Associated British Foods plc

It really is fantastic to see you all in person. It’s a moment that I think John and I have been looking forward to very much.

We did have a sort of sweepstakes of how many analysts would turn up and whether the room would be filled solely with advisors of our own.

We did actually come up with a couple of them just in case.

Okay. Yes, you did.

We had a little bit of fear of just speaking to completely empty barn of the room. But thank you for coming into this review of the end results for the 53 weeks ended the September 18.

Let me start with this slide. We really have been squarely in the path of this pandemic.

We’ve now lost 43 people to COVID-19 all around the world, and the economic effects of COVID are very evident in these results but the resilience of the group I think has demonstrated more than ever. Our Primark trading recovering well from lockdowns and also recovering well from the uncertainties of more recent times.

Strong food performance underpinned by the strength and diversity of our brands -- of our products, our markets, our very diversity. And the resilience was also shown by the balance sheet at year end.

I don’t think we’ve ever had £1.9 billion of cash on our balance sheet, and John will talk about dividend policy as a consequence of some of these cash piles. And then we want to talk about it today, the confidence of Primark’s rollout is undiminished, and quite frankly the opportunities for further development for growth through investments in the food portfolio, I think our confidence has never been higher.

Let me now go on to the financial highlights and they’re these: A group revenue of £13.9 billion, adjusted operating profit, £1.1 billion, adjusted profit before tax, £908 million, adjusted earnings per share, 80.1p, dividends per share, 26.7p for the year, and then the special dividend which John will come back to and explain in greater detail 13.8p. We’ve invested £721 million of capital during the year, and as I mentioned before, net cash pile, £1.9 billion.

The business highlights for us, these are customers returning to Primark stores in very large numbers, very creditable profit margin in the second half of 10.6% in Primark, important number that one. And then, of course, over the course of the year, we have launched very wide-reaching, very important new sustainability strategy for Primark, but also we’ve had 2 ESG days, 1 in the group in the total and 1 on Primark, and I think important statement of purpose.

Our food business’s adjusted operating profit increased to 10% on top of a very good year last year. Strong year for AB Sugar, new capital allocation policy, again for John to go into detail on later, and then we’re quite just about the Standard and Poor’s A grade stable outlook credit rating recently awarded to us.

Let me pause and hand over to the Finance Director, and I’ll come back later to talk about the businesses.

Great. Thanks very much, George.

I really would echo George’s comments. It’s great to see so many of you here in person.

So group revenue was £13.9 billion, that’s in line with last year rate -- actual exchange rates and 1% ahead at constant currency. This revenue is still below the level of sales reached pre-COVID in financial year 2019 and mainly reflected Primark store closures.

1/3 of the trading days available to Primark were lost this financial year, an increase on the number of days lost in the prior year. Importantly, our growth in our food businesses continued this year and that was with a combined increase in revenue of 5% at constant currency.

Adjusted operating profit for the group this year was £1,011,000,000 and that was broadly in line with the last financial year. The combined adjusted operating profit for our food businesses was actually strongly ahead and that was at 10% ahead of the prior year.

Net of the job retention scheme repayments that we made this year, Primark’s profit declined. But as I’ll show you later excluding these repayments, both margin and profit for Primark increased.

For the full year, the average rates used to translate the income statement resulted in a translational loss of £36 million and that’s primarily driven by the strengthening of sterling against the U.S. dollar.

And arriving at the adjusted operating profit, exceptional items totaling £151 million this year were excluded. This mainly comprised the impairment of £141 million of certain plants and equipment in our sugar businesses.

I think we’ve already explained to you and that was in the pre-close trading statements, this includes a non-cash exceptional charge of EUR136 million to write down the net asset value of certain plants and equipment in our Spanish business Azucarera. Following a review of smaller sugar businesses, we’ve also taken a non-cash charge of £21 million to the relevant net asset values.

Now these exceptional items also include the inventory charge of £21 million taken at the half year for Primark. You’ll remember that related to the clearance from our stores before the spring reopening of certain autumn, winter items still on display, and that provision has been fully utilized.

