J Sainsbury plc

Good morning everyone and welcome to our 24-25 preliminary results presentation. Thank you for joining us today. As usual, I will start with a brief introduction before handing over to Blaned who will cover the financials. I will then share the detail on our progress we have made during this first year of our next level strategy and the plans we have for the year ahead. Now as a reminder, this is the next level Sainsbury's plan we set out in February of last year. You will remember our refreshed purpose. We make good food, joyful, accessible and affordable for everyone, every day. And underpinning our purpose, here are our four strategic outcomes which we set out to define this next phase of our growth. Our purpose and outcomes are the driving force for the choices we make across the business and guide how we show up and deliver for all our stakeholders. First choice for food. We are bringing more of our food range to more customers in more locations, attracting more bigger basket primary shoppers and delivering further grocery volume share gains. Loyalty everyone loves. We're making loyalty more personalised for our customers and investing to accelerate our market leading retail media capabilities. More Argos, more often, where we're taking focused action to extend range, enhance digital capabilities, and improve relevance to growth frequency and spend in Argos, whilst delivering further operating model efficiencies. And underpinning all of these outcomes is our plan to save and invest to win, delivering another one billion pounds of structural cost savings and investing in our capabilities across technology, automation, and infrastructure. Now over the past four years, we've transformed our business. We've invested one billion pounds in lowering our prices and now have the winning combination of value, quality and service in the market. A combination that our customers love. And we're obsessed with the consistency of how we show up for customers week in, week out. We're food first and people first. Our people are at the heart of delivering everything that we do. That's why we led the sector on pay in January for the third year in a row and why we've increased colleague pay by 58% since 2018. We continue to invest in the quality and resilience of our supply chain through building long-term partnerships with our suppliers, ensuring leading availability for years to come. And we've built resilience and created sustainable competitive advantage across our customer offer, our operations, and our technology platform. We are stronger, more agile, and we have the capabilities to win in this market. And these are not capabilities that you can build or deliver sustainably overnight. We've been making balanced choices since the start of our four-year turnaround. This discipline has got us to where we are now, and we will continue to guide our outcomes to deliver for all of our stakeholders going forward. Now, you've heard me talk before about the key factors that really influence where customers choose to do their grocery shopping. Value, quality and service. Through focusing our £1 billion of price investment where it matters most for customers, they now know they can trust us to deliver consistently great value. And because of this, value perception continues to improve at a faster rate than our competitors. Our reputation for outstanding quality and innovation continues to strengthen. And we've reached record levels of customer satisfaction on availability over the last year, continuing to lead our key competitors on overall customer satisfaction too. More customers are making Sainsbury's their first choice for food. Over the last four years, the number of primary customers, those doing the majority of their grocery shopping at Sainsbury's, has increased by 18%. And so in the last year, we have delivered our biggest market share gains in more than a decade. We promised this would feed through to profit leverage, and it has, with Sainsbury's profit growth of over 15%. This is supported by our industry-leading cost savings programme, where we are well on track, having delivered £349 million of savings in this first year. And we have a clear line of sight to one billion of savings over the three years to March 27. And this will be a vital point of difference in the year ahead. We are also committed to improving returns. And so while we are spending more capital on growth and efficiency, the higher retail profit has fed through to an improved ROKI. And we're delivering higher cash returns to shareholders while keeping leverage comfortably in the middle of our target range. Now these are the eight commitments that we laid out with our next level strategy. A year in and we've made really strong progress against an ambitious plan. Right across the business, our teams have done the most brilliant job as we've stepped up. We've delivered improving customer satisfaction, food volume growth ahead of the market, and as a result, profit leverage from sales growth. And we have good line of sight on our financial commitments as we look ahead. And we are confident of delivery over the three-year programme. So accelerating into the year ahead is exactly what we are doing. Starting the year with strong trading momentum across all our brands. Our belief in the strength of the Sainsbury's offer has driven our decision to make our largest investment expanding store space in more than a decade. With 40 store openings planned for this year, we are moving at pace and with confidence as we focus on delivering this next phase of our growth. And as we bring the best of our food offer to more customers, we are going further with our plans for product innovation, scaling our personalised loyalty programme and taking strategic action in Argos to make sure that we have the best range and proposition for our customers. Now, all of this is underpinned by the investments we are making in technology to drive efficiency, deliver better customer experience and enhance our platform for growth. So, as we look to the year ahead, this puts us in a really strong place. In the guidance we've given this morning, you can see that we will continue to make balanced choices and that gives us the capacity to navigate the environment around us. And to be clear, we are committed above all else to sustaining the strong competitive position we have built and we expect to continue to outperform the market. Finally, introducing our results this morning, I want to say we are proud of what we've delivered for our customers this year and of the progress we've made in what has been such a strong first year of our next level plan. Now this level of success doesn't happen without the most passionate, committed and dedicated teams working right across Sainsbury's every day. Our colleagues, suppliers and partners have really stepped up this year. They've done an exceptional job and for that I'm hugely grateful. With that, I'll now hand over to Blanid to take us through the numbers.

