Associated British Foods plc

Thank you all then very much for coming to this review of ABS full year results for the 52 weeks ended 14th of September 2024 and I'm aware that there are some people online and welcome to you too. It's a much easier job delivering today's results to those of the last four years. They're really very strong, substantial improvement in profitability with operating profit up 38%, adjusted earning per share up 39%, and then even better than the operating profit increase has been the increase in cash generation up to 1.4 billion. That's an increase of a cool 1.1 billion on last year. material improvements in our return on capital employed, increasing to 18.1 percent from 13.6 in the year before. They're not just strong financial results. We've also had a year of very good operational progress. Across the group, this has included strong execution in marketing campaigns, new product development, and capital projects. The marketing campaigns, the product development, got awfully stalled in the supply chain disruption and the inflation battles that we've fought in years gone by. We've seen a return to normality in our markets, in our supply chains. There are still some bumps, but overall many fewer. I think it's not just been about the environment. We've also seen the results of our consistent multi-year investment across the group. And this year, just gone, we invested another $1.3 billion. That will underpin future growth. It will also enable us to deliver on our most important ESG priorities. But even in a year of this record investments, we continue to increase our capital returns to shareholders. Our proposed total dividend for 2024 represents an increase of 50%. Over the last two years, we'll have returned approximately 2.3 billion pounds to shareholders through dividends and share buybacks. Looking at these investments, Specifically, we were investing even through COVID, new stores, depots for Primark, increased capacity and capability in our food businesses. And I'll take you through some examples of that through this presentation. Expenditure on sustainability projects, most of which come with a good financial return as well. And then a few acquisitions that are small in the grand scheme of things, but important. This next slide puts our profit delivery and margin recovery in the context of the last four years. In 2019, we were at 9.4% margin. In 2024, we're at 10. We've gone elsewhere. We went elsewhere in the intervening years. We're much more in line with what we were delivering before the disruption of COVID and the consequent inflation and disruption. With that, let me hand over to Owen to go through this year's financial results in more detail, and then I'll review this year's strategic and operational progress within the businesses.

It's green. It's not working. Okay. Thank you, George. So, look, I'm going to just take you through the results in a little bit more detail. Starting with revenue, you'll see group revenue was £20.1 billion, 4% ahead on a constant currency basis, with sales growth in retail and most of the food businesses. But the performance in adjusted operating profit was incredibly strong. up 38% on a constant currency basis to £1998 million. And I'm going to go into each segment in turn in a moment. But as you can see, that improvement was driven by retail, but also strong performances in grocery ingredients and sugar with all divisions advancing. It's worth just noting at this point, actually, that the increase for the group was 32% at actual exchange rates with an adverse translation movement of £97 million in the year. So, of course, the significant increases in adjusted operating profit meant that we had a very strong margin improvement within the individual segments and for the group as a whole, as George has said, from 7.7% to 10%. So let me take you through some of those drivers of the performance by segment, starting with performance. And there's a bit on this slide, so I'll go through it slowly. I'll also actually just note out that we've added some disclosure to Primark in the announcement today. We've broken down the business into more discrete country segments. And in the appendix to this presentation, we've given some historical performance by those new sub-segments. So in the year we had 6% growth at constant currency with strong performance in our key growth markets, particularly in the US, France, Spain, Italy and Central and Eastern Europe. We also had good growth in our largest market in the UK and a good recovery in Northern Europe. George is going to provide a little bit more colour on those markets in a moment. As we saw before, we achieved a significant recovery in operating margin to 11.7% and adjusted operating profit increased from 735 million to just over 1.1 billion pounds. This was driven by increased gross margins, which was supported by an increase in price in H1, but most notably by an easing in input costs. Remember that this is after we chose not to cover the full inflation in FY23. The increase in gross margins was partially offset by our labour cost inflation, and we are also investing in initiatives across digital, product and brand to continue our growth momentum. It's worth noting that a combination of this profit increase and the normalization of working capital has driven a material recovery in return on average capital employed also, which has increased from 12% to 18.7%. So moving on to grocery, we've achieved significant profit growth and margin improvement here also, all the while investing in brand activity to drive longer term growth. Sales grew at 4% on a constant currency basis, reflecting good performance across a number of our leading international brands, in Twinings in particular, but also at our regionally focused brands and at our US focused brands in particular. Again, here we've added some additional disclosure to give you a sense of the weighting of revenue by region. Easing input prices, input costs have contributed to our margin improvement to 12.1%, but so has the improvement year on year in our bakeries business in the UK and the strong performance of our U.S. brands that I've noted, and the latter effect of this performance in our U.S. brands began to normalize in Q4. Overall, we've seen a substantial improvement in our return on average capital employed, increasing from 30% to 35.8%, which actually, even if you adjust for the contribution we get from our significant JV in this segment, Stratus, it's still very strong and is above 30%. At ingredients, we've been pleased with our performance here. We've seen a strong improvement in profitability while continuing to invest in growth. Overall adjusted operating profit was up 12%. Our yeast and bakeries ingredients delivered robust sales and margin recovery and was the driver of that improvement. Speciality ingredients faced some impact due to customer destocking in the first half of the year, but showed improvement in the second half. We're very excited about the long-term potential of these businesses. Our sugar division actually delivered significant growth in both sales and profitability in FY24. Obviously, we need to break the business down largely to two components, European sugar and African sugar. In European sugar, it was most definitely a tale of two halves with high prices initially. And then as we announced at the beginning of September, a significant price decline in Q4, which impacted profitability and will so into next year, which I'll come to. In Africa, we had some very good performances, particularly in Zambia, South Africa and Eswatini, although a more challenging time in Tanzania. That's a market we have high hopes for, but had a lot going on in the year. It's worth noting that the operational performance in Virgo has reduced losses in the year, further contributing to our overall improved results. Margin volatility at that business still remains a challenge, though. Finally, we fully exited our business in China to streamline our focus on resources in the segment. In our agri division, we saw good growth in speciality feed and additives, which was a positive highlight. Sales and compound feed were soft. However, the real challenge was at our JV frontier, where prolonged wet weather in the UK negatively impacted demand. We continue to integrate our newly formed dairy business, which we believe will contribute to future growth. Right. How did this significant increase in adjusted operating profit drop down to earnings per share? As I said, adjusted operating profit was up 32% on an actual basis. So let me highlight a few other items. Finance income of £71 million was strong due to the higher interest rates earned on our cash. Other financial income decreased to 23 million, primarily because of foreign exchange losses caused by the devaluation of African currencies. And with these, adjusted profit before tax rose by 33%. The adjusted effective tax rate was 23.1%, which was down from 23.5% last year. This included the full year impact of the increase in UK corporation tax rate, but it also was much more than offset by changes in profit mix. So with that, and with the impact of the reduced number of shares from our buyback programmes, adjusted earnings per share was up 39% to 196.9 pence per share. In basic earnings per share, I'll just pick out three things. First, the exceptionals. We had a £35 million charge in the year, all non-cash. with impairments in sugar at Vivergo and our Mothballed Mozambique business, and at retail relating to German stores. The second point I just want to point out is the profit on the sale and closure of businesses of £26 million, which is predominantly due to the profit and sale of our sugar business in Africa. And the third point is a net profit on disposal of non-current assets of £16 million, which includes profit on sales of investment properties in the UK and Australia. So basic earnings per share of 193.7 pence was 44% ahead of last year, also benefiting from the lower number of shares. So on to cash. As George mentioned, cash flow was very strong. And that's despite the fact that we had a step up in total investments, both capital and acquisitions, which I'm going to cover in a moment. Of course, we had the strong profitability starting this off, but we also had some other good positive movements. I'll note three in particular on this chart. Firstly, a working capital inflow of 305 million. This is driven by a number of factors, including the normalization of inventory at Primark, which I mentioned, but also stock reductions in most of our food businesses and various other working capital initiatives. Secondly, the cash tax paid was broadly similar to last year, and that's despite the significant increase in profit. And that's due to overpayments from favourable settlements and returns historically. In other cash flow, we see the benefit of the UK pension fund abatement, which we mentioned at the end of last year, of £64 million. And overall, all of this contributed to a significant free cash inflow of £1,355 million. And of course, this, of course, led to a further strengthening of the balance sheet with an increase in cash and total liquidity and a reduction in overall net debt, despite the step up in shareholder returns. So crucially, the key metric is leverage and the combination of higher adjusted EBITDA with the lower net debt has resulted in a lower leverage ratio of 0.7 times at the year end versus one times at the end of 2023. Now, our priority is to continue to invest in the business, and the chart here is the one you're becoming familiar with in terms of how we break down the 1.3 billion we spent in FY24 across the businesses. Approximately 40% of the spend was into retail, which is investing in the growth program, but 60% was across food in a large number of multi-year projects to drive capacity and capability and George is going to comment on some of these investments in a moment. The second priority is to return excess capital to shareholders and we are continuing to step up our level of return given the strong balance sheet. So let me start with dividend. We're proposing a total dividend of 90 pence per share, which includes a special dividend of 27 pence per share. The level of total dividend represents a 50% increase year on year. In sterling, it's an amount of just over £650 million. So in two years, we'll have paid over £1.1 billion in dividends. On share buybacks, we executed our second £500 million in the year, and we also announced an extension of £100 million in September, which we have now completed. And we're announcing today another £500 million programme. Again, the total we'll execute over last year and this year will be circa £1.2 billion. So just to finish off on outlook before I hand you back to George, there's very little change here to what we said in September. We're targeting mid single digit growth at Primark in 2025, with margins to remain broadly in line with last year as we continue to invest for the future. As discussed in September, we expect a drop in sugar in 2025 before a rebound in 2026. Grocery will be impacted by the normalization in the U.S. performance, but otherwise we're looking for progress in this segment. And in ingredients and agriculture, we are also looking for progress. So with that, let me hand you back to George and I'll come back to you for questions.