If you cast your mind back to last year end, we had £22 million markdown provision taken for potential damage of Primark inventory stored on behalf by suppliers for longer than usual as a result from the pandemic. That wasn’t needed and we released that in the year.

So moving on. The unadjusted or statutory operating profit of £808 million was in line with last year.

Profit on the sale of businesses this year follows the transfer of certain used assets in China to the now operational and successful joint venture with Wilmar. Net interest expense decreased from £113 million to £102 million and that’s following the repayment of £25 million of private placement notes during the year, and there was no RCF interest because that facility was undrawn this year.

Profit before tax increased by 6% to £725 million. Now turning to the tax charge.

The group’s adjusted effective tax rate was again elevated and you can see it was 28.1% and that’s with a lower proportion of the group’s profit generated in the U.K. and Ireland because of the lower profitability on Primark compared to pre-COVID levels.

However, this rate is lower than you were expecting. You probably had about 30% in your numbers because of the better margin performance by Primark in the second half of this financial year.

Based on current tax rates under recovery in Primark’s profitability, we expect the group’s effective tax rate to fall next year to a level closer to pre-COVID levels, okay? And as a reminder, the effective rate in 2019 was 21.5%.

It won’t be as low as 21.5%, but it’s getting towards it, okay? Adjusted Earnings per share were 80.1p.

No dividends were proposed for our 2020 financial year due to the effect of COVID-19 on the group and the uncertainty at the time of considering the dividends for future cash flows. This financial year, the Board declared an interim dividend of 6.2p, which was paid in July.

The Board has now proposed a final dividend of 20.5p and is also declaring a special dividend of 13.8p. Taking the interim and the final dividend together gives a total of 26.7p for the year.

This is 3x covered by the adjusted earnings per share of 80.1p. After no dividends relating to the 2020 financial year, the payment of the ordinary dividends 3x covered by adjusted earnings per share, that principle is re-established this financial year.

The Board is pleased by the recovery in trading across the group’s activities, the highly effective management of cash, and the reduction in financial leverage. As a sign of our confidence, which is looking forward, the Board is also declaring a special dividend of 13.8p per share and that’s going to be paid as a second interim and at the same time as the final dividend.

The amount of this special dividend was determined such that taken with the final dividend proposed for this year, the aggregate equates to a final dividend of 34.3p per share, which is the same as the one that we paid in the 2019 financial year, that was our highest ever final dividend and was based on the groups pre-COVID profitability. Total dividends for the year are, therefore, 40.5p.

Now, moving onto the balance sheet. Net assets increased to £10 billion and that’s £0.6 billion higher than last year.

That was driven by the following: an increase in net cash of some £350 million to £1.9 billion, and it’s also by an improvement of actually some £560 million in the net pension assets. Those 2 then are net off a -- well, you’ll net off from them a translation loss of some £350 million following the strength of sterling against the euro and U.S.

dollar between the 2 year ends. Over the year, the U.K.

defined benefit pension scheme surplus improved sharply and that was a result of a strong performance by the scheme assets on the rise in bond yields. Working capital at the year-end was in line with last year but was ahead at constant currency.

Inventory has been rebuilt at AB Mauri and ACH from the very low levels last year and partially offset lower inventories in sugar and our Don meat business. The last 2 years really have underlined our long-held belief that the group should have sufficient financial resources and credit strength to invest for growth and to meet the operational challenges faced by our businesses.

So this year, we codified our approach to financial leverage with the adoption of a financial leverage policy that the group’s ratio of net debt including lease liabilities to adjusted EBITDA should be well under 1.5x at each half-year and year-end reporting date, and potently in exceptional circumstances, the Board would be prepared to see leverage above that level but for a shorter period of time only. I’m pleased that the S&P Global have just announced that they have assigned the group an A grade long-term issuer credit rating with a stable outlook.

In their words, this reflects the strength of the group’s businesses, their diversity, strong group credit metrics are all underpinned by a conservative financial policy. We will be paying most of the high coupon private placement notes from our existing resources and we’re perfectly capable of being able to do that this financial year and the amount we can see is £223 million.

And then, as a reminder, we still have an undrawn revolving credit facility of £1,088,000,000 with a term to July 2023. Capital allocation policy.

