Hilton Food Group Plc

Good morning, everybody. Welcome to Hilton Foods full year results 2023. I'm Steve Morales, the group's chief executive, and I'm presenting today with our chief financial officer, Matt Osborne. We'll share our full year performance this morning, review the progress that we're making in the business versus our strategic priorities and lay out the strength of the platform that we have in place to go after future growth. This has been a good financial performance for the year achieved against a backdrop that has remained volatile. As a group, we've seen a pleasing uptick in group revenues and volumes. In addition, and particularly encouraging, has been the growth in profits, which is largely down to delivering our seafood turnaround ahead of our plan. We've also made progress in further strengthening our balance sheet with notable improvements in our free cash flow, which positions the business well to support future growth opportunities. I'm also pleased to announce the final dividend of 32 pence an increase of 7.7% on the prior year and in line with our progressive dividend policy. Our financial outturn has been driven by the strong operational performance across all the businesses. Our core meat category has performed well in both retail and food service. In APAC, we've seen another strong year of revenue and volume growth, whilst in the UK and Europe, we've shown good resilience given the economic backdrop. Particular credit must go to everyone within our seafood business who have delivered the turnaround ahead of plan and returned the business to full year operating profit. This has created a sustainable business foundation to support future growth. We've responded to market trends in vegan and vegetarian and taken decisive action in the second half of the year to right-size our operational facilities. Meanwhile, easier meals continue to perform strongly, delivering our customers' needs for convenient pre-prepared products. We've continued to focus on our core and grow our multi-category offer with existing customers, whilst targeting new retail relationships, a particular highlight last year being our new long-term partnership deal with Walmart in Canada. Meanwhile, sustainability remains at the heart of the business and our commercial offer, and only last week we had our more ambitious science-based targets approved. Now, this is the slide that I first showed at the half year, and I wanted to take this opportunity to once again reiterate why I believe Hilton Foods has a clear and competitive advantage. These three pillars illustrate that we're a multi-category provider of proteins, an international player of scale, and a business with a market-leading technology offer through green chain solutions. When combined, this brings us competitive advantage in optimizing cost, quality, service, and innovation. Hilton is a business built on a passion for food. As we stand here today, we're continually looking to food skills and innovation, allowing us to enhance our offer by leveraging our world-class insights across all products and all categories. From an international point of view, we've grown from operating in one country with one retail relationship to a business that has strong customer partnerships now around the world. Over the last four years, we have more than doubled group revenues from under 2 billion to 4 billion, driven by our international and our category expansion. Today, 75% of revenues are now outside the UK. And to our industry-leading technology, a clear differentiator, we provide the most efficient supply chain to our partners through scalable robotics and cloud-based infrastructure, allowing retailers to manage their full end-to-end supply chain from specification to product quality and cost of production mapping. We know there are significant opportunities for us to go after. The key for us is to grow incrementally with the partners that we have today, gaining a greater share of their business. But more than this, there is of course potential for a further step change in growth by agreeing more partnerships in new geographies into the future. The key priorities behind me have guided the business to success throughout 2023. Personally speaking, I'd like to thank all of our teams across all our markets for their continued hard work, their contribution and commitment to delivering progress in all these areas. These strategic priorities will continue to be our focus throughout 2024. I'm now going to hand you over to Matt for a deeper dive into the numbers. Matt.

