Ocado Group plc

Good morning, everyone. Very good to be with you here today to talk about FY25. And FY25 was a year of real tangible growth for Ocado, but one that also saw the business mature in a number of important ways. and while we've seen robust growth in the business and good progress across most of our global operations, we also work to help some partners address a number of key challenges in their early network decisions. This included constructive engagement with our partners in North America, as they made decisions to close sites in areas where demand had not evolved as initially expected. And in fact last year we reflected that a number of our partners were looking at a small number of sites which required a different strategic approach. And while the decisions made in North America to close were difficult, it does reflect a mature approach with those partnerships and putting them on a stronger foundation for long-term and sustainable growth. With exclusivity now having ended in North America, we've begun the journey to re-engage in many of the commercial opportunities available in that very large, world's largest grocery market. And Tim will reflect on this and Ocado's approach to re-entering the wider global opportunity as Ocado moves into this next phase of commercial growth. So I look forward to hearing more about that soon. I've now been chair for just over a year and during that period I've spent a lot of time engaging closely with a range of stakeholders and reflecting on what I've learned, I remain still very excited about the significant opportunity that remains to solve a range of business issues across the omnichannel journeys of our retailers. And Ocado itself is still a business that has a huge breadth of talent, a unique and world-leading technology platform, a visionary leadership team, and a scale commercial relationship with many of the leading retail brands around the world. I've enjoyed getting under the skin of these issues over the past year, and while recognizing that executing in a competitive and ever-changing world is challenging, I do believe Ocado is well positioned to take advantage of the significant global opportunity, both with current and future partners. I particularly value the time spent with many of our Ocado partners including counterparts at Coles, Ocado Retail of course, Kroger and of course our JV partner M&S. This engagement gives a tremendous window into the strategic thinking of our partners and in particular a depth of understanding on how some of the world's most successful retailers think about their own long-term success and growth. Today you'll hear from Stephen and Tim about progress we're making towards the key priorities that we laid out at the half year. First of all, our core priority to turn cash flow positive later this year with full year cash generation in FY27. the measures that we're taking to drive continued growth and greater efficiency with our partners, and lastly, how we're reconfiguring key parts of the business to make sure we're well set to take advantage of the renewed and significant global opportunity. So over to you, Stephen.

Thank you, Adam, and good morning, everybody. Hope you're all well. Thank you for joining us at today's For year 25 results, I'm going to take you through the financials. Next slide, please. Oh, sorry, I've got this here, haven't I? Okay. Here are the headlines. So good financial progress across the board, really. Revenue grew, grew revenue by 12%. I'm going to take you through the logistics and the tech solutions growth shortly. We had strong adjusted EBITDA growth of £66 million to £178 million. The underlying cash flow, if you exclude the legislative credit, was a £213 million outflow. But if you were to take that into account, underlying cash flow would be £113 million better driven by that receipt from the letter of credit. I should say up front, by the way, on the closure fees from the four site closures and on the letter of credit, the accounting is not straightforward. It mostly impacts fiscal 26 and future years, but we've included in the appendix a couple of charts that show you how it all works for when you come to do your modelling. So I just wanted to make that open up front. The retail, sorry, the underlying cash flow to the credit talks about that. Liquidity. Finished the year yet again with healthy liquidity of £700 million or so of cash and the access to the revolving credit facility. This has been bolstered further by the £279 million inflow that came in post the year end. So we're sitting on very good cash balances today. It does mean, and I'll get into it when we look at our debt chart shortly, if we approach our debt maturities, there's optionality there. Certainly in the first instance, the £350 million convertible bond that's due in January 27, we can pay out of cash, which we'll see our gross debt number starting to come down. Important factor for us, particularly when you see the trend in interest costs. Yet again, we achieved our guidance for revenue, margin, and cash flow targets and hit all of those. There's probably nothing more I'll say here, so I'll take you through the detail now of each business. Here's the statutory chart getting you to your earnings before tax of £403 million, a positive number, but benefiting, of course, from the big adjusting item of the valuation of Ocado Retail at the stake of our 50% in Ocado Retail when we deconsolidated the asset and M&S took over