Hilton Food Group Plc

Good morning and welcome to Hilton Foods interim results for 2024. I'm Steve Morales, the group chief executive, and I'm presenting today with our chief financial officer, Matt Osborne. This morning, we will share our interim performance compared to last year, 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 for our long-term growth. Turning to the numbers, we've had a strong first half to the year, delivering growth across all three areas of volume, revenue and profit on a constant currency basis. At our four-year results, I stood here with a message to focus on driving our core volumes and continuing the progress in our seafood business. I believe these results represent another step forward in delivering on what we said. Our balance sheet continues to strengthen, and I am pleased to announce an interim dividend of 9.6 pence, an increase of 6.7% on the prior year, and in line with our progressive dividend policy. These interim results have been driven by the strong operational performance across the business and our best place product offer. Our core categories remain attractive and relevant to our customers and their consumers, with our major protein meat notably driving our volume growth over the first six months of the year across all operating regions. The continued progress in the seafood business underpins the profit performance in the UK and Ireland and remains on track to return to pre-2022 profit levels by the end of 2025. Our incremental work to leverage our existing product offer across more countries continues with particular success on coated seafood into New Zealand and slow cooked meats into Ireland. Turning to Canada, we remain on track to start producing for Walmart early 2027. Having completed the consolidation of our two Dalco facilities into one, the team continue to execute a robust improvement plan whilst the vegan and vegetarian market remains challenging. Meanwhile, I'm pleased to announce that our team at Foods Connected have landed a new global partnership deal with McDonald's for supplier auditing and product specification management. A testament to the unique value that Foods Connected can bring and a service that global brands and retailers are looking for. Sustainability remains at the heart of our business. In the first half of the year, we've continued to make progress across our targets, particularly in packaging, saving a further 390 tonnes of plastic through continual rollout of our Flow Wrap Mints offer, eliminating circa four million cardboard cartons through conversion to reusable crates in our Bunbury site in Australia, and improving the recyclability of our packaging in APAC. At this point, I would like to spend some time sharing some more detail on the two fundamental elements that have been key in delivering our half-won performance. Firstly, meat. It remains the cornerstone of our product portfolio, contributing nearly 80% of our revenue. Our core business continues to perform robustly, reflecting its enduring strength. A closer look at our meat volume performance in the retail sector during the first half of the year reveals that all our operating regions have experienced significant growth, consistently outpacing their respective local market trends. This achievement highlights two factors. First, that we have the right partners who are winning in their markets. And second, we play a pivotal role in driving their success. Our teams across the business have been laser focused on delivering high quality and relevant products at competitive prices, meeting the needs and desires of consumers, which has been fundamental to our outperformance across all three operating regions. Second, our seafood business continues to move forward, contributing significantly to improve profitability. The seafood team remains focused on the three strategic pillars outlined on the slide behind me. As part of this effort, we've streamlined our product portfolio further by cutting an additional 10% of lines, prioritizing the products that matter most to our customers, and targeted new product and customer development. Key achievements include launching new lines with our existing partners and working together with our APAC team to produce coated C3 ranges here in the UK and shipped to our facility in New Zealand. Over the past six months, our operational progress has continued, creating a more sustainable cost base through continued investment that delivers strong returns, including the installation of a new whitefish processing line, which improves our processing efficiency and our yields. Finally, our procurement teams continue to work closely with our upstream partners to ensure that we are optimising availability and cost whilst delivering security of supply. As I mentioned in my first update as Group CEO last year, we remain steadfast in our commitment to the strategic priorities that will drive growth and value into the future. The four priorities displayed behind me continue to be central to our strategy. Grow our global footprint, expand our multi-category offer, build further expertise as a supply chain partner, and leverage technology as a key value driver. These priorities are supported by our greatest assets, our people, and are underpinned by our unwavering commitment to sustainability and food innovation. As we move forward, these strategic priorities will remain our focus throughout 2024 and beyond. Now I'll hand over to Matt for a deeper dive into the numbers.