Thanks, Steve, and good morning, everyone. As Steve's highlighted, we've reported volume growth of 0.7%, with revenue growing by 3.7% to just under £4 billion for the year. Operating profit increased by 33.5% to £95 million, an overall increase of £24 million, with the turnaround of our seafood business driving a significant amount of this, though across all of our regions we've seen operating profit growth. Reflecting these improvements, Our operating profit margin increased from 1.8% in 2022 to 2.4% in 2023. And our conversion margin, which is adjusted to exclude the value of raw materials from revenue, increased from 10.6% to 12.7% in 2023. Profit before tax, after allowing for the impact of increasing interest costs, was £66 million, up 19% on the previous year. With adjusted EPS of 52.8 pence per share, up 17%. And as Steve said, our proposed full year dividend of 32 pence is 7.7% up on last year with dividend cover of 1.7 times. Looking at our balance sheet and our overall capex spend was 56.8 million pounds, marginally up on 2022, while our robust trading performance and delivery of working capital improvements resulted in strong operating cash flows and therefore a significant reduction in our overall net debt position, which ended the year at 140 million pounds with leverage at one times net debt to EBITDA. Revenue grew by 3.7% to £3.99 billion, with constant currency revenue growth of 5.7%. The overall strengthening of sterling continues to present a headwind, both in terms of revenue and profitability, and we've included the average FX rates for 23 and current rates for 24 within a guidance slide in the appendix for your reference. As I said earlier, total volume increased by 0.7%, with increasing prices accounting for a further 4.4% of our revenue growth. whilst changes in mix, largely from the benefits of a full year of ownership of the Fopham business, contributed 0.7%. On a like-for-like basis, so excluding the benefits of acquisitions and the impacts of changes in FX rates, our volume grew by 0.5%, with revenue growth of 4.8%. Looking in more detail at our regional performance, the volume performance in both Europe and the UK and Ireland has remained robust in the face of continuing inflationary pressures in the market. Volume in the UK and Ireland fell by 3%, with revenue up 3.5% on a constant currency basis. In Europe, volumes were down 2%, with revenue up 6.8%, with Europe benefiting from the full year of trading for FOPN compared to nine months in 2022. During the year, we responded quickly to the structural changes in the vegan and vegetarian market and have consolidated our Dalco business into a single site. However, we did see reduced volume and revenue in the segment, albeit this accounts for a relatively small part of the business overall. Volumes in our APAC business continue to be strong. A 7.2% increase, a reflection of more benign food inflation, with more moderate growth expected in 2024, with revenue in APAC up 1.4% at actual effect rates, but up 6.7% on a constant currency basis. Overall, group operating margins have increased from 1.8% in 2022 to 2.4% in 2023. The key building block for this increase was the positive impact of the successful turnaround of our UK seafood business. This has resulted in the business returning to operating profitability in the year, carrying positive momentum into 2024 to continue the recovery further. As I mentioned earlier, we've also had a full year of trading from Foppen, whose added value speciality smoked salmon products are accretive to the overall margin mix in Europe. And in APAC, where we earn an overall cents per kilo fee, the recovery of increased interest costs positively benefited our overall margin, with our more normalized central costs resulting in a partial offset. As we've discussed previously, our de-risked cost pass-through model generates low single-digit operating margins. But we also look at our margins through the lens of the value we add through the conversion costs that we directly control. And on that basis, excluding raw material costs, pass-through and revenue, our enhanced conversion margin increased from 10.6% in 2022 to 12.7% in 2023. The UK and Ireland has seen the strongest year-on-year profit progression, but across all of our regions, we have seen profit growth. Within the UK and Ireland, alongside the seafood recovery, the core red meat business and our Fairfax Meadow food service business continued to perform well. In Europe, operating profits were up 13% overall, with a full year of trading following the acquisition of Foppen, combined with strong performances in our core meat businesses in Benelux, Scandinavia, and Central Europe. This, though, is partially offset by the impact on our Dowco business of the wider challenges facing the vegan and vegetarian markets. Volume growth in our APAC region has driven strong profit growth, albeit tempered by the ongoing impact of strengthening sterling, with operating profit up 13% and constant currency growth of 19%. After allowing for increased central costs and the impact of interest rate rises, PBT for the year on a constant currency basis was up 20.3% and up 19% at actual FX rates to 66 million pounds. Our business continues to generate strong cash flows with an operating cash conversion ratio of 3.2 times for the full year. Operating cash flows have increased by £95 million compared to 2022 to £154.5 million, benefiting from strong EBITDA and working capital cash inflows. In the year, we've seen strong working capital cash inflows with the levels of inventory held in the business being optimised in all regions, with strong December trading also resulting in working capital improvements. Underlying free cash flow. after consistent levels of maintenance capital spend was 134 million, and overall free cash flow after expansionary capex was 96 million. We introduced our medium-term financial ambitions in November, and these included a sustainable cash conversion level of 1.5 times and an overall leverage target of less than two times. Our strong cash flows leave us with overall debt of 140 million, a £72 million reduction compared to the end of 2022, with net debt to EBITDA reducing from 1.8 times to one times. Our strong balance sheet, combined with undrawn bank facilities in excess of 100 million and a supportive bank group, provides us with the opportunity to invest in achieving sustainable growth in both our existing core business and through wider geographic expansion. Looking at CapEx in more detail, we've invested £58.6 million in total this year, with £38.5 million of expansion we spend to support growth in our business, and with £20 million of maintenance capital, which keeps the facilities we operate at the high standards our customers rightly expect. The majority of our investments in the year have continued to focus on our businesses in the UK and Ireland, and in Europe. In the UK, investments in automation are delivering efficiency benefits in our sites in Huntington and in Grimsby, and have played a key role in supporting the recovery of our seafood business. In Europe, we've invested 10 million pounds in our foodbark in Sweden, which commits production in quarter three, and delivers incremental growth with our partner, IKA. Our medium-term ambitions are to invest less than £50 million per year in our core business. Though looking forward to 2024, we anticipate spending ahead of this at around £60 million as we have a strong pipeline of expansionary investments in our core business that exceed our returns hurdles. The Group's ROCI improved by 3.5 percentage points to 18.3% for 2023. We've spoken before about the investments we've made and about how the investments we've made in APAC are now additive to the overall Group Rocky as the capital we've invested in those businesses matures. In 2023, we've also seen the positive impact of the turnaround of the UK seafood business, which is driven just under two thirds of the rocky improvement. And looking ahead, in the shorter term, we'll see our investment in Hilton Foods Canada dilute rocky marginally, but as we ramp up and the facility matures, we expect to see longer term sustained rocky benefits during the initial term of the agreement and beyond, with our overall rocky moving towards the 20% ambition we've set ourselves. The group is in a strong financial position with a strong balance sheet and conservative leverage that gives us both the confidence and ability to support future growth. Our approach to capital allocation gives us a framework to ensure that our investments are targeted to protect our core business and unlock sustainable growth opportunities, driving attractive shareholder returns through expansion in the core business, geographic expansion supercharges, and selective complementary M&A. Finally, we set out our medium-term financial ambitions in November, and as we've seen this morning, we've made significant progress towards each of them in the year. We remain committed to these ambitions as the guardrails for the business and firmly believe that focusing on their delivery will ensure long-term success and attractive, sustainable returns. I'll now hand you back to Steve to take you through a business update. Thank you.

