board has decided to return an additional 600 million pounds of capital to shareholders, firstly through the continuation of a share buyback program, targeting an amount of 500 million in the next 12 months and, secondly, through the payment of a special dividend of 12.7 pence per share. This is as per the capital allocation policy, but it reflects the outlook for the group, the strength of the balance sheet, and the underlying cash generation of the business.

So okay with that, I’ll hand it back to George who is going to go to the business performance in more detail.

George Garfield

And let me start with grocery which the company is in which did a very good job of recovering cash cost of inflation through the year, particularly in the second half, we lagged costs in the first half, and then caught up in the second. International brands and I’ll put a slide on them in just a moment, traded well. The US focused brands had a particularly good year and then Allied Bakeries improved considerably particularly again in the second half of the year.

Just focusing on the international brands within the portfolio then, Twinings strong sales in UK, US, Australia and France, and good growth in fruit and herb infusions, which is where the growth in the hot beverages category is coming from. Sales there are nearly as large as black teas now across Twinings. We did a three or four important marketing trials, trials of advertising in the course of the year that has led or is leading to more significant marketing spends in Twinings this year based on the feedback and the learning that we got from those trials. Ovaltine next then strengthen Brazil, Switzerland, and Nigeria; tougher time in Thailand, China, and then Myanmar; and, as John mentioned, we’re beginning to build the — it will be an important plant in Nigeria to supply West Africa, the brand still has historic resonance, up and down the coast of West Africa and we think that there is good growth there for us. Patak’s, half of its sales is outside the UK, that’s why it’s on this list. Blue Dragon is growing well, outside the UK, in particular, and the United States, most notably. And then Mazzetti, nearly half of its sales, that’s balsamic vinegar, are now outside Europe. These international brands obviously just have access to bigger markets, more markets and more growth.

Turning then on to the US focus businesses. Mazola, is now firmly established as the leading brand in the US edible oils category. It’s had a good year of both margin growth and also sales growth. We were previously constrained in our volumes, we’ve got a new production capability in Chicago, and there is more available corn oil in the US market than there had been previously. Fleischmann’s yeast, part of the bakery — one of the bakery ingredients that we’ve got in the States, again, very good year. It’s regained the share it lost during COVID when it couldn’t supply the very elevated demand, but demand remains strong, so some of the new home bakers who acquired the habits during lockdown are still baking with us. And we think that when now seeing into this year, homemaking strength caused by people choosing to bake at home as a cheaper form of entertainment for families, I think than going out to movies or whatever else. Stratas joint venture had another year of trading exceptionally well; improved sales, good oil procurement. It’s a very profitable business and has been for a while for us.

Back to the UK, performance trajectory in Allied Bakeries continues to improve. We won some more volume. We secured good pricing and the operational performance of the business was good through the year, obviously more to do but good progress there. Ryvita is now back on TV and there is lots of exciting new product development in Ryvita, which you will be seeing in the next few months, positive early results from the advertising and lots of enthusiasm around the new product. After the period end, we bought quite a small business called Capsicana. It’s a business that specializes in Latin American and Central American products. We are going to include those in the world foods portfolio and we are — so the good important broadening of the cuisines of the world that we now offer from world foods. I’m sure it’ll go international in time.

Australia, Tip Top did a good job recovering cost inflation and the construction of the Western Australian bakery is well underway and that’s going to be an important asset for us. Don was held back by a number of factors, it had to replace its distributor at very short notice when its existing distributor Scott’s [Phonetic] folded with very little notice. It’s also managed to find labor to replace — to reduce the labor shortage in Castlemaine where the factory is. Labor shortages in Australia are not quite as bad as they are in Australia but they are a whole lot worse than anywhere else, where we have businesses.

On to ingredients; so large increasing in raw material cost, very large increases in raw material and other input costs. But the pricing in this part of ABF, the pricing actions we took were I think the best of anywhere in the group and volumes are, most important, held up even as we push prices up significantly. Significant investment in capacity, capability and in Mauri in particular water treatment, which I’ll go on to in a moment. So Mauri, good increases in revenues, good increases in profits, the performance in the States was very strong indeed. Yeast, both for industry and retail, held the sales, they’re held up well all around the world, as I say despite the pricing actions that we took. We put our assets in China into a joint venture with Wilmar to get better distribution coverage in that market. The work to complete that joint venture was completed during the year. And then heavy investment in Mauri, we’ve completed the new specialty yeast plant at Hull. We are underway with capacity expansion in Brazil and there are two big water treatment plants, investments again under underway, one in Brazil and one in Mexico. Once they’re done, the bulk of the cost of improving the water quality at Mauri will be a — globally, will be completed little bit left to go, but the back of it will have been broken.

ABFI, there’s been some softness in the specialty ingredients sector. We’ve seen it in enzymes. We haven’t seen it in yeast extracts and only where we’ve had robust demand, good demand from both food and also bio-nutrient customers. There’s an important a reconstruction of a good part of the Hamburg site going on there, the fermentation end and also product drying, we’re investing in that at the moment. SPI better manufacturing efficiency helps improve the profits there. Fytexia, the business we bought in phytonutrients 18 months or so, again, is on its acquisition case, still we’re obviously very pleased with that and we’re pleased with the visibility that we’ve got of future growth. And then enzymes, the powder packing line is costing us some 30 million pounds, it’s no small investment. Sales have been flat in the one part of the ingredients portfolio, which has always given us growth in the past. We still believe it’s destocking in our customers and it’ll come to an end probably later on this calendar year or maybe in the New Year.