So this is something that I really want you to pay attention to. So our priority is always to invest in our businesses.

Of course, it is both organically and by acquisition. This will be at an appropriate pace and we have strict internal policies to ensure that every growth opportunity, be it organic investments or M&A that they can generate an attractive return on capital.

The presentation today that George will make, will make clear that we see considerable opportunities both over the short term and the medium term and across all our businesses. Nevertheless, the ability to invest our capital is inevitably subject to the timing of these opportunities and practical limits as to the amount that can be invested within a given time frame.

As a result, from time to time, the Board may conclude that it has got surplus cash and capital. And making this assessment, the Board will seek the financial leverage to build up -- to be below 1.0x, 1x.

The Board will also then want substantial net cash balances and then -- at both half and full-year ends and the policy will be subject to the Board’s discretion. Surplus capital may be returned to shareholders by special dividend or share buybacks.

Moving on to cash flow. So last year, the group generated £898 million of free cash after lease liability payments.

The free cash flow this year was lower at £469 million. I think the cash flow last year was actually large, so the drivers of the change that we had a small working capital outflow this year and that compared to the inflow last year and an increase in both the repayment of lease liabilities and tax paid.

The working capital reduction in the 2020 financial year of £106 million was unusual and was mainly COVID-19 related with lower inventories in Primark and some of our businesses, obviously, not repeated this year. The repayments of lease liabilities increased with the signing of new leases during the year and last year benefited from a higher level of rent concessions than this year.

The increase in tax paid this year is primarily due to a £23 million payment that was required by HMRC this year following the 2019 European Commission decision that found that the U.K. law did not comply with EU State Aid rules.

It was also affected by top-up tax payments made this year following a strong final quarter last year. Capital investment for our food business was ahead of last year.

And actually looking forward, George will tell you a little bit about some of the capital investments that we see in our food businesses to support that growth. Primark was behind last year with further delays to our store opening program caused by the COVID-19 restrictions but we still successfully opened 15 stores for the year.

Next year, we expect an increase in CapEx in Primark and that’s driven by investments particularly in technology and in warehouses. Dividends paid to shareholders.

This year, the £49 million are related to the 2021 interim dividend and last year the £271 million related to the final dividend for the 2019 financial year. Finally from me, let’s just have a look at the performance analysis by business segment.

Revenue was ahead in each of our businesses, our food businesses, grocery, sugar, agriculture, and ingredients, and combined was 5% ahead of last year at constant currency. Grocery revenues were 3% ahead at constant currency with especially strong sales growth from Twinings Ovaltine.

Although there was a small decline in some retail volumes compared with the elevated levels seen last year, the development of our brands continued. Adjusted operating profit however declined driven by weaker corn oil margins at ACH.

The profit decline this year, I think really should be seen in the context of the very strong profit increase last year, so it was 15% last year and so that gives you a 12% growth from this number over 2 years. Sugar delivered another year of very strong improvement and we’re really pleased with the result here.

Illovo recovered and all businesses delivered cost savings. Our focus in this business has been to deliver an acceptable return on capital over the cycle, and I would turn your eye to the return on average of capital employed which reached 10.2% this year.

Primark lost an estimated £2 billion of sales during the time of store closures, probably the number’s a bit bigger because of where the like-for-likes were when the stores were open. So when our stores opened after in the spring after a long lockdown, customers returned in large numbers.

George is going to take you through the trading in more detail. But after a third quarter like-for-likes, the final quarter was really affected by COVID restrictions and were down by 17%.

Like-for-like sales have improved significantly since then. Importantly, excluding job retention scheme repayments, there was a strong profit margin recovery reaching 10.6% in the second half and that’s all about giving us confidence full margin in the new year.

Coming by geography segmental analysis. Revenue and profit in the U.K.

continued to be affected by store closures of Primark. However, the job retention scheme repayments of £72 million is included in the number in ‘21 here and so without that margin, profit improved year-on-year.

In Europe and Africa, the profit recovery by Illovo, which is startling, more than offset the effect of store closures in Continental Europe. Revenue and profit in the Americas benefited from a strong performance from AB Mauri, yeast and bakery ingredients.