Good morning and thank you Simon. I will now cover the financial highlights for the 52 weeks to the 1st of March. Starting first with a reminder of our financial framework. This lays out the factors that underpin our commitments to deliver profit leverage from sales growth, strong cash flows, higher return on capital employed and enhanced shareholder returns. One year into this next level strategy, we are really pleased with our progress. We've delivered food volume growth ahead of the market, profit leverage and continued strong cash generation. We have returned more than £500 million of cash to shareholders in the year through the payment of our dividend and a £200 million share buyback. Let's move on to our sales performance. Sales in Sainsbury's grew by 4.2% in the year, whilst Argos sales declined by 2.7%. This led to retail sales growth of 3.1%, excluding fuel, and 1.4% growth, including fuel. Looking at the shape of that through the year, grocery sales growth was slightly stronger in the first half, driven by higher volume growth against weaker comps, but we continued to grow volumes in the second half despite tougher comparatives. Grocery inflation averaged between 1 and 2% in the year, but ticked up slightly in the fourth quarter. Sainsbury's general merchandise and clothing sales improved in the second half, driven in particular by strong sales growth in clothing as we took actions to drive availability and improve women's wear ranges. Argos sales were behind our expectations in the first half due to a significant reduction in online traffic and a weak start to the summer. Performance strengthened in the second half as we took action to improve traffic and volume. Sales returned to growth in the fourth quarter. Turning now to retail profit. Retail underlying operating profit grew by 7.2% year-on-year. This was driven by double-digit growth in Sainsbury's operating profit, reflecting strong grocery volumes, the delivery of operating leverage, continued growth in the nectar profit contribution, and good progress on cost savings. This was partially offset by lower year-on-year operating profits in Argus. Profits declined in both H1 and H2, with actions taken in H1 improving the outcome in the second half. Looking ahead to the financial year 25-26, we have started the year with good momentum across all of our brands. We expect to continue to grow grocery volumes ahead of the market. We expect to deliver retail underlying operation profit of around £1 billion, weighted more towards the second half than this year. This reflects the benefits of new supermarket openings and space reallocation activity being weighted more towards the second half, with a higher level of disruption in the first half. Our guidance gives us the capacity to continue to make balanced choices across our business and sustain our current competitive position. Moving on to financial services. We announced in January last year a phased withdrawal from core banking, that is loans, credit cards and deposits, and a move to a model where financial services that are more complementary to the retail offer will be provided by third parties. We have announced several updates over the last year, which I will detail on the next slide. For now, this slide covers our underlying financial services performance. Underline operation profit grew by 3.4% to £30 million on a total basis, inclusive of discontinued operations. Growth was driven by reduction in overheads, more than offsetting lower income driven by higher funding costs and lower lending as a result of the decision to exit core banking. Guiding on the year ahead, we expect to deliver underlying financial services operating profit of around £10 million from continuing operations, including commission income from insurance products and travel money. This is over and above the retail underlying operating profit we've guided to. This compares to a continuing operations loss of £7 million this year, reflecting a relatively high level of cost allocated that will normalise next year. As a reminder on the recent changes of our Financial Services Division, we announced the sale of our loan and credit card portfolios to NatWest in June last year, which we expect to complete next month. We then announced the sale of our ATM businesses last September. In October, we announced the sale of our Argus Financial Services Cards portfolio to Newday, alongside a new forward flow contract to provide financial services products to Argus customers. This deal completed in February this year. Once complete, we continue to expect total annual profit from financial services of at least £40 million to the Group by the financial year to March 2028. This comprises income from the New Day Partnership together with commission income from insurance, travel money, care and ATMs. We announced this morning that we expect to return Sainsbury's Bank disposal proceeds of £250 million to shareholders in the second half of this financial year, subject to regulatory approval via special dividend and associated share consolidation. Any proceeds in excess of this will be used to enhance our 25-26 share buyback programme beyond a core level of £200 million. Moving