Thanks, Steve, and good morning, everyone. As I know you'll have seen, the half-one 2024 numbers are presented for a 26-week period compared to a 28-week period for last year. So to provide a meaningful comparison, the majority of variances in this presentation are calculated on a comparable 26-week constant currency basis, and we've also included a summary of the impact of this on the key measures in the appendix to the presentation you all have. As Steve's highlighted, we've reported strong volume growth of 3.2%, with revenue of £1.94 billion up 1% on a constant currency basis for the first half of the year. Operating profit increased by 23% to £46.9 million, with continued momentum in the UK seafood business driving a significant amount of this growth. We've also seen benefits from strong volume growth in meat and easier meals. Reflecting this progress, our operating profit margin increased from 2% in the first half of 2023 to 2.4% for the same period this year. And similarly, our conversion margin, which is adjusted to exclude the value of raw materials from revenue, increased from 11.1% in half of 2023 to 12.3%, a reflection of the strength and continued progress of the business. Profit before tax was £33.5 million, up 38% on the previous year. Adjusted EPS of 25.8 pence was up 31% compared to 2023, really impacted by increasing tax rates. And with our proposed interim dividend of 9.6 pence per share, up 6.7% on last year. Looking at our balance sheet and our overall cap spend in the first half of the year was £26.2 million, marginally down on 2023. And alongside our strong trading performance, the business has maintained the strength of its balance sheet with £137 million of net debt at the end of the half, which is a slight reduction on the year-end position, leaving leverage of 0.9 times versus the year-end of one times. As I've said, overall revenue grew by 1% on a constant currency basis to £1.94 billion. The strength of sterling continues to present a headwind, with revenue down 1.4% at actual FX rates, and we've included average FX rates for 2023 and half of 2024 within the guidance side in our appendix as well. Total volume growth across the business was 3.2%, with the upside from shifts in our product mix driving revenue growth by a further 1.9%. However, the majority of this upside was offset by the net pricing impacts of disinflation in our UK and Ireland and European businesses, and more significantly, deflation in our APAC region. Looking in more detail at our regional performance, the volume performance in the UK line has been strong, with the business also benefiting from changing mix with a notable increase of sales in B-states, particularly within premium product ranges. In Europe, the volume performance of the core business has also remained strong, with, as Steve highlighted earlier, an underlying strength in our core meat category. However, the European region has really been impacted by the challenges in the vegan and vegetarian sector that we're facing into. And with the market in APAC, we've seen deflation faster than we anticipated, and certainly more so than when we spoke to you at the full year results. Volumes have remained strong, up 6.8%, and the growth we saw in the first half of this year is consistent with the growth we saw throughout last year. And it's really a further reflection of the strength of our core meat category and our ability to drive volume through our business. The impact of deflation leaves revenue in APAC down 6.7% compared to half one last year. And the key impact there is around the primal pricing for beef and lamb that's deflated significantly during the first half. Overall, group operating margins have increased from 2% in half one 2023 to 2.4% for the first half of 2024. 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 this basis, excluding raw material costs passed through in revenue, our enhanced conversion margin increased from 11.1% in half one of 2023 to 12.3%. The key building blocks for these increases are the positive impact from the continued momentum of our UK seafood business, which remains on track to return to previous levels of profitability in 2025. And this has been coupled with the strong benefits of growth in our core meat volume. In Europe, the upside we've seen from growth in core meats and also from convenience ranges in Sweden and in Central Europe has been offset by the ongoing challenges of the market in the vegan and vegetarian foods. But the local team at Dalco, supported by the wider group, are focused on optimising our single site facility. In APAC, where we earn an overall cents per kilo fee, the reduced level of interest cost recovery has held overall profits flatter despite the strong volume performance. And after allowing for increased central costs and the impact of interest cost reductions, PBT for the half year on a constant currency basis was up 38% and 35% to actual FX rates to £33.5 million. Compared to the numbers we reported in half one of last year, operating cash flows have increased by £9.6 million to £56.2 million, benefiting from strong EBITDA growth and broadly flat working capital cash flows with an ongoing focus on working capital across all of our operations. Underlying free cash flow after consistent levels of maintenance capital spend was £46.3 million, with overall free cash flow after expansion we spent at £30 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 business continues to generate strong cash flows with an operating cash conversion ratio of 2.3 times for the first half of the year. Our strong cash flows leave us with overall net debt levels of 137 million pounds, which is marginally lower than the year end, and a significant 80 million pounds lower than the same time last year. Net debt to EBITDA is 0.9 times compared to 1 times at the year end. Our strong balance sheet, combined with undrawn bank facilities in excess of £130 million and a supportive bank group, provides us with the opportunity to continue to invest in achieving sustainable growth in both our existing business and through wider geographic expansion. And since the year end, we've also received a final insurance payment of £13 million, bringing the total received in respect of property damage and business interruption following the fire in Belgium to £22.8 million. Looking at CapEx in more detail, and we've invested £26.2 million in total, including £16.3 million of expansionary spend to support growth. The £9.9 million of maintenance capex investment helps to ensure that our facilities continue to operate efficiently whilst meeting the high technical and quality standards that we set ourselves and critically that our customers require. The majority of our investments in the year to date have continued to be focused on our businesses in the UK and Ireland and in Europe. In the UK, investments in automation are continuing to deliver efficiency benefits at our Huntingdon and Grimsby sites. In UK seafood, automation has continued to play a key role in supporting our strengthening business and to include the investment in a new whitefish processing line that improves yield and efficiency. In Europe, Capital Spend has supported the continued rollout of flow-up mince packaging to Denmark and Central Europe. And as part of the consolidation of our vegan and vegetarian business into a single site, we've invested to bring retail packing capability in-house. With a pipeline of strong returning investment opportunities, we continue to expect core spend for 2024 to be around £60 million. In addition to this, we are anticipating around £10 million of spend towards the end of the year in Canada as we begin to order equipment for our first North American processing facility. 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. The group's ROCI is improved by 1.9 percentage points to 20.2% and is in line with our medium-term financial ambition of a ROCI of greater than 20%, with the group benefiting from maturing capital across the APAC region and continued positive impact from the strengthening of the seafood business. However, looking ahead, we anticipate short-term dilution as we invest to develop Hilton Foods Canada, which, as we've discussed previously, delivers strong returns over the term of our partnership with Walmart. Our commitment to 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, driving attractive shareholder returns through expansion in the core business, geographic expansion supercharges, and selective complementary M&A. In summary, I believe that with these results, we've demonstrated further sustainable progress and that the financial strength of our business allows us to continue to invest in growth. I'll now hand you back to Steve to take you through the business update.