Great. Let me start with retail with sales are up 6% in 2024 and we're pleased with that. We had strong performances and what we're defining now is our growth markets in Europe, Spain, Portugal, Italy, France, and together they account for around one third of Primark sales. And they're the real growth engines for the medium term future. We have good momentum in these markets. Our brand is well established. and we're building market share. We've also demonstrated, particularly in Spain, that we can successfully add stores beyond Tier 1 locations. So, moving to secondary locations using smaller stores, we've just recently opened one of these smaller stores actually in Portugal next door, where previously we'd really struggled to find new space. Portugal is a very good market for us. There is plenty more white space in these growth markets, Spain, Portugal, Italy, France. It's earlier days than in Central and Eastern Europe, but our brand and proposition is really resonating with the consumers, and we're confident of accelerating their Central and Eastern Europe. The US in the long term is our largest growth market opportunity. It's only about 5% of our sales today. We're now at 27 stores, and the business is nicely profitable. We're continuing to make good progress with the store rollout, 27 stores, and another 14 leases signed, two more to open before Christmas. Then the UK and Ireland represent about half of our sales now. We expect growth to continue, but not at the same pace as our growth markets. The year just gone was bumpy in the second half, which we firmly believe was really entirely down to weather. There's still plenty to go at in these markets, including through continual improvements in ranging, through digital customer engagement, and through store optimization and cost. In Northern Europe, the main focus of the last two years has been the restructuring of our footprint in Germany and to a lesser extent in the Netherlands. And we're starting to see the benefit of that work coming through. Both markets in the year just gone had a very strong improvement in like-for-like sales and densities. Some of this was the benefit of sales transferring from clothes stores, but some of it wasn't. It's worth remembering that Germany remains the largest retail clothing market in Europe, and we still believe that Primark has a role in that market. Store rollouts continued with 22 new openings. A highlight was the first store in Hungary, which had a fantastic response and takes us into our 17th markets. New stores in Europe have generally performed well with good densities, densities above company average. In the U.S., we added six stores in the year, our first stores in Virginia, North Carolina, and Michigan, our second store in Florida, very early on in this financial year and the distribution center that will support our continued growth in the southern states. That second store in Florida is an amazing success so far. We look forward to opening our first store December the 12th in Texas on the Mexican border. Since 2020, we've opened 19 stores in the U.S., and generally they're performing well with good densities, good profitability. One or two, including that second Florida store, are doing extremely well with densities well above our total company average. Inevitably, we've got a couple of them wrong, but we've got plans in place. To fix those, within the leases we've signed, we have an interesting opportunity in Manhattan. It's a store that in its own right makes good economic sense. The footfall in the area around Penn Station, where this store is to be located, that footfall is enormous. A lot of it is from wild estate. A lot of it is from out of Manhattan, I think the halo that that store provides for us will be really good. There's a real opportunity also in the States to unlock the growth potential by raising brand awareness. I'll come back to that in the middle in a moment. So looking ahead, we have very significant space to open into in our growth markets in the States, in new markets. And we have detailed roadmaps that we're working through. In terms of new markets, GCC is next. We're excited about that. It's a big market. It'll be our first franchise experience. I think the franchise model gives us capability of getting into markets beyond simply GCC. Instead of the 530 target, which we've been sharing for a couple of years now, we're now, given that 530 by the end of 26, we're now targeting new stores to contribute around 45% sales growth per annum for the foreseeable future, so well beyond 26 medium and into the long term. That's stores. Let me... give you a bit more detail of how we think about our product strategy. Core essentials are the first part of it. This is in four buckets, if you like. Core essentials at the heart of the business, and they remain the key driver of volume. These are things like leggings, hoodies, jeans, t-shirts, underwear, socks. Underpinning our business here is our relentless focus to ensure that we're never beaten on price. 85% of all the products Primark sells are under £10, and a lot of them are in those core essentials bucket. Alongside our great value proposition, we do have an opportunity to keep expanding our offer to slightly higher price points and more premium products, so collaborations ranges grew strongly. We had the first full year of the global partnership with Rita Ora. It's been a great success. Sales of the edit are more premium essentials range doubled this year, and it's now in 300 stores. And menswear, let's not forget the menswear teams. Sales of both Cam and LA Stronghold also doubled as we added more products within those ranges and introduced them into more stores. Licensing then continues to grow. Sales of NBA and NFL products grew particularly well, especially in the U.S. We added this Italian sportswear brand, Kappa, to the portfolio. Also, the partnership with well-established brands such as Disney, again, keep on developing. That second store in Florida has a Disney shop within it on its mezzanine and is phenomenally busy. And then we continue to work with new products. This year we added Hello Kitty, which has gone straight into the top three. Growth then finally is also coming from expansion into new categories, including home and accessories. In home, the offer is working very well. The standout success this year was ceramics. They went viral on social media and sales doubled. And the luggage shop, again, is really, really successful as well. Let me turn to a couple of our sustainability priorities. The first one is cotton. We're committed to using all our cotton, either being organic, recycled, or from the Primark cotton project. And we're making very good progress here. In 2024, the percentage was 57% of all our cotton coming from one of those three sources, and that was up from 46% last year. Cotton is by some way our largest fabric. Secondly, we're working harder on giving lives a longer life. You may have seen the 15-pound gene story. Our genes are sustained as long-living as any more expensive ones. We've introduced a durability framework across all our buying teams. It sets out the requirements that all clothes must adhere to, including physical quality tests and a set number of washers, and we're making very good progress there. We've previously highlighted the work we've been doing on the Primark brand, including an updated look and feel. So a good example has been the introduction of what we call the P portal. You can see here, this is now all across all our channels, all our marketing. We are, through digital in particular, getting better at tailoring our local communications to customers in individual markets. And for the first time, we've invested this year in multimedia marketing campaigns in two markets, Germany and the US, different jobs for each of those campaigns to do for us. So in Germany, it's part of the overall transformation plan. We launched a brand campaign last spring. It's aimed at addressing Primark's brand perception in the market. We've had, I think we're on the third burst there. We're tracking various metrics, for example, brand affinity and consideration, and we've made good progress. Too early to claim success, but we're moving those brand metrics strongly. And as I said earlier, the like for likes in Germany have been good as well. In the US, we have a simpler goal. We just want to increase brand awareness. We have every faith in our proposition for the US shopper. We just need more people to know about us. So in August, we've launched a 12-week media campaign in the New York area. I think we have 11 stores now. that are covered by that marketing campaign. And the campaign is still ongoing, but the initial testing is positive. Let me be quiet for a second and show you the ad that we have been running along with other media, aspects of media.