on to underlying profit before tax. Total underlying profit before tax grew by 8.6%. This was driven by higher retail operating profit and slightly higher financial services profit, partially offset by increased underlying finance costs, mainly attributable to interest paid on the £575 million term loan been fully drawn down for the majority of the year. Underlying basic earnings per share were up 4.5% to 23.1 pence, with the year-on-year increase behind UPBT growth given a higher underlying tax rate in the year. The next slide lays out items excluded from underlying results. We encourage £377 million of non-underlying costs in the year, with the large majority relating to the phased withdrawal from our financial services division. £274 million of costs sit in discontinued operations, primarily relating to losses on disposals and provisions for onerous contracts. We also recognise structural integration costs of £128 million in relation to the multi-year restructuring programme announced in November 2020 and the next level strategy programme. Non-underlying costs incurred are primarily non-cash. We incurred retail cash costs of £71 million in the year, a little lower than guided due to phasing, and expect to incur cash costs of around £100 million in 2025-26, which includes some rollover from 2024-25. Turning to our cash flow metrics, retail free cash flow of £531 million was down year on year, mainly due to lower working capital inflows and higher corporation tax payments. Reduced working capital was driven by increased payables due to timing, partially offset by actions taken to reduce Argos stock levels. Net debt, excluding leases, increased by £64 million year on year, and net debt, including leases, increased by £204 million, driven by three large lease regears at distribution centres, as well as lease additions from our new head office location and from our acquisition of stores from Homebase and Co-op in the year. This table shows the key elements of the cash flow and movements in net debt this year and last. The main difference in retail free cash flow this year is the lower working capital inflow. The movement in net debt excluding lease liabilities was an increase of £64 million after returning £508 million to shareholders through dividends and share buybacks. Looking ahead, we are committed to continuing to deliver retail free cash flow of at least £500 million in 2025-26, in line with our next level strategy commitment. We expect the composition of free cash flow to be similar to this year, as we continue to drive improvements in working capital and expect capital expenditure to be broadly in line with this year. Cash contributions into our pension scheme will be around £20 million lower year on year. We have included a slide on capital expenditure here. Looking ahead to 2025-26 you can see our spend on efficiency stepping up, underpinning our confidence in the delivery of our cost saving plan and further building sustained competitive advantage against competitors who are more cash constrained. We are tightly controlling maintenance capex while ensuring standards across the estate are good. And growth capex is higher across 24-25 and 25-26, reflecting our plans for new space growth. This includes the cost of converting the acquired home base and co-op stores, where we expect to deliver return on capital employed in the low teens. Our guidance remains unchanged. We expect to incur capital expenditure of between £800 million and £850 million in 2025-26. Here we lay out our balance sheet metrics. Net debt to EBITDA has steadily reduced over time and remained flat year on year at 2.6 times after funding the step up in cash returns for shareholders. We remain broadly in the middle of our target range of 2.4 to 3 times. The strength of our balance sheet was reflected in the public investment grade rating that we published in January this year and we issued £550 million of unsecured bonds under a new EMTM programme, our first unsecured bond issuance in 21 years. We are pleased to deliver an increase in return on capital employed of 70 basis points to 9% driven by growth in retail operating profit. On to shareholder returns. As we announced at last year's Capital Markets Day, we are commencing a progressive dividend policy. Our proposed full year dividend per share is 13.6 pence, an increase of 4% year on year. Given the strength of our balance sheet, we have returned nearly all of our free cash flow generated in the year to shareholders through a dividend and buyback. and we have announced that we will buy back at least £200 million of shares in the year ahead, as well as paying a £250 million special dividend relating to the bank divestment. In summary, we are pleased with our performance in the year one of our next level strategy, delivering continued grocery volume growth, retail operating profit leverage, and enhanced returns to shareholders. Looking forward, we expect to continue to grow grocery volumes ahead of the market, sustain our strong competitive position, deliver retail operation profit of around £1 billion and generate free cash flow of at least £500 million. Thank you for your time. I will now hand back to Simon.