Thank you, Matt. I'd like to start this section by sharing what we've been up to these last six months in delivering against our four strategic priorities. First, we remain committed to expanding our global presence beyond the 10 countries that we currently operate in. We continue to have multiple conversations to grow our footprint further. Our latest project with Walmart is on track to launch Hilton Foods Canada early 2027. And together we're finalizing the product range and we've deployed commercial and project management teams on the ground in Canada to ensure close day-to-day collaboration. We've now settled on an 18-acre greenfield site in Brantford, Ontario. Whilst on the other side of the world, our international sales team, Hilton Foods Global, is working with our extensive network of businesses in the APAC region to deliver a compelling product offer to the Asian market. Our longstanding relationships, some of which have spanned decades, form the bedrock of our business. Many of these relationships are well established, particularly within the core meat category. Through our consumer-led pull model, we continuously identify opportunities for new products and growth within current protein areas. In the first half of this year, our local teams across all three operating regions have launched over 200 new products, including premium tier range extensions, seasonally focused summer offerings, healthier options and more convenient product solutions. To highlight a few examples, in New Zealand, the team have relaunched and expanded their poultry range, including the convenience to cook pre-prepared meal centres to include new flavours and formats, and introduced shellfish to the seafood product offer. In Sweden and Holland, we've introduced healthier blended mince products that combine beef with other proteins. And additionally, we've launched a bespoke own label range of slow-cooked products for Tesco Ireland, and our UK team have extended the reach of the chilled TGI Friday slow-cooked meat brand into Asda and Morrison's. We've also enjoyed success in Northern Ireland, securing a new port contract with our biggest partner in the region. These actions have further strengthened many categories, helping trade shoppers up into more premium choices, into healthier choices for their everyday meals, and into more added value categories to meet their needs better. This time last year, I shared with you the chart that you see behind me. The blue squares illustrated where we had an existing presence in that category, and the white squares presented an opportunity to extend our catalog of products further. We've endeavored to do this through organic, incremental, and supercharging levers for growth. If we fast forward to today and focus on two elements of our growth drivers, you can see that we've grown organically across many countries. The APAC team best example this through the continued development of their meat offer, which has successfully underpinned continued volume growth. In the UK, the team enjoyed a strong Easter performance and have focused on driving and promoting the core meat range, including beef, mince and steaks, and introducing bigger pack, better value in lamb products, which has allowed shoppers to trade up and drive our volumes. Secondly, we've successfully driven incremental sales. In New Zealand, we introduced a range of shellfish, expanded our poultry offer to include burgers, meatballs, sausages, and increased the number of flavors and formats offered in the to-cook range. Later this month, we'll launch coated and fish cake products as well. We equally see this done well in Central Europe, where our fresh food factory has continued to launch a new product range with their convenience retail partner, Jabka, and optimizing trade through targeted new special buys for the Euro 2024s and doubling the sale of the convenience burger range. Both organic and incremental successes have delivered the volume growth enjoyed in this first half. Now, the strength of Hilton Foods lies in the diversity of our product range and the markets that we serve, positioning us to succeed across various consumer segments. Evening meals can generally be categorized into three key occasions, everyday meals at home, social special meals at home, and time off from cooking, which includes dining out or opting for convenient at-home solutions. When we consider these three meal occasions, I am confident that regardless of how consumer trends and needs evolve, our extensive product range and broad channel reach enable us to meet those demands, whether it's providing quick midweek solutions like mince and salmon fillets for everyday meals, catering to social and special occasions with our premium products and steaks, or capturing growth in the food service sector and convenience meals when consumers seek a break from cooking, we are well positioned to continue to succeed. What ties together our diverse products, our geographic reach, and the sectors that we support is our passion for food and for innovation. We are dedicated to producing high-quality, value-for-money, consumer-driven solutions for all our partners. Turning to our vegan and vegetarian business, the market remains in structural decline. Our team at Dalco is focused on its recovery plan, bedding in a single-site operation, simplifying the range, and bringing retail packing in-house. We now expect our run