Thanks, Matt. I wanted to take this opportunity to outline the prevailing market trends that we've been seeing and how we as a group have a relevant offer supporting our customers in responding to consumer needs. What sets us apart is our ability to respond to fast moving trends, deliver via our catalogue of products and then roll out at scale and pace. Through our insight and food innovation teams across the business, we work in close partnership with our customers, setting them up to win, whether that be through an increased focus on everyday affordability or greater indulgence at special occasions. Similarly, we've bolstered our customer offer in the face of consumer demands for healthier, more convenient meals, while also prioritising more sustainable choices of which packaging has been a key focus. It is a highly relevant product offer which is supporting our organic growth amongst current customers. As well as there being plenty of white space for us to go after across geographies and categories, there is also considerable opportunity to achieve incremental growth in existing markets. Demonstrated by the light blue outlines on this chart, this is what we've done over the past year. To bring a few examples of the progress to life, as Matt said, We've launched our fresh food park in partnership with our long-term standing retail partner, IKA, in Sweden, which launched in quarter three last year, and has also recently commenced supplying a similar product portfolio to our Danish business. We've launched a new range of UK ready-to-cook products in partnership with Tesco and capitalized on our bacon processing expertise in Ireland, launching with a complimentary new leading retailer, Dunn's. We've also started to engage new customer relationships in Central Europe, UK seafood, and our UK food service business, Fairfax Meadow, securing a pipeline for growth for the future. And most recently, we've expanded the portfolio of fish products that we supply to countdown stores in New Zealand, starting with shellfish. In addition, we've expanded our presence in North America and Asia through our Foppen acquisition and recent Walmart announcement. These incremental wins and gains, albeit in their early stages, give us a presence and a foothold into new categories for future development. As you can see from the pictures on this slide, we have outstanding products right away across all of our categories. driven by our passion for food and combined with our supply chain model, which puts the needs of the customer at the heart of the decision making of our local teams. And they've worked tirelessly in partnership with their customers to drive success. I'm now going to take you through each of our core product categories, the progress that we've made, and how they're underpinned by our strengthening supply chain. Meat is our heritage and where it all started. It is our core category and underpins everything that we do. We've maintained a robust performance across the geographies that we operate in. And key to this has been ensuring we have the right products available at the right price. Growth in our APAC region has remained strong throughout the year and we've continued to make progress in reducing the weight of the packaging we use and the recyclability which has underpinned the success of the rollout of our flow wrap packaging format for mince products, and we're exploring trials in the burger category to roll this out further with Albert Hein. Fairfax Meadow is our entirely complimentary UK food service business, which will be celebrating its 50th anniversary later this year. They are established and recognised leaders as catering butchers in the food service sector. Their expertise, their service and the strength of their long-term partnerships were recognised recently as Mitchell & Butler's Food Supplier of the Year, in addition to winning the Catering Butcher of the Year at the Meat Management Awards. Their excellence and expertise best place Fairfax in their sector, adding Shepard Neame, The Alchemist and The Restaurant Group as new customers in 2023. In our ambitions to be the protein partner of choice, we have further grown our poultry offer across Europe and APAC, including extending our own brand, Hackster, in Scandinavia to include chicken products. We've also extended our sortation service provision in Denmark to support our partner Co-op through their peak festive trading period and extended our responsibility for the management of Albert Heinz protein supply chain. During the year, we were pleased to return our seafood business to full year operating profits ahead of plan. We're confident that the measures that we've put in place now provide a strong platform and leave us well-placed to go after future growth. The business has simplified its operations, including a reduction in our ranges, while driving the core through more popular products, including profitable special buys. We've successfully recovered the cost inflation, whilst also winning new business in the year. And where it makes sense, bringing together the best of our fish operations in Europe with those in the UK. Our joint venture with Agito, part of Green Chain Solutions, has underpinned the cost-out plan delivering the 21 million investment program in automation. This has helped the business create a sustainable, lower cost base by reducing reliance on labor and improving the efficiency of the key processes through end-of-line automation. Through a lower sustainable cost base, including driving operational efficiency, yield optimization, waste reduction, and better buying, The business carries positive momentum into this year following a strong finish to 2023. Looking forward, we fixed the problems of 22 and we continue to focus on the improvement plans. We have a strong platform for sustainable growth and we're pushing on to the next phase. Vegan and vegetarian is a small proportion of our mix. That said, we took timely action to right-size the footprint of our facilities, consolidating