Asia Pacific sales benefited really from a good Twinings Ovaltine performance in the region. I’m now going to hand it back to George.

Thanks.

Thanks, John. We’re actually going to start this business review with Primark this time.

There’s perhaps more going on of relevance there than anywhere in the group’s, but I would ask you to still be paying attention when I get to agriculture at the end of this presentation. So retail, we estimate we lost £2 billion as John said.

Customers returned in large numbers after we reopened and the important part of this line is too well-ordered stores hugely to the testament of store operations people. We have magnificent capability in store operations.

It’s one of the things we do incredibly well. Delighted when inventory return to normal levels.

It’s where it is now turning inventory into cash allowed us all to breathe much more easily. The profit point has been made by I’m banging home one last time 10.6% in the second half, please don’t forget it.

The wide-ranging new sustainability strategy, Primark Cares was launched both with investors and also most importantly in stores and I’ll focus on that a little bit. 15 stores added in 8 markets including the first in the Czech Republic.

So this is how we lost 1/3 of all our available trading days versus 25% the year before and, obviously, not only did we lose trading days to store shut but we lost trade to other restrictions. That explains I think the 15% like-for-like decline in the first half when stores -- when some of the stores were opened some were shut.

We saw lower footfall, lower category expenditure. The third quarter, that was when people came back to the stores after the reopening across large parts of Europe, U.K., and Ireland in particular, very large basket sizes, queues, et cetera, all great.

And then the fourth quarter. I think we were really hard hit by the pandemic, the contact tracing alerts and we were also hit by the absence of people shopping for summer holidays and the absence of tourists.

In Iberia, we have a number of really good stores that bring tourist destinations around the coast of Spain and like-for-likes there were sort of half of where you’d expect them to be in a normal season. But that was last year.

Where are we now? Well, all the stores are trading, thank goodness.

Some still have restrictions but not too badly and not too many. And we’ve seen, as John said, a significant improvement in the like-for-like run rate from the fourth quarter that minus 17.

But -- and I have to say it, post-pandemic equilibrium has not yet been reached. It is bumpy.

We have some really good weeks, we have some disappointing weeks. We see the effects of new mask mandates, of new store limits on customers.

It all has an effect but we think it’s getting better but in a sort of bumpy way. We are confident in Christmas, we think Christmas will be good.

We think people will want to have Christmas together that they missed last year in the U.K. in particular and we’re well-stocked for that.

We think next summer, we’ll have a much better holiday and tourism season than we have this year. So that will -- another reason to thinking that our like-for-likes are going to build.

And I think over time, the nervousness that a lot of people still feel of shopping on high streets will reduce, but there is still significant nervousness amongst important parts of our shopping population. And then we’re navigating the supply chain disruptions but it is difficult.

We think over the next year, it will become less difficult but I’m not sure these difficulties in total will go away, but I think everything is just gradually getting better albeit with bumps. Those supply chain disruptions, so they start in the factories, there are power restrictions in China at the moment.

So inventory hand-off from suppliers, delays in getting supplies onto ships at ports, delays getting supplies off ships in destination, then difficulty getting supplied goods out of the ports into our warehouses. So it is difficult.

We’re managing it closely. We’re prioritizing the product that’s most in-demand.

So we’ve prioritized Christmas, we’ve prioritized elements of women’s fashion in particular which is relevant for Christmas. We think that we have -- that our scale gives us our advantage.

We have long-standing important relationships with transportation, a couple with logistics providers, and our warehouses are in good shape. I will go into that in a little more time.

So good stock covered before Christmas. So for the full year compared with last year, we expect that profit margin to remain sort of where it was as we closed last year, so above 10%.

The drivers of this, we are forecasting the stores will remain open for this year and we are forecasting that we will continue to see better like-for-like trading and it getting better as the year goes by. There is inflation in raw materials and distribution cost, et cetera, that we all know about, but we expect those pressures to be broadly mitigated by lower store operating cost and then transaction currency gain from weaker U.S.

dollar exchange rates. That is where we are now.

Let me move on to product. License as you will know well is an important part of our sales mix.

It’s still fast-growing. The relationships with global brands are getting stronger and stronger.

