Associated British Foods plc

Just before we get on to the results, a couple of minutes on the demerger of Primark. Since last November, as a board and as a group, we have reviewed sort of fall angles every which way on this potential transaction. And I think it's fair to say that as a board, we have a deeper conviction even than before that the restructuring and the split is the right way to go. Just to emphasize, this is not an exercise in financial engineering. We feel that each of these businesses, because of their very distinct dynamics, deserve and need separate oversight from separate dedicated boards and accountability to separate groups of shareholders, each of whom have chosen to invest in either food or retail because of a clear choice. We are absolutely focused now on delivering this transaction. The timing, we've talked about the end of 2027. That's to give us maximum flexibility. I suppose there's probably a sweet spot between June and October. The costs, I hope very much that we're conservative in the numbers that we've put in the release. Obviously, nothing's final till it's final, but we've tried to put a top estimate there for the costs Whittington are fully supportive and it's all systems go so we are excited to be proceeding with the transaction I suggest if there are any questions I take them at the end rather than now and we just move straight on with the results George

Michael, thank you. It's actually quite a big day for those of us who've grown up with Primark. I think it is a moment to celebrate the success of that business over the 57, 58 years that it's been part of ABF, during which time it has benefited hugely from the governance that ABF has provided, often in fairly idiosyncratic but always very effective ways. Secondly, though, I thought I was just going to be talking to empty chairs today, and congratulations and thank you for making it in person. I guess there are a number of you who are enthusiastic cyclists. and good luck getting home in that mode of transport. So I'd just like to take a moment to add to what Michael has said with a few words on why we think Primark and food are going to be two really good separate businesses. And let me start with Primark, which is, It's a global disruptive leader and apparel. And I think during Owen's remarks today, you'll start to feel again some of the excitement around the business and what it is capable of. But we really do offer clear price leadership, great quality and exciting fashion in prime location stores. And it's the combination of those three that I think together that make this such a unique place. business. The business has got a really top-class product engine. The buying team in Dublin is absolutely amazing. We have sustainability and ethical sourcing in any discount business you need to, I think, to over-index on your capabilities in the supply chain to convince the skeptical that actually you are very responsible citizens and that you care about the people in particular in the supply chain. We know we've got multiple levers still for long-term growth, continued investments in value, better availability, increased digital enablement, more locally tailored execution. That's all stuff that we can, Owen and the teams can still get there. The business has really exceptional brand strength. And we've seen that most recently in the Gulf states. It has just re-emphasized to those of us who've watched the first three store openings what an amazing brand Primark really is. We have proven more scalable growth model for international expansion. Both are in stores. And inevitably, when you open a franchise and it just goes off like a firecracker, you think, well, I wonder what else we can do with franchise. And again, Owen is thinking through that. We have a highly productive store estate. These big stores give us cost efficiencies. We have an efficient supply chain, one that is capable of further improvements, but it's good already. And we have a lean overall cost base behind the store and the supply chain as well. We have an experienced team. We're a very deep team. The capability goes a long way down through the organization, both in store management, but also in Ireland. We have a solid balance sheet. We are even more are disciplined in our capital allocation. It's inevitable that when you put a finance guy on top of the business that you get to see more finance discipline quite early on. And I personally just have huge confidence in the sustainable long-term value creation of this business. But what Michael says, I absolutely fundamentally believe it's time to have more specific governance and oversight of the business into the future. It's not about the next year or two years. It's five years, 10 years, 20 years out. The right governance will help us deliver the growth potential and ambitions for years and years to come. So that is Primark. And then to food, we've built a differentiated, really quite different global food group that operates across multiple parts of the food supply chain. It gives us resilience. It positions us well for long-term structural growth trends that we see in food demand. Food demand is always changing. If you're right across the food supply chain, I think you have insights into that change, which are quite privileged. At the heart of the business are strong brands and ingredients platforms. we've inevitably, because we just do, have a well-invested asset base. These characteristics will allow us effectively to compete and to grow. In turn, it'll enable us to deliver attractive, sustainable returns to shareholders. We have a deliberately devolved operating model, which again is quite different from other food companies, and we think it's a key strength. You put decision-making close to customers and markets. You have strong central oversight. We have a strong network of connection across the business. That putting of authority down the organization into lower levels of the organization helps us to move faster. It helps us to stay relevant locally, and food is always a local business. And it also allows us to attract and retain customers. high-quality talent. We have any number of people who've spent very large amounts of