two sites into one. This was completed earlier this year. The team at our Dalco site have completed a full product portfolio review and is working to unlock new co-manufacturing partnerships and opportunities that remain within our private label relationships. This business represents an additional lever to pull in the case of any upturn in consumer sentiment and we are well placed within a market that we anticipate will naturally have fewer players over time. Moving to our final food category, easier meals. This category includes food for now, ready meals, pre-prepared meal centres and highly localised convenient products. It showcases our love of food, our local insight, and our manufacturing expertise, and demonstrates our prowess in innovation, creating new solutions that better meet our customers' needs by launching new product ranges. Some of the highlights within this category include relaunching the Tesco sandwich and wrap offer in Central Europe, resulting in sales growth of 25%, driven through improving the quality of the products that we offer. We also launched healthier ready meals, enabling shoppers to meet their aspirations of healthier food in more convenient formats, which are also performing ahead of expectations. Growth in our ready-ticket ranges have also flourished with new wins in Europe, UK and Australia. In September, we announced our long-term partnership with Walmart in Canada. Back at our investor day in November, we shared a theoretical returns profile of a supercharger-style deal. Deals like this do take a long time, but they generate attractive returns over the initial agreement term and beyond. I believe that Walmart's decision to partner with Hilton in building the most highly automated, multi-category, state-of-the-art facilities is a testament to the strength of our unique offer and our expertise. This is a partnership that serves to underline the strength of our international capability. And while we remain in the early stages of onboarding, design and execution, we're confident of the future opportunities that lie ahead with this iconic retailer. We're continuing to develop our partnership with Walmart and design the product ranges for beef, pork, lamb and seafood, and explore further areas of opportunities, full production, is expected during the first half of 2027. Green Chain Solutions is a key ingredient to our competitive advantage, supporting our facilities to be highly automated and ultimately market leading, as previously illustrated in our seafood operational improvement plan. Complementing our product offer, Green Chain Solutions brings a benefit to our customers in ways others simply cannot reach. Through our assets of Agito and Connected, we're creating efficiencies and prioritizing traceability, two of the most important aspects for the modern retailer. As shared in our Investor Day, we are at the early stages of commercializing green chain solutions, but in the year just gone, the team have already landed new business wins, extending their reach into new geographies outside of the Hilton Food customer base. The Sustainable Protein Plan underpins everything that we do, and not least our sustainability commitments and progress are crucial to our commercial offer for both our customer and their customers. We continue to invest in developing our people and their expertise, and we've maintained our CDP climate rating, making improvements in both soy and forest disclosures. Since 2020, we've reduced our scope one and two emissions by 14% and made significant progress in improving our packaging, both reducing absolute weight by almost 2,000 tons and 70% of our packaging is now recyclable. We've raised the bar in each of our facilities, reducing food waste and also investing in renewable energy sources and adopting best practices in our energy management system recognized by our multi-site ISIO 50001 accreditation across 10 of our facilities last year. We recently submitted more ambitious science-based targets in line with one and a half degrees centigrade which were validated last week. As you can see behind me, our revised, more ambitious science-based targets have been validated by SBTI as part of the business's commitment to reach net zero by 2048, two years ahead of schedule. This includes accelerated targets to reduce scope one, two, and three emissions across areas including greenhouse gas emissions, energy, industrial sources, forestry, land and agriculture, and builds on Hilton Fu's continued efforts to progress its sustainable protein plan that was first set out in 2022. Turning to the outlook, it continues to be a challenging and unpredictable market. However, we are well-placed for the year ahead and continue to trade in line with expectations for the start of 2024. The business has a strong financial position and we're focused on making progress towards our medium term financial ambitions to support the business's drive for future growth. I remain confident that we're well placed and there are many opportunities for further growth through existing partnerships, highly complementary M&A or wider geographic expansion. In summary, this is a robust set of results delivered through strong operational progress across all aspects of the business. Our core categories have performed well and our seafood business is back on track and fit for future growth. The Hilton Food business model and competitive advantage deliver a real USP, optimising cost, quality, service and innovation. This sets us apart from the competition within our existing long-term customer partnerships and best places us for continued future success. Looking to the year ahead, I'd like to share my focus with you. Put simply, that's on executing the plan, ensuring our partner relationships remain strong, continuing to strengthen the balance sheet and drive sustainable growth. Thank you very much. We'll now take questions from the floor. Could I ask, when you do ask your question, that you just share your name and the institute that you represent?