We’ve done some really nice collaborations over the last 12 months with Disney around sustainable product in particular. License now covers a whole range of media channels, gaming, TV, lifestyle, music, theatrical, toys, sports, et cetera.

And it’s not just all sweatshirts and t-shirts, increasing number of product categories and services, we’re working with license providers. New partnerships with the NBA and the NFL across a broad range of products.

We’ve got dedicated sports zones now in 20 stores and they perform very, very well. So staying on product, the Snuddie, our response to desire for comfortable living.

It is trademarked and that’s great and we can’t keep it in stock even though we’re prioritizing its out loading, it is -- Snuddies are flying off the shelf and why wouldn’t they be. Looking forward to Christmas, Famjams hit the stores again just last week and the response has been brilliant.

The Primark wrapping paper bag is back. And then homeware, much -- biggest ever home entertaining range and we think that that will play very well into the desire that we anticipate for families to want to get together and entertain one another at home.

Tremendous value, of course, in the home range. The vase you might be able to see there is £4 and the wine glasses, £2, £4, £12.

Embracing customer trends. Now this is important too.

We have a new and excellent range, which we’re calling the Great Outdoors. That parka on the left-hand side of my picture sells to a £40.

It is a very high-performance, high-quality item of clothing. It’s high functionality, waterproof.

We’ve got boots in the range, we’ve got breathable trousers in the range, and we can sell that product very successfully and are doing so. Higher price points.

Getting into the space that’s perhaps been vacated by others who have left the high street. It’s also important to say that now 60% of that range is made from sustainable or recycled fiber, 60% of it.

The trench coat on the right-hand side I think is also indicative of a space that -- opportunity that we have. It also sells out as soon as it comes into store.

It is part of our Primark Edit. These are classic designs that will last from season to season.

That trench coat is £40. I challenge you to find something similar -- of similar quality for under £100 anywhere else.

That Primark Edit range women’s closing at the moment, higher price points, high fashionability, longer-lasting, and we are selling them very, very successfully indeed. We think there’s space for us also to expand our home range.

We’ve now got dedicated space in -- for home in 40 stores. The picture on the left-hand side is Murray Hill.

It shows you just the extent of our ambition, much wider range of quality, affordable home, and lifestyle products. We’ve got ceramics for the first time, cookware, rugs, small pieces of furniture, all very attractively priced, and we think there is room for us in that category as well.

Primark Cares then and I hope most of you will have listened to our Primark Cares ESG presentation. We’re positioning Primark very overtly as a pioneer for making sustainable fashion affordable for everyone.

The 3 pillars inevitably, product and rightly planet and people. 1 in 4 items of clothing is sold from recycled or more sustainably sourced material.

The Cotton Connect relationship and the training of farmers developing world up to 160,000 by next year is really important part of what we do. We think that this gives us an opportunity to drive further sales with both new and existing customers and as we were at pains to point out in the ESG presentation, we really are confident of our ability to mitigate increased costs that may come from this Primark Cares program without any significant movement in margin over the long term.

Most important maybe we’ve launched this product not only to our investors but also to our customers under the How Change Looks tagline. These are the 9 pillars that you will have seen.

We’re very open with these with our customers and I think the How Change Looks, if we go onto the next picture, adds which are -- an information which are in-store now are very impactful. We have got -- it’s early days yet.

We’ve got a fantastic reaction from our own staff. They’re young, they’re our own shoppers, and they love what we’re doing here.

Positive customer reaction as I say, early days. Turning on to digital then.

We’ve done a lot of work this year on digital both thinking about where to head and where we are now. The diagnosis is -- our diagnosis is that we’ve got 24 million engaged followers on our social media channels but gee, we make life difficult for them.

There are evident limitations in allowing those engaged followers to get from a social media channel to our own website. We’re putting that, right, poor user experience and there’s no link from social channels to the website.

And then when you get to the website, we don’t actually tell you much, we don’t show you much, we show you about 20% of the range and we give you not great imagery or not. We don’t tell you whether it’s ranged in the store or not.

So it’s not a great experience. We also know that when -- that we’re only catching very limited amounts of the passing digital footfall from non-Primark’s related search.