Agriculture, it was a challenging year to be supplying pigs and chickens anywhere with flocks and herd sizes down. Frontier though, that joint venture continued to perform very well in the UK market. And then we’ve made, I think it’s three acquisitions, in the dairy sector. We think the dairy sector is an interesting sub-sector of agriculture. There’s growth both in the UK to come and also globally. We are going after the opportunity, which we think exists to create an integrated sort of full service supplier to the dairy sector.

Sugar, we saw higher sales prices. And that offset a number of ills in the business. We saw exceptionally low, particularly European sugar production, that was climate related, but very strong co-products performance, significant improvements in Illovo and then start up losses in Illovo, which were greater than we had hoped they would be, although they improved significantly in the second half. Turning to sugar operations; we’ve seen, I think, two offsets that give us confidence in the stability of our sugar businesses. Yes, the crop was down, but prices were higher. Yes, energy — gas prices were higher in the UK, but the co-product electricity just about offset all the extra gas prices we were seeing. So net-net across British sugar in the year that looked like it could have been calamitous, was just a very small reduction in profitability because we’ve got these, I think, imperfect though there may be hedges in that business. Azucarera, higher prices offset lower volumes again, so the profitability in Azucarera was slightly up. And then in China, we’ve taken a one-off, not exceptional charge, to recognize the lack of profitability in that business. So Illovo, then — apologies for repeating what I’ve said in the past, but essentially we’re building a lovely branded retail products business. We saw good growth in pre-packed banded sugar in the year in Malawi, in Tanzania, and in Zambia, strong pricing, and then across the piece in Illovo higher sugar production driven by a recovery in Eswatini where there was a strike the previous year, and then a good production levels in Malawi, and are good efficiency improvements in South Africa as well. There was severe flooding in Mozambique, essentially we lost the cane estate, factory is fine, but the cane estates has been flooded, it won’t open this year and we’ve taken that exceptional charge to recognize the damage that’s been done to that business. And then the — after I think it is a slowish start, the construction of the new sugar factory in Tanzania, another one of our growth retail markets, that project is hitting its straps and development — and developing well.

Vivergo, so we saw significant losses in the first half. We opened this factory just as Russian tanks drove across Ukraine sending wheat which is the input product that we use, input raw material up through the roof, and then also energy prices up through the roof. To make matters worse, the ethanol price then dropped, as Europe fund itself, I think, long on ethanol. All those situations resolved, the second half losses were much reduced. We made money in the final period and we’ve continued to turn a profit so far this year we really do think the hard times in Vivergo in the past.

Okay, carbon reduction at sugar, something like 80% of the whole of ABF’s greenhouse gas emissions come out of British sugar in the UK. We must, if we’re going to make significant inroads into our carbon footprint, start off with British sugar. It’s the gorilla amongst all our operations and that’s why we have undertaken 17 or completed 17 projects across various sugar processes in the UK in the year just gone. Just about all of them have good financial payback. I don’t want you to think that decarbonising sugar is going to come with a huge capital cost, it comes at a capital cost, but one which brings a return with it. So projects include replacing coal with natural gas in the dryers and Bury Sugar Factory, improvements in the gas turbine at Wissington, elimination of the use of heavy fuel oil at Cantley, and then the installation of more efficient slices, again, in the Bury factory. Our carbon footprint in British sugar is 24% lower than it was in the baseline year of 2017-2018 and we’ve published this in the recent TCFD report, the carbon transition plan up to 2030 for British sugar.

Right, moving to retail. So very good like-for-like sales growth across our markets, some of which was of course pricing. But actually demonstrating after nine years of not taking pricing that we could know customers would come back to us was hugely reassuring for us. Our strategy from the beginning was only to partially mitigate inflation, some of the inflationary costs that we were seeing were clearly temporary. So freight rates being one, cotton prices being another. We didn’t want to bring take prices up to recover all that and then find that six months later, 12 months later, all those prices come back down again. So we absorbed the bubble costs. We extended the product ranges, I think really effectively with premium essentials. The collaborations go from strength to strength and licensing is great. The new stores performed exceptionally well, higher sales densities in the new stores than the existing state. At the roadmap, still 27 new stores, eight in the States, I’ll show them to you later, so over a million square feet. And then the digital investment, I’ve got to talk to you more about that, continues and quite frankly earns its keep.

Looking though by market, to begin with the US performance, the sales increased 11% against the prior year, 10% like-for-like growth. Market share increased, this is the whole market online and off counter data, 6.4% to 6.7. We did have unhelpful weather in the third and fourth quarters and has been reported the beginning of this year as period one, we saw these very hot weather periods since then, sales have come back very well indeed. We’ve now got 192 stores in the UK and, yeah, UK really good performance. Across Europe, sales increased 18% against the prior year, 8% like-for-like growth all countries delivered like-for-like growth. We opened 17 new stores with strong customer demand really in all those stores, and good resulting footfall. Two new markets, Romania and Slovakia, again, we’ve been very well received there. And where we have the data, we’ve seen good market share growth in both France and Spain, big markets for us, important markets for us. And the German restructuring is on track. Shoppers are coming back to high streets in Europe just as they are in the UK. We saw some interesting survey results the other day about people’s intentions about shopping in the run up to Christmas. And I think 44% of people said that they would shop more on high streets than online this year. So I think there’s further to go on increasing participation in high streets.