Thank you. Charles Hall from Peel Hunt. Hello, Charles. Hello, Steve. Morning, Matt. Firstly, could we just talk a little bit about the volume and inflation trends? Obviously, inflation has been a big headwind over the last couple of years. How do you see inflation playing out through this year and also the volume trends in the key markets?

Well, we're setting the business up, I think, this year for volume. Generally, we expect inflation to come down, but it will vary, Charles, depending on what sector you're in. We can clearly see utilities lighter than they were. We equally will see certain commodity areas may rise in price. Currently land pricing is going in a northerly direction. But generally we see it coming back and therefore we'd expect our volumes to increase.

And specifically on the seafood side, given that was the area that caused the most problems, what are you seeing overall in seafood prices this year? And are we going to get back to actually starting to see some of that lost volume be recovered or is it going to take a bit of time for promotional activity to really work?

So I see fish inflation normalising. The Norwegian tax that was really causing some of the issues last year has settled at 25%. And, you know, I'm confident that with the business wins that the team's winning, we'll start to see volume recover in that part of the business.

And then, Matt, a lot of expansionary capex this year in the existing business. Can you just give us some highlights about what that's being spent on?

In 23 or 24? 24. Yeah, so I think, as we said, we have a number of opportunities that really deliver on the hurdles we set ourselves. If we look in the UK and Ireland, we have an opportunity to expand capacity in our facility in Ireland. We have further automation investment we can undertake in the sites in the UK. Then if we look into Europe, where primarily the majority of the investments are UK and Ireland and Europe, we see opportunities to invest in automation in a number of the facilities we have, which drive really strong returns and certainly at least hit the hurdle thresholds we've set ourselves.