rate to get back into profitability by the end of 2025. Over the midterm, we continue to believe this is a market we can win in as we seek to land new business, take costs out and improve the eating quality at lower prices. Now whilst we specialise in and control the middle segment of the farm to fork supply chain, our influence and impact extend across the entire process, driving positive change from start to finish. Recently, our UK teams conducted a comprehensive end-to-end supply chain review in collaboration with their customer and strategic suppliers. This initiative led to improved product availability, directly contributing to our customers' growth ambitions in the steak category, with total steak sales increasing by 12% year-on-year and premium steak sales rising by 25%. In our seafood business, we're focused on strengthening upstream partnerships across all seafood categories, and our seafood sustainability specialists have also played a key role in developing a standardised carbon measurement tool. The tool enables targeted decarbonisation efforts within the seafood supply chain, covering both farmed and wild-caught seafood. Lastly, in Australia, our partnership with Woolworths, we've developed our end-to-end business plan. This has resulted in better on-shelf availability, driven by improved forecasting and raw material planning. Market-leading technology is a cornerstone of our success and a key factor in maintaining our competitive edge. Its primary role, as I've said before, is to support our core global food business. In the first half of the year, we continued our end-of-line automation in the UK through our JV partnership with Agito, reducing labour dependency and enhancing factory efficiency. We also partner with Foods Connected to digitize our packaging supply chain, improving how we manage and measure the critical aspects of our business. In addition to this, our team has also made significant progress developing opportunities to monetize our tech stack, which has been best executed through Foods Connected. Since this time last year, they've expanded their customer base, and as I mentioned earlier, successfully landed the global contract with McDonald's on auditing and product specifications. Additionally, Agito were selected as one of two strategic partners for a major project in Australia with Coca-Cola Euro Pacific. Our sustainability protein plan is a crucial underpin to everything that we do. As you know, it's a detailed program of work across three pillars, people, planet, and product. I'm not going to go into all the detail here today. It is all important, and we report on it in detail twice a year. What I will do is remind you why we do this. First, and put simply, it's the right thing for us to do. Second, it drives efficiencies in our business. And thirdly, it is crucial to our success because it's so important to our customers. In doing what we do, we help them achieve their sustainability goals. The plan is fully embedded in everything that we do, which is underlined by the fact that the LTIT plan for all senior leaders includes sustainability objectives across these three pillars. In summary, these strong interim results coupled with our clear strategic priorities have provided a solid platform for the first half of 2024. Our core meat category has driven volume growth across all three regions, whilst our UK seafood business has made continued improvement underpinning profit growth. We continue to cross-sell in all three regions and this momentum, coupled with the strength of our balance sheet, reinforces our confidence in achieving sustained organic growth moving forward. And so, what are our ingredients for success? As a reminder, we are an international player of scale that has the ability to enter new markets successfully. Our expansive breach and multi-category offer across a large and attractive market presents many opportunities. We enjoy stable, long-term relationships with our partnership model. Our competitive edge is driven by a consumer-led approach that ensures we remain aligned with the needs of our partners. And with our in-house access to market-leading technology, we are able to stay ahead of the curve, delivering superior products and services that set us apart from the competition. Looking forward, first and foremost, we remain ambitious with a clear and focused strategic plan in place. Looking ahead, Hilton Foods is well positioned to deliver four-year results in line with market expectations. We have the right strategies in place, the financial health to back them up, and the commitment to execute our plans effectively. And finally, you would have seen a second R&S this morning announcing the appointment of Mark Allen, who joins the board in October as chair designate. I would like to take this opportunity to thank Robert personally, not only for bringing me into the business, but for his continued counsel and support over this last year. As one of the two founders, Robert has been the heartbeat of Hilton Foods for over two decades, and he leaves an incredible legacy. I'm delighted that Mark has agreed to become Hilton's next chair. He brings with him all the necessary skills and experience as we journey into our next chapter of growth. At this point, I'll open to the floor and take questions. If you could share your name and the institution when you ask your questions, that would be welcomed. Thank you.