Welcome to Primark. My love has no beginning, my love has no end. Lost in a spin My love has no beginning My love has no end My love has no beginning My love has no end I'm in the middle Lost in a spin Loving you

That's a great improvement. From Primark, TV adds to digital engagement, which is now a key driver of footfall across all our markets. We're making good progress. We had 140 million visits to Primark.com across all 17 markets. That's an increase of 23%. Traffic in the UK increased 15% to 58 million visits. Partly it's a continuous improvement to the website and expansion into new markets that's driving these improvements. It's also the result of real focus and capability across digital activity. Our customer database continues to grow. Search engine optimization targeted digital activity. marketing. The CRM database reached three million customers this year, which is a threefold increase on last year. Two million of those customers are in the UK. Use of our stock checker continues to grow, up 35% on last year. It's now between 15% and 25% of all visits to the website include a visit to the stock checker. 20% is the number in the UK. Social media following, which we still think we can exploit further, was up 10% this year to 26 million. We think that's contributing as well. We do a lot of data analysis to estimate the conversion rate from website traffic into footfall. It's not a perfect science because it never is. But we're comfortable that conversion rates are good and that our digital engagement is contributing to incremental sales. Click and Collect, of course, is an important evolution of our digital journey. We now have 87 stores with Click and Collect. point. The rollout to all GB stores will be complete by the end of 25. The metrics for Click and Collect are good in terms of basket size and value. It's driving incremental in-store purchase as well. It's attracting new and returning customers and customer satisfaction scores are very high. The technology works extremely well. Cost optimization and efficiency are really important part of the mix, particularly as we have in this country in particular new and growing cost pressures. We aim to deliver annual savings through large numbers of initiatives across our stores, across our supply chains, and in the central costs. Self-checkouts are one aspect of them. They're now in 103 stores across eight countries. They reduce queues. They help reduce staff numbers. We expect to get to 190 stores with SCOs by the end of next May. We're also, as you know, investing in the depot network, using automation there to manage headcount. The new warehouse in Ireland is near completion. The automation projects in the Netherlands at stage two and the Czech Republic are underway. Let me go back to another one of our important priorities, which is carbon emissions. The bulk of our carbon emissions are in scope three. We've been running a number of pilots in our supply chain to see whether our suppliers can reduce or to improve their energy efficiency. And we now have rolled that work through 51 factories. in Bangladesh, China and India. And absolutely, you can get big chunks of carbon out of those factories by running them better. We're training, we're running workshops, we're sharing solutions that ABF might have in other parts of the world and taking them into those factories in Bangladesh. The consequence of that, Scope 3 emissions reduced by 12% in the year despite increased volumes. So our total Scope 3 is now 0.6% lower than the 2019 baseline despite the significant increase in volume. There's a long way to go, but we have a methodology, we have a capability, and we're doing the work. As for scope one and two, where we've got more control and where we've been at it for longer, scope one and two emissions are now fully 52% lower than they were in 2019. I think we're on stage four or round four of a low energy light bulbs. Good saving. We will spend 130 million pounds on them by the time we're done, but with good payback. So bringing all this together for Primark, we're feeling We're feeling very good about the business. The low-cost model is working extremely well. We've got good market shares, growing market shares in the growing market, growing markets, lots of white space. We're back to margin levels that we think are right, that we've seen in years before COVID. And we think that those margin levels are sustainable. Okay. Then on to grocery. which has had a good year. As I said earlier, we're able to get back to focus on growth, on new product developments, on other commercial activity, marketing campaigns, and so far we increased our spend particularly but not just in in twinings the commercial execution around those marketing campaigns in twinings in particular has been very very good and as has been the new product innovation especially for these international brands that we're now now now pulling out for you and we're evolving our portfolio in Australia in particular where where we have very good marketing positions. But let me turn to start with to some of these some of the marketing that we've been talking about. Mazzola is a good example. We've upped the spend on Mazzola. It's very focused on our core consumer, who's Hispanic. And that population in the States is increasing. So we have more mouths to feed every year in that population. We outsold our closest branded competitor in the States by some 40 percent. We think that our status as number one brand is well established now. Yes, we've enjoyed an increase in margins that's going to tail away back under the year. It's begun to tail away. But fundamentally, the strength of that business has improved significantly over the last 18 months, two years. Increased marketing investment for Twinings has also shown us great returns. I showed you the US ad six months ago. We've got a French version of it. Actually, the US version is the version of the original French ad. It's also top scoring. Twinings is now the number one brand in France. We grew our share in all our largest markets, the UK, the US, Canada, and France. And this combination of effective marketing also increased distribution, improved in-store visibility, particularly in the States. New product innovation has given Twinings brand very good momentum indeed. New product development. Then a couple of examples in Twinings. The one bottom middle is iced tea in the U.S., but we've also launched Twinings sparkling tea first in the U.K. It will go to Australia next. It's going well. It's part of meal deals in Waitrose and Sainsbury's, and I have every confidence that we'll give you some to take away after this meeting. Patek's radiant heat meals available, launched in the States, can be heated in the microwave from 90 seconds, going well, as is Jordan's slow-bake granola, also for the U.S. market. Investment in capacity, capability, market expansion, then in grocery markets. Tip Top, we're adding new bakery capacity in two sites in Australia, Canning Vale in Western Australia. We've had in Western Australia one of the leading brand known label position for 30 or 40 years. This investment will ensure that we maintain that for the next 30 or 40 years. Tip Top though also has a good position in supplying buns to food service. It's a very major supplier of QSR restaurants in the Australian market. And we're commissioning, I think it's probably up and running by now, a new line in Queensland, really just to keep up with growth in the QSR market. From Australia to the UK, Scrocchiarella, which took me a year to learn how to say, and I'm still not sure if I know how to write it. It's a fantastic new bakery product. It started off in Italy. We're commissioning a line in the UK to supply, in the first instance, the UK food service market. It will be... ready to be consumed by Christmas. Very excited by that. And then Nigeria, we're investing in a factory that will make Ovaltine. We won't be importing it from China anymore. We'll have a lower cost base, less exposure to currency. We'll be supplying the rapidly growing Nigerian markets. 93% of Nigerian families consume milk modifiers. So it's a very big market in Nigeria, growing with the population. And this factory also gives us access into other parts of West Africa, reduce our costs, increase our capacity, and those other markets increase our access to hard currency countries. Let me just spend a couple of minutes on the evolution of our grocery portfolio in Australia and New Zealand. It's a very attractive market for us. We've been there for a long time. We're well established with good market positions. There's population growth, there's interest in branded food, they're wealthy countries, they're food experimenters. So, Tip Top and Don in particular are well established traditional grocery brands. They have The task that we're on the way with, we're evolving beyond sliced bread and sliced ham. The growth areas in bakery and in cooked meat are not the staples of the past. And there's also, in Australia, we're pivoting not only to these more niche, higher growth areas, but also into food service. food service is being held back by recession in Australia a little bit, is on a very similar growth trend to America, big food service market. So I mentioned the tip-top bun line investment. Yumi's took us into dips, which is an attractive category. It also takes us into the fast-growing vegetarian sector, and we're investing behind that. In New Zealand, only ABF could do it. We bought Dad's Pies to sit alongside our existing business. We've got very strong market share, and that combination is trading extremely well. This year, just recently we bought a company called the Artisan Group. It is the supplier of premium baked goods