consolidation. As a consequence of that, we took our value that we put in at one and a half billion pounds or so, half of that, and then we adjust for the assets that are on our balance sheet to get to that adjusting item's income. A couple of other call-outs. Tech Solutions revenue growth, I'll go through that. Logistics, 11%. I think it's probably worthwhile calling out the finance cost line. A 48 million pound increase in our interest costs. As I've mentioned earlier, there are plans to address that debt and gradually reduce that gross debt level. I'll get to that shortly. So Accordo Group adjusting items. Here is the key item up there at the top that I talked about, Jones Food. If you recall, went into administration last year. We wrote off those assets that were consolidated on our balance sheet. We were the consolidating company. The Kroger of lesser credit, the pre-fiscal 25. So whilst the cash was received in early this year, sorry, last year, in fact, there is an accounting recognition of the revenue in related to prior periods, which is an adjusting item in a prior period. You'll see at the chart at the back how it works. It's not straightforward. the organizational restructure. That is not the costs of the restructuring that we're about to do. We did a relatively small amount of restructuring, principally in G&A and in technology in the first half of this year. So there's a small amount in there. The rest is pretty straightforward. So tech solutions. Well, you know the business model, grow the average number of live modules. On that point, and we'll come to it shortly, that's probably the key number in respect to becoming a cash flow positive business, full year fiscal 27, turning cash flow positive in the second half of 26. 121 modules today, driven by the growth there is driven by new sites going live. We've got around six sites going live over the next couple of years, but also drawdowns in existing sites. Those are the two drivers of that growth in modules. The quicker we grow our utilization of those sites, fill their capacity, the more modules and CFCs that are ordered going forward. That's a key metric for us. Recurring revenues make up the bulk of that revenue, that £444 million, growing by 7%. And as you'd expect, that's in line with the growth in average number of live modules, but also the fees that we get, as you'll see shortly, per module that are indexed every year to local inflation. The non-recurring revenue, a material increase in non-material revenue by £41 million, but there's lots of noise within that number. A lot of it that's in there is around the Morrison's fee that we got when they exited their five modules out of Erith. I think there's about £17 million or so there. And then there's about a £15 million number in respect to the closure fees as well. So you'll see that detail check later on in the pack in the appendix. Other than that, contribution margin for tech solutions, an improving contribution margin of 72%. Of course, the revenue does benefit from those items that I mentioned, but we've also included a potential decommissioning provision in there in respect of those site closures. So just to make sure that we've balanced it out, that we haven't taken all of that benefit directly to contribution. There is some provision in there as well. These are the expensed items of the technology spend and then support costs. That's the G&A cost that exists, but it's also the partner-facing teams as well. As you'll see shortly in the slide, it's sales team, but it's also G&A corporate overhead type teams. Okay. left hand chart showing the progression of average live modules. Now clearly as we approach 26 and 27, we are going to be hindered in 26 by of course the sites that have closed. in recently that were part of that 121 number. We make that up by the sites that go live, we also make it up by Ocado retail drawing down on further modules as well, which they will do, self-evident, we're going to show you shortly where they are on their capacity, but as they're growing as strongly as they are in another year, we've grown 15% revenue growth. And that's driven by volume as well, that's a volume-driven growth. Better revenue per module, I talked about that, that progression, indexation playing a part there, drives our recurring revenues. That's the maths. So here you go, go live of CFCs and drawdowns to drive the growth following the resets. Here on the right hand side, we call out the CFCs we expect to go live over the next couple of years. And again, there's some bullet points there that just reinforce my earlier comments around module drawdowns and the importance of those. We expect by fiscal 27 to be at least 125, and we're targeting over 130. But for the purposes of the modeling of cash flow positive, this range does the job. We expect we can go further than that, but let's get there when we do. That's our ambition. Okay, direct operating costs. We expect those to benefit further going forward, but you can see the progression here. continued efficiency in the operations, we do think we can get to these being below 25% and therefore an over 75% contribution margin. Technology spend, you can see how it's declined in fiscal 25 to a total across CapEx and P&L costs of £248 million. We will be seeing shortly in the guidance that we give for fiscal 27, again the cash flow positive, we're looking at around £100 million or so reduction in that spend over the next two years. We have made