It's Andrew Ford from Peel Hunt. Thank you, Steve and Matt, for the presentation, and well done on a good set of results. A couple from me, if I can. Can you comment first on the outlook on consumer demand in the second half? Are you expecting a continuation of the theme that you've seen in the first, or are there any other headwinds? you can foresee creeping in. Secondly, on seafood, obviously a big improvement in profitability there, but can you give us an idea of what you're seeing, again, on consumer demand from the seafood side? And lastly, on the foods connected contract with McDonald's, are you able to give us a bit more detail, maybe on the scale of that agreement, whether it's

particular products or or you know you mentioned global but are there particular regions that you're starting and just exactly how that how that's working thank you do you want to take the seafood question first matt on terms of the next six months and then i'll pick up on the other two yeah

So obviously the seafood business has seen a strong first half, certainly compared to the first half we had last year. I think if we... I touched on a little bit around pricing and market dynamics more broadly, but I think what we've seen in seafood is inflation has maintained, particularly in whitefish. I think demand is certainly there. I think what we do know is that with seafood that it's very... very elastic on price, but it's a great category for us to be in. People very much are looking to enjoy seafood more regularly as part of their kind of more balanced view of protein, I think, and certainly our retailers are promoting their category, and if you walk in any retailer in the UK, certainly the space devoted to seafood is growing. And so for us, we see it's a very good category for us to be in, and I think, you know, as... We see prices kind of maybe more stabilised. Then we'll see... We would expect to see the consumer return to that segment.