into food service. Cafe culture in Australia is alive and well, and the Artisan Group is the major supplier down the East Coast to that market. Let me pause. Ingredients. Firstly, yeast and bakery ingredients where markets around the world are really back and in very good health. Yeast margins have recovered well in many places and we see little reason why these new margins won't be sustainable. We've got really strong bases and what we're trying to do is put other bakery products through those channels. So we've built an R&D center in the Netherlands. We've expanded it. We've already got one in Australia. Product development for the world will come out of or is coming out of those two centers. And that's a source of our growth into the future. But we're also investing in capacity in new capabilities. We're building a new yeast plant in India, northern India, the yeast market. They quite quickly in that country and we have to keep up with demand. I think that factory will be completed sometime next calendar year. I think I've mentioned in the past the specialty yeast plant in Hull, which produces yeast for the alcohol beverage. We commissioned it last year. But it has a relevance to another acquisition we made, which the company called Omega Yeast based in the United States. It's a leading provider of liquid yeast for the craft brewing industry in the US. And we have the capability to take their know-how, some of their products to the rest of the world. So it sits nicely beside our existing business. We have a very strong business in supplying yeast for the alcohol industry. closely related that we're also strongly a good supplier into the bioethanol industry. We've invested $120 million over the last 15 or so years in effluent treatment, water treatment across Maori. Standards have reset across the world. We gave ourselves the task of not only being compliant with all present legislation, of course, but all likely future legislation. And after 15 years, we're very nearly there. It's been one of our big ESG priorities for a long period of time. We've got a couple of plants still to do, and then we're done. So it's falling off the list of ESG priorities because we've just about completed it. Right. Let me try to bring a little bit more clarity to our specialty ingredients portfolio. We have seven businesses across three key technology platforms, and there they are in the middle. Industrial biotechnology, precision extraction, and synthetic chemistry with these seven businesses lined up. along them, and then these technologies in turn conserve a wide range of markets down the right-hand side, food and beverage, nutritional health, pharmaceutical, animal feed, and some technical applications from enzymes such as pulp or paper or detergents. We're investing in these businesses in the science and the scientists in the other capacities and also in plant and equipment, and we have We have high hopes, high expectations for growth into the future from this part of the ABF portfolio. In Oli, we're de-bottlenecking our fermentation, giving ourselves more spray drying capacity. That's in the yeast extract business. And in enzymes, we're investing in a very good powder packing business. line which both expands our capacity and further increases the safety standards on the site. Those projects will be complete this year. Let me show you with this slide why we like our African sugar businesses so much. We've got population growth in sub-Saharan Africa. We've got GDP growth that the chancellor would die for in sub-Saharan Africa. And we know that sugar sales grow faster than GDP where there's GDP growth. So the market fundamentals are really good, and we're very, very well positioned. The footprint is strong. Our cost base is low. Our market shares are high. We've got the leading brands in Tanzania, Zambia, and Malawi. We've got good cane estates, good factories, good routes to market. We have on top of that some quite close in potential for profit improvement. In agriculture, we have a new farming method, essentially by improving soil health you improve future yield. We're demonstrating yield improvements by up to 15% in Zambia where this has started. Back to basics in the factories, there's a lot more to come from that. There's more brand work and route to market development available to us too as we produce more sugar, not least from the new factory in Tanzania. We have the distributor relationships, the brand, to carry those products through into market. Switching now to European sugar, which is also a business we like a lot. The grey and the green lines on this chart show how European and UK spot prices for sugar, how they went up, how they came back down again. The sharp drop essentially just came from the surplus of sugar in Europe. Increased acreage, increased Disease control was very good. Yields were very good. And then Ukrainian sugar came into the EU in large quantities. We can't mitigate very much of the impact of that price fall because we've negotiated the prices for sugar beet. That's how the European industry works. You negotiate sugar prices, beet prices in advance of. negotiating sales prices. As we said in September, we expect profits to bounce back in 2026. We've negotiated those lower prices for beet next year. The benefit of that will be about 50 million. We also think that supply will reduce, acreage given over to sugar beet will reduce, and the Ukrainian sugar has been quoted right back. This is also a business that, I've said it in the past, is very good at continuous improvement, so there's more cost base to get at in those sugar businesses. We have, as I say, confidence that 2026 will see us bounce back. I get mocked for this slide because I keep on saying it's one of my favorite ones. It's essentially the highlights of ABF's reduction in carbon production. Our approach is aligned to 2015 Paris Climate Agreement. We're on track with that. Just a little bit of explanation. The bigger the bubble, the more carbon you save. The color indicates the whether the project is finished and whether the returns are good or not. So, green is high financial return say above 18 percent. That steam reduction project in Wissington was right up there. Berry is being done now. The green project is steam drying of of animal feed rather than using natural gas to build it. You can see what's being done. You can see what's coming along and you can see in the gray where there is opportunity but no financial or inadequate financial return. We simply won't do those ones until we've got a way through to make a a financial case as well as a carbon case. This takes us out to about 2030. 28% of all of ABF scope one and two is in the four sugar factories in the UK. So this is the priority. This is the methodology and this is the work being undertaken. But not to deny that sugar profits are going to be lower in 2025, but I do want to put that in some context. We've had five years of good growth leading up to the decline this year, and we expect 2026 to bounce back. We're confident in the medium-term outlook for European sugar and very excited by the outlook for African sugar. Finishing on agriculture, we've always had a strong presence in the UK agricultural market. We're leveraging that to build our presence in more value-added products and services, leveraging it across the world with enzymes, premixes, feed additives in particular. And we're leveraging our routes to market in the UK, particularly in our dairy strategy strategy. where we're integrating last year's acquisitions to create a full service offering to dairy farmers. We're expanding that business in specialty feed ingredients. That's going well. As Owen said earlier, the difficulty that the year just gone was the rainfall in the autumn into spring, which cut back the opportunity for frontier. Let me summarize with this next slide, again, give you a bit of context of the food growth story going back to 2019. We've added the best part of 400 million pounds of profit to this part of ABF. We've done it through Good commercial work, a lot of investment, and for all that we have a lot of diversity in the group, we also have an extremely good track record. Next year it will step back a bit because of sugar, but we have good momentum in the rest of the food portfolio. Taken together with Primark then, As we showed you in opening slides, when you put retail and food together, you can see significant recovery, the extent of the recovery achieved this year. Back to the margin we had in 2019, and then we've had four years of COVID and the consequences of COVID. We're back on the same growth trajectory, I think, that we achieved for many years prior to 2019. The group sort of wrap up very good year in 2024. EPS now significantly ahead of 2019. Consistent investment, good execution is delivering strong returns. We've also seen the benefit in the EPS from the share buybacks. A number of the multi-year capital projects will complete this year. will continue to invest in others, particularly within Primark. All of them underpin future growth. The store rollout program continues in Primark and continues beyond 2026 and will contribute a sales growth of around 45% for the foreseeable future. It was a year of great cash generation, good momentum in the business. We're well positioned for the medium term, as you can probably tell. A year where you increase your profits a lot, where your cash generation is fantastic, where you invest more money than you have invested before and have a whole lot left to give back to shareholders. That's a pretty good year. Thank you. You apparently have microphones in your chairs. in front of you, so with that let me be quiet, take my glass of water with me, and over to you.