So if you type blue jeans, women’s jeans into a search engine, Primark will come up on Page Z, I think, certainly not early on, and we think we can do something about that. The design and the development of the new digital platform is progressing well.

It really is well underway. We expect sometime in the first quarter of calendar ‘22 to have that capability up and running along with a digital marketing capability that we’re building alongside the improvements to the website functionality.

So the digital opportunity, mobile-first, of course, integration with social channels. We will take the product range on display up to 70% from the current 20%, we will showcase products which customers expect to browse, the photography would be much better, much richer product information, and you will be able to check product availability in your chosen store.

Selected digital marketing activities to drive search from non-Primark terms. We will see how much that advertising benefits us.

It’s all about driving conversion to purchase in-store. I’ve said nothing about online selling.

Let me then show you what I mean about richer product content. This jacket on the left-hand side, that’s the picture you would find in the website today.

The future, you will get as you would on any good fashion website all the information and the variety of pictures on the right. So that’s where we’re headed.

But digital isn’t just about customer-facing. It’s wider than that and digital is only one of the technologies that we’ve been getting on and developing, and I’ll come on to what I mean by that statement in a moment.

So strategic investments, they are important and very significant investments to bring operational -- greater operational capabilities and to deliver safer efficiencies. So the Oracle implementation is well progressed now.

It will be the technology backbone of the company to support further scaling of Primark and further addition of any other digital capabilities we may wish to adopt over future years. Financials and Purchase-To-Pay are already implemented.

They’ve been in for a couple of years and the final phase, which is warehouse and the stock management parts are rolling out at the moment. These projects are never without risk but we’ve got much of the risk behind us and it’s looking good for rollout.

We are also putting EPOS into all our stores. That’s rolling out at the moment and it will be done by the end of calendar year 2022.

It facilitates a consistent and improved customer experience and much more flexibility at the Till than we currently possess. This other technology application is the automation of our warehouses across our markets.

Roosendaal is complete, that’s in Holland, it serves France. That is complete and working beautifully.

I was -- my first trip outside the U.K. since March last year was the Roosendaal and it is a thing of great beauty, for those of us that love train sets.

Bor in the Czech Republic is -- will be finished this financial year, and Naas in Ireland, the replacement of the Naas depot is underway. We will be automating I think all our warehouses over the future years.

The paybacks on that work quite are interesting, and the more that we can free ourselves from needing to employ large amounts of depot warehouse -- depot labor, the happier I will be. So we successfully opened 15 stores in 8 markets in the past year.

You’re probably going to be a bit sniffy about that but it wasn’t the pandemic. And I think the important part of this slide isn’t the number of stores, it’s where they are.

For the Czech Republic, Wenceslas Square is absolutely flying. Another store in France, 2 stores in Rome, brilliant both of them.

A showpiece store in Rotterdam, second store in Poland, 4, by and large, smaller stores in Spain. We’re rolling out smaller stores to smaller shopping areas in Spain, that’s great.

Tamworth, which gets on the list is actually a brilliant store for us at the moment. And then 4 new stores in the states; 2 in the Northeast, one in the Midwest on Chicago State Street, and then Sawgrass Mills down in Florida.

The Florida store and American Dream are great. So a couple of pictures.

This is Wenceslas Square. It’s had queues outside it most days since been opened partly because there are so many shoppers wanting to get it and partly because there are still restrictions on occupancy levels, but Wenceslas Square is great.

And no tourists, so it’s a domestic trade and it’s very, very strong. And then Philadelphia Fashion District, second store in Philadelphia in a downtown shopping area and I think it’s now the third-biggest -- third-highest sales levels in the United States after Brooklyn and Florida.

So this year, and you’re going to be sniffy about this number too, we are planning to add 0.5 million square feet of additional selling space, 4 stores in Italy, fantastic market for us, 4 in Spain, and one each in the U.S., Chechnya, and Ireland. There are growth opportunities in all our existing markets and we have a well-resourced team of property specialists to allow us to find the sites that we need to capture those growth opportunities.

There is further growth in Central and Eastern Europe. We’re early days in that part of the world, but I just wanted to focus on these 4 growth markets, all markets which we know well now and have a really strong trading record in Iberia, France, Italy, and the U.S.