Thank you, Blaned. Let's now turn to look at the strategic highlights, covering each of our next level outcomes in turn. And starting with our plan to be first choice for food. The momentum we have in grocery is clear. We are delivering for our customers on freshness, availability, quality, outstanding service and experience, and consistently great price. All the components necessary for being the first choice for our customers. Through constantly delivering what is a winning combination, customers are more and more confident choosing us for their big weekly shop. And this is showing through in our sustained volume growth, reaching a two-year growth rate of 5% over the course of the year. Resetting our value position has been a key focus over the last four years. We've invested a billion pounds in price and we have found a formula that really works through our combination of Aldi price match, Nectar prices, your Nectar prices and low everyday prices. And as a result, we're in a really strong position versus all of our competitors. You can see our progress on the left hand chart, which shows the extent of our improvement versus November 2020 when we started this work. We know what it has taken to reset our pricing position. We know how to invest selectively and smartly where it matters most to customers and we are very confident in our ability to sustain this competitive pricing position. We are a partner of choice for suppliers and this is evident in the support we have received for Nectar Prices with deals now available on more than 9,000 products. This sits alongside more targeted personalised offers available through your Nectar prices. And we have extended our Audi price match again, now on more than 700 products and more to come in the weeks ahead. It's a value formula that we know works for our customers. Customers trust us to deliver on best prices consistently on the fresh food centre-of-the-plate products they buy most often. And the reality of maintaining a strong competitive price position is consistently being noticed by our customers. We can see it in the significant improvement in value perception we've achieved this year. And all of this is translating into consistent and sustained market outperformance. Investing in price alone isn't enough, and alongside strengthening our value position, we have reinvigorated our passion for food to ensure we are delivering the best freshness, inspiration and quality for our customers. We launched more than 1,300 new products over the course of the year, of which more than 600 were in Taste the Difference. and Taste the Difference sales grew 15% in the year with a particularly strong performance in fresh products where sales were up 17%. As a result, we continue to deliver the strongest premium own label performance in the market as customers look to us to deliver outstanding quality at affordable prices for all the big events through the year and for every occasion when they wanted to trade up. And we have clear ambitions for Taste the Difference in the year ahead as we celebrate its 25th birthday in a year where the brand is set to reach £2 billion of sales. There are lots of great things to come here, including more than 50% of our product innovation for the year ahead being in Taste the Difference. So watch this space as we celebrate with the biggest and best year yet for Taste the Difference. Our product innovation is only possible through the support of our suppliers and through that culture of trust, collaboration and long-term partnership we have established. We are committed to driving investment into the food system, contributing to economic growth and a thriving farming sector in the UK through working more closely with our suppliers and farmers to give them long-term assurance. We work with over 18,000 British farmers and we are committed to partnerships which are good for Sainsbury's, good for UK farmers, good for customers and better for the environment. Last month we announced a 10-year partnership with Cranswick. Together, we're planning to invest around £60 million to improve welfare standards and provide more stability for our pork farmers, giving them the confidence to invest in more sustainable practices, building resilience for the future, while protecting value for customers. This builds on the work we've done with Chicken and Moy Park and the Sainsbury's Egg Producer Group we established this year too. Working in collaboration with our three main egg packers and around 100 farmers to ensure continuous improvements in animal welfare, give financial reassurance to our farmers and secure protection for our egg supply chain for years to come. Through our plan for better, we're going further all the time to support our customers to make healthy and more sustainable choices. Be this through inspiring them with our healthy choice logo and gamified nectar challenges that nudge towards healthier choices. by building knowledge through our Good to Know campaign, by using our skills in food innovation, food agriculture and packaging innovation to provide better for the planet choices, and by ensuring good food for everyone through our community initiatives, including increasing the amount of surplus food redistributed through our partnerships with Neighbourly and Oleo. For us, everything starts and finishes with delivering for our customers and so customer satisfaction is the measure we look at before anything else. Customers expect leading service at Sainsbury's and we've been consistently delivering ahead of our competitors. Through strengthening our supplier relationships and introducing our machine learning forecasting tool, we've been able to make a major step forward on our availability. And of course, this has a huge influence on customer satisfaction, with satisfaction for availability now at record levels. Our deep confidence in the strength of our grocery proposition has driven our decision to open more new stores to bring the best of Sainsbury's to more customers, our biggest investment in space in over a decade. We've been very targeted in our approach here, identifying supermarkets in long sought after locations where we haven't got a significant presence. And the home base and co-op sites we acquired during the year tick all the boxes. Combined with our organic store opening programme, we expect to open 15 new supermarkets in the year ahead and a further 25 new convenience stores. And we trust our track record