Tesco PLC

Good morning everyone and welcome to our preliminary results presentation. I'm joined in Welland by our CFO, Imran Nawaz, and we're delighted to update you on our performance for the year. I'm really pleased to announce another strong set of results for Tesco, which reflect our efforts to grow and innovate, ensuring we provide the best value for money, quality and service for our customers. Our passion for people and product continues to be a winning formula, with all drivers of customer satisfaction and market share growing strongly. We're seeing signs of improving consumer sentiment, but we know that cost of living pressures are still a challenge for many. We're committed to doing everything we can to drive down food bills without ever compromising on quality. We've continued to invest in our customers, supporting our position as the cheapest full line grocer. We're investing in our people with a record pay increase and new wellbeing benefits, as well as an addition two and a half million colleague hours in our large stores and around a thousand new store positions by the end of the financial year. We've also invested in the future growth of the business, opening new stores, refreshing existing ones, reducing costs and developing solutions to improve productivity. We've now established a firm track record of delivery, giving us the confidence to continue driving value for all our stakeholders. Before I come on to talk about performance for the year, I wanted to say a few words about the recently announced sale of our banking operations and future partnership with Barclays. We're really delighted to be combining the scale and reach of the Tesco brand with the Barclays expertise in financial services. The exclusive partnership will allow us to continue providing our customers with Tesco branded banking products and services. The sale of our banking operations and credit cards, savings and personal loans will simplify our business and significantly reduce our financial liabilities. We are retaining our insurance, travel money, ATM and gift cards businesses. These are all capital light, profitable, and they strongly complement our existing offer for customers. Barclays will deliver banking services to customers under the Tesco Bank brand, combining its own expertise in banking with the benefits enjoyed by millions of Tesco customers, including Club Card points and Club Card prices. By working with one of the UK's leading banks, we will be able to offer our customers new and innovative services. which will continue to benefit from Tesco Clubcard's unique insight and digital capabilities. Looking forward, our aim is to be the best provider of financial services in the UK, unlocking greater value for customers and for our shareholders. Turning now to our performance for the year. The work we've done to drive value for money has been the basis for our strong results. Group sales were up 7.4%, supported by share growth and a return to positive volumes during the second half of the year. We've also made strong progress in Save to Invest, which has now delivered £1.2 billion of savings, exceeding our original target. As a result, we've seen strong profit growth in cash generation, which was ahead of expectations. The strength and sustainability of our financial performance is enabling us to make the crucial investments we need to stay competitive for our customers. Customer satisfaction is key to understanding how customers are responding to our offer. The latest YouGov data shows that the perception of the Tesco brand has grown year over year, well ahead of the rest of the market. And that is consistent across all six categories, including value, quality and overall satisfaction. Market share is another key metric for us, with our objective to grow or at least maintain our core UK position. And it's pleasing to see that customers are choosing to shop more at Tesco with the latest Kantar data showing that we're growing both value and volume share ahead of the market. As you can see, this has been supported by 12 consecutive periods of switching gains, which include gains from premium retailers. Although headline inflation has come down, we are well aware of the continued challenges that many customers are facing. we remain committed to investing in value, ensuring that our customers are spending less wherever they can. Our powerful combination of Aldi PriceMatch, Low everyday prices and club card prices mean that customers get the best value in the market for their everyday essentials. To help customers find products and recipes which feed their families for less, we launched our True Value campaign, which highlights the value and quality we offer on simple, everyday ingredients such as porridge oats, chicken breasts and fresh strawberries. In addition, we ran a double Club Card points promotion in January and February, with over 10 billion points issued across the course of the event, allowing us to increase