Good morning. William Woods from Bernstein. Thanks for taking the questions. I've got three on Primark. The first one is, when you look at your Primark margin, you're obviously guided to flat for this year after a big boost in the last year. When you look beyond, is this the ceiling to Primark's margin or is an aspiration to take that higher?

I'll go one by one. What we've seen in the past has been Primark margin around this level. But it moves around a bit. Currency moves around. Trading success moves around. We're comfortable with where it is now. Primark is a business which we wish to grow through volume rather than margin. So it's come back to a good level. Maybe it can go up a bit, maybe it'll go down a bit, but we're at a level which kind of works for us.

Got you. The second one is, so I've been to quite a lot of the US stores over the last year or so, and you've got quite a different mall strategy, particularly in terms of the newer ones, right? So you look at Tyson's Corner being quite premium, for example. You look at some of the more factory outlet type of malls. Could you give some color on the US store strategy, which mall types are working, which customers you're getting traction with, that kind of thing?

Yeah, it's a good question. The brand works particularly well in the less premium malls. It works very well in areas like Queens, Brooklyn. It still works in premium. One of the best stores, for example, is... God, I always forget the... I know it because my auntie lives nearby, she doesn't buy everything there. So we work in good regional malls too. We've got a couple of stores where we're scratching our heads wondering why it's not working quite so well, but only a couple. But essentially we think that we're relevant to both mid-market for now, but where we've got opportunities for less premium malls, we'll grab those by preference. We're very interested to see what happens on the Mexican border in Texas. We've got five stores signed up in Texas. We suspect they're going to be really, really good because we know that we're very attractive to a Hispanic shopper.

Perfect, thank you. And the final one is just on the Primark management team. Obviously, haven't had a COO for a while. CFO, is that still vacant? Have you had any movements in bolstering that management team?

Yeah, no, big changes. So we now have a finance director who came from within and who's very good. And underneath Adrian is a very much strengthened finance function. So we've got depth in finance, which is greater than we've had before. We've got a new COO. in Nigel Jones, who has started very well. We have a saying across ABF that they're all heroes at this stage. But he's landed extremely well and brings us capabilities, particularly around cost-based management that I think we've been a bit light on recently. So that team, the breadth of that team, the depth of that team is stronger than I've seen over the last 20 years. Excellent. Thank you.

Morning, Warwick O'Kines, BNP Paribas Exxon. Just on that cost management then George, perhaps you could comment on the ways that Primark can mitigate some of the cost pressures coming to the UK, particularly from April.

Right. This goes help. We have a big project underway on the way we run our stores, the way we get the relevant stock into place at the right time. There is opportunity in both those. Owen, do you want to?

Yeah, I mean, I think actually Promark's had a pretty good history of cost management over the years, as you'd expect it would do. So I think it's probably taken a bit of a hiatus through the kind of challenges of COVID. Store operating model is always a place where you you you know, just how you manage the store model in an effective way and Scos is part of that but there's kind of other aspects of of that and that that's a kind of a continuous improvement program and We talked about the supply chain There will be the cost savings coming out of automation through true supply chain and I would say just go back to store I would say store optimization particularly in the UK, you know as we've you know, UK is more mature market. So you're going to have a lot more kind of updating of the store portfolio and with that comes a more effective way of laying out the stores in some ways. So, like for example, we did 23 refits in the year just gone in the UK and that doesn't just help with how the store is set up for sales but also helps with the set up for costs as well.

Got it. Thank you. And my last question is just on the gross margin and whether anything has changed since your assessment in September. So anything from sort of freight negotiations that you're seeing and then just sort of relating back to the cost piece. Are you expecting the gross margin will need to rise a little bit in 25 in order to achieve broadly stable operating margins?

Not much has changed. I wouldn't say it's a normal world out there, but it feels more normal than what it's been for a good bit of time. We've been able to navigate through the freight volatility well. Look, currency's moving around a bit as we know, but other than that, there isn't huge movements in gross margin. But yes, you are right in saying that if we're to have kind of flattish margins into next year, there's a little bit more in gross margins offsetting the inflation and investment in overheads. Yeah. Hello.

Sorry, I'm Neanderthal, but Clive Black from Shore Capital. Two areas, really, not Primark related, you'll be relieved to know. Firstly, on sugar, quite struck, George, by what you said around Africa. Does that mean that on a five-year view looking forward rather than five years looking back, it's not unreasonable to think that ABF sugar business could break out of that £1 to £200 EBIT range? I'm not suggesting he gives a forecast, but conceptually, does Africa provide the potential for that? Maybe start with that, thank you.

Yes, I think so. I think so. There's a significant amount of cost opportunity and cheap volume growth opportunity in the work in the cane field projects and also in factory improvement. don't need capital or don't need much capital for any of that. And as I showed in that first slide, we've got the market demand. So we're just supplying, um, markets there and then the Tanzania project is an important one it more than doubles our capacity in that market where again there's growth there's a deficit market and we have the leading brand and really good roots to market there is then secondly beyond sugar and we have to be careful with this there are opportunities in investing in adding value to co-products In Tanzania right now, for example, we're a major supplier of potable ethanol. With the factory expansion, there's an opportunity to produce more potable alcohol. Africa is not short of things that you could do with large slugs of capital. We just need to be very disciplined about it. But, yeah, absolutely, I think there's growth there.

