Mitchells & Butlers plc

Right. Good morning, ladies and gentlemen. Bang on 8.30, so we'll start. Welcome to the interim results presentation for Mitchells and Butlers. Our first half is a tale of two quarters, with quarter one being very strong, culminating with a great festive period, followed by quarter two that was impacted by poor year-on-year weather and to a lesser extent by the macroeconomic backdrop. That's why we're delighted with our first half year results, as despite quarter two, softer growth in quarter two, and despite the impact of incremental employers' national insurance and the very high cost of stake, we managed to bring profit in just slightly ahead of expectations and slightly ahead of last year. To us, that demonstrates the power of our Ignite program and the work done on cost mitigation. And as we believe the macro issues are temporary, we are maintaining our focus on the midterm, where debt service costs significantly reduce, where the business is going to be very well placed. I'm delighted to say that we're joined today by Emma Harris, our new CFO. But Tim will deliver his final City of French presentation this morning. But both he and Emma will be available to meet with you after the presentation. So I'll now hand over to Tim, who'll take you through the financial results, and I will turn to add colour to the things we're working on.

Morning. So, as Phil said, I'd like to take through the summary of the financial results for the 32nd and final time. LAUGHTER We feel we had a really good first half of the year, as you can see here on this slide. Sales remained strong, certainly well ahead of the markets, such that despite very stiff cost headwinds that we talked about previously, we were able to maintain our operating profits at 181 million. And EPS, which continues to benefit from a reduction of debt, lower interest charges, was up 3.6%. So that's a strong performance in this market. It starts with sales. I've set out here a flow of the sales on a monthly basis over the last 12 months. Now, clearly, individual months can be quite impacted by calendar events, so you shouldn't read too much into the individuals. But overall, across the first half, we had a like-for-like sales increase of 3.3%, with volumes marginally down and driven mainly by food. Now, within that, we had a very strong start to the year, very strong festivities, as was previously reported. The Q1 life's up 4.5%. Since then, the pace across Q2 is slightly slower, 1.8%. Phil's going to talk a little bit about that. Certainly adverse weather was a key factor within that. But also, you know, it's harder to discern, but possible indications of some sort of response to macroeconomic pressures. We look at how that affected our EBIT. You can see here the various drivers and elements that contribute to our performance. We are increasing capex justified by very strong returns in excess of 30%. Current year projects are dilutive, of course, for us for this year as a result of closure and pre-opening costs. But naturally, they lay the ground for profit growth next year. So we're continuing with that plan and indeed scaling up that plan. We're also driving value from light to light trading and from our Ignite deficiencies. And they all came together to balance what were very high half year disproportionately weighted to the first half. And, you know, we talk a lot about costs at these sessions because it's been very important challenge for us. But I've set out here what we consider to be the pre-mitigation cost headwinds that we face as a business. Now, this year we had talked about 130 million premiums. We think it will be slightly lower than that, largely as a result of reductions in business rates and also red meat not being quite as extreme as we feared it was at the beginning of the year. We've also now closed out our entry purchasing this year, so we've taken that risk off the table. So a slightly lower cost headwind this year than we've previously flagged. That's going to be weighted 60% towards the first half, so we're, if you like, we're through the worst of it. That's a result, principally, of