On the shape of the next six months, we're slightly more seasonal in half, too, as that takes into account, obviously, the big trading period of Christmas. But, you know, I think generally with... The optimism in the country and some of the macro stats that we're seeing, we would expect that to continue. But recognizing, though, that we'll be up against much larger volumes in the second half. Just returning to the Foods Connected contract. A couple of points here. Firstly, it shows that our tech is transferable outside of our core business. So that's very helpful and confirms what we've always known in this unique asset that we've got, that we can monetize it outside of driving the core. It's a meaningful contract in the context of Foods Connected, which is we know we've got strong ambitions to grow that business at pace over the next few years. It will clearly start off around specifications in the meat contracts and then start to move into more fresh foods. But again, as we have found, the capability of what the Foods Connected team does enables that to transfer across markets. And so once the guys have completed that first tranche, we'll be keen then to see how we can adapt that into other commodity markets and other sectors.

That's really helpful.

Thank you. Hi, morning. It's Damian McNeill from Deutsche Neumis. A couple for me. So the first question I think would be for you, Steve, and it's just on what you've delivered in the first year in terms of organic growth and incremental growth on the two slides that you showed. I was just wondering if you could give us some thoughts on how confident you were on the future outlook of being able to build on the progress you made this year in given, obviously, you hadn't had that much time in the business when you set the strategy this time last year. The second one is around Belgium. The insurance claim has been completed. I was just wondering, what are the thoughts around having a site in Belgium versus the current supply arrangements? And I guess the last one, in terms of... The vegetarian business, you said it was in structural decline. How much further do you think we've got to go? I know you sort of said you're hoping to sort of be back to sort of profitability by the end of 2025, but I'm just sort of wondering what the dynamics are within that. Is that going to be driven by more private label through that business, or is it sort of reliant on branders getting their act together?

Okay, thanks. Great. Damien, three really good questions. Look, a year's gone really quick. What the team have done well is... put its foot on the ball, breathe, get back to basics. I think we've then done a good job having a clear strategic plan of priorities going forward, which we've shared with you this morning. And then we've had a real commitment to continue to strengthen the balance sheet, make sure that the underlying cash flow of the business is strong, and endeavor to ensure that those special relationships remain special. The combination of those things on a very solid platform of a business are now starting to generate the performance that we're starting to see. And I think that endorses where we put our energies and will continue to play out that approach and deliver on those priorities. Along the way, hopefully, you get some wind on your back and some opportunities, which the team have exploited well. But generally, we've got our arms around this business. We've got very, very capable people in the right places. And we're in good shape. On the second point around Belgium, as you know, we've serviced the Belgian needs out of our Dutch facility. In truth, that is a much better model for us because it's benefiting from the volume that flows through into our Albert Heim business. And so it makes sense for us to service the Belgium region continuing from Holland rather than go back and build another facility in Belgium. On vegetarian, it's a market structural decline. It's not a Hilton structural decline is, I think, the first point. The second point, this is a small part of our business. As we've said this morning... Our core meat business at 80% is very strong. This is a small part of our business. We have a clear plan in which we think we can win in, but because the market hasn't yet bottomed out, it is taking us longer to get to where we want to be. Trying to predict when the market will bottom out is not easy, Damien, but we think with the things that we can influence... in how we run the operation, in bringing in new customers, and working on the product, which needs to be more flavoursome, needs to be better value for money, in the levers that we can pull, that gives us confidence that we'll get to the right place and on a run rate basis by the end of 2025.

Clive?

Thank you. Well, firstly, I'd like to echo your comments about the man in front of me here, Mr Watson, and also his Essex sidekick, Phil Heffer, what they've created, actually. But following Damien's three questions, firstly, could you give us a little bit more commentary on how you feel about Australia in particular? Because I sense it's been a more challenging market than we may have thought a couple of years ago. Secondly, on Canada, the profile of CapEx and activity, really, over the next couple of years. And then lastly, more generally around CapEx, what are the sort of things that you're prioritising? And I guess my thought process here really is around labour. Labour's becoming more expensive across the world, and I just wonder to what extent you have plans to become more capital-intensive rather than labour-intensive. Thank you.