it very clear for quite a while that the last five or six years has been a peak investment period for us. If you recall, we launched those reimagined innovations in January 2022, and now they're going into the market. With our partners taking those, Ocado Retail in the UK, Kroger in the US and so on, ordering them and seeing the productivity gains that Ocado Retail is already benefiting from. So it's a natural part of our evolution as we expected for this technology spend to start to wind down. SG&A costs will reduce further as we focus on a leaner operating model. You'll see that in the mixed area of SG&A costs that we've actually, I know it's split in a first half, second half split, we'll show it a little later, we've actually put an extra £6 million into partner-facing sales teams, and G&A costs have come down by the same £6 million. So whilst it's flat year-on-year, the mix has changed quite significantly, and we'll continue in that direction. Again, that number we're expecting there to be about £50 million lighter in 27 versus where it is currently today in fiscal 25. That gets you to your £150 million of cost savings. According to logistics, okay, 11% growth in revenue. Orders, again, it's volume-driven growth, as you might expect. So what would I call out on this slide? Pretty reliable EBITDA number that we're generating. EBITDA has grown a little year over year. Some of that, I should say, is down to TSAs that have rolled off, that we provided to Ocado Retail that we're now charging for as those transition services agreements have concluded. So we're getting more profitability out of the business. Each year's growth of 8%, orders per week up 10%, in line with revenue growth. UPH, again, we're going to see a chart in a while that shows that UPH progression, really important part of the business model and the investment case for Ocado, which is the productivity our technology can bring to warehouses, drive down labour counts and drive down labour costs where the labour is becoming more expensive and more scarce, a really important part of our investment case. And going through those metrics, there you go, you can see the progression in UPH. Luton has had a peak of 318 UPH recently. We averaged 289 with fiscal 25. And then DPA, pretty steady at around the 21 number, 21.5 this year. So just close to 22 drops per van per eight-hour shift. Got a retell. Another really strong year for Ricardo Retail, revenue growth at 15%, strong growth in our customers and growing our market share in the online grocery market. 15% revenue growth, gross profit up by 14%. Across these cost lines, you can see the operational leverage coming through as well. With the revenue growth of 15%, CFC costs up just 7%. Service delivery, that was hit hard by UK labour inflation, but also by the national insurance changes that kicked in over the last year or so. Utility costs flat year on year. Support costs, you can see, growing by just 8%, and marketing costs growing by just 3%. So good operational leverage in the business model. What else? I think I've pretty much highlighted the key things there. The underlying EBITDA margin, if you were to add back the £33 million of Hatfield fees, is now a 3.8% number. We expect those Hatfield fees to reduce as Ocado Retail orders more modules. There is a credit system in place that as they place more, order more modules for every three ordered, roughly there's around a two reduction in the Hatfield fees number, which is a 13 module count for that business, for that, sorry, that warehouse. Carter Retail, structural and volume-led sales growth. Orders per week, so it's a volume-driven growth, not a price-driven growth. 13% growth in orders. Average basket value up slightly at 1.3%. And I think you'll be familiar with these trends. Okay, again, customer growth. now comfortably over 1.2 billion, 1.2 million, sorry, basketing items, stable, and utilization. There's the chart, the important one for us. We like that chart because it means they're going to be ordering more modules and CFCs shortly. Watch this space on that one. So our cash flow, when you put this all together, this is from an EBITDA basis down to a cash flow basis. In fiscal 25, there's our EBITDA basis. The cash received into contract liabilities, that's the cash that actually came in. We deduct then, of course, the amount that was recognized through the P&L account, which is part of the EBITDA number, and because that's the non-cash item, we take that out. The working capital movements we benefit from, there's the interest payment line that I highlighted earlier, £46 million increase in that cash outflow year over year. CapEx, pretty much in line with last year. CapEx is principally the CFCs, of course, the MHE, but also our technology spend. OAI CapEx, that's related to McKesson. Lease liabilities, no movements there, and nothing to write home about in the other line. And then finally, the proceeds from the letter of credit of £113 million getting used to that underlying cash flow of £100 million. Net cash inflows, when we take into account the final receipt from AutoStore, from that settlement that we concluded, agreed with them around three or four years, three years ago now, that's the final payment that's now come through. On our financing, we actually paid, we paid down less debt than the amount of debt that we'd raised and benefiting with 58 million pounds on the balance sheet, which you see today. Other items, you may have read