And then working capital, you had a big inflow last year. Does any of that reverse? And can you just remind us sort of what you see as the sustainable medium-term working capital movements per annum?

Yeah, so we benefited at the end of 23 from... huge amount of work the teams have done on optimising inventory holding levels. We'd have talked in 2022 about higher, certainly salmon stocks to combat some of the challenges of the salmon tax that we were facing into. So a huge amount of work to really kind of focus on what is a sustainable inventory level We also benefited from strong trading towards the end of the year. Our working capital cycle is such that we have strong trading. That gives us a huge benefit. I think, will we expect to see such large positive inflows in future years? No, I don't think so. That's not what we're expecting. I would expect us to be broadly flat working capital year on year on a sustained basis. Perfect. Thanks.

Hi, thank you. Damian McNeill from Numis. Just on Walmart Canada, obviously you've indicated that full production is likely to sort of now be first half of 2027. Just wondering if you could elaborate on the discussions that you've been having with Walmart and the progress that you've been making that has sort of led to that sort of slight delay, if you want a better word.

Yeah. I think it's slipped by a couple of months, but you'd expect that on a deal of this size. You'll remember that we signed the contract back in September last year. We speak regularly. We've had multiple meetings in Canada, in the UK. hosting Walmart on a number of occasions. And those conversations have been very good, very progressive, looking at opportunities beyond the start point of this deal. And I think it's important that we explore all of that, Damian. And if that means that there's a slightly slippage in two or three months, I think that's prudent for us to do. But it's very positive. The Walmart team are super enthusiastic, both in Canada and in Bentonville, and we're really looking forward to getting started.

Okay, thank you. And then in terms of seafood, I'm just wondering, I think this year we're expecting a modest improvement in profitability in UK seafood. Are we still expecting full recovery in 2025? What gives you the conviction that that's still the case? Could you exceed historic levels of profitability in UK seafood?

Look, I think most definitely we're confident that we'll be back to pre, if you want to call it crisis levels, by the end of 25. I think with the changes that have gone in, of course we expect to go beyond that in the outer years. The competitiveness on pricing through the automation, a far smarter inventory of lines winning new business and the innovation that's flowing through that part of the business. We're confident that we'll get back to the normalised levels by the end of 2025 and we'll be able to spring on from there into 2026 and beyond.

Claire, thank you.

Clive Black from Shore Capital. Two from me. Do you think you've got scope to materially move your conversion margin in the medium term, and what would be the drivers of that? And secondly, am I right in saying that you're a little bit more on the front foot in terms of strategic growth potential in your concluding remarks, Steve? And is that consistent with CapEx nudging back below 50 million in the medium term, particularly if you think about the cost of CapEx these days? Inflation in RMI and all the rest of it has been very strong in recent times.

Thank you. Clive, I'll take your second question first and then invite Matt to come back on the margin. I think it's complementary M&A for us. We said, or I said at the investor day, that complementary M&A was on the table. It would be prudent that we continue to have it on the table whilst at the same time making sure that we grow the core in the way that we started to set out this year. What's important is that if we are going to do anything, that it's a natural bolt on and that it has a good return. At one times, we've got the luxury to invest in the right things, which is part of the reason why we've just ticked up this year's investment, albeit in the expensary level of capital, because we can see we can do stuff that gives us good returns. But I think we're well placed and we should keep a watchful eye on things that are really complementary.

Yeah, so conversion margin. So this year, we're at 12.7, good increase from where we were last year, driven, as we said, by largely the seafood turnaround. If we look historically, we'll have been sustainably between 12 and 15. So I see no reason why we don't get back towards that levels. And what are the drivers? So we talked about the continued growth driver through seafood. Steve touched on the opportunities that Green Chain has for driving new services and incremental incremental margin, but also we've touched on the investments we're making in automation and efficiency and that really drives, that's driving the efficiency of our operations which ultimately drives that conversion margin through. Thank you.

I think it was here first and then Sean afterwards.

Thanks. Andrew Ford from Peel Hunt. Can I just ask about green chain? You sort of mentioned there's a few projects there on the commercialization front. I wonder if you could give us the geographies or the partners and maybe where you see that break-even point coming in for that sort of business element and if that's been accelerated.