Thank you. And that's a nice segue actually into my second area, which is about capital in the grocery arena. And two areas, really. Firstly, across the piece, payroll is probably more challenging, not just the UK. How is that influencing your CapEx decisions? And is it evolving in terms of capital replacement, labor replacement, sorry, with capital? And then just while I'm on, just in relation to that, across grocery and ingredients, you talked about areas of investment in ingredients, but where in grocery would you see, say, category or geographically where you may want to add on additional acquisitions? I think you said you did a couple in ingredients in H2, but where do you feel about grocery on that front? Thank you. And that will be enough from me then.

Clive, acquisitions in grocery have tended to be, in the last couple of years, quite small but quite nice. World Foods in particular has added a couple of small, has bought a couple of companies that have taken us into new cuisines, has taken it into kind of Arabic, North African, and also has given us a way into sort of premium Italian. That's a very big category of talent. You need to find your chunk of it. Is there more potential there? Probably, although the opportunities in world foods, now having got those two acquisitions under their belt, may be in leveraging them rather than adding another one. Australia is the big place where I think a couple of things. It's both acquisition and also CapEx giving us, finding our ways into more premium parts of the market, faster growing parts of the market. It wouldn't surprise me if we found another equivalent of TAG, the artisan group, to acquire. They're not very big acquisitions, but they are very sort of leverageable through the assets that we've currently got. UK, I think we're okay.

I think the US is the other obvious place. We're executing very well in the US in grocery across a number of our businesses, so it definitely gives us the opportunity. We don't want to overpay, and that's been a problem for the last number of years, but it certainly is in a market that we're executing well, we could build on. I don't think the recent labour moves necessarily changed the game per se. I think labour inflation has been a challenge for manufacturers for 10 years now. So automation has become part of the DNA of manufacturing.

I think the driver in the last couple of years has been more about labour availability. We've just commissioned a automated warehouse in Poland where the labor shortage is every bit as acute as it is here. The payback is good, but it's much more about securing supply chain really than it is about labor. Australian automation projects, labor cost, again, it's more labor availability. So we are signing off. labour efficiency projects more than previous years, really only about the automation of those sheds. That's where the... Thank you very much. Yeah, sorry. Richard.

Thanks. Richard Chamberlain, RBC. Owen, probably one for you. Do you mind commenting on the outlook for working capital in the coming year, I guess particularly in light of any expectations on sugar and sugar inventories, about how you see the overall picture as well? Thanks.

Yeah, I mean, we've sort of come off a couple of years now of sort of working capital normalizing across the group, most notably, I would say, in Primark. I think next year is probably a bit more of a normal year, I would say, with the exception of Sugar, as you've rightly pointed out, where we've sort of ended the year with relatively high stocks, so you would expect some of that to to normalize into next year. But we're back to a little bit more outside of that, a bit more normal. I think I've said it before, I think there's still opportunities across the group to improve working capital. So we'll be working on them. I'd hope that we'll get some improvement in those through the year. So that's sort of the aim.

Primark, I guess historically it's been a business that's been known for not spending very much at all on marketing and then obviously being able to then keep prices very low versus the lowest in the market and that's been one of the reasons. The marketing you're planning in markets like Germany and the U.S. Is that specific to those markets or is that going to be a sort of precursor to now change in sort of group-wide thinking on marketing or you think actually should be doing more in some of the other markets as well?

It's a very good question. We start off in those two markets with a job to do and we'll see where we get to. At the same time, we are investing really in trials of digital paid content. We'll be very pragmatic. If we end up richer as a result of doing it, we'll keep doing it. I would speculate that in Germany we're going to have to have a level of ongoing brand marketing. And in the States, again, it's pragmatic. If it drives sales, then great, we'll do more of it. In the States, I think we're probably going to be doing more digital because, as we showed you from, as you can see, we've got a couple of clusters of stores. But in a lot of other areas, we're miles away from there. And to get efficient TV coverage, it's just not going to happen. So I think we'll go digital and quite focused. In that New York area, we'll see what this does.

One follow-up, is it easier with... more digital marketing to sort of see the positive returns on that because I guess the risk is you don't really know what customers would have bought anyway, right?

You can see it with a great deal more precision in digital marketing. I think in a place like Germany you've just got to chase brand metrics. We know that we have an issue there. That's what we're trying to fix. So, actually, the specific returns can only be inferred from how much like-for-like was the result of the improvement on views about quality. But we're off the brand metric.

I mean, obviously, we measure any type of marketing, whether it be conventional or digital. It's all to be measured and determined from a returns perspective. Okay. Yeah. This is Gary Martin here from Davey.

We can hear you.

I suspect the problem in those growth markets is there are a number of fairly big drivers of the like-for-like, and some of them are negative. Two of them at least are negative. The first one is that our experience over the last few years has been fantastic first three-month sales performance, which then a year later you're anniversarying, and there's no way you're going to – achieve those. That brings you to like for likes, drives them negative, and then you typically start to grow from there. But given that we're opening stores reasonably quickly, you've got quite a lot of that sort of complexity going on. The second one is that, and I sort of hesitate to use the word cannibalization, but we've always believed there's good cannibalization in some of these growth markets. When we opened the second store in Milan, we got a whole lot richer, but we had negative like-for-likes in the first store. When we sign them off, we look at the expected cannibalization. We then compare with what we said we were going to do. But it is a drag on like flights. On the other hand, a brand that is reasonably new to a market should see good sales progressions years three, four, five. Net-net, I think those markets are going to have lower like-for-likes than we would hope to see in the established markets where all this sales-generating work, whether it's digital, whether it's new categories, whether it's new products, etc., etc., etc., should be allowing us to keep on growing same-store sales.

But obviously they would have the higher growth in total because that's where the growth is coming from. I mean, I think next year, look, you know, we, mid-single-digit growth, I mean, I think we said in September that we'd expect the non-like-for-like to contribute more to the lower end of the range, 4% to 5%. and that's kind of calling for some modest underlying growth. I think the metric is more relevant, as George says, in the mature markets, and we are targeting like-for-like growth in the mature markets, including the UK. I think we're well set up for that. I think our product set is as good as it's ever been. The consumer is, you know, we'll have to see how the consumer is post-budget. I think our kind of hope would be that the consumer is in OK Nick, and certainly our demographic would be in OK Nick, but we'll have to see.

Makes sense. And then just maybe another one just on the store rollout, just more broadly, and it's another two-part question. Just firstly, I guess, if we kind of discuss again maybe some of the growth markets, so we're talking Italy, Iberia, France, can we get a reminder of the white space opportunity to kind of further grow your store count in those geographies, like what you see the overall opportunity set in those geographies to be. And then maybe just as a second part, you obviously have done good work in Germany, you've done good work in the UK in terms of store resizing, you know, kind of changing the dimensions to kind of better suit the kind of demand levels there. Is there more store dimension or store size changes kind of planned into the future? Thanks.

Why don't I take the second one first, what do you think? I mean, I think store optimization is an important part of retail, right? Every good retailer does store optimization, particularly as you get more and more mature in your markets. And I think UK, we've done a few already, actually, where we've just relocated to slightly better pitches, or we've done small resizing and so on. So I think that will be, it should be a good part of your arsenal in terms of continued productivity, etc. and so on. So we did, we've done some in the US previously of some of the older stores. So I think we have to keep on that actually agenda to make sure that we're optimizing what we got as well as opening new stores. So yes, is the short answer. On the first one, or do you want to?