national insurance contributions for employers, which we've now annualised on at the increased rate. So that's no longer a headwind for us. If I look forward to next year, we would anticipate the challenge becoming slightly more benign, slightly lower, with the cost inflation of £95 million, representing about 4% of our cost base. Probably one area of risk in that is energy. We've brought forward 15% of next year's energy as I stand here today, so there's scope for a little bit of volatility in that. That's why you've got a slightly blurry bar for energy there. Cash flow was very strong. We have a typical seasonality whereby working capital is an inflow in the first half due to our payments profile. A lot of that will reverse in the second half, as it did last year. But beyond that, items of note, CapEx increased to £117 million as we're now back on our seven-year remodel cycle that we've talked to you about. justified by strong returns and indeed also including the purchase of a number of new sites. So we bought five new sites within the first half and indeed a couple since the balance sheet date as well. So we'd expect full year capex to be slightly higher than we guided before up to about 230 million with I suspect more new sites, single site acquisitions taking place. We've also paid the final consideration of our pesto business of 11 million. And lastly, tax pay. For the past couple of years, our tax pay has been depressed or alleviated, if you like, by the fact that we've built up a number of losses during COVID. We've sort of used all those losses up, if you like, through the course of this year. So we'll start to see our cash tax paid slightly higher. But overall, a really strong cash performance and indeed 30 million in excess of what we need to pay down amortisation in the first half. You can see the value of that cash flow on our balance sheet, reducing our gearing net debt now just under £750 million, about 1.6 times even dark, excluding leases, alongside a transformation of our pension position to now what is a de-risked asset of about £100 million. We haven't but we do have a further increase in net assets to now £4.91 per share. So a very strong balance sheet. And as we've said before consistently, over time the board will continue to keep the balance sheet and the capital allocation strategy under review, particularly with respect to break costs and new issue costs. So pulling that together and summarising it, we think it's a strong trading performance in the first half, doing very well to maintain operating profit despite stiff cost headwinds progress has also been made across all of our scorecard cash debt returns staff scores and guest scores and we see a positive outlook looking forward um we expect to continue to outperform sector we do see cost headwinds beginning to beginning to moderate now as i said before this is the the last time you'll hear from me so we thought we'd sort of use the opportunity to reflect on where we are today and how we got to where we are today. There have been a number of challenges in this sector over the last 15 years, and none of you here need reminding of those, so I won't go through them. But I feel we have met all of those challenges head on, and we now face the future in great shape as a business. We have a really strong financial position. We've navigated net debt down from over six times EBITDA to under two times. We've transformed the pension position deficit to 100 million assets. And looking forward, we will see value from that deep gearing. It's a number of capital allocation options and flexibility will open up for the group. We have a fantastic portfolio of well-invested sites. We have a large and stable of brands and formats that we can use to maximise the trading from each of those sites. I think we have a business and management team that's now established a clear track record of continuous improvement and delivery. So we don't know what the future is going to hold, but we do believe that MB faces it with confidence and is set up very well for success. With that, I'd like to hand you back to you.