US performance then, total sales increased 24%. We opened eight new stores, mainly in the in the northeast. We’re actually opening two new stores this week, so we will be at 23 stores in the US by the end of this week and approaching a million square feet at that point. The new store trading has been good. And we’re also expanding our regional footprint. We’ve signed two leases in Texas, this stores which will open I think in 2025. I think Texas is going to be a good market for us. The expansion of the product offer is an important success of the business this year. Now there are — having said that, I’ll come back to the moment, there are lots of strong performances from the existing ranges. I don’t want you to think that we’re sort of running away from failure elsewhere in the range, we’re really not. But this is extra for the Primark offer. So starting from the top left The Edit, which are the premium essentials ranges, we’re increasing the number of items in the range, we are increasing the number of stores that carry us, and we’re seeing the — how the online trial goes with Edit products — sorry, the Click and Collect trial goes with Edit profits. And then the expansion of our collaborations, particularly, of course, Rita Ora, she’s our first genuinely global collaboration. She is also very, very authentically a Primark shopper. She grew up next to Hammersmith store, which used to be our flagship in the old days when she was young and she said very, very openly that that’s where a lot of her fashion experimentation started, within Rangers out of Hammersmith, Primark.

Licensing continues to grow really well. Barbie was fantastic. We ordered far more stock than we thought was wise and wish we’d ordered three times as much. It sold for up to sort of five times what we were selling it for on eBay and we felt slightly sore about that but, anyway, licensing very strong. Important licenses in the States, NBA licenses, and Disney and others, Netflix are all going well. And then bottom right, this is an important part of the business, it’s also quite a large part of the business for us. So, accessible and affordable products to support women at all stages in their lives and quite frankly, some of the products that we carry in this range are ones where a woman who had been asked to pay a huge amount in the past, and we don’t think they should. We’re getting well known for these ranges.

Margin then, we decided, as I say, not to fully recover inflation. I’m sure it was the right thing to do. But it did bring down our margin from 9.8% the year before to 8.2%. In the first half, higher costs are brought in goods freight rates, labor rates, energy costs, just about everything in the first half. And then the second half, bolting goods went up again, particularly on the back of dollar strength. This was when we got the pound down to about 107. But freight rate starts to come off in the second half, particularly in quarter four. Obviously, some costs will stick, labor costs in particular. We’ve increased wages in this country, shop wages, by 24% over two years, but there is a lot of big following wind in some of the other big categories, particularly freight, but also cotton, artificial fabrics, and to some extent, just construction, the fabrication costs in sourcing markets where we’re benefiting, I think, from demand being subdued. Higher than expected stock loss, this has been much reported. I’m glad that there is good coordinated action in this country in particular, now underway. It’s targeting in particular, the gangs, who I think has been responsible for a fair amount of the stock loss that we’ve seen over the last year.

Turning to digital then, we’re transforming the digital capability of Primark. It’ll be as good as anyone’s, I think, by the time we’re done. Obviously, we’ve got the enhanced website in all 16 countries now and the stock checker. It’s undoubtedly driving sales, as it was always intended to do, but digital is about so much more than simply the stock checker and the website. It’s about driving traffic to our website, primark.com, through organic search, through CRM selected performance, marketing trials. We’ve been running all of those in the year. We’ve had some good results from the marketing trails as well. We also think that there’s opportunity to leverage the power of that social media engagement that we have, which were really just in the foothills of that work, but it’s a good, it’s got so much potential for us.

The click-and-collect trial is going well but I think the bigger story here is the digital roadmap that we have. We’re still to decide whether click-and-collect is a commercial opportunity for us or not. It’s going well so far. Other investments, self-checkout technology is well received by our customers. We got it in 22 stores. There’s a big program of installing self-checkouts in other stores this year. So for instance, I think we’ve got 50 refits in the year and then it will go into all 50 of those and picking like 57 stores now within the UK, and we’ve got women’s wear in us as well.

The rollout, 27 new stores in the period eight in the US, six in Central and Eastern Europe with three in Poland, two in Romania, and the first store in Slovakia, and then four stores in each of Italy and France all very well received, three in Spain, and one in the UK. We have very little doubt that we will get to our 530 stores by the end of 2026. We have very little doubt that we will keep on going after that as well. We’re beginning to get visibility for footprint expansion beyond 2026 and I’m sure we’ll have more to say about that in due course. The states that we’ve announced in America include Texas, Virginia, North Carolina and Michigan, so all the way from the northeast.

Primark Cares, so 55% of all the clothing units we sell, or we sold this year contain recycled or more sustainably sourced material that’s up from 45%. 46% of all our cotton clothing, so nearly half. Contained cotton is organically recycled or sourced from the Primark sustainable cotton program, which won a major award at the recent Reuters sustainability awards. It’s a phenomenal program. We are now up over 300,000 farmers trained. The results of that training are reduction in use of agricultural inputs, reduce of water — reduction in water, increase in sales prices to the farmer, increases in farmer income, increase in biodiversity on the farm. It’s a remarkable, remarkable program.