their career in the food business, and it's a key strength. And I just refer to one, which is we are on to the third chief executive of Twining's Oval Team in 60 years. We've just got a wealth of knowledge of hot beverages markets. And then finally... The balance sheet, cash generation, gives us the flexibility to keep on investing for the long term. It allows us to keep building better businesses, stronger brands over time. None of that will change once the businesses have been separated. And finally, and again, sustainability is part of what we operate. I think it's actually knowledge that food is, wherever you're operating food, it's part of the supply chain, has given us over the years some of the insights into the Primark supply chain. You are not unique. you have responsibilities up and down the supply chain. And that we will take with us in food. The businesses, both businesses have very strong fundamentals. Primark will be the largest retail, international retail clothing business listed on the FTSE. And I believe that food will be the only pure play food company on the FTSE 100. So quite distinct. and worthy businesses. Let me now turn with that to the half year results. We're here this morning to review the last 24 weeks ending the 28th of February and let me just take you briefly through some of the highlights. We knew that the first half was going to be challenging and that's been borne out in the numbers on this slide with group adjusted operating profit down 18%, adjusted EPS being down 15%. The difference is the benefit from the share buybacks. The half one performance was broadly in line with our expectations and there's currently no change to the full year outlook despite challenges that are clearly emerging and present. from the Gulf. And the exception to what I've just said is sugar, and I'll come back to that in some detail later on. We've kept our interim dividend in line with last year. We have confidence in the future performance of the group. We have confidence, actually, in the second half. We completed £187 million of buybacks in the year to date. We'll have completed the announced £250 million by the end of this year. financial year. Joanna will go through the financial results in some detail in a moment, but let me just give you some overview. In Primark, we made good progress, we really did, in re-engineering the customer proposition. That's across product, across price perception, and in our digital engagement with our customers. In the UK, these initiatives began in the autumn, As a result, performance in H1 in the UK was much better. We really do have the answer, I think, to our lackluster trading of the last few years. We delivered like-for-like growth. We gained market share in the UK, all within a challenging consumer backdrop. Trading in Europe was weak. The initiatives and investments to drive the improvement in the UK are clear. We know what we have to do and it resembles what we're currently doing in the UK. But we've started unapologetically as Owen will take you through in the UK. In food, profit in grocery and ingredients business was impacted by the weakness that we had expected in the US consumer in certain categories, particularly cooking oils and baker ingredients. Mazzola is its largest consumer franchise is Hispanic. And as you all well know, the spending in that community is well down as a result of the challenges that they face. The rest of these food portfolios in grocery ingredients generally performed well. In sugar, the results were below our expectations. The adjusted operating loss was mainly due to prolonged low average selling prices in Europe. The crop last year was sadly better than we'd expected. Acreage was down, but yields were up. The market is still long sugar in Europe. And I'll talk about the dynamics beyond that later on. And what I think it means for the outlook, both the second half and also into next year. The last six months have been another period of intense activity. Lots of good progress made in all sorts of places. Obviously, the two key leadership appointments. When we met in November, Joanna and Owen were both very ably filling their roles on an interim basis as a consequence of what they showed us in those interim meetings. positions, we appointed them for the long term, and I'm actually delighted that we're able to do that. We've made good progress with the acquisition of Hovis. The CMA issued an interim report at the end of March. It provisionally cleared the transaction in Great Britain, which is great, but it noted competition concerns in Northern Ireland, and we'll continue to work constructively with the CMA over the next few months. We expect them to reach a final decision in the summer. Across the group, we invested $534 million of capital expenditure in the first half. These are investments very largely in growth opportunities. They have good, attractive returns. And it's been exciting to see a number of the multi-year projects reach completion over the last 12 months, and others will be finished later this year. And as well as investing in our businesses, we've continued to make strong capital returns to shareholders through dividends and through share buybacks. The balance sheet remains strong with 1.2 times leverage. It's worth just spending a little bit of time on the Middle East conflict and what it means for our business. From a cost perspective, the primary direct impact is energy costs, but there are others including freight, fabric, packaging, and agrochemicals. Given what we know today and given the hedges that we have in place, we expect to be able to manage the cost impacts that we're seeing through the rest of 2026. The longer-term cost impact is not yet clear, and we need to remain agile as things evolve. We're not seeing shortage of raw materials. We're just seeing the likelihood of inflation in them. We're also focused on the impact on consumer spending, particularly for Primark. We've seen what we think is an impact in just the last couple of weeks in Primark sales really across the whole of Europe. And there must be a risk that if the conflict persists, consumer spending will keep on being subdued. And with that,

Thank you, George.