Thanks, Kevin.

So I'd like to start by looking at sales in a little bit more detail. Now, we came out of quarter one with 4.5% like-for-like sales growth. but poor weather at the start of January dampened our January performance. And you can see that both our and the market sales dipped as we came out of the festive season. And of course, year-on-year weather and a shift of key dates, not least Mother's Day and Easter, further distorted year-on-year comparisons, making it quite difficult to get a read, with the sustained very hot spring weather of last year not being repeated this time around. The odd black bar merely shows the impact of moving calendar dates and or weather anomalies. Amazingly, our guest metrics remain at an all-time high, which suggests to me that the brands are in very good health, and it's the frequency of visit that has dipped, as the consumer is being a little more careful with their spend. There's been a definite split between our wet lead and dry lead brands, with the pubs having a strong performance and restaurants bearing the brunt of reduced frequency. For example, in my 11 years, Miller & Carter has been a big driver of company performance, but with a sharp rise of stake as an input cost, partially reflected in our selling prices, stake has clearly become more of a luxury item at the moment, which has given Miller & Carter a tough first half. The guest reviews scores are as strong as ever, and the key calendar dates have traded incredibly well. It tells me that the brand is in good shape, and I'm convinced that we hold our nerve when the macro environment improves, and M&C will bounce back quickly. Quarter two finished with 1.8% like-for-like sales growth, but it's been very difficult to get a clean read on underlying growth because there are so many moving parts and due to the poor year-on-year weather. There is no escaping that weather is a key factor to our business. And so far this year, it's pretty much worked against us. If I look at our daily sales, rain is a factor, of course, but so is temperature and sunshine hours. Although we have a well-diversified estate, when there is a big drop in year-on-year temperature, as there has been this year, we see the business that goes into decline. But when temperature is close to last year, we go back into growth, and when it's in this year's favour, we see big growth. In quarter two, 69% of the days were colder than last year, and 91% of the days had fewer sunshine hours. And in the last three weeks, 81% of the days were colder than last year, and 90% had fewer sunshine hours. On Tuesday this week, Propel, one of the industry trade journals, headlined the impact of rain and colder weather had on April sales. So like I say, on the odd sunny day that we have had this year, we've seen the business jump back into solid growth. So we know the underlying trade is still very, very good. As I say to my team, there's little merit in wasting too much time in trying to disaggregate the result. And instead, we use this as a catalyst to work harder and faster on things to drive the business forwards. And this is where Ignite and our way of working comes to the fore. As always, we don't believe there is a single silver bullet, but if you make progress on numerous fronts simultaneously, you can make a big difference to performance. Now, for me, our half-won profit was one of the best results that we have delivered in my time as CEO, as we knew the cost headwinds we faced at the start of the year were at an unprecedented high. However, we faced into them with the same sort of rigour that the team has approached every challenge. And to have flat profits, despite the fact that we had to absorb the incremental 12 million of employers' national insurance, and despite the super high cost of state, that has been really satisfying. Our work on reducing energy consumption is a good example of activity undertaken in recent years now driving value. Solar panels, voltage optimizers, improved local housekeeping, and now the Internet of Things project, which enables remote switching on and off of kit when the businesses are closed, helps to mitigate the other cost increases elsewhere. As you would expect, we have work streams in place looking at reducing consumable costs across the business. We have procurement and product specialists ensuring that we optimise our scale and that we limit exposure to the highest inflated categories. And we continue to employ our labour deployment. In many ways, half one demonstrated the real value we ignite to the business as the many initiatives have helped us absorb extraordinary cost headwinds. Now, Ignite has a good blend of sales, volume and spend initiatives balanced by some solid efficiency improvement projects, which I'll cover in a few moments. However, we have used the Tupperware sales environment as a catalyst for embracing and implementing a suite of initiatives brand by brand to ensure that we optimize trading where we can in the short term. And to give you some examples. There is a lot of discounting going on or promotion going on across the sector right now, but we believe it's far better to be targeted when you promote, and we're trialling a series of price-led promotions in specific brands aimed at specific day parts. It's interesting to see that when we do run a week of discounted offers, which we do every year, the take-up is immediate, which would further cement the view that the consumer is currently being cautious but can still be attracted by the right offer and messaging. Now, if you don't want to take more price and you've done all that you can to attract new business, the other area to go out is spend ahead from the existing business that you do have. Now, we have a number of initiatives in train to sell up to our guests, but in a way that adds enjoyment to their visit. Now, an obvious example of this would be selling a second drink. We believe that this simple action, spotting when guests are nearing the end of their drink and offering to bring a second drink to their table, could be worth several million, given the huge number of drink transactions that we do in any year. Moving to costs, now we have made great inroads in recent years in terms of understanding our labour roster, and we have driven efficiency year after year in this space. However, we don't see labour control as being about cost cutting, but more about optimising deployment, ensuring you have the right number of team hours by day part. As well as we've done, we know that we still have far too many fat hours, those being hours where our labour rostering system is telling us that we have too many hours deployed at off-peak times. And although never easy to deliver, those hours could in theory be taken out without impacting trade at all. Conversely, the system also tells us we have too many thin hours, those being the peak trading hours where we have insufficient labour to deliver our offers in an optimal fashion. And where we had to deploy more hours, we could reasonably expect to take more sales. So the challenge is obvious. Move fat hours to thin. And we're determined to land this opportunity that will start to benefit half too and set us up for next year. The point of all of this is that we remain excited and positive about our ability to continue to outperform the market. And we believe that even if the Iran war continues, the warmer days and nights, the World Cup and more favourable comparisons in part two will see the growth rates climb again. And if they do and we deliver on our cost aspirations, then we will finish this year strongly. As for the World Cup, we would normally be saying that net-net a World Cup tournament would be marginally negative for the business, with the gains in our wet net businesses being offset by the impact on food sales. However, the timing of the matches this time around should mean that there's probably a slight opportunity because there will be less impact on the restaurants and we will be extending licensing hours in some of our wetlet businesses for some of the later matches. As always, how far England and Scotland go will decide whether it's a positive impact for the business, but we're optimistic.

So we'll see how that unfolds.

