Associated British Foods plc

And thank you for coming to this review of the interim results for the 24 weeks ended the 2nd of March, 2024. Obviously, these are a strong set of results. They're in fact the best I've been able to talk about in 19 years. Margins have built back to more normal levels, both within Primark and across the food businesses. That is the consequence of, quite frankly, a restoration of normality in our supply chains and in our inflationary environment. So, return to normality. We're also benefiting, though, through that normality. We're beginning to see the consequences of, in some cases, years of investment and strong strong execution. We've been adding, for instance, a million square feet or so of space in Primark. We just haven't seen the benefits of it until this year. We have made good progress within Primark, in particular on digital strategy, another piece of work that's been going on for a long time, high quality work. And included in digital strategy is the Clicking Deck service, which we have more to say about today. With normalized working capital with supply chains allowing us, running better and allowing us to take safety stock out, we've seen very strong cash flow in the first half. And then with the strong shareholder returns, those flow through into increased dividends. We're also going to take you through what's going back, what's going on with our share buybacks. Geopolitical risks remain. And I don't want to say too much more about that, but I think it would be negligent to me not to salute the fact that the world may look normal at the moment, but these things can change.

Great. So, look, thanks, George. As George has said, look, these really clearly are a strong set of results. As you see in the financial highlights, we've had significant progress across all of our financial KPIs with good growth in revenue, both in most of our food businesses and in retail markets. obviously strong growth in adjusted operating profit and adjusted operating margin, and indeed a record adjusted earnings per share at this time in the year. Of note also, and I'll speak a bit more about it, we had a free cash inflow in the period, despite another big step up in growth investments, and of course a significant increase in the interim dividend aligned with the increase in adjusted earnings. So, look, as usual, I'm going to just walk through some of these indicators in a little bit more detail, firstly starting with the segmental view. And, obviously, George is going to go through each of the segments in a little bit more detail. On a constant currency basis, revenue was ahead across most of our food businesses. As I said, for grocery and ingredients, this increase in revenue was largely driven by the price increases last year to offset cost inflation, but also by volume growth. Across the grocery segment, adjusted operating profit recovered and adjusted operating profit was significantly higher. Our ingredient segment continued to be strong and ahead of expectations, driven by AB Mowry, our Eastern bakery ingredients business, which maintained its strong performance from last year. In our sugar segment, profitability improved significantly, driven by the much reduced loss of Virgo. In this segment, it is worth noting that profits were impacted by FX translation laws, particularly in a low boat. Sales were lower at agriculture with declines in the compound feed markets in both the UK and China, but profits improved on better procurements and improved pricing. So at retail, full-year revenues rose significantly, up 7.5% on a constant currency basis. reflecting the continued growth in selling space. And the first half also saw the significant increase in adjusted operating profit of 46% to $508 million, with margin recovery to 11.3%. So, as always, let me just walk you from adjusted operating profit of $951 million to adjusted earnings per share. As a reminder, adjusted operating profit was up 39% on an actual basis. That includes a translation loss of $57 million driven by the threatening of sterling against dollar and euro, but also against our trading currencies in Africa, as I've mentioned before. Finance income continued to increase as a result of higher interest rates earned on our cash position. In other financial expenses, we recorded losses on cash and foreign exchange balances of some of our African operations, most notably Nigeria and Malawi, which both faced material currency devaluations in the period Lease interest increased during the period because of the increased number of Primark stores. Overall, for the year, we expect a similar level of finance income and lease interest in the second half. However, we do not expect the losses on cash and prime exchange balances in other financial expenses to repeat. Back to the first half, on an adjusted basis, property force tax was up 37% to £911 million. I'll come back to tax in a minute. Adjusted earnings per share increased by 46% to 94.4 pence per share, benefiting both from the increase in adjusted earnings, obviously being the significant driver, but also from the reduction in the weighted average number of shares because of the buyback. Obviously, the weighted average number of shares is going to continue to reduce from the completion of the share buyback this financial year. So just briefly on basic earnings per share, overall profit before tax was up 37% ahead of last year, actually similar to the adjusted profit before tax. Let me just point out two things on this slide. Firstly, in profit sets, losses on closure and sale of businesses, we have a loss of 10 million pounds relating to the closure of our China sugar business. And secondly, the exceptional charge of 6 million. To give a little bit more color on the exceptional charge, it's made up of two things, both in sugar, a non-cash exceptional impairment charge of 18 million at Vivergo, which although it's performing well operationally, and George is going to speak a moment about that in a moment, it continues to be impacted by margin volatility. And offset that, we had a 12 million pound partial reversal of the impairment we recognized in Mozambique last