Clive, thank you. I'll cover off Australia, then Matt, if you just want to come back on the CapEx points. We've actually found the last 12 months fantastic in Australia. I think that's because under Mel Chambers' leadership, she's got her team firing completely to the needs of what Woolworths need. I suspect it's probably been more challenging for Woolworths as a business, given some of the issues in the region. But the relationship's super strong. As we've shown this morning, another not near 7% volume growth on last year's 7% volume growth gives us confidence that we are doing the right thing. We're keen to see where that leads us next with them. We've obviously got the food park concept in New Zealand. We want to do more with the Woolworths business in Australia. But I think that will come as long as we continue to deliver for them in our core protein areas of meat. But it's in good shape. And in fact, I'm there in three weeks' time. It's a great asset. And we haven't talked too much about Hilton Global. But in order to access... I think the Asian market, you do need boots on the ground. It's quite a complicated, complex market. And therefore, starting to think about how we can bring our Australian and New Zealand business to help get after that opportunity, I think puts us in a good place. Do you want to come back, Matt, just on the Canada profile on CapEx and then the comment in general?

Yeah, I think, so Canada, we talked about spending about £10 million this year. Now, step back a little bit. In terms of the key bits of activity, as Steve mentioned, we have a site. The first key bit of activity is building the shell effectively, and that's something that we will do with our partner. They will build to our specification. The spend we have this year is really about ordering, so it's ordering the equipment so that by the time the shell is ready, we're able to receive that equipment over the next, towards the end of 25 into 26, and the spend we would make, remainder of the spend is probably split evenly over next year and the year after. At the same time, though, there's a huge amount of work going on with the commercial teams, building those, strengthening the relationships with the team in Canada. We have more people based locally now than we did, so that relationship will continue to grow. But in terms of capital spend, it's really then driven by us ensuring that the equipment we have is on site when we very much need it. And this is equipment that we've used in our businesses, and you'd have seen in Australia when we visited, equipment that's tried and tested, and we know how effective it can be at delivering for the customer. On CapEx more generally, I think the spend we'd have made this year and the spend we're making in the second half, there is a huge amount of automation focus in there. We touched on a whitefish processing line. There are other areas of automation. And I think you're right. As labor becomes more expensive and equally as skills... Traditional skills are lost. Investing in automation is very much the right thing for us to do because we know that we can consistently improve yield, improve efficiencies in the facilities. And as we've talked about, and as, again, you've seen in Grimsby, there are huge benefits for us of putting in automation where it makes sense.

Morning, everyone. Sean Keely from Premier Librem. A couple from me, if I may. So first of all, with some of the CapEx creeping back into this year for Walmart, is there anything more you can share on some of the changes in scope that maybe we were talking about? six months ago, and any major shifts to point out there and how that contract has changed over time. Secondly, Matt, I remember the full year results we were talking about, flat working capital on the year, but you've had another release in the first half. Do you see the level of working capital at the moment as stable, maybe a little bit more investment in the second half? Is there maybe like a timing change or something going on there? And then finally, given the big contract or potentially significant contract with McDonald's and the Coca-Cola Europe Pacific Partners contract in Australia, is it still your intention to run green chain solutions that break even for the foreseeable, or should we see some of that drop down? Thank you.

Sean, I'll just come back on Walmart. So you're right. We said six months ago that we just wanted to re-look at the scope, and that was prudent to do then rather than later down the line. That work's been completed. We've agreed now to park that work, and that then allows us to bring that back in at the right time. As we've already said, the relationship is super strong, helped by Hilton people on the ground there already. I was out there A month ago, the entire Walmart team are getting very excited as we get closer to officially opening. And I think the work, the good work that the team did holds us in good stead at the right point to possibly then bring that back in from a kind of a food park concept point of view. Matt, do you want to just pick up on those last two points?

Yeah, so in terms of working capital, I think we've seen a small inflow in the first half. I think for me, I'd probably characterize that as more broadly flat. I think that we made some step changes last year in how we operate. I'd expect working capital to be broadly flat for the full year. I think the thing, though, we look at if we're... We will make tactical decisions when it comes to, for example, purchasing of inventory to take advantage of market pricing where we need to, because we know that benefits the business in the longer term. So there's movements around there, but I think broadly we will remain flat working capital. And I think what we're seeing is we've got a renewed focus on that element of our business across all of our operations throughout the world. So I'm really keen to see that continue. You asked then about scope changes on CapEx or CapEx changes. I think, look, there was a lot of work done at the start of the relationship with Walmart around really botting out the scope of that facility. We've settled on that, but now there are opportunities for us to grow beyond the initial scope, but very much pleased with what we have with Walmart and very much looking forward to working with them in the future.