Despite a relatively difficult trading environment, we have maintained the pace of our capital programme. To remind you, one of our strategic priorities is to maintain a balanced portfolio, which is all about keeping the brands relevant by grounding them in quality, customer insight, ensuring that we're structured and systematic in the way we raise the average quality of our amenity. We recognise that the consumer has a lot of choice and we believe that having a quality environment is a prerequisite to doing business. As you know, we target ourselves to operate on an average seven-year cycle of investment so that every site is refreshed on that time scale. And with payback being within five years, it gives us assurance that we have at least two years of genuine value creation. The return on investment for our remodel programme remains very strong at circa 33% for this year's cohort and the prior two years' cohorts that we continue to measure. This proves to me that the investments that we make have real impact, longevity of return, and are cementing our brands at the top of their respective markets. Now, we believe capital investments is a critical lever to pull each year. And on top of the remodel and conversion program, we've also acquired five sites and half one and remain opportunistic towards the increasing number of sales leads coming across our desks. As always, we're ideally interested in quality freehold assets, but we won't overpay. but we believe the opportunity is going to increase over the coming months as the software and trading environment will inevitably lead to some casualties in the sector. We will grow our market share as and when that happens. We are also investing in the new HR and payroll system, which is due to go live in July, which will generate modest running cost savings, but will improve our management information in this key area, which will help drive further engagement. Our team engagement scores are already at an all-time high, and we are relentless in trying to understand any dissatisfaction and to resolve any issues. The correlation between strong engagement and strong like-for-like sales is irrefutable. At the same time, we're about to launch a new CRM platform, Guest360, which will step-change our ability to genuinely personalize our communication to our 15 million strong guest database. This is potentially very, very powerful and should become a growth engine for next year and beyond. On top of these projects, we are soon to complete the full upgrade of our network and hosting at site level, which will mean improved Wi-Fi coverage, critical for capturing internal and especially external order at table sales. So capital investment remains a critical part of the business, and we believe this will further strengthen our position versus the rest of the sector. Moving on to Ignite, our ongoing change program. It's now 10 years old, and Ignite has just become a way of working, has forged an ethos of constant and relentless improvement, and it's fostered a culture where silos don't exist. Now, we have a back catalogue of successful improvement initiatives, and the value that can be derived from assuring each of them has landed in the business would be significant in itself. However, Ignite never stops, and this summer we will continue our pattern of holding a formal event to brainstorm and refill the hopper, as I call it, as we have done every two years. I have no doubt that we will see a mixture of refinements and improvements than some of the things we already do, some large and small blue sky ideas, which will be great and exciting to test, and some bigger ticket technology intensive ideas that could be truly transformational. This is the beauty of Ignite. It has no boundaries and it drives pace and innovation across the business. Now, one of the areas that's growing in importance under Ignite is, of course, how we view the future. And it's all things AI. Artificial intelligence is here to stay. And we're already deploying it in some of our processes, such as recruitment, guest care and reporting. We have built chat box functionality and a brand website, giving our guests a quicker response when accessing information in a conversational style. We think there is unlimited potential for AI to transform so much of what we do. Initially saving time on more routine aspects of doing business, such as business administration, stock management and management reporting, and freeing up our people to focus on guests. However, the AI workstream is still embryonic. and will grow in importance as we run through to 2030. We have plans to grow our expertise and knowledge, and as with all things in Ignite, the richness of the output will be improved by the quality of multifunctional input and expertise that will go into reimagining the hospitality business for the future. What we're doing now is ensuring the myriad of data points that we have in the business, of which there are many, are available to be part of this very exciting initiative. Turning to sustainability, we continue to make strong, measurable progress against our long-term commitments. We have reduced our total carbon footprint by 16% versus the 2019 baseline, including a 22% reduction in scope 1 and 2 emissions, driven by lower energy use and reduced reliance on gas, and a 15% reduction in scope 3 through closer supplier engagement. Operationally, we now divert 100% of waste from landfill, with recycling rates increased to over 60%, and we have reduced food waste by 23%, supported by both on-site actions and partnerships with third parties such as FairShare and Too Good To Go. From a social perspective, we are very proud of our partnership with Social Bite, focused on targeting homelessness issues in the UK. We've now raised £2.5 million over the last 18 months, and we have employed 40 people impacted by homelessness through the employment programme that we have established together. We remain committed to our sustainability ambitions, delivering measurable environmental and social impacts. So in summary, we remain on course to deliver this year, despite a tougher quarter two. And we're already focused on pushing on again next year when cost headwinds should drop back to circa 95 million versus 120 million this year. We're staying focused on brand management, capital deployment and Ignite as these three levers continue to serve as well as we begin. The difficult macro environment is outside of control, but we're not fazed by it. And we've already closed out our energy requirements for the current financial year. We will continue to de-gear, and the current volatility caused by geopolitical issues is a good reminder that being prudent until the debt service costs fall away is still the right path to follow. M&B has the best brands in the sector, some great locations, a strong track record of delivery, and a strengthening balance sheet, and we remain excited and positive about the future.

I'm happy to take your questions. I don't think this is working.

Okay, maybe, yeah, that's a great answer. Right, so I've got two questions. First one is obviously you're talking about competitive behavior and discounting. I was just wondering if you could talk about differences in performance between the premium end of your estate, excluding obviously the red meat impact and the sort of value end, and any geographical differences you're seeing in trade. And then the other one was a capital allocation one, because obviously you're NAV is 491 a share, which is more than double the share price. And I was just wondering if you're tempted to be maybe selling some assets from the non-core end of the estate if there is much, and perhaps buying back shares given the massive difference that's in place at present.