year. So overall, basic earnings per share were 87.4 pence, which is 30% ahead of last year. So just on tax, the adjusted effective tax rate was down from 24.7% this time last year to 23.2% this year. This is largely due to the change in mix of profits and in particular through the increase in the profitability at Primark. And that all set the full year effect of the increase in the UK corporation tax rate. And as guided at the beginning of the year, we've seen a much lower level of cash tax as we benefited from capital allowances and overpayments from prior years. So you'll be able to see that in the cash flow in the next page. But we expect this lower level of cash tax to benefit the full year. So on cash, obviously, we're very delighted. We're very delighted. We're delighted with the cash inflow of £468 million. Let me go through some of those components. Firstly, of course, we have the higher profits we've already discussed. Let me go through working capital next. As you can see, we had a positive working capital movement in the half compared to a large outflow in the same period last year, and that's despite the normal seasonal working capital outflow we see in businesses like sugar. And so this performance in working capital reflects a number of things. One, a normalization of inventory at Primark as expected, stock reductions in most of our food businesses, as George mentioned, and reducing inflation overall, and various other working capital initiatives. We continue to expect these to drive a meaningful decrease in overall working capital at the year end. Next, You will see the step up in capital expenditure mentioned earlier. I'll cover that in a bit more detail by segments in a moment. After that, as I've already mentioned, you can see the cash tax level was low. Actually, the actual amount being the same as last year despite the increase in profits. And finally, in other, we see the benefit of the abatement of the UK pension payment contributions we spoke about at the year end. and all adding up to the strong net free cash inflow. Below free cash flow, of course, we have the cash outflow for our continued share buyback programs. We also paid £348 million of total dividend, which reflects the final dividend and special dividend from last year. Which leads us nicely to the group capital structure and its strong balance sheet position. We ended the period in strong cash and liquidity position. This includes the one and a half billion undrawn revolving credit facility, which we now have extended out to 2029. As mentioned, during the financial year, we executed 281 million pounds of share buyback programs, with the remaining 275 million of our second 500 million pound buyback to be completed by the end of the financial year. We are declaring an interim dividend of 27 points per share, as I mentioned, reflecting the growth in adjusted earnings. And at the end of the half, we had financial leverage ratio just under one time. I thought I'd finish, actually, on the step up in the gross investments, given it's such a big theme for the business, and George has already mentioned it, as we look to drive median term growth. And George is going to talk about elements of this in a moment. But in the first half, we had gross investments of 571 million, as I mentioned. It includes a number of multi-year strategic initiatives to improve capacity, capability, and sustainability. In grocery, if I kind of go around the pie, you see some of the highlights include the continued investments in the production facility in Nigeria for Ovaltine, which will serve and markets across West Africa. In sugar, you see the continuation of the build of the new sugar factory in Tanzania. In sugar also, a lot of decarbonization projects in British sugar, and George is going to speak to you about one in a moment. And ingredients, the expanded capacity for the Oli yeast extracts business in Hamburg, and indeed our new yeast plant in India. In Primark, the outlay reflects the continued store expansion. as well as investment in warehouse automation and technology, including new logistics centers in both the U.S. and in Ireland. Overall, we continue to prioritize investment in the business. As we've previously said, and as you can see in the first half, we expect to increase spend in each of the next few years to slightly above last year's level. So, okay, with that, I'll hand you back to George, who's going to take us through the business in a bit more detail.

Thank you very much indeed. Starting then with grocery, where the trading performance across the half was really very strong. Margin improvement in particular characterized the half, but also fair decent sales growth, sales up 5%. I especially want to call out the performance of our U.S.-focused brands. Performance was nothing short of sparkling in the first half. And then we've been increasing our investment in sales and marketing. through the period. Let me turn now to the international brands. So, Twinings and Ovaltine in particular, but also Patax and Matheti. At Twinings, we've seen good growth in major markets led by further growth in the well-being range of teas. Ovaltine more mixed. Powder sales in Thailand, which is our largest market, were down a little, although ready to drink has been Selling well and successful new launches of a number of Ovaltine type products across the world in Europe, but in Europe in particular. Patax is going really well internationally, particularly in the U.S. and Canada. We've really got the wind in our sails there. And then Mazzetti where we are after building a global, premium balsamic vinegar brand. Again, strong volume growth in the half on the back of good commercial work. We have increased marketing investment to support the long-term growth of these brands, and that will be a characteristic of the second half, and I have no doubt of years to come. Let me show you an ad that we've made to support twinings in the United States, and then I'll say a few words about it, but it's a significant piece of the mix that is helping us drive sales very strongly in the U.S. and actually the Canadian markets as well. So if we could show you that.