to deliver here. We've opened over 100 stores in the last five years and they are delivering strong returns. So we expect our 40 new stores in the year ahead to deliver similar benefits. Now, we're excited about the opportunity we have to reach new customers in new locations, but alongside this, we're also making more of our food range available in our existing stores through our More for More plan. This is about rebalancing space away from clothing and general merchandise to really showcase the best of our food offer, driving a better customer experience and higher trading intensity. We are seeing positive early results in the invested stores and as we add another 90,000 square feet of space in FY25-26, we expect the benefits to build. Although this will be weighted to the second half and beyond as we annualise some initial disruption. We're also making some key propositional changes to food services in our stores, driving growth, availability and efficiency at a lower cost to serve, whilst also creating further space for fresh food. As a result of all these elements of space growth, we expect to grow total food space in Sainsbury's by around 3% in the year ahead. Over the last year, we achieved volume growth in every channel, across supermarkets, convenience and online. We have transformed our convenience estate over the last year, reconfiguring space, optimising our ranges and introducing our IOD price match campaign to deliver great value to customers wherever they shop with us. Now these changes have helped deliver convenience sales growth of almost 4% and market share growth of 20 basis points, as well as a step on in customer satisfaction. However, our highest growth in customer satisfaction of all channels has been in online. The changes we've made to improve the digital customer journey and better showcase our product ranges has been the key driver of increased basket size and greater frequency of visits, driving sales growth of 7%. And our on-demand rapid delivery channel remains very strong too, with sales growth of around 80% this year as we have successfully rolled out the offer to more than 1,200 locations. We are driving continued profit growth across online and on-demand, with more improvements planned for the year ahead as we make meaningful changes to our groceries online app. Now within our plan to be first choice for food, we're doing more to improve the performance of the products and services that sit alongside our food offer. In two, we have improved our availability and refreshed our focus on design and range in women's wear. This has resulted in better clothing performance with sales growth of 12.3% in quarter four and higher full price sales participation through the year, delivering market share gains and higher profits. And we continue to see opportunities to further strengthen what we're able to achieve in two as we focus on improving product design and availability. We now have smart charge EV charging sites established in over 75 supermarket locations with 25% of all electric vehicles entering these car parts now charging with us. And these are maturing rapidly with sites delivering month-on-month double-digit revenue growth. And this is our focus in the short term, building revenue and strengthening our offer through Nectar. Turning next to loyalty everyone loves. Now, as a reminder, within our Nectar ecosystem, we have two parts. On the left hand side, our customer facing Nectar loyalty scheme, which is all about rewarding customers with points and cash discounts. Now the unique thing about our Nectar scheme is that it's a coalition. A clear point of difference for us so customers can earn and redeem points across a wide range of brands. Customers love the benefits of our Nectar loyalty programme and in taking Nectar to the next level we are making it more and more meaningful for customers. Moving beyond simple rewards to using sophisticated tech to really step on our personalisation and customer proposition. On the right hand side is our Nectar 360 retail media business. We have a huge number of media opportunities for our suppliers to talk directly to around 25 million customers a week who visit our stores and our websites. The media services we provide deliver strong returns and give brands great insights to drive their innovation. Our data analytics helps clients and media agencies to improve the effectiveness of their digital media investments. There's no doubt that the establishment of Nectar Prices has been truly transformational for us, delivering improved value perception for both Nectar and Sainsbury's. We executed the rollout at pace, and customers can now choose from more than 9,000 Nectar Prices offers, saving an average of £13 on their big weekly shop. We've delivered a huge step on in Nectar participation as a result. And we're really learning about what customers want from a loyalty scheme. Value across the board, but also an expectation for personalization. Offers geared individually to them on the items they buy most often. And this is informing the way we go further to deliver personalised, rewarding and integrated loyalty. We've established a strong foundation, moving from a card-based loyalty scheme to a digital one, building our capabilities to be truly market-leading in what we can deliver. Our ability to target customers with tailored propositions that appeal to their propensity to engage, whether that's through instant benefits or gamified challenges, is becoming more and more advanced, and it's delivering results, with our targeted Count Up to Christmas campaign this year reaching its highest engagement levels yet. We are already leading the way in personalization, having first launched this capability in 2021. But we're going further to scale this offer and are really refining our skills, using machine learning to work towards 500 million personalized offers per week. And through investing to enhance the design of our app and website, we're now making it even easier for customers to access the offers available to them, driving a significant increase in digital engagement. We're also leveraging these skills across the coalition to deliver more engaging mechanics with our partners, really showcasing the best value across the board. The strength of our loyalty scheme is the fuel for our Nectar360 business, our fully integrated loyalty insights and media services agency, where we now have over 900 clients and media agencies partnering