So we’ve adopted science based targets centered around for Primark. Scope three emissions actually increased this year as we expected them to do as we increased volumes. We expect that that numbers just starts coming down. I think sooner rather than later — I was in Bangladesh recently, you can see the work that’s going on in the supply chain to tackle carbon intensity. I have some my name attached also to two effluent treatment plants just outside Dhaka, which I proudly cut the ribbon on there. So the work is going on in the sourcing countries, it’s going to take time. In the meanwhile, we’re doing a super job on Scope 1 and 2 emissions. 70% of our stores are now powered by renewable or low carbon intensity electricity and 141 stores have switched to energy lighting efficiency. Again, that installation of low energy light bulbs is a very profitable investment for us along with cutting store usage by about 30%, sort of, it was just a usage and the rollout of the low energy light bulbs continues this year as well.

Okay, group outlook. Let me start by going back to my first comments, I really am pleased with how we manage our way through 2023. They’re good results and they were made in the face of significant headwinds, significant disruptions. It feels like those disruptions are, if not completely over, much reduced, much reduced. The fact that we’ve been talking about weather events, bad trading weather, makes a happy change from talking about perhaps the loss of the Chinese supply chain through Omicron last Christmas, or being unable to get stock into the Spanish depo, the Christmas before or, of course, all the COVID closures. It feels like we’re stable again and when we’re stable, I think we can do great things. We’re expecting a year, this year, on the back of that stability of meaningful progress. It is going to come from sugar. The British sugar — the UK sugar crop at the moment is looking very good and you’ve got to get it out of the ground. But that usually happens a lot better than we were last year. And then the removal of those losses from Virgo will make — will give us decent growth in its own right.

And then in Primark, we’ll see sales growth, we’ll see space in expansion, modest like-for-like growth is in our forecast, underpinned by the value we offer, product relevance, and stretch, and then the digital programming platform and, in the first half, limited pricing, as well. We’ll see that strong recovery and gross margin and on the back of reducing costs. And the operating profit margins here we expect to be above 10%. There’s further improvement possible from that number, depending on sales levels.

Strong cash generation, obviously we start the year with a strong balance sheet. We know that there’s a working capital unwind to come this year. We’ve got the benefits of the tax prepayment. We’ve got the benefits, and it’ll last longer than the single year of the pensions payments holiday. There’s lots going on. There’s lots of investment. I think it’s all based now on much firmer, more stable footings than it’s been for a while.

So I think we’re going to have a good year. Thank you

Question-and-Answer Session

George Garfield

Who wants to go front? Start at the front.

Richard Chamberlain

Good morning. It is Richard Chamberlain from RBC. Can I maybe then just start with a couple on Primark. John you are talking about sort of modest like-for-like outlook for the coming year. But it sounds like you’ve had a good start to Q1, probably going to get more benefits from the enhanced website still to come and so on. So what should we read into that? Is that just a function of sort of price normalization through the course of the year and maybe, I guess, tougher comps, while you’re only guiding to modest? And then how are you seeing the overall stock costing environment, particularly in Asia? I think there’s been some recent disruption in Bangladesh factories shut and so on. You said I think you were recently just over there. But how are you seeing the overall costing run? We are seeing minimum wage rates going up quite a lot in various sourcing markets. So just interested in your thoughts on that? Thanks.

John Bason

Yeah, there are — I think, particularly in the period up to Christmas, there are tougher comps this year than there were last year. That’s one of the reasons to hold back the like-for-like forecast into the year and then the second reason is just caution around consumer spending. I think Germany is probably in recession, whether we get there or not, I don’t know but we’ll be close. So I think it would be ambitious to forecast like-for-likes to head your level but we think we’ll get some.

George Garfield

Guys, just on — we get the benefit of pricing in the first half of the year so that is one benefit, you won’t get that in the second half of the year. On the flip side, arguably you should have softer comps in the second half of the year. So that’s their kind of moving parts on the overall modest guidance.

John Bason

And then the costs we’ve built in an assumption of high wage rate inflation in Bangladesh into our costing models. And I hope that what we’re seeing at the moment is, it is just the sort of febrile end of a long wage negotiation. But of course, that wage negotiation, then goes into an election campaign, which in Bangladesh always, or always creates a degree of disruption. We’ve seen both before in Bangladesh and the supply chain has never really suffered more than very temporarily. So I think we’re so cautiously okay. I’m feeling a whole lot less worried about this one than I was about Omicron a year ago in China. But —

Richard Chamberlain

You are in Bangladesh anyway so, basic sort of stuff you have done.

John Bason

Yeah, it’s becoming more sophisticated, it is a very important market for us, so I don’t take anything for granted there but whereas Bangladesh has got its problem think the China supply chains are working very well, which is the first time I can say that in three years. So, net-net across the supply chain into Primark, it’s fine. It was some of that disruption in supply chains and uncertainty that led us to the highest stock levels and we might have wanted last year in which we’re coming out of the system this year.

Richard Chamberlain

Okay, great. Thank you.