I think France, Italy, Spain, Portugal, the success of these smaller store formats does open up a fair number of markets. And I don't want to give a specific number, number. But in Spain, it's unlocked Portugal, for instance, where we have a fantastic business. We haven't managed to open a new store in years and years and years because we can't find big enough sites under the old model. These smaller stores allow us. I would imagine that we could double our participation in the Portuguese market. Spain, I think, a smaller number but still reasonably significant. Italy, I think, is still more, it hasn't reached that stage yet. It's still got big locations to go after. France, I think we're up to 28 stores or so. We're beginning to look at some smaller stores in particular. We have to be so careful in France to make sure that we keep footfall levels high. I think actually in Germany, we're really interested in these two new stores that we're opening. They're much smaller. We have more freedom to operate. Germany is a very under-penetrated market for Primark. I think there's quite a lot there. Eastern Europe, standard stores, we've got so much space. I'm aware all that is a sort of numbers-free market.

Hence the 4% to 5%. Hence the 4% to 5%. Exactly.

Thanks so much, guys. Okay.

Shooter.

Hi, morning. Sridhar Mahankali from UBS. Maybe three things, please. Just back to grocery. You've talked about normalization in the U.S. to be felt through the year. We're taking that as a modest step back in the margin for the year. More if you take a step back, and you've put some slides there showing the longer-term growth and things like that. You could perhaps talk about mid-term growth and margins in grocery. How should we think about it? There's quite a lot going on, different geographies, different brands, et cetera. That would be very helpful. The second one is click and collect. I know you're extending that into the rest of the UK. Anything incremental to share, perhaps in terms of basket size, the secondary basket, et cetera, anything that's helpful for us to think about it? Thirdly, maybe, should a big picture stepping back at a group level, again, new charts have pointed out, margins have recovered, cash generation strong. Owen, you talked about potentially further opportunities in cash and working capital. How should we think about, again, medium-term shareholder returns? If you could talk through, please. Thank you.

That grocery margin is a mixture of a whole lot of things, and let me pick out some of them. The mixed change towards higher margin products like tea, that has driven some of that step up. We still haven't got our net margins in UK grocery back to where they were pre COVID. We recovered the cash costs of inflation, but not in the margin. So maybe there's a bit more opportunity there only maybe uh australia i think has a margin opportunity as we as we shift the portfolio mix uh us will step back a bit but still be good uh have i missed out no that's that's a good that's a good i mean yeah it's it's a mixed benefit of of uh it's international brands and it's the kind of improvement i would say in in the uk and australia australia um

I don't think I'd be comfortable giving a guidance on it, but there's no reasons why you can keep it at these levels. It might bounce around a bit, but keep it at these levels.

I think on click and collect, I think the best we can say is that we've seen nothing to undermine the financial case for rolling out click and collect following that long test we ran. The basket size, the click and collect basket size is good, the attachment rate. Have we given the number of attachment rates? No, we have.

We've said it's up to 40%. Which is what you'd expect, actually. You'd expect people, if they're going to come in, they'll shop more.

The return rate is well controlled, so it hasn't got worse as the rollout has continued. And we're seeing a significant proportion of the click and click at Shopper. being consumers who haven't shopped with us in the last two years. So we're getting new people in. All those were the things that we weren't looking for in the test. So it's not dramatically better than the test, but I think we've done the right thing.

Yeah, I mean, the medium, it's hard for us to give medium term shareholder returns. I mean, I think we just point you again to the sort of the capital allocation methodology, which we've stayed true to in the last number of years, where we've sort of pivoted around the one times leverage. I think, look, the business has got good cash generation. So, you know, I think you've got to look at the two things, the cash generation and the capital allocation policy, and then determine as to whether we believe. But, yeah, look, I think if we can keep generating cash, we'll be able to keep healthy shareholder returns.

You shouldn't think that the CapEx bill is going to drop much over the next few years. Yeah. We've had a lovely reversal, at least some of that working capital build that went into a balance sheet during inflation. That's made this year particularly good. I think a dividend policy, the dividend policy really hasn't changed. All that's changed is what we do with surplus, is the policies that come on beyond that. Sorry. Is this up? Pick it up. There you go.

Hey, guys. Ashton here from Redburn. Firstly, as a Kiwi, I should congratulate you on the purchase of Dad's Pies. I've got two questions. I suppose my first one just on the European sugar recovery, and I suppose just the moving part into FY26, and I appreciate lots of things can impact the sugar price. but to you as the main determinant, the acreage, like how much is dedicated to sugar. And I suppose in that scenario, does, does your volume decrease and does that have a second order impact? And that's my first one. And then I guess just secondly, just to square the circle on sort of these smaller store formats in Iberia, for example, is the reason that you can do that now just because the brand's at a scale whereby you can get the right level of store density?

Just keen to talk through that. I think... Sorry, let me start with sugar recovery. We... I think twice now since deregulation, the sugar industry has chased volume at dramatic cost and margin. If there is a volume reduction in the UK or in Europe, I think financially the European industry will benefit from that. When you go from being at kind of import parity prices to export parity prices, which we've sort of done this time, you get a great step down in margin. So I think that, look, acreage is only one thing. Yield is another one. The yields looking into next year are good, not least because most of Europe is allowed to use neonicotinoids to prevent fungal infection. That has been part of their recovery in yield, which I think hadn't been expected to quite the same extent. So I think that sugar, we would much rather see a smaller crop in Europe. And we think we'll get it because that acreage will come off by a fair amount. You can't force it out, but I think it will come down. Smaller store format, in that very Primark way, we took a couple of sites and we tried it. You know, we'd spent years increasing the range of what we were selling in stores. The stores were getting bigger and bigger. And to some extent, you know, we were being driven by that. You know, the ultimate manifestation of that was Birmingham with 150,000 square feet. We didn't exactly forget that we had lovely businesses, particularly in Ireland, all the way down to 8,000 square feet, which had traded for 60 years profitably. But anyway, we started looking, particularly in that Spanish market, where you go, well, we fill in the geography of Spain. It implies that people often, there were a lot of Spanish consumers who couldn't get to us or were never going to get to us. So we have to go to them. And how do we do it profitably? Well, you look back at some of the island markets. experiences of how you trade a much smaller store. You have the advantage in Spain of lower labor costs. So, let's give it a go. I think the first one was Leon. It's been great. So, in that very primate way, go, let's do that again. And then that takes you around. So, the confidence builds with the experience.

Morning, hi, it's Andi Tasood from Citi. Just one on Primark, you've helpfully called out the sort of revenue mix. Is there anything to call out in terms of varying levels of profitability in those segments? And I guess linked to that, you know, you've also said that 85% of your SKUs are sort of below £10. Is that in the UK or is your stock pretty consistent throughout the markets?

That second one is pretty consistent. Yes, the margins vary between markets based on occupancy costs, labor costs in particular, sales densities to some extent. And no, that's a number we've never shared.

Other than the U.S. and Northern Europe, because we've talked about it plenty of times, are below the average.

We're done? Thank you.

Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again. And now we're going to take our first question on the phone. And it comes from the line of Warren Ackerman from Barclays. Your line is open. Please ask your question.