with us. Our next level plan in Nectar360 is anchored on three key growth initiatives, all of which have made strong progress in year one. We're growing the Nectar Coalition with exciting new partnerships announced with Marriott Bonvoy, Seven Trent Water and Smart Charge, and with further new partnerships in discussion for the year ahead. We're leading on data and insights with our Sainsbury's Insights platform delivering 10% growth year-on-year and the Argus equivalent of this platform scaling rapidly. And we're really delivering our digital retail media offering, investing in our platforms and services to drive strong returns for advertisers. This is all being delivered with continuing strong customer satisfaction scores across the board. and we see more scope for growth in the years ahead. Having seen the benefits of the first phase of building a connected digital screen network across our stores, we're accelerating our plans to invest in this at scale, with an ambition to reach more than 2,500 screens, delivering a cash payback of less than two years. And we're developing innovative proprietary technology which will connect our audiences, media and measurement services and should be a real launch pad for growth as we look ahead. We're already ahead of our plan to deliver £100 million of incremental profit contribution from Nectar360, having delivered almost 40% of this in year one of the plan, underpinning our confidence in the continued strength of Nectar360 and its contribution to our profit delivery. Our priorities for Argos are super clear and haven't changed. We're focused on increasing the frequency of customer visits and average spend. More Argos, more often. In a tough year, we've had some significant headwinds. We've made some progress with a sharpened training plan and better momentum towards the end of the year. We've previously talked about some of the headwinds that impacted sales and profit over the course of the year, with a slow start to the summer, a subdued customer, and significant discounting over the peak period impacting sales and margins. But our biggest challenge entering the year was online traffic. This was a key focus, and as you can see, we've turned the trend here, back in healthy positive territory in the fourth quarter. This has continued into the start of the new financial year. Volumes have recovered alongside this. This reflects strong work on our digital proposition in particular. We're making some headway on basket spend, showing up more strongly on key brands at the right time, with stronger trade partnerships and driving more product attachment. We're also continuing to expand our ranges through supplier direct fulfillment. We'll be adding another 10,000 products in the year ahead. And we're focusing our own brand ranges on a tighter but stronger number of core brands. And we're bringing sharper value to customers through focused value campaigns such as our Big Red events. We've now completed the bulk of our standalone Argos store closures and the impact on sales of closures will be significantly lower year on year. Our focus is now on refining and resetting the store operating model and the store network, right-sizing some standalone stores and investing in others to improve brand standards and convenience. After a period of significant portfolio change, we think there's a lot of opportunity here as we bed down the store estate. So in summary, some encouraging early signs of trading improvement, plenty of activity underway to further improve the customer proposition, and still some significant efficiency opportunity ahead of us. We've built excellent momentum in our cost savings programme over the last year. I spoke earlier about the contribution of cost savings in delivering the retail profit growth we've just reported, but we're also increasingly confident about the momentum of the programme over the next two years. This isn't just about finding new ways to reduce costs. This is about the long-term capital investments we're making in technology and infrastructure that deliver structural and sustained cost reduction and grow competitive advantage against those who are not in a position to invest in the same way. This is not a capability that's built overnight. We delivered around £350 million of savings in the last year and we're well on track to deliver £1 billion of savings over the three years to March 27. We're well underway with the re-platforming of our general merchandise logistics network, centralising stock in fewer locations, improving service to stores, bringing more automation and lowering cost. This will deliver savings of around £70 million when the programme is complete. Investing to offset a known challenge for the industry, we are using video analytics technology to reduce shrink at self-scanning locations. And we will make further steps forward with SmartShop, with pay on handset trials reducing friction for customers and increasing digitization of the customer journey. Now SmartShop has been a key part of the transformation of the front end of our stores. We've invested in the tech and the customer experience behind SmartShop and self-checkouts, and over the course of over five years, we have nearly doubled the amount of transactions going through self-checkouts or SmartShop to nearly 75%, whilst maintaining customer service metrics ahead of major competitors. Over the last year alone, this has improved the volume per labour hour by 9%. This has enabled us to continue to invest in significant colleague pay increases while keeping our labour cost to sales ratio low. So let me finish with this slide. Over the last four years, we've been transforming every part of this business. As a result, we're operationally stronger and more competitive, and we are now consistently delivering for our customers. The investments we are making in our stores, in our people and in our technology and loyalty platforms are driving efficiency and are supporting our plans for growth. As we look to the year ahead, we are in a very strong competitive position and we are committed above all else to sustaining this. We expect to continue to outperform the market, supporting the profit and cash flow outlook we have shared with you today. Because putting good food at the heart of all we do is helping us to go further and faster than ever before. As we take Sainsbury's to the next level. Thank you for your time. Bernard and I will now take your questions.