Anne Critchlow

Yeah, it is Anne Critchlow from Societe Generale. Can I ask about the sugar margin, please, and the outlook for that, both this year with the close outs of the Vivergo loss, but also for the medium term? I think previously, you referenced the FY17 margin, which I think was 12%. Just wondering if you think you can get back there.

John Bason

Look, there are two sources of volatility in sugar; one is market volatility and the other one is sort of crop related. We will never get rid of the top right, one because it’s just sort of what happens. But the market one, I think, in Europe in particular, has been dampened down in the years since the regime reform shock, which was back in 2017, which is why we use that as a reference here. I think that there is sort of more market discipline across Europe than there has been for a few years. So I think that’s a good thing. Quite frankly, also, we benefited from uncertainty that Brexit causes. So, it’s tougher to get sugar into this country from France and Holland and Belgium that might have been in the past. So I think that supports our position. The world sugar price, I think, will remain elevated for a little while, but high prices tend to fix high prices. So that’s not that — we’re not going to be seeing 26 cents sugar in three years time, two years time. But I think through this year, this crop year, I think those higher world market prices will remain — are likely to remain in place. After that, I don’t know.

Anne Critchlow

Fine. Thank you.

John Bason

Alright.

Warwick Okines

Good morning. Warwick Okines from BNP Paribas Exane. I’ve got two questions, please. The first one on Primark, could you just say a little bit about your supply chain investment? You’ve talked in the past about automation and maybe a depo investment in the US? And then second question is you’ve got a couple of either loss making or close to loss making businesses just be helpful to get a bit of quantum or movement year-on-year. I’m talking about Allied Bakeries, Primark Germany and Vivergo as well. Thank you.

George Garfield

Which one do you — which fits you about two, one or two?

John Bason

I’ll do the second one.

George Garfield

You didn’t want to do the first one.

John Bason

As a supply chain investment, look, both workers depo labor is hard to come by but also because there’s financial opportunity in automating, we are going through a multi-year program of automating both our depots beginning in Europe and it’s both pallet handling and also case handling. We’ve done the pallet handling in Holland. We have done actually case handling in [Technical Difficulty] and Czech Republic. We’re doing both at the same time in Ireland. We’re doubling back to Roosendaal and Holland [Technical Difficulty] here, less than 10 years more than five worth of investment in warehouses in Europe. In the States, I think we need to be more cautious about putting a lot of capital into a depo structure which might not be the right footprint for the long run. So I’d rather leave a higher depo cost in place there than put tens and tens of millions into a warehouse in the wrong — that turns out to be the wrong place.

Warwick Okines

Yeah. And Jacksonville is, in some ways, kind of a relatively low-ish cost approach to serving the southern part of the US.

John Bason

But Jacksonville will be fine to Texas to begin with, but won’t be in the long run. So, is Jacksonville actually the right place in the longer run? It might be. It depends on growth in the southeast estates.

George Garfield

Just on your second question. Yeah. I mean, obviously, we’re making good progress in all of the, as you call it, the loss making businesses. I mean Germany isn’t loss making, so it’s not really the — it doesn’t have as much of a drag. So I’ll kind of say that we’ll move on next year in the same direction as all of the primary businesses because it’ll obviously benefit from gross margin, benefits isn’t the same way as all the Primark locations. Allied Bakeries, I mean, we don’t give quite the quantum here, but it has a meaningful impact year-on-year. I would kind of say, in terms of overall grocery, the reason why we’re kind of saying groceries is sort of flattish is that there are sort of ups and downs. We have tough comps in our US grocery businesses, for example, which offset some of the full year benefit effective Allied Bakeries, for example. And then in for Vivergo, Vivergo was a substantial loss this year, like sort of, to use previous 10s of millions will be and we’d hope it will be flashed this year for Vivergo. So I mean, it is good that we don’t have the drags but we obviously have to work on all of them, all those three we just mentioned. Please get a microphone. Yep.

Nick Coulter

Good morning. Nick Coulter from Citigroup. Three, if I may. Firstly, were slightly higher levels of CapEx? Should we expect that to be reflected in slightly higher levels of medium term growth? I guess that’s another way of asking about your paybacks, as CapEx creeps up? Then I guess allied to that, could you talk about the whitespace in Primark? It sounds like post 2026, it is coming into view, but how do you think about maturity and opportunity in your different country markets? You just gave some insights on the US in your comments. Then lastly, if I may, can I ask about the rationale for the split, special and buyback that’s probably quite unusual in market practice. Thank you.

John Bason

Let me do some of the growth CapEx. So most of the food product, food projects, I think with the exception of the water treatment plant in Mauri and these are the last two big ones in that division, our growth are predicated on growth. So the Western Australian feed mill which is done will help grow volumes in that lovely market. Actually, the bakery in WA is replacement of — is more replacement of very old capacity, so 60 years old. But Tanzania is all about growth. The yeast, the fermentation end of Ollie [Phonetic] is all about debottlenecking that growth business. What are the ones? [Multiple Speakers] specialty ingredients, ingredients, the packing plant in enzymes we just have to do because it’s an allergen. I would say probably two-thirds of the spend is has got a sort of above 15% payback associated with it, give or take.

John Bason

Where do we go from there? Oh, yeah, — and obviously the same, sorry, the same as Primark, we’ve got to pretty kind of — we’ve got pretty disciplined paybacks and return to hurdles across all the business, but that obviously applies to Primark as well. And, so we look at that very tightly, then whitespace and Primark.