that we've sold our stake in Paneltex, which was a very small £400,000 investment, and we've got back comfortably our money back from the valuation of that sale, which is around a £20 million sale or so. And we own 25% of the business. Okay. It's the outlook for the year ahead. or the next couple of years. This goes back to my earlier comments. We have guided for quite a while that we'd be heading towards 20% of recurring revenues. When you do the math, this is the 250 million pounds or so that we spent across CapEx and P&L spend in fiscal 25, declining about 100 million pounds to 150 in fiscal 27. Tim will be talking more about that during his pack. Other than that, I will then move on. CapEx has been waiting to reimagine. So as you can imagine, you can see the composition of the capital items in fiscal 25 in the pie chart at the top there. And then there's more commentary around the 26 and the 27 targets outlook. The cost that we are taking out of the business of 150 million pounds in aggregate, that will be an exercise that is commencing now. The key events will be in March, and then later in the year as well there'll be another event. We'll just see how that progresses over the course of the year. It will take place, I should have said it will conclude by the end of November. There'll be progressive reductions over the course of the next six months. There's a better way of framing it. Lowering and leveraging our SG&A costs remains a key focus for us. This £50 million of costs come out of this area. You can see the trend has been a downwards trend. You can see the shift there between the blue and the green bars around partner-facing teams and corporate functions. I think I've pretty much commented on this dynamic already. There's the £150 million, putting it all together. Again, just reinforcing that point. And summarising the key building blocks to be cash flow positive for the full year 27. Live modules of 125 to 130 plus. I've explained the drivers of those. That will generate a contribution of around £400 million with a cash contribution of Circa £3 million per module. Total tech spend and SG&A spend will be around £250 million. From around, you can see the £400 million in fiscal 25, that's the 150 saving. And then we get a variety of other net inflows, including upfront receives from partners. We typically get about £34 million a year from, £30 to £40 million a year from those. Logistics cash inflows, the business that generates cash for us. Take off our lease costs and then whatever the movement is on working capital from year to year. Net interest costs, we've modelled £80 to £100 million, but hopefully there'll be opportunity there to reduce that, given our strong liquidity, and as I said, when we look at our debt stack and options to address some of that debt. We've concluded here in the final bullet there'll be sufficient cash flow to be cash flow positive and to fund circa 10% module growth. So one could argue that if we did a 15% module growth in fiscal 28 versus 27, we wouldn't have the cash flow. We might not be cash flow positive because we're putting the capex in. That's a high-quality problem, I think. We'll cross that bridge when we get there. That would be the only reason why we wouldn't hit our target if we had some big orders for delivery in 28 and 29. But I think both Tim and I would actually welcome that. Okay, managing our debt maturities, and I've talked about this. You can see here, by the way, the £56 million convertible bond due December 25, we paid that off, if you recall, just after the year end. The £500 has gone away. This is the one we'll be targeting out of cash, the £350. And there may be opportunities as we look through with our cash balances to look at those other three debt items that we've got as well. So I think you can pretty comfortably expect our gross borrowings number to start to come down quite significantly, which would be good news. So summary guidance, tech solutions, revenue of around £500 million and adjusted EBITDA margin of around 30%. Logistics, more of the same. No great surprises in there. We're going to be having, somewhat perversely, a £200 million outflow in the year that we turn cash flow positive. A lot of that is driven around the timing of our cost reduction, the activities that I talked about, the sequencing over the year. You get the full year benefit in 27, but you then see a partial year benefit in fiscal 26, which explains a lot of this dynamic. CapEx will be around £250 million. And those are all the key numbers of our guidance. And that concludes it. There you go. I'll just repeat those messages. Good management of our balance sheets. I think we've been pretty good and proactive there on debt management. Strong financial performance in 2025. Cost and capital discipline becoming a key theme for the organisation. And again, the core priority is to turn positive during the second half, but it's backed up by a very robust plan as well. Thank you very much. Tim, over to you.