Yeah, morning, George. Owen, it's Warren here at Barclays. Hopefully you can hear me okay. Yeah. A few from me. Firstly on grocery, George, can you give us an update on Allied Bakeries? Losses narrowed. What's happened to improve the situation? Do you see a scenario where you can eventually get back into the black in the UK bread business? That's the first one. And then secondly, just on Primark, I've been reading more and more recently about mix. You're talking a lot about licensed wear, vintage denim, cosmetics, accessories. Can you maybe talk a little bit about mix as a light-for-light driver? I know it's mainly volume, but it does seem to be more of a feature. Any particular countries you'd call out where you are seeing a bit more premiumization in some of the slightly more expensive ranges? And then finally... Just one for Owen. I'm wondering whether you could, Owen, help us a little bit on finance costs for 2025, any kind of ranges we should be thinking about from a modeling point of view. Likewise, anything on net debt-free cash flow would be great.

Thank you. OK, starting with LI Bakeries, the improvement was both the consequence of input costs coming down, so energy and wheat, And price, eventual price recovery, we didn't manage to get pricing increases out of our retail partners for a long time. And we, the year before the one that we're reporting on, the margin hit was very significant. But we got those price rises. We've enjoyed them all year. We've had a little bit of extra volume manufacturing for another competitor who suffered a fire. We've lost subsequently a little bit of trade in Tescos. That stings. And can we get back into the black? Certainly cash positive. Yeah, that's the first goal. Mix within Primark, curiously but quite comfortingly, the best mix I think is Germany. biggest participation of licensed of some of the more premium basics, the chem ranges, the edit ranges doing very well in that market. Yeah, we've been chasing mix very deliberately. We have to keep re-emphasizing the the value that we offer at the in the bulk of what we sell that pre-10 pound and we also have to emphasize the value of the more premium products they are fantastically good value for what they are but we must never forget the people who come into our shops for the cheapest best value basics.

Yeah, unless you want to do finance income and free cash flow. Yeah, no, I mean, sorry, I just added, I think it is a kind of helpful tailwind mix, actually, but we've got to be very careful how we manage it, Warren, as George says. So just on finance costs, I keep it relatively simple. I think as it stands today, I think we're sort of broadly neutral year on year in terms of finance income, where we'll have a bit of a... You'd expect because we're going to have a little bit lower cash and potentially rates coming down, we're going to have less of a benefit on interest income. But as it stands today, we don't have a repeat of the FX losses on non-currency balances. So they kind of net each other off as such as it stands today. And then on free cash flow, as I said before, I'm not expecting material move in working capital in the year. But we are expecting a repeat of cash tax to be low and also for us to have the benefit of the pension contributions. So they do repeat into FY25. And then, as George said before, CapEx, which we think should be at a similar level to FY24.

Cool, thank you.

Thank you. Now we're going to come to the next question. And the question comes from the line of Georgina Johanan from JP Morgan. Your line is open, please ask your question.

Hi, thank you very much for taking my questions. I missed the start of the call, so apologies if I am asking anything that you've answered already. Please feel free just to ignore if that's the case. Just three quick ones from me, please. First of all, just in terms of the pick and collect and the continued rollout, and you're sounding sort of quite constructive on that, I was just wondering if you could share where that is now as a proportion of sales, perhaps in the UK, or maybe it would make more sense to share it kind of as a proportion of sales in the stores where it's actually been rolled out already. That would be really helpful. The second one, just in terms of the budget and what we've learned on the plans for business rates, if we think about your store portfolio, how should we be thinking of that portfolio? split in terms of rateable value of above and below the 500,000 threshold, please. And then finally, just if you could share anything on trading into the new year so far. I know the weather hasn't been sort of super helpful. Are you actually sort of still, are you in positive light flight territory in terms of the year so far, please? Thank you very much.

Okay. Budget on rateable value, we're still looking at the numbers. that there is a period of consultation where we will be making the point that to penalise the anchors of High Street is not the best way of regenerating High Street and city centres. So we hope that that message will be listened to. As best we can see, we are probably more or less neutral. Probably, but I think there's more to be uncovered Trading into the New Year is exactly as you say. It's this funny time of year where it can go cold and it can go warm. Our sales have never been more sensitive to weather than they've been over the last 12 months. We're okay. There's another point that Owen rightly makes, which is that you have to look at what was happening with the weather last year as well to look at the comparison. Period two, so October, November, was one of our best periods because September had been very warm and then it suddenly went cold.

I think the last couple of weeks of the last financial year demonstrated just a little bit of the volatility here you're seeing, actually, the strong performance that we had in the UK. So, yeah.

Click and collect share of the UK, do you want to...

Yeah, I mean, we said before we think it could contribute 1% to 2% of like for like, and I think that's probably what we're seeing in the stores. So it's still, we've only got a couple of months under our belt where, or a few months under our belt where we're in a broader set of stores. So I think, but that's the type of kind of numbers we're looking to target with it.

Thank you. Thank you. That's really helpful. So just sorry, I can't do the math off the top of my head right now. But if it's contributing one to two percent of like for like in those stores where it's present, what is that representing as a proportion of sales in the stores where it's present, please?

Well, we've only just gone up to 87 in GB, which is under half of the total of the state. We were sitting on about 30, I think. No, slightly more than that. It was 55, which was give or take a quarter of what we had.

I mean, it's just not material at this point in time yet until we roll it out.

Okay, that's really helpful.

Thank you very much. Thank you. Now we're going to take our next question. And the question comes from Adam Cochrane from Deutsche Bank. The line is open. Please ask a question.

Thanks for asking my question. I've got a question on the U.S. business. I'm assuming if there's any tariffs that get introduced from the U.S., that most of your grocery business will be domestically produced. Just to confirm that. And secondly, on the Primark side, how much of the Primark manufacturing that goes into the U.S. would be made in China? if you can answer that. Thanks.

Yeah, okay. I suspect the proportion in Primark would be rather less than the proportion in Walmart. I think consumers have just no idea how much their bills will go up if Trump puts 100% tariff on everything produced in China. But, yeah, I mean, we're not far short of 50% of what we sell in Primark coming from China. And if that all doubles in price, well, you can sort of do the maths. But as I say, we will be in the very small roundings of the problem that the US consumer will face.

And then in terms of grocery, obviously our US-focused brands, they're all domestic, so that's pretty much all within country. But then our international brands, people like Twinings, et cetera, would be imported in from Europe.

In terms of the Primark manufacturing, is it feasible – to manufacture the products that you make in China in other regions that are just going to the US. So you might not have to change it for Europe, but you can produce it in Bangladesh or something just for the products that you're selling.

Yeah, I mean, there's a whole heap of things. Look, I think we cross that bridge when we come to it. I think there's a whole heap of things you can do. I mean, a large percentage of what comes currently from China is in non-apparel. So, you know, you'd obviously, you know, people would do mix changes that, you know, they would kind of adapt to that. And then you're right, you would look at alternative sourcing. But again, you know, we'll be following the pack on that one.

I think in the long run, only the development of India's manufacturing base will serve as a global alternative to China's. But you're looking out 10, 20 years, I think, for that.

Thank you. Dear speakers, there are no further questions for today. I would now like to hand the conference over to George Weston for any closing remarks.

Thank you.