Yeah. Look, green chain has two functions. Its primary function is to drive the core capability and equip our factories to be lowest cost operator. The additive part to Greenchain then is how we monetize that operation outside of driving the core and start to revenue generate acquiring new partners as we go along the way. And that's very much being led by the connected team. I can't give you expressly the details of those contracts because we've just got to just let the ink settle. But when we're able to announce in a few weeks' time, I think it will show you the strength of Green Chain and how those partnerships, how those new partnerships bring lots of opportunity for them to add incremental value to the overall group.

Thank you. And just on the slowdown in sort of vegan and vegetarian that you've seen, just I think you said it went to 3% CAGR. Is that dropped 3% or that's now the expected kind of growth rate for that category? That was just sort of a minor question. And building from that, sort of what are you now seeing as being, you know, some of the main drivers from your customers, you know, for the next, I know it's sort of a bit of a, a bit of a fad, but is there other sort of big themes coming through that you think are important?

I think what's important to say is we remain a fan of the sector, and that's because our customers continue to want to develop this market. We generally think that we will benefit from this market change. The reasons that have caused the drop are clear. Flavour. value for money and price, and some of the health connotations that go with the product range. In price and taste, the teams are working very hard to enable our own branded retail partners to push hard in their own backyard. And you'll see, I think, a change from more branded dominance to own label dominance. Andrew, if I could predict CAGR in this sector, I wouldn't be sitting here. I don't think it's yet settled, but I think we're not far off from the base. And when that happens, I think through the work we're doing in Holland, we'll be well placed to see an upturn in that sector.

Thanks, Steve. Thanks.

Morning, everyone. Sean Keady from Pamu Gordon. If I can just follow up on Damien's question about Walmart Canada. So contract delayed by a couple of months. The FY24 CapEx guide was a little bit below where I am at the moment. And a few comments from you, Steve, on further opportunities there. An optimist might interpret that all as a bit of a redesign of the CapEx plans, potentially to make the contract a bit larger. Is that fair? Or is there anything you can share on that sort of thing?

Do you want to say that? The enthusiasm of the Walmart team as they've got to know our capabilities is palpable. We came together because of our core meat capability and our seafood capability. But as they've had a good look around the operation across Europe and the UK, they can see there's much more that we can provide for them. We're going through all those opportunities with them because if we're going to do anything larger, it's better to do it at the beginning rather than come back to it. I think we'll be much clearer in the next few months to know whether or not we stick with the startup or whether or not there will be some areas for us to bolt on.

Perfect. Thank you very much.

Sean, do you want to give the mic to Darren? Sorry.

Thanks. You mentioned that in Ireland that you've recently got a new contract with Dunn Stores. Does that subtly or not too subtly suggest that you're moving away from a one customer, one country model? Is this open opportunities in some of your European markets?

The interesting thing about Ireland, Darren, was that Tesco could see the opportunity of bringing DUNS in and the efficiency that that would bring overall. And so they were encouraging of us to go and attract them in to Drogheda, the facility that we have in the south. And equally, duns were highly complementary of what we were producing for Tesco. So it's been a win-win. It's a business that we've not traded with in the past. We like the family. We like their stores. They are trading very well in the south. And as I say, it complements the capability that we've got, and it works for both retail partners.

And what does Ireland look like post the Dunn values? Is it 25, 75, 50, 50? What sort of incremental...

Between the two partners?

The majority will remain Tesco focused clearly, but I think Dunn's is additive. It will be a relatively small proportion of the whole, but it's... but it's a meaningful proportion of the whole and creates a great opportunity for us. As I touched on, one of the investments we're looking at for this year really is to build that capacity to support the volume for those two customers.

What's exciting is both Tesco and Dunn's are growing. And as Matt says, that's where we're going to lay some investment down this year to capitalise on the growth. And of course, growing... the facility in the south, allows us to serve both the south and the north.

And then just on New Zealand and the shellfish and prawns business, could you give an... the scale of that relative to the existing New Zealand business? Is it a material step up in what you're producing?