Thank you, Stephen. Thanks, everyone, for joining us today. Right, let's move on. I'm going the wrong way. Okay. Right. So we've had a good year in a number of ways. So I think one of the key metrics is that first one is that's the international CFC volume growth of the 26%. So we just want to keep helping our clients to grow. We're helping them to grow more and more. And we want to see that number continue to grow. And the compounding effect of that will lead to more and more drawdowns of modules that are available in existing CFCs as well as demand for future CFCs. Just again, to give you some idea of scale, we shipped 72 million orders across the whole of the OSP platform last year with more than a 98% fulfillment rate, 0.7% of average OSP waste. And then we saw quite a lot of efficiency coming into the platform last year. We got across the platform to a 21 DPA on a weighted average basis across all of our clients. We saw an average of a 10% improvement in CFC productivity across our clients. And as Stephen mentioned before, in the financial year, we achieved 318 UPH in Luton and since the end of the financial year have got into the 320s. The metrics keep getting better, and to put it into context, that 318 UPH, that means that a 40-item order is fulfilled using less than eight minutes of human endeavor compared to about 75 minutes to do the same thing in a manual operation picked in store. So as you know, we've been busy working with our partners on partner success. That's the one area that Stephen outlined where we've been spending more money, improving our partners. We thought we'd pick a couple of examples just to show you not just what the equipment is capable of doing, but how we help our partners and what kind of results we achieve. So this is one warehouse. where we've been working closely with one of our partners. Again, because of part of confidentiality, I won't get into exactly who they are. Please don't ask me. But this is an international warehouse. This is a combination of... Two things. This is a combination of new software and operational advice. In this particular first example, this is DP8. So this is deliveries coming out of that warehouse. And we helped over an eight month period to get a 34% improvement in the number of drops per shift. To put it into context, actually the top of that graph is 25 DP8. So actually it's higher than the UK. The UK is not the standout performer on DP8. We have achieved greater results in some of our international warehouses. And so this is not a question of somebody who is extremely poor becoming less extremely poor. These are actually quite impressive numbers and are significantly ahead of our partners' expectations. If we choose a UPH example, here is a UPH example. It's a five-month period that we went in and helped a partner inside their warehouse. We improved their labour productivity by a third in just five months. That is a combination of better operational processes where we're helping partners in their planning and in their operations, as well as a rollout of some of, an early rollout of some of the reimagined kit into that building. But so quite meaningful results in short periods of time. We brought back in Lawrence Heaney, who used to run a significant part of Cardo Retail for many years, and he's leading our partner success efforts, working alongside Nick de la Vega, who's come in to run our revenue sales and partner relationships. So significant progress in those areas. In terms of CFC's driving growth, here are some comments which I won't read them out, I'll let you read them yourselves from some of our newer partners, Alcampo, Ocean Polska and Coles, who all have opened warehouses recently, who are all seeing strong growth in their sites ahead of the wider online markets that they operate in, are achieving incredible NPS scores from their customers. What we're seeing is if you take an existing geography where you have existing store-based operations and move them into a warehouse, you can see not only enormous pickups in NPS, customer satisfaction generally, but you can also see 30% to 50% growth beyond the market and beyond your baseline in a very short period of time. from the better performance, better availability, better fulfillment, fresher goods that arrive from putting those volumes into the warehouses. I think obviously we've spoken a bit about the warehouses that have closed. You need to put volume through warehouses. These are examples of retailers that have got some volume from store-based operations. Putting that volume into warehouses makes enormous sense. So historically, we built warehouses that were designed to largely do fulfillment from order today, deliver tomorrow. We've talked before, we talked at Reimagined about inventing new software that would enable these warehouses to be used for order today and deliver today. We have been rolling out that software during the course of the year. We are still in the early stages of rolling out that software. It is currently available for rollout with all of our partners, and we expect it to be in the vast majority of warehouses before the end of the year. It's currently deployed in nine CFCs. we've seen the earliest deliveries from order to delivery of 73 minutes. Now, 73 minutes is not an impressive number for speed of delivery of an online grocery order. You can do that in 10, 15, 20 minutes, but from microsites with 1,000, 2,000, 3,000 SKUs in them with efficiency levels that are really, really poor. This is an order processed in a large-scale Ocado CFC with extremely high productivity, as we spoke about before, with ranges of 20, 30, 40, 50,000 SKUs available to those customers. And it is not costing anything in productivity to achieve that. And that order is being delivered in a scheduled eight-hour route. but we are able to get the last from the customer ordering it to delivering it to as little as 73 minutes for a full basket order. We have