George Garfield

Yeah. I think there is — we’re thinking about whitespace in two areas. I mean, clearly, some of these lovely markets like Italy, and France, there’s just geographical. There’s just quite a lot of space. I think in France, we’re up to about 40 stores or so also; in Italy, we’re close to 20. I don’t think we’ll ever get to the same sort of store density population that we’ve got in the UK, so don’t think France is going to get up to 190. But I would hope it wouldn’t be far off 75, Italy probably something similar. So just fill in of the big trading areas, and then the status is a whole new opportunity of whitespace. We also wonder whether there are more affiliate opportunities in smaller trading locations. So in Spain, and now Portugal, we’re opening smaller stores, 20,000 square feet stores in smaller trading areas, and they’re working very, very well for us. So again, it maybe not in the UK, where we’ve got very good 190, but in some of the other markets where we might think that 75 naturally will be enough, actually, maybe there’s an opportunity for smaller stores beyond the way we’ve looked at stores in the past. So I think there is plenty of opportunity for space addition for a while yet. And then started Poland, we’ve only got our four stores.

John Bason

And then in the decision that random split, well, I mean, first of all, bring it back to the capital allocation policy. So, obviously, we determined we had 600 millions of have access to look to return. The share buyback has been effective and an efficient way of returning capital to shareholders. Obviously, we took quite a bit of advice on them. As you might notice, there’s as much art as there’s science to this whole topic. But we felt the buyback worked and 500 million is about right in terms of the scale of that in 12 months and so we topped it up with a special dividend. We also were thoughtful of all of our shareholders when we think of special dividends, particularly smaller shareholders. So that was that was factored into our thinking as well.

So if you just because I’m sort of not exactly obsessed by fairness, but fairness, important thing for us. The special dividend and the share buyback are about the same size — sorry, the total dividend and the share buyback, both are around sort of 500 million.

Nick Coulter

A couple of questions on Primark and one on a cash flows piece. I guess first one is the more than 10% margin this year. To what extent is it dependent on the modest like-to-likes you’ve talked to, it feels like it isn’t gross margin driven and all that. And the second one, can you perhaps paint the medium term picture for Primark margins? How do we get to the low double digits? What might be the drivers from here on? Is it operating leverage or some of these losses that we talked about earlier, Germany, etc? And a third one, just a really technical one on cash flow, if you don’t mind, but working capital, cash tax and pension benefits this year, in terms of cash flow, to what extent some of these will persist into next year, particularly cash tax and pension if you can talk through those. Thank you.

John Bason

Right. Yeah, the above 10% margin is set on we think these — with modest ambitions for like-for-like growth. I think there’s probably more upside on growth than there is downside from sales, but I wouldn’t rule out having a disastrous season somewhere. So I think that post 10% has — flows off that but only to an extent. Medium term, I think the two ways of — two things I’d point to, firstly, I think the competitive dynamics that Primark faces into in its markets, and its supply chain hadn’t changed dramatically since before COVID. So I’m not sure which of Mr. Porter’s Five Forces has changed to change the underlying profitability of this business. I think this is a double-digit margin business, was in the past, I don’t think that anything significant has changed, so I think we’re okay. There is also the specific that we may not be seeing much of it now because we’re putting quite a lot of costs into things like digital, but there is volume leverage on margin available to us.

George Garfield

Yeah, I still think there’s quite a bit of operating leverage still available in Primark not just from the space of [Indiscernible] low, but that’s a big driver of that. Obviously, you could see more scale in terms of your — how you how you deal with suppliers and also, as we leverage investments as we speak and we still got automation benefits in supply chain. So I still think there’s quite a bit of operating leverage to go after individuals as the business grows, which suggests that double-digit margins are sustainable. And obviously, we will continue, the model is to continue to invest in price to make sure that we’re the lowest cost price operator, so then I think that model works.

John Bason

On the cash flow items, the cash taxes is pretty much a one-off in the year, we believe. You almost need to think of it. Cash tax would have been lower when you think of all the super deductions that came out of the COVID. It should have been lowered, the year just gone on this year, but it’s already falling into next year. It’s kind of the most simplest way to describe it. But it should normalize into FY 25. Pensions is ongoing and that benefits is with the surplus that we have there, we would expect that to be for quite a long time.

And working capital, I do expect it to be a decent inflow this year as particularly in Primark normalization. And I think there’s pockets of places to keep on going on working capital, but I think it’ll be more of a one off next year and I’d hope a little bit of improvement in years to come but it’s probably a little bit early for me to say that. But for now, I would suggest it’s more of a one off into next year.

Unidentified Participant

[Technical Difficulty]

John Bason

No. Well, sorry, it is connected to triennial but given the level of surplus, it’s very hard to imagine a scenario, it’s a pretty risky game now. So it’s very hard to imagine a scenario where that would have to restart.

William Woods

William Woods from Bernstein; just building on the question on margins, obviously, you’ve talked about gross margin a lot. How much do you think mid-term there’s an opportunity for both OpEx and labor efficiencies, and also the geographical mix to help on margins? And then on digital, two questions. Why don’t you sell licensed product online? And secondly, how comfortable are you with the installed pick and pack model at the moment? And should we expect in the mid-term for you to move to a dedicated fulfillment site for click and collect orders? Thanks.