our support for customers after Christmas. Quality and innovation are central to our offer, ensuring that in addition to great prices, we are providing the value for money that our customers have come to expect. During the year, we launched or reformulated more than three and a half thousand products, from fresh fish to pasta and our finest steak offering. We've significantly enhanced many of our lines, including the summer cook at home ranges, Christmas party food and our vegetarian plant chef ready meals. But our focus on quality is not just confined to food. We're innovating and introducing new lines throughout the store. In women's wear, for example, we've launched a new F&F Activewear collection, curated by Kate Ferdinand, which covers everything from true sportswear to a versatile at-leisure range. This contributed to sales growth in women's wear of around 4%. Our performance is supporting investment in future growth, and we're focusing our resources on high returning projects that drive efficiency and greater productivity. We continued with our store expansion and improvement program, opening 113 new stores. This included seven super stores and 60 express stores in the UK, with 389 stores refreshed across the estate. we're continually looking for new and improved ways to serve customers better, recently introducing a new AI-based tool to improve our retail proposition. This will enable more bespoke product ranging by store location and demographic, meaning we increasingly stock the products that customers want to buy in the stores they want to buy them. We're also now using data-driven software to drive more efficient transport scheduling and stock assembly processes in our supply chain. We expect AI-driven solutions such as these to become a growing part of how we do business going forward, supporting our colleagues to focus on the most value-added parts of their roles. The strength of our performance would not be possible without the dedication and hard work of our teams, who are committed to serving our customers every day. We supported our UK store colleagues with our largest ever investment in pay. Over the past two years, this is now over 800 million pounds. including a 26% increase in hourly pay and a thank you payment for a great group performance. We have also enhanced our wellbeing offer, providing UK colleagues and their families with access to online GP appointments, an expanded employee assistance programme and greater support around maternity, paternity and kinship leave. Our commitment to customers extends beyond our stores and into our communities. Working with our partners, we've now donated over 200 million meals in the UK and we're now in the 10th year of redistributing surplus food in the Republic of Ireland. Our Stronger Starts grant program has now provided support around health, nutrition and physical activity to over 4,000 projects. In February, we expanded Stronger Starts with an apprenticeship scheme to help young people from the most deprived areas achieve a stronger start in life. Supporting customers' health is also a priority for us. We've raised almost £30 million to date for our health charity partnership. and have also now trained over 1,500 pharmacy colleagues to advise customers with diabetes, cancer and heart conditions. Our relationship with suppliers is a critical part of our success, and we've continued to work with them on a wide range of initiatives, including £75 million of additional support for suppliers in key agricultural sectors. This week also sees the launch of a new Best of British section in our website, bringing together over 500 great quality products, making it easier for customers to support British suppliers. We've had great success with our innovation-led accelerator programme, with 27 suppliers now enrolled, including Holy Moly Dips, Grind Coffee and The Gym Kitchen. Customers have responded well to the new products that this program has produced, and by building trusted partnerships, we're helping new brands to gain traction in the market. Supplier satisfaction is now at record levels, and we're delighted to have been ranked first in the Advantage Survey for the eighth consecutive year. We're taking strong action on climate change. as we work towards our objective of achieving net zero in our own operations by 2035. We've made further progress in reducing Scope 1 and 2 emissions with a 61% reduction against our baseline, which is ahead of target. Additionally, we've now also set fully validated science-based targets across the full value chain, which includes Scope 3 emissions. We are also supporting our customers' health as part of our Better Baskets campaign with healthy products now accounting for 63% of sales volume in the UK and the Republic of Ireland, which is well on track to achieving our target of 65% by 2025. It's been a fantastic year for all stakeholders in Tesco. I'll now hand over to Imran to take you through our financial performance.