Just an aside, when we were over there, we met the local MP, the local mayor. Everybody is very welcoming. They're pleased that we've found an incredible site in Ontario. That will be the next best. facility that Hilton will go and develop. And I think along with the sortation capability and notwithstanding the fact that we're doing this on both fish as well as on core meat, it's going to be kind of a first for us as well.

Perfect. Thank you both. And if I could just go back very quickly to Green Chain Solutions, are you still planning to run that break-even for the foreseeable given some of the step-up in activity there?

Sorry, yeah, that was your final point. So there's no need at this point to move away from kind of a directive break-even position. As we've said, our focus is on really accelerating the top line. But equally, I don't want to miss a step in rushing for that line and ending up burning ourselves and losing money as others have done. So I think Hilton's prudent, sensible approach of accelerating as fast as we can, but making sure that we don't lose money is important, even in a tech attribute that this actually is. Matt, sorry, you had your hand up earlier.

Thanks very much. Matthew Webb from Investec. I wonder if you'd just talk a bit more about the improvement in product mix in the UK that you've cited in the statement. I just wonder what the drivers behind that are. Is there an element of natural mix improvement as the consumer environment maybe improves a bit? I presume given that some of the numbers you cited on state, that's a big part of it. Was there an element of promotional activity driving that? how much is sous vide contributing, etc. And then also, I just wondered whether you feel that your ability to trade consumers up and provide a richer product mix is more advanced currently in the UK and Ireland, and whether therefore there's the opportunity to apply some of your skills there to European markets and indeed Australia.

Thank you. Yeah. Our primary partner, as we know, in the UK and Ireland is Tesco. And they have done a very good job about getting after their finest brand and providing fantastic products for their customers. And they've seen a transformational growth trade up into the finest brand. You will have seen us showcase that in the past through our Christmas ranges and what we've seen over these last six months is actually in core stakes how we can not only drive standard sirloin fillet steaks, but also transform the sales rate into the finer sector. So that's a trend that Tesco, with our support, have really gone after and it's proved successfully well. That's probably also helped by the fact that more people are choosing to premiumize their meal occasions in the home. And therefore, we've got that perfect position that we straddle both markets when one is slightly off, the other one benefits and vice versa. Clearly, some specific categories like sous vide are meeting an absolute need. These innovations start with top quality chefs and in restaurants. And I think coming back to your final point, The UK innovation and food developing team is probably more advanced than our other regions. That fills me full of excitement because as we're starting to demonstrate with the cross selling into Australia, the same thing will apply around fantastic premium meals in those sectors and in Europe. So that's all upside to come.

Thank you. So we have a question from the webcast from Doriana Russell from HSBC. What was the contribution to profits from vegan stroke vegetarian in Europe? And the second question is, what was the volume performance in UK seafood?

UK seafood... within these numbers was flat. The reason why it was flat is that salmon, which is a large proportion of our business, has only just now started to go below last year's pricing. So there is a lag effect, whereas the meats actually enjoyed six months of disinflation. Salmon's held its prices, but that's now going below last year. So I would expect certainly one of our largest engine rooms of salmon to start seeing its volume move up in the second half. I should also say, though, that whitefish still is inflating. Whether it's Norwegian cod or haddock, inflation prices in whitefish is high double digit. Whilst that continues, you'll see a more bland volume performance. But I see salmon starting to pick up. Matt, on the Dalco piece.

Yeah, so for the first half of last year, the Dalco business made a low single-digit operating loss. For the first half of this year, the Dalco business has made a slightly bigger low single-digit operating loss. So it is clearly a headwind, but as Steve said, it's a relatively small proportion of the business, and I think the key for us is that we have a plan in place that we believe will deliver the turnaround in that business and get us back to run rate profitability next year.

No further questions from the webcast at the moment, so there's no further questions in the room. Steve, back to you for any closing remarks.

Thanks very much, Scott. I have no closing remarks, so thank you very much and enjoy the rest of the day.