seen in the first warehouse we rolled this out in days where we're achieving 40% same-day deliveries in an international CFC. We think this is a game changer, and we look forward to the rollout of this across the rest of the network and our partners continuing to work with it and increasing the amount of capacity that they have for same-day ordering, which largely addresses that large shopper universe of people who want to shop online but find it hard to plan, where they'll be able to take advantage of the big ranges, the hypermarket prices, and same-day delivery. We also spoke at the half year about aggregators. So we have now integrated aggregators into our platform for the first time in the past year, enabling customers who order groceries with our partners, but from wider platforms. So from aggregator platforms, those orders are going through, and then those orders are processed either in Ocado CFCs or using Ocado in-store picking software in the client stores, making significant efficiency compared to having multiple apps and multiple pickers in those stores. And these changes really reflect the evolution of the online grocery market where in some markets significant amounts of volume are going to aggregators who don't process orders themselves or don't have stores or warehouses themselves. But now our platform is flexible and those orders can get pushed through it. It has enabled Morrisons to increase their aggregator coverage in the UK to a further 100 geographies. It's enabled Monoprix to roll out to 22 further cities in France with one of the global aggregators that they work with. So let's just talk a little bit more about the evolution of the platform. If we went back to 2018, there's a little graphic here that described largely the platform that we sold to our early partners. We had a largely next-day service. Partners were expected to operate OSP webshops and take 100% of the orders across OSP web and mobile. And they were processing those largely in warehouses at an average of a six-module size for home delivery in vans, either directly or via spokesites. It was a narrow but successful approach to the market that had served us extremely well here in the UK for a number of years. But the market's changed and the market continues to evolve. And today, shoppers expect to shop online with total flexibility across different platforms, lead times, and shopping missions. And retailers need and want to meet those expectations without incurring the high costs associated with the traditional fulfillment. So where are we today? Today, our platform supports all different shopper lead times from sub one hour, one to six hours, remaining same day and next day deliveries. We support bringing orders into our platform through managed fulfillment, where the clients run their own front ends, through the OSP webshop that continues to evolve and deliver a market-leading experience, as well as mentioned before, through aggregator sites as well. We can process those in in-store fulfillment over a thousand stores live through our new store-based automation that can range from four to five thousand square feet attached to a store up to about 17,000 square foot potentially unattached to a store. In two to ten module sites for large scheduled delivery businesses, in micro-fulfillment centres, as I said before, from about 4,000 to 17,000 square foot that do not need to be attached to a store if they don't want to, as well as in manual warehouses or third-party DCs. Serving all the different customer missions and all of them with the best economics. And then in the last mile space, we're working today delivering orders to customers using couriers, lockers, customers collecting it, home delivery and home delivery via Spoke. It's incredible amount of total and evolution of the platform to total flexibility for our existing global partners and future global partners. It is the product of a very large and busy R&D period for us as a business, but we've now deployed most of this evolved platform for our partners worldwide with strong results. with our exclusivity rolling off in multiple markets we're focused on bringing these benefits back to some of the world's most mature grocery markets for the first time in years as we move into this new commercial phase we're also taking steps to realign our business to better serve our global customer base and focus on new prospects opportunities with the biggest value But I wanted to start by reflecting on the scale of some of our commercial footprint today, as I think it's sometimes underestimated. Most of you are aware of our global grocery partnerships worldwide. They remain the core revenue driver for our technology solutions business and the partnerships where our technology is most fully deployed. However, our commercial footprint does extend more broadly into the wider logistics, CPG and retail sectors, primarily driven by our growing AMR business. Today, our technology is live in 127 warehouses and more than 1,000 stores worldwide with 70 commercial clients and partners. We've got more than 17,000 bots live on grids around the world, as well as 431 on-grid picking arms, that number growing probably daily, and more than 2,500 Chuck AMRs. And we're seeing keen interest in initial orders for our new case handling product, Porter, case handling AMR. So as we move into a new commercial phase at Ocado, we're building on strong widespread relationships with many recognized and leading