Thank you, Ken, and good morning, everyone. I should mention upfront that the performance of our banking operations, which includes credit cards, loans and savings, has been classified as discontinued following the announcement of our planned sale to Barclays. As such, the majority of my review will be on a continuing operations basis. I am delighted with the strength of our performance this year. We delivered another strong sales performance across the group and our retail adjusted operating profits grew by nearly 11%. We generated 2.1 billion of retail free cash flow with 1.5 billion returned to shareholders in the year in the form of dividend payments and our ongoing share buyback program. We also further reduced our net debt by 0.7 billion. Our headline earnings per share was strong at 23.41 pence and we have proposed a final dividend of 8.25 pence per ordinary share, taking the full year dividend to 12.10 pence per share. I am particularly pleased that we have delivered the strong financial performance whilst further improving our competitiveness, investing in our colleagues and maintaining strong relationships with our supplier partners. we are building a track record of delivery and one that seeks to benefit all of our stakeholders. Moving now to a more detailed view of performance. Our total retail sales for the year were 60.7 billion. Our UK and Ireland segment delivered 7.6% sales growth, while sales growth of 8.8% in the first half moderated to 6.4% in the second half, which reflects the impact of easing inflation, partially offset by an improvement in volumes. In Central Europe, our sales were broadly flat year on year. The trading environment continues to be challenging, but we are seeing encouraging volume trends in response to our additional value investments. The Tesco Bank revenue shown here relates to the retained business in insurance as well as money services, with the growth primarily reflecting a strong performance in insurance with high level of renewals and new customer acquisitions. Over the next few slides, I will cover the performance of each of our segments in more detail, starting with sales before moving on to profit. In the UK, we delivered like-for-like sales growth of 7.7%, Our food sales were really strong at 9.3% and we saw consistent volume growth across the second half as customers responded to our investments in price and our focus on great quality across the breadth of our range. We were really pleased with the performance of our finest range with sales growing close to 16% including volume growth of 9%. Home and clothing sales declined by 3.4%. This was largely driven by the impact of strategic ranging decisions, including exiting low returning categories such as large electricals. Excluding these impacts, our sales were broadly flat. A strong performance across all formats and channels was supported by market leading availability. Large store sales grew by 8.2%, driven by our investments across key seasonal events and in putting more colleagues on the shop floor this year. As a result, we saw a broad improvement in customer satisfaction measures, as well as strong market share gains. Our overall convenience store sales grew by 4.5%, including a strong performance in our city and town centre express stores, which grew by 6% in the year. Moving now to our online performance. Our sales grew by 10.4%, driven by a 5.3% increase in order numbers, which are now at 1.2 million per week, as well as further improvements in availability. Tesco Whoosh contributed around 2 percentage points to overall online growth and is now available in over 1,400 of our stores and to two-thirds of the UK customers, with over 70% of orders delivered within 30 minutes. Our online sales participation remained stable at around 13% of UK sales. In Ireland, our total sales grew by 8.5%, including like-for-like sales growth of 6.8% and a 1.7% contribution from new stores. which includes the full year impact of the Joyce's stores we acquired in June 22, as well as five new stores in the year, including one new Superstore and four new Express stores. Our food sales grew by 9.1%, with fresh food sales, a particular highlight, up 10.6%, driven by our extensive refresh program, along with our ongoing investments in our value proposition. We lowered the price of over 800 products in the year by an average of 12%, contributing to a steady decline in inflation. Booker had another very solid year with sales and volume growth across both core catering and retail divisions. Overall, total Booker like-for-like sales grew by 5.4% and growth was even stronger excluding tobacco at 8.2%. Retail sales excluding tobacco grew by 11%. We delivered record availability and expanded the number of lines in our entry ranges in response to strong customer demand, leading to an overall increase in customer satisfaction in the year. Our catering sales grew by 10.2%, driven by a particularly strong performance in our own label ranges. We continue to offer great value to all of our hospitality customers, including our largest ever price lock on over 700 products through the Christmas period. We opened a new central retail hub in the year, repurposing an existing freehold site in Ferrum. This has allowed us to offer retail customers access to an even broader range