I'll take the first one, Tim. So in terms of performance premium versus value, I think our split, as I said in the script, is more wet lead versus food lead because I suppose you'd argue something like Nicholson's is a premium brand and that's had a very strong... London's traded very well. Our London sites are very strong growth and they tend to be the more wet lead businesses. So that's more the split. I think the discounting we're seeing in the market is probably... not everywhere, but the people who are running it are probably running it longer and at times you would expect over weekends and things. It says to me that some people are sort of a little bit desperate, let's say. But that's, you know, I think this is something that we constantly monitor and we can respond to it. Geographically, generally, no, not very many distinctions, but London has remained strong.

I think on I guess what we've been saying for a while now, The board do keep it under review and we will decide when is the most efficient and most effective time to reset the capital structure with respect to most other things, investment opportunities, break costs, refinance costs. We've said we wouldn't return money, dividends or share buybacks if we had to draw down debt to do that. Neither would we sell assets just to do that. I mean, I think if we've got sites that are trading well and profitable, we're not going to sell those and start undermining the very strength that we have as a group to buy back shares. There will and always has been some element of churn of the estate. So you will see a small number of site disposals, but that would be for operational reasons. We don't think we can make as much value out of those sites as we can if we crystallise their value and maybe invest in a decent site at the top. We're not looking to cannibalise our state, just to be certified that.

Thanks. Jamie Rollo from Morgan Stanley. Three questions, please. First, on the recent trading slowdown, obviously, it's clearly weather, as you laid out, is the main driver. But you also mentioned the weaker consumer. So what data points are you seeing that sort of makes you think it is the weaker consumer? Because your food sales are quite good in Q2. And are you not worried that gets worse, that sort of macro headwind in the second half of the year and into next year? Secondly, if we look at the M&A out there, you've been linked with a number of some of the biggest sellers out there, but obviously you're doing mostly individual transactions at the moment. So how do you think about larger scale or even blocks of pods rather than individual units? And then finally on efficiencies, if things do get worse, that 12 million H1 efficiency number, if we annualise that, is there sort of a plan B that could perhaps step up if, like, flights did suddenly deteriorate? I get your point about filling the hopper on Ignite, but just on the hard cost savings alone, is there something there to offset any top-line weakness? Thank you.

Yeah. Firstly, I mean, look, I mean, I think the The reference to consumer confidence is probably more borne out of it. It would be a bit naive to say that with all the government issues and all the things going on in the Middle East, to say that that's not a factor. We've sort of felt a little bit naive not to say that, but I think the point of the script is that we're pretty convinced it's weather. And as I say, on the very odd day where we've had year-on-year better weather, sales have been very strong. So we're not sort of overly concerned. And I suppose where the data points reflected, I think the fact that we have had stronger food, but it tends to be the food in the wet-lead businesses. And that sort of is logical. That would sort of say that the wet-lead businesses have certainly had a tougher environment for drink sales because of the sunshine last year. but they have traded very well and the food food as uh sales have been strong there which would say that that could be a danger point that people may be trading back down into into pubs um but like i say i mean it has been an incredibly difficult period to read and we are still confident on the odd day everything lines up the business is as strong as ever so that that would be my what i my take out to leave you with in terms of um acquisition and larger scale i mean i probably be disappointed in the answer because it's the same answer we always give that we remain opportunistic to sales to acquisitions and whenever larger groups of pubs come to market of course we look at them but as ever we don't need to acquire and we won't want to overpay So I would say, yes, we'll look at them. We're very well aware that we get linked to everything. That doesn't mean to say that we are remotely interested. We just tend to get linked with everything. So I would put it like that. And then in terms of efficiency, I mean, yeah, I suppose the point we're trying to get across today is that Ignite is already generating efficiency savings as it has been for over the last 10 years. That point I made around labour rostering and patterns in hours, that is a good example that if we were to land that, that would certainly more than offset any concern on sales. So whether we, no, we do expect to get every penny of that, of course we don't. But there's one example, just one initiative that we've got our sights on that we know will make a step change if we land it. And there are plenty of those. So the Ignite refresh that we're doing in July is probably more for next year. There tends to be probably a six-month lag between the ideation and start to see it. So the things we are seeing now are things that we've been working on for the last year. And the ideation in the summer will pop up next year.