worldwide brands. We're also making changes to the structure of our technology solution segment. Stephen has already talked through our progress towards reaching a steady state cost base that we flagged over the last few years. We've made significant strides towards our full year 27 targets over the course of the last year, and we continue to track towards those targets as we move out of this peak development cycle and into a steady state R&D phase. The structural changes that we're making support these goals and make sure our business is properly geared towards our priorities, namely a renewed and focused go-to-market strategy, a simpler operating model, Investment concentrated where we see the clearest path to value creation. One of the first key steps is the consolidation of our commercial divisions, meaning Ocado Solutions and Ocado Intelligent Automation are now operating as a single point of sales and account management under the new leadership of Nick de la Vega, who joined us as Chief Revenue Officer at the end of last year. This change also reflects an overall shift in our approach to new commercial opportunities with a more targeted approach to the most valuable opportunities and primarily within sectors where our expertise is most needed. Taking the example here, which shows in the blue areas of the grocery supply chain where our technology has been traditionally deployed, in the CFCs and delivery to homes. One of the key lessons we've learned from the market engagement of OIA has been that there's significant opportunity to go further up the grocery supply chain and the CPG supply chain. We see significant opportunities to expand into those areas, both case replenishment for stores and wider distribution networks, both where AMR products like Chuck and the New Porter solution can bring significant capital-light productivity improvements. Our AMR products are already deployed in upstream CPG supply chain environments, and we see a positive opportunity to build on this business supported by a single, more simple commercial structure. We believe that opportunities like this will bring significant added value and optionality to our core OSP business, enabling us to grow an attractive new revenue stream in our tech solutions business alongside our core automation and fulfillment assets. Our solutions are very deployable in the case fit market for store replenishment. We highlighted this next piece in the half year, but I think it's really important that we continue to focus on it, which is about bringing the right fulfillment for the right market. To be successful today, retailers need to do careful network planning to make sure they deploy the right solutions in the right places at the right time in their development of their e-commerce journey. But we have a full toolkit to address those different opportunities. It's a framework for future growth, and it underlines some of the decisions taken in recent months. We can do everything from low-density solutions where you use manual pick-in-store with world-leading efficiency using our software. We can do manual pick-in-dark stores. As we mentioned, store-based automation before. We're going to focus on that in a moment. Micro-fulfillment centers as well as the large automated CFCs. The critical lesson that we've learned is that you do not buy a large-scale CFC unless you have a business to put through it. They are not a profitable asset if you don't use them. But if you do use them, they're great. So moving on with a little bit of focus on a CFC to start with. So a CFC can range from about 150 million of annualized sales to over 500 million in capacity. 500 million is approximately what we refer to as a six-module CFC. So if we take a six-module CFC as an online case study, it can do about 480 million of annualized sales in a standard sales pattern with kind of similar metrics to an Ocado retail business. Today, to build a six-module CFC requires both upfront fees and retailer capex to put in things like fridges beyond a standard developer spec shed of about 50 million pounds of investment. The benefit of running that at 480 million of sales compared to doing this in store is somewhere in the region of 30 to 40 million pounds a year. meaning it is a one to two-year payoff asset. These buildings are amazing if you can use them, and that really is the key lesson. Some of the buildings in North America were not being used, and those retailers working with us have made the decision to close them. Where these buildings can be used and you have an existing business or you can rapidly grow into these buildings, they are amazing. significant improvements for the same volume going through them. As I mentioned before, they deliver a far superior customer service, driving up significant NPS, resulting in significant uplifts as well in sales. So if you go into a building where you've got, say, recent examples, we built some three-module sites. We've launched a three-module site recently. We've got another one in build at the moment. If you've got one or one and a half modules of business from your store pick to go into that facility, by the time you go into it and see the uplift and you've got strong growth, you're in a very good position to drive to. full capacity and see significantly quick retailer cash payback. These have been a, these principles have been a key in the engagement with all partners at the moment and are reflected in those new CFCs that we're building. And