whilst unlocking additional catering capacity within our branches. This is a really good example of a high returning capital light solution that allows us to optimize our existing asset base. Best Foods logistics sales were broadly flat, including a decline of 5.4% in the second half of the year. This was largely driven by our actions to exit unprofitable contracts. In Central Europe, sales were broadly flat year on year. Customers in the region have experienced high levels of sustained inflation, resulting in a challenging trading environment. We doubled down on value investments for customers in the second half and our volume trajectory did improve. Food sales grew by 1.1% as customers responded well to our low price guarantee commitment. Non-food sales account for around 13% of total sales in Central Europe and declined by 4.8%, reflecting an overall reduction in discretionary spend across the region. We launched a new basics range in clothing, offering customers great quality at an even more attractive price point. Following strong customer demand, we've now rolled this out to all of our large stores. I will now move on to our retail profit performance. We delivered 2.76 billion of retail adjusted operating profit, which is 273 million ahead of last year, and in line with the upgraded guidance we shared in January. Our profit growth was driven by a very strong performance in our UK and Ireland segment, partially upset by a decline in Central Europe, which reflects the challenging trading environment I mentioned earlier. Our retail operating margin was 4.1%, which is up 25 basis points as another very strong contribution from Safe2Invest offset cost headwinds as well as our customer investments. I will now describe the performance of each segment, starting first with the UK and Ireland. Our adjusted operating profit grew by 363 million year on year to 2.67 billion. Our volumes were ahead of our expectations as customers responded positively to the continued investments in our customer proposition across value, quality and service. In response to significant inflationary pressures across our cost base, we accelerated the delivery of our safe-to-invest plans with key initiatives including space realignment in our stores as well as the optimization of management structures. Booker delivered another very strong contribution from both its core retail and catering divisions. Our UK and ROI operating margin was 4.2%, bringing us back to pre-pandemic levels. Turning now to Central Europe, where the impact of the challenging market conditions we talked about in the first half persisted. The customer backdrop has been challenging as customers have faced very high levels of inflation over the past two years. In addition, we continue to face regulatory actions in Hungary, including incremental retail taxes, as well as mandatory pricing and promotions on key grocery lines. This has impeded our ability to recover rising input and operating costs, although they were partially upset by Safe2Invest. In the current year, we do expect a partial recovery in Central European profitability. This slide provides further detail on the components of our statutory profit performance, which increased by 1.1 billion year-on-year. The primary driver of this increase was the 982 million non-cash impairment charge last year, which was driven by a significant increase in discount rates. This compares to a 28 million impairment release this year. Our net finance costs were broadly flat year-on-year as interest paid on borrowings was offset by higher interest earned on our cash deposits. The group tax charge increased by 301 million to 525 million. This increase was primarily driven by the increase in UK corporation tax rates from 19% to 25%, effective April 2023. in addition to the higher retail profits as well as lower tax credits as a result of last year's net impairment charge that I just described. We expect an adjusted effective tax rate of around 27% in the current year, reflecting a full 12 months of the increase in the UK Cooperation tax rate. Moving now to our retail free cash flow, we delivered another very strong performance, generating 2.1 billion, which is ahead of the upgraded guidance I shared in January. Before working capital, you will see that we generated 4.4 billion of retail cash from operations. The working capital inflow of 418 million was driven by our strong sales performance in the year, as well as the continued impact of rising cost prices, which increases our trade balances. Cash capex was 1.3 billion, in line with our guidance, as we continued to invest in high returning projects, including Safe2Invest and our digital platforms. Our cash tax paid was 214 million, up 107 million, primarily driven by the increase in UK tax rates as well as higher retail profits. The key difference between cash tax and the P&L charge is driven by the 2.5 billion one-off pension contribution made in 2021. The associated tax deduction was worth around 150 million per annum, with the relief required to be spread across four years. 