George Garfield

Look, what I hope click and collect officers is range expansion. It’s not primarily a service offering. So quite frankly, if we’ve got it on the shelf in a store, I’d prefer the customer picked it themselves rather than we put that work into doing it for them. So pick and store, so, no, it’s not what we’re about. It’s about giving people in smaller stores and then in all stores. Small stores have access to a bigger part of the range that they might be able to get if they went to a big stores and everyone to have access to new products that we don’t quite frankly, have space for even in a big store. License, we’ll see where we get to with a trial of two things; to see whether this is an incremental opportunity for us. [Multiple Speakers]. If we prove our points, then we will expand the proportion of the offer or the categories where we have click-and-collect as an option, but we’ll prove the point first.

George Garfield

Yeah, I mean, it’s kind of similar answer to the question before in terms of places to go. I mean, they’re the you know, yeah, I’d like to think there are some — sell some pockets of individual markets where the margin is below the average where we can bring it up. I think the bigger issue — the bigger opportunities is really leverage on investment. I mean, I think the US is a good example, right. We’ve obviously put a lot of investments into the US anything growth phase. So obviously, as you grow, you will leverage that investment. So I think that’s probably the bigger opportunity in terms of CapEx. But look clearly if there’s places to improve, we’ve talked about Germany, as well.

Adam Cochrane

Adam Cochrane, Deutsche Bank. Couple of questions, please. When you sort of read all of the news about weight loss, drugs, GLP and things, what proportion of your food businesses do you think that might have a potential impact on it? And in terms of your longer-term strategic thinking, when you’re looking at M&A and acquisitions and things, he’s going down a more healthy route, I saw an option that you might look forward to, as we as we go forward. And then secondly, you talked about what’s structurally changed or nothing has actually changed within the market. You’ve always had a very low price point, but you’re very proud of that. How would you think your price point would compare to the likes of Shane or Teemu? Are you prepared to match their prices, even if their product is of a lower — potentially lower quality than neuron? Thanks.

John Bason

On that last one first, we match, like-for-like prices, so that there is a job to do to make sure that you’re comparing similar project — products? But yeah, our business strategy has to be the lowest price and that that is what it is. I don’t think inherently that they have a lower cost model, particularly if some of the freight subsidies are removed, some of the tax subsidies are removed. I think that they have a lot of cost to introduced into their businesses. GLP, yeah, firstly, let me say I think these drugs are completely fantastic. I have, I’m married into the medical profession, I have friends who have spent their whole lives trying to get weight off people who are pre-diabetic and failing. And for the first time in their careers, they actually have something that works. Whether that changes some of the focus of the obesity debate, I don’t know. If you can target weight loss from the people that really needed, maybe some of the general dialogue around healthy eating changes into kind of healthy eating, rather than trying to get people to eat less, which has been something we’ve been trying for 60 years and failing to do. So I think societally, it’s great. We’ve been observing some while that population growth isn’t really happening in most of our markets. So trying to sell more calories hasn’t been part of our ambitions for a long time. I’d also point out that in the UK, in our grocery products in the UK, something over 80% don’t get caught up by the HFSS rules. So we’re already in a very healthy part of the market. In parts of our grocery business like hot beverages, we’re trying to premiumize, we’re trying to premiumize in a [Indiscernible], that’s much more what our business is about in grocery. So no, I don’t feel any concern at all about calorie consumption being reduced by people that really shouldn’t be reducing their calorie consumption.

Adam Cochrane

And I mean, on M&A, I think, yes, it would feature into how we think about M&A. Like you always look at growth, long-term growth potentials of businesses, so it’s the any health not concerned or any health sort of headwinds, etc, and so on, there would be a feature of what you would look at when you look at a brand in M&A.

George Garfield

The only part of the portfolio where we’re encouraged by population growth trends is Africa, where our sugar businesses should benefit from rising populations and by rising wealth. They obviously are a long way away from having an obesity problem.

Anubhav Malhotra

Hi, it is Anubhav Malhotra from Liberum. I bought a couple of questions. Firstly on click and collect in womenswear. I don’t know if you already discussed this, and I may have missed it. But how the performance has been so far, for click and collect in women’s wear. And then secondly, on the thinking behind opening smallest doors and you seem to be a lot more open to it now, is the fact that you are rolling out a click-and-collect option online. Is that a factor in your thinking head opening smaller stores? Because you can offer a greater range to the customer through the online click and collect option or do you think they will open them if they are generating sufficient returns even without the click and collect offer.

George Garfield

I think at this at this level of where we are in clicking click journey, you’ve got to look at stores in their own right because we don’t know whether we’re still going to be doing click and collect in two years time. So no, it’s about it’s about the experience, most immediately that we that we’ve been having in the smaller stores in Spain, in particular, the profitability of them, and then that pulls us back to our — I suppose our knowledge that we sort of — we’ve always had but hadn’t really thought about too much about the success of many smaller stores in Ireland. We’ve got stores that trade profitably at 7000 square feet. I don’t think we’ll go there but we can trade stories in the right circumstances on quite small footages and we’re seeking in Spain.