this kind of thing is reflected as well in some of the CFCs that have opened with Coles, for example, putting significant volume into their new CFCs in Melbourne and Sydney in the year that they've opened. And you saw the positive comments from Leah just before. If we move on now to the other end of the spectrum, which is store-based automation. Here's a nice little visual of our store-based automation sites with their external pickup ports. The same robots operating on grid, the same on-grid robotic picking. The one new piece being the external ports, a small development that we are engaged in at the moment. Store-based automation is a phenomenal product if you have a lot of customer pickup direct from store. because you can process these orders really quickly and really efficiently compared to in-store. It's a phenomenal product if you have a lot of gig-based direct-to-customer deliveries from drivers picking up one, two, or three orders. They can also interact from those ports, and those products can also be picked incredibly quickly from order to delivery. It is even more important if you're doing ultra-short lead time delivery because when you pick ultra-short lead time orders in a grocery store, the effective pick rate drops by about 70%. because you're no longer able to batch and pick in the zones. You have to run around and pick a smaller order across the whole geography of your store for a single customer. And the pickup to doing it in our machine will be comfortably into a number above double-digit percentages in terms of efficiency improvement. Now, If you take some markets, we take a market like the US, for example, eight years ago, the average store was doing $1 to $2 million of sales. These machines wouldn't work sensibly. to do one to two million of sales. But markets have grown dramatically. And so here's an example of the sites that we've been talking to retailers about in the last few weeks that we've been able to speak to retailers in the North American market. And we're seeing significant enthusiasm for this product across every conversation that we've had with retailers in that market. Typically, sales in store could be anywhere from 5 to 40 million online. I know that 40 million sounds like a large number. There are people who are interested in sites of those size. That's also a particularly relevant size for the French market, which is a 90-plus percent pickup market. But if we take a case study of a store with $12 million of sales, that's a fairly common size. That's 10% to 15% of a store that does $80 to $120 million of store-based sales, now doing 10% to 15% online. The full retailer upfront fees to us in CapEx would amount to about $2 million upfront, we estimate, with a greater than $1 million a year operational improvement. This ignores the improvements in NPS. This ignores the benefits of increased capacity, which is suffering in a number of the larger stores and busier stores in these retailer networks. This is just pure labor savings, predominantly labor savings in these facilities, meaning that retailer cash paybacks of two years are quite possible in this space. across all of the stores across markets that are doing 8, 10, 12, 15, 20, $25 million, which in many markets now is the kind of average. If we look at the U.S., for example, when we entered into our exclusivity arrangements with Kroger eight years ago, the U.S. grocery market was $30 billion in size. Next year, we're not ready to roll out store-based automation in mass scale at the moment. We're looking to do a few handfuls of sites at the moment to prove all the different points around the costs and the execution. But by 2027, when we would look to roll out in scale, the US grocery market is estimated to be eight times the size it was in 2018. This is why when people rolled out what they believed were microsites eight years ago. They tried to roll out one site to cover five to 10 supermarkets worth of volume. It created incredible complexity that doesn't exist today because today each of those sites now needs eight, 10, $12 million Ecom sales from the singular site. But also the difference today is that we can build these things in a fraction of the space that was being used with a fraction of the labor that was being used because of advances like our incredible AI-powered pixels to action on grid robotic PIC, which today is doing more than 50% of the PICs in Luton across a 45,000 SKU range. Globally, since we entered into a number of exclusivity arrangements, the global market has more than doubled. And so we are super excited about reentering a number of markets where we're having some very interesting conversations with a large number of grocers and keeping Nick in his new role very busy. So in summary, we're reentering markets with a tech solutions business with a simpler operating model, with a focused commercial operations, and a strong R&D base. We're seeing strong interest in a massively evolved solution set with massively more flexibility, a wider fulfillment tool set, and world-leading shopper outcomes. Our partners are seeing robust underlying growth, strong year-on-year improvements in operational performance, and we have learned important lessons. We now have stronger foundations of our key partnerships and clear pathways to deliver disciplined, sustainable growth worldwide. And on that, we'll start taking questions. Well, Tintin knows I can't handle as many as two at once, so I forget what they were.