It's early days. The first containers landed three weeks ago. It's on the shelf. But we've now taken the countdown team through the entire portfolio of what Grimsby does. So it goes beyond shellfish, goes into fish cakes, battered, breaded, ready to cook products that they just haven't had in New Zealand. Those things are coming, and I think that will be quite a step change. But at the moment, the first thing that's just landed is shellfish. Thank you. Back to Charles.

Steve, is there any update on progress in Singapore?

So you remember that we updated on our relationship with Country Foods some six to eight months ago. And that was all about using our relationship with them to access new partners in the region. That continues to happen, but we want to go faster. And so with their support, we've now set up our own international sourcing team in the Asian region so that we can make greater and faster connections to those retailers in China, Singapore, and go much faster. So again, very early days, but for us, that's a great example about where we can take our current catalogue and expand it at pace into a new region.

Thanks, Giles. Thinking about the annualising impact of FOPN, some of the recovery in UK seafood, could you touch briefly on what we should expect the H1-H2 split to look like this year?

Seafood specific?

At a group level. so i think we'd have seen if we look in 2023 this split very much h2 focus because you know we were working through the recovery of the seafood business in the first half and that clearly delivered in the in the second half so a bit more waiting i think we would see the first half um waiting more stronger than we would have seen for 2023 the other thing to flag is that our half year will be a 26 week half year in in 20 four versus a 28 week in 23 so that will also skew it a little bit as well but the other way so um yeah we certainly see a a greater weighting to the to the first half more similar to what we've probably seen historically um where it's kind of fairly fairly flat half on half yeah perfect thank you

It's Andrew from Pillhunt again. I noticed in the presentation you mentioned further rollouts of the FlowWrap product. Can I just ask what the consumer acceptance is currently on those? I know there's a lot of noise about it when it came to market and made a lot of headlines for squashing meat, etc. And building from that, when customers have that demand of a product that might impact on volumes, how do you manage that? Because obviously they want They want the change and maybe the customer doesn't. Is that part of the conversation and how do you manage those?

The way retailers manage it is they have shops and they will take a number of stores and effectively live test what customers do. On the basis of that, they'll then go slower, go faster, or take a greater period of time to implement. This is an interesting sector. I think I framed it as Mintz Gate, didn't I? In Central Europe, certainly in the Benelux and now becoming the Nordics, we're seeing a very fast take up. In Albert Heijn, 100% rollout is in this packaging format. We're now going to burgers, as I mentioned, and we're also seeing that flow wrap incentive taking place in Sweden and, as I say, our other units across Europe. In Ireland, the Tesco Ireland team fully have endorsed it, and that full rollout is start taking place now. And the UK Tesco team are into their second tranche of stores. I continue to be of the opinion that it is a much, much better product than the slab of mush that I see on other shelves. And I think customers will vote with their feet. And this will be something that happens over time. Two of us are driving it in the UK, our sales and waitrose.

Just on the variability of deployment based on customer feedback from your customers, how difficult is that for you to adapt? Is that very easy to ramp up and ramp down from the two products?

As I think I said, We're agile and we can dial up and we can dial down. In this particular sector, retailers, because it's important for their customers, are absolutely focused on reduction in plastic. And the conversion from an MAP traditional form of packaging to the flow wrap sees a significant reduction in plastic. And retailers very much are encouraging of us to do those types of things. But it does take different times. And therefore, we'll go at the pace according to what that retailer needs. Thanks.

There's no further questions in the audience. We will go to questions online. We have one question online similar to one asked earlier. What was the contribution to profits of the UK seafood business and what are the opportunities to further improve the profitability of this business in the future?

Yeah, so the UK seafood business has recorded a low single digit operating profit this year from the position it was in in 2022. So it's really driven the majority, though not all, of the improvement in the operating profit in the UK and Irish business. I think as Steve touched on in terms of where the opportunities sit and when we get back to that more normalised profitability level, we would anticipate by the end of 2025 getting back to that more normalised historic profitability. That takes us from, you know, into 2024. We have opportunity for growth as that business continues to I say continues its turnaround. I think the turnaround is largely complete. It's continuing to build on the turnaround rather than continuing the turnaround.

Thank you. There is currently no further questions online, so I'll hand back to you, Steve.

Thanks, Amelia. Okay. Thanks very much, everybody. Enjoy the rest of the day. Thank you.