23-24 was the final year we will benefit from this relief. Finally, in the dividends received line, you will see a 59 million lower inflow year on year, which is due to the removal of the annual Tesco Bank dividend. Turning now to the impact of the planned sale of our banking operations. The deal allows us to remove 7.7 billion of capital intensive assets and 7.1 billion of financial liabilities from our balance sheet. In return, we expect to generate proceeds of 600 million on completion from Barclays, as well as a further 100 million of cash after the settlement of certain regulatory capital amounts and transaction costs, in addition to the annual partnership income from Barclays. We've set out the accounting impacts of the proposed sale in this morning's release. And as you can see, we have classified the performance of the banking operations as discontinued. In doing so, we have recognized a remeasurement loss of 628 million post-tax, which does include a 211 million write-off of goodwill. We expect the deal to complete later this calendar year. Following completion, our actions will have generated around 1 billion of cash, including the 250 million special dividend already paid by the bank in August 2023. We plan to return the majority of this cash to shareholders by means of incremental share buybacks. We will retain all other existing Tesco Bank activities, including insurance, ATMs, gift cards and travel money, all of which are very complementary to our core offer, profitable and capital light. Adjusted operating profit from continuing operations was 69 million. As we set out in the release, alongside a strong performance in insurance, gift cards and travel money, this benefits also from a couple of one-off factors, one relating to the transaction and one to our pet insurance business. A more representative view of underlying profitability is between 40 and 50 million. Total Tesco Bank adjusted operating profit, including the discontinued operations for the year, was 148 million, which is towards the top end of the guidance range we set up. On an ongoing basis, we expect the profit contribution of between 80 to 100 million from the retained business, including the partnership income from Barclays. Let's now turn to the balance sheet, which strengthened further this year. Overall net debt reduced by 0.7 billion, driven by another strong retail cash flow performance, which more than offset the total dividends paid of 778 million, as well as the 750 million of share buybacks. Our net debt to EBITDA ratio improved significantly and now sits at 2.2 times, down from 2.6 times, driven by higher retail EBITDA as well as a reduction in net debt before lease liabilities, which included the benefit of the special dividend from Tesco Bank. Our fixed charge cover also improved year on year, from 3.5 times to now 3.7 times, reflecting an increase in retail EBITDA. We continue to take a disciplined approach to capital investments by prioritizing projects which deliver growth, drive efficiencies and develop our digital platforms. As a result, return on capital employed improved further in the year and continues to be significantly ahead of our weighted average cost of capital. In the year, we expanded our reach by opening a further 113 new stores across the group, and we stepped up the investment in our core assets by refreshing 389 stores. Tesco Woosh and our new Booker retail hub in Farram are great examples of maximizing the value of our existing assets in a capital light way, whilst enhancing the customer offer and creating capacity for future growth. Earlier this year, we started the construction of a new fresh distribution center in Aylesford, which incorporates higher levels of automation, and we continue to deploy AI-based solutions across the business to further improve productivity. We expect a total capital investment in the current year of around 1.4 billion. Before I wrap up, I want to touch on our outlook for the current year. We expect to deliver retail adjusted operating profit of at least 2.8 billion in 2024-2025, in addition to an adjusted operating profit contribution from the retained Tesco Bank business of around 80 million. We expect to generate retail free cash flow within our guidance range of 1.4 to 1.8 billion, despite the impact of a lower contribution from working capital and higher cash tax paid. I am very pleased to confirm we will buy back a total of 1 billion worth of shares over the next 12 months, including 250 million funded by the special dividend paid by Tesco Bank. We will provide a further update on our plans to return the proceeds from the sale of our banking operations to Barclays when the transaction completes. To summarize, we are building a consistent track record of delivery against our performance framework that we set out in October 2021. This continues to guide our actions to create sustainable long-term value for every Tesco stakeholder. We have delivered another strong sales and profit performance, supported by the accelerated delivery of our Safe to Invest program, and we have generated 2.1 billion of retail free cash flow. Our progressive dividend policy has been reflected this year in our proposed full-year dividend of 12.10 pence per share, growing in line with profits. We have returned 1.8 billion to shareholders since October 2021 through our ongoing capital return program and have committed to buying back a further 1 billion of shares over the next 12 months to April 2025. Thank you very much for your time and I will now hand back to Ken.