Thanks, and Tim, thank you too, for many years and best of luck for the future.

Morning, Tim Barrett from Deutsche Neumis. Could I get a bit more colour on a couple of the guidance points, please? Firstly, around CapEx, that £230 million, it feels like there's some single sites implicit within that. Are you paying a couple of million per freehold, something like that? If you could split it, that would be good. And then secondly, around the 2027 cost guidance, it feels like it's a long way away. And within that, there's things like the living wage beyond April 27. There's utilities. So could you just sort of say what you've assumed on wages and utilities, whether that's mark to market? Thanks.

I mean, so on CapEx, that assumes we buy a few single sites. what you said in the second half so last year I think we spent nine million on new sites this year I suspect within that number it could be 25 to 30 million year-on-year increase I guess asking a bit differently what's the maintenance capex That'll be up a little bit as well, because as we call out in the narrative, we've done a lot of investing in our network and hosting around the whole of this. So that was 65 million last year. 55, something like that. Also accelerating our solar panels. And your other question? I think I'm clearly important call we have to make in that guidance. We're assuming that there's fairly measured approach taken to the living wage this year for next April. So sort of 4, 4.5%, maybe 5%, something like that. We certainly haven't baked that into our number. We're assuming it's roughly equivalent to the rate of inflation. And on utilities, we've baked in a small increase in the cost of utilities, about £10 million. Some of that will come from the fixed charges, though. which escalates um and that leaves provision for a little bit to come from increased multi-req as well and to reiterate 15 is secured right so the bulk of it is not not yet secured by us understood thanks for everything

Hi, Karan Puri from JP Morgan. I have one question on World Air 27. I know it's a bit far out, but in terms of margins, just wondering, given your cost inflation guidance of 4%, you have some offsets from operational efficiencies. What is the sort of like-for-like that you think you'll have to sort of maintain for any sort of margin expansion or keeping margins flat on an area basis? If you have any color on that, would it be helpful?

Yeah, I think... I think the outlook for margins this year is tougher because of the cost headwinds. I think if they moderate next year, you know, I think our margins would be better, to be honest, particularly with benefit from national insurance. So, you know, the sweet spot of sales at the moment seems to be around 3.9%. If that runs through, then we'll be comfortable with that.

Thank you so much and all the best for your future endeavors.

Thank you.

Good morning, Phil, Tim. Vincent Ryan here from Good Buddy. Just one question for me, please. Given the step up in the site acquisitions that you've sort of got into for this year, Under what banners are typically the new sites that you're looking for being acquired? Are they being bought as single sites or are they bought for potential conversion to Miller & Carter or Nicholson's or just in terms of the brand strategy with the new sites?

Yeah, no, I mean, to be honest, I suppose in recent years, you'll probably be aware, we've tended to buy from Miller & Carter and travel hubs for all but one. And that's probably been where the predominant thing. I think going forward, What we tend to do is look at the site. We have a property mapping tool that can look at demographics, competition, populations, all those sorts of things. And so increasingly, we will acquire from other brands. I think on the sites we've acquired so far, there'll be some Miller & Carter's in there. We might even have one or two Toby Cargill's in there too. So it's a sort of evolving trend. part of what we do. If a brand has got real momentum, then why wouldn't we look to convert? We'd love to do more Nicholson's, for example, but finding good quality pubs in London is quite hard to do, but that's certainly something else we would acquire from. So I think we've just got a number of brands at any point in time that the right site comes, rather than going out and saying, I'm going to buy a site for Nicholson's, we'll see what the site coming forward is and we'll map it and say, this fits that brand. Will we acquire sites and just trade them under their existing badge? Possibly, but more likely we'll convert, have a site and think, right, we can put it into this brand format.

And just in terms of some of your recent acquisitions of the Ego and the Pesto brands, how is the conversion of those sites going and what's the plan?

We haven't accelerated. I think in recent years we've talked about a number of R&D brands. We haven't accelerated on those. really because the donor brands, as I call them, are trading very well. So, for example, when we acquired Ego, we envisaged it being a solution to Vintage Inns. Vintage Inns was our top performing brand last year. So we're not going to convert unless there's a need to do so. So the focus on Inigo and on Pesto has been around integration and been around establishing those brands as part of M&B. But I think, you know, looking in the future, I still think those brands probably will expand. We just don't need to do it right now unless we have a real emerging issue and another brand

Thank you and best luck to him for the future.

I think that completes the question. Thank you very much. I'm happy to have a chat offline after this. Thank you.