On click neglect, women’s wear, what I can tell you is that the basket sizes are good. The attachment baskets are good. The percentage of people attaching is okay and the return rates on women’s wear are okay. What we don’t know and why we need more stores. Sorry, why we needed to go to the take a story there is what the cannibalization effect on other stores, who are not in click and collect. So how much are you simply substituting people across into a less profitable channel, that’s where why we need a good amount of data.

And kids ware has benefited from women’s wear have been added. So it’s — we’re still gathering, it is the main point, particularly to drive that incrementality equation. That’s the focus.

Gary Martin

Gary Martin here from Davy. Just a couple of questions just on Primark, just to start with – just begin with, I think you’ve mentioned previously that you had done some selective price reductions across the children’s range. Has this had any incremental benefit? And if so, do you expect to roll out further kind of targeted pricing reductions? And then just secondly, just on the FY24 Primark margin, I think you’ve mentioned previously given the kind of pervasive and persistent nature of stock losses that you had baked in some negative impact into FY24. What sounds like this actually just seems to be moving in the right direction, and it seems to be a heavy crackdown on this. If this does subside, do we expect it to have a benefit FY24 Primark margin. Thanks.

George Garfield

It’s, I mean, on largest stock loss quickly, I mean, we largely assume that continuation of it, I mean, just modest improvement. We don’t want to be completely defeated on stock loss, but it does feel a very tough battle to fight. We’re obviously throwing quite a lot of resources at it. But I think at this point in time, given where society to circumstances, I think, assuming a level of continuation is probably the kind of the prudent, right thing to do. But, you know, obviously, as I say, we’re going to try our best to counteract it. I don’t think it’s going to be a big feature of the margin dynamics into FY24 would be view. Second price reductions, yeah, I mean, we think it’s benefit on kids wear, to an extent,

I go to a slightly different place, which is that well — we exist to give the best value. We’ve talked a lot about collaborations with Rita Ora and all sorts of things. I think to reinforce our price leadership message and invest in price is absolutely the right thing to be doing, particularly for sort of less affluent families with kids who I think are probably the hardest off. I think it’s really important that we just signal to them that we are for them.

Gary Martin

Good morning. It’s James Grzinic from Jefferies. Two quick ones, first one, have you considered increasing the payout rate? It just feels that if it’s almost like a legacy of a margin profile and the volatility in the business that it doesn’t simply doesn’t have that anymore. And secondly, the 8.5% like-for-like in the past year for Primark, can you please split that into price — like-for-like price and mix impacts and how you think about those two drivers within that modest like-for-like for the year ahead?

John Bason

The answer partially or introduced? We’ve had a bit of a clear out at the office recently, and someone handed me remarks that my father made in 1977. It was actually at the AGM and he started off by refusing to apologize for a payout ratio which was 4.5 times and I can only imagine him rolling in his grave that we’ve got to three. We look at all aspects of capital returns and came to conclusion to this was the wisest one. And maybe were too early on in this kind of cash position to, to change payout ratios, be my view, you view?

George Garfield

Yeah, look, we did review it. And we keep all these things under review. I think our capital allocation policy largely works actually. I don’t see it being a problem, I think our dividend payers is well understood, and it’s healthy. So, yeah, but it’s a good point.

Q – Unidentified Participant

[Indiscernible].

John Bason

I don’t think it’s wise to be forecasting. We’re willing to tell you what next year is going to bring. To get in the world of speculation beyond that, I don’t think is a particularly valuable thing for us to be doing. Who knows what’s going to change?

George Garfield

Yeah, there’s a lot of uncertainty. I mean, price volume, mix, I mean, small amount of volume, most of it was priced in the 8.5%. Just a small amount of mix, I think it was kind of a mix kind of sort of method itself out in the end actually, it for the year, so. So predominantly, it is pricing into just a small amount of volume. Most of that was in the first half of the year, second half of the year was less volume? And it was more priced, as we roll forward into this year, as I think it’s — a before the — we kind of expect about one percentage point on price for the full year. And then obviously, we’re hoping for the rest of the volume to drive the modest like-for-like not expecting a huge amount of mix. Sorry, John also said in forecast that would be futile to give a forecast so he wasn’t going.

Paul Rossington

Paul Rossington, HSBC. Can you give some kind of quantum of what you expect Primark inventories to come by over the course — come down by over the course of the full year. And then any guidance on the split of store openings in this year, H1 versus H2? Thank you.

George Garfield

Oh, H1, H2, [Indiscernible] should come down by at least a couple 100 million. So in terms of working capital inflow, so that’s what that’s what I’ve been hoping for. I think we’ll have to get back to you on store openings on H1, H2. I don’t think it’s — I think it’s relatively even across the year but I’d have to just double check, to nine stores in H1. Okay. So, yeah, that’s even across the year. I think we’re probably running towards the end here. Have we any questions on the web or no, no. Thank you. Thanks very much indeed. Thank you. Do you want to say anything about just about reporting?

John Bason

Yeah, just one point to make in the appendix page, something. There is just a note on — we’re just modifying our financial calendar just a little bit in terms of how we’re reporting next year for primary updated Jan trading update, LC in terms of final and then a September pre-close. So, that’s the rhythm for next year. Thank you very much indeed. Thank you.

George Garfield

Thank you.