Thank you Imran. I'm now going to take you through some of the key highlights from the progress we've made against our strategic priorities. Starting with magnetic value, the combination of Aldi price match, low everyday prices and club card prices allows us to deliver compelling value to our customers. It enables them to save hundreds of pounds a year on their favourite products, giving them fewer reasons to shop elsewhere in their search for lower grocery bills. As inflation has begun to ease, we have led the way in passing on savings, cutting prices on over 4,000 products by an average of 12%. During the year, we had more than 600 lines on Aldi Price Match. We locked low everyday prices on more than 1,000 products and had over 8,000 products on Club Car prices each week. As a result, we are the most competitive we have ever been. And as you can see here, we are the cheapest full-line grocer, a position we've held since November 2022. Our price position has strengthened again this year, including further improvements against the limited range discounters. Being the most competitive is not just about being the cheapest, of course. It's also about ensuring high quality products which are both dependable and innovative. I mentioned earlier that we've improved the quality of around 2,700 existing products. while also introducing over a thousand new ones, which included a range of slow cooked meals, new single origin chocolate and our finest signature veg collection. Our commitment to continuous innovation has seen us win around 260 awards during the year. These included winning own label range of the year at the International Wine Awards and multiple accolades at the Taste of Ireland Awards. While the awards are great, it's the direct response from our customers which is the most pleasing, with about 100 base points increase in quality perception and 19 consecutive periods of switching gains from premium retailers. There is perhaps no better example of our commitment to quality than our finest range, which has just reached its 25th anniversary. When it was launched in 1998, Finest was the first premium grocery-owned brand in the UK, offering our customers the very best food in the market at accessible prices. It has grown significantly since then, and this year reached a major milestone as we exceeded £2 billion of sales. Finest has become one of the biggest brands in grocery and continues to be incredibly popular, with over 23 million customers buying a Finest product during the year, and more than one in four baskets including Finest over the festive period. We continue to focus on building out our digital platform, which has driven the scale and reach of the Club Card. This has helped to make shopping easier and cheaper for customers. We are seeing record levels of engagement with over 16 million app users across the group, which is up 13%, and Clubcard sales penetration growing in all of our markets, now reaching 82% in the UK, 85% in Ireland, and 87% in Central Europe. Significantly, we are also now seeing digital club card scans exceed the use of physical cards as the evolution towards digital continues. The club card rewards and partner schemes offer customers unequal benefits amongst our competitors, with the depth and breadth of club card data allowing us to offer a more personalized and relevant shopping experience. We issued close to 300 million personalized coupons to customers during the year, providing them with even better value, money off their shop, extra club card points and other rewards. We've seen a significant uplift in the number of coupons redeemed by customers and a growing sales return with a sales to cost ratio now consistently over 10 times. We're exploring new ways to make Clubcard relevant and exciting to users, giving them a fun and unique insight into their shopping habits, with 17 million customers receiving Clubcard Unpacked information this year. By using our Clubcard insights and leveraging Dunhumbie's expertise and data, we are creating a sophisticated digital platform for the benefit of our customers and supplier partners. We recently created a new retail media team who are building partnerships with advertising agencies and consumer brands to increase retail media opportunities throughout the business. These include more sponsored media placement, connected TV and social media, as well as store activations and connected displays, enabling us to reach customers at home, on the move and in store. Our scale means that our media reach rivals some of the biggest online platforms, creating more opportunities for brands to connect with their customers in an exciting and engaging way. The market for retail media is evolving at pace, and we're pleased with how customers and suppliers have already responded. This year, we delivered more than 17,000 campaigns across all channels with around 550 supplier partners, including some of the world's largest consumer brands. We've had another strong year in online, with availability now over 98% and online perfect orders growing by 20 percentage points. We've grown the number of DeliverySaver subscribers, with over 700,000 customers now benefiting from a choice of delivery plan to suit the way they shop, including early access to Christmas and Easter slots. Our rapid delivery service, Woosh, has also been a particular highlight and is now available in over 1,400 stores. Woosh now reaches over two thirds of the UK population and enables customers to order groceries from a curated list of around 3,000 products with 74% of orders now delivered in under 30 minutes. Looking forward, we will develop Woosh further, aiming to cover around three quarters of the UK population with planned range and proposition enhancements to serve customers how and when they choose. We're continuing to expand our store footprint and have invested in the breadth of our customer offer through the refresh of our larger stores and by partnering with a number of specialist retailers. In October, we relaunched the Paper Chase brand in around 120 stores, offering customers an even wider range of cards, gifting and stationery, making it easy to pick up school and office supplies or grab a last minute greeting card as part of the weekly shop. During the year, we also extended our partnership with leading toy retailer, The Entertainer. enabling us to offer customers its fantastic toy ranges in over 750 of our larger stores in time for Christmas. We now have over 50 retail partners across our estate. This includes our national partnerships with the likes of Costa Coffee, which is in most of our express stores, and our 340 Yost sushi counters, which are benefiting from the increased popularity of sushi as a healthier alternative. We also have partnerships with local brands, such as Rose, who offer authentic Cornish products to customers in 30 of our stores in the Southwest, and Kelly Deli, a street food counter specializing in freshly prepared hot and cold Asian and Mexican food. We are constantly exploring opportunities to work with other retailers with multiple trials underway. We've continued to develop our convenience network, adding 60 new express stores during the year. We've also updated our range, replacing 50 key everyday products from pasta to peanut butter with more keenly priced alternatives, many of which are our own brand. These products are on average over 40% cheaper than the products they replaced. One Stop has also been performing well, and we opened 27 new stores during the year. As part of our commitment to make One Stop the best store for customers in every neighbourhood, we are now offering online delivery of everyday essentials in almost 800 locations. In the Republic of Ireland, we spent close to £70 million this year on eight new store openings and an extensive store refit and refurbishment programme, ensuring we provide the very best shopping experience for our Irish customers, for both convenience and value. Booker is growing in strategic importance for the Group and had another great year, Like for Like sales grew 5.4%, driven by ex-tobacco growth of over 10% in both retail and catering, with availability of just over 97%. We've continued to expand the retail network, adding 354 new retail partners across the Londis, Budgins and Premier brands, which contributed to growing volumes. Retail customer satisfaction also grew significantly and was up by around six percentage points to 81.7%. Customer satisfaction was also positive in catering, increasing by a little over two percentage points to 87.1%. And we've seen particularly strong sales growth in Chef's Larder and Chef's Essentials. The strength of Booker's performance has been reflected in numerous awards this year, including the Grocer Gold Award for Franchise Retailer of the Year and the Quality Awards Food Service Operator of the Year. The catering business has really strong foundations with around 400,000 customers nationwide, serviced by 190 branches, which generated two and a half billion pounds of sales during the year. It's a profitable part of the business with a significant opportunity to grow. We're focused on redesigning our distribution network following the conversion of our Fairham site, which we see as the first part of a multi-year program to continue expanding more dedicated catering capacity. In addition, we're investing in enhanced stock and ordering systems, improved buying and distribution processes, and further expansion of our ranges, particularly in fresh food. Our Save to Invest program has provided significant opportunities for us to simplify operations and increase productivity. We've exceeded our initial savings target with £640 million of savings in the year. contributing to cumulative savings of £1.2 billion over the past two years. We have delivered across all areas of the programme, which has included a realignment of store space, new management structures in large stores, new technology to drive productivity, and improved stock processes across our depot network. Looking forward, safe to invest remains a key priority, and we expect to deliver another 500 million pounds of savings during the year, which will support continued investment in the business. In summary, we have delivered a strong performance on all fronts. Our consistent focus on value and quality is reflected in the momentum we're seeing in customer perception and market share. Allied with significant and continuing cost savings, this is driving growth in profits and strong cash flows. We're encouraged by signs of improving consumer sentiment, which combined with consistent business momentum means that we're excited about the opportunities ahead. Thank you very much for your time, and we'd now be very happy to take any questions you have.