And let me start with the U.S. where we have a proven profitable store model and the whole market for us is now profitable.

So we’re covering the overheads of the depot and the management team and therefore new store openings will be very accretive to our profitability, strong trading performance, 6% like-for-like growth in a pandemic with still a lot of mask mandates in place where we are located. The trade in the newly opened stores demonstrates that we are really resonating with the American customer, 13 stores, say 11 in the Northeast, one in Chicago, one in Florida.

We’ve signed, 1, 2, 3, 4, 5, 6 new leases. So we’ve got -- we’ve got builder’s boots on the ground in all these.

Jamaica Avenue, which I think we’ve already announced, and Tysons Corner in Washington, Green Acres, I think you also know about, but 3 more stores in New York site; Fulton Street, second store in Brooklyn; Roosevelt Field Mall, which is on the way to JFK; and then Albany Crossgates, I’m not quite sure where that one is, but they will be really good stores for us and their site. Over the next 5 years, I want to lift everyone’s vision from last year’s store opening and give you a medium-term view of where we’re headed.

This is what we see today. So the U.S.

will reach 60 stores by the end of 5 years from now. The growth markets of Iberia, France, and Italy will reach 145 stores from the 89 we’ve got there at the moment, 90 once Sicily opens on December 1.

We will see growth in Central and Eastern Europe on top of that, and roughly, we estimate and we can see how we’re going to get to 530 stores in 5 years’ time from the 398 from this year. And of course, we’re going to continue to investigate other new markets as well.

If you subtract the 0.5 million square feet from that total number, you get a store opening program of about 1 million square feet a year for the out years. So there are a number of reasons to believe in the further growth of Primark.

The first one is the return to normalized trading. Shopping behavior is still significantly I think disrupted by fear of the pandemic.

Tourism and holidays, I mentioned a big part of our trade in the summer, in particular, and then the supply chain disruption will ease over time. But there are also more opportunities to increase customer loyalty, to win new customers for the brand innovation and core product categories extensions into these new areas, which I’ve mentioned.

I think sustainability delivery will attract customers to us. And then that digital platform work I think is very significant in easing the shopping journey that people currently have to make.

And then the accelerated expansion of selling space in major growth markets, markets that we know well. We’re not talking about growing in places that we haven’t been to yet, we’re talking about markets where we know that the brand resonates.

Let me just have a glass of water before I move on to sugar. So the return on capital employed, which is a really important measure for us and for everyone reached 10.2% this year on the back of strong Illovo performance, higher -- well sugar prices, significant cost savings once more again.

The U.K. production was well down but actually, the profitability wasn’t too bad and then the Vivergo bioethanol plant, which I’ll come back to is planning to restart in 2022.

It’s an important reopening for us. Just dwelling on sugar operations, we only processed 0.9 million tonnes of sugar.

The previous year, we produced 1.19 million tonnes. The growing conditions were the worst anyone can remember.

We had dry weather when we wanted water; we had water when we wanted dry weather; we had cloud cover and we also had severe impact in some areas in particular, of virus yellows, that’s in the U.K. The 2021, ‘22 campaign we’re processing now is looking much better.

Very much reduced virus yellow contamination. We think will get over 1 million tons of sugar.

We are experiencing very significant energy cost inflation. We’re hedged up for at least part of the year but the energy bill is eye-watering.

In Spain, lower volumes from the northern sugar beet crop, the southern sugar beet crop was very good, and then the low sugar production was good in the year, particularly Tanzania and in Mozambique. Moving on to Illovo, which is the most important -- sorry, the biggest part of our sugar portfolio.

I want to say first and give credit to a quite extraordinary response from leaders throughout the South African business for the response and leadership they showed in the face of really awful civil unrest in KwaZulu-Natal in particular. Villages, townships that people knew very well were on fire and we had managers guarding their own communities through the night.

Factories were shut down for a period of time, came back up again really very, very quickly indeed, but on top of really awful COVID infection rates, to be coping with that too was an immense challenge and I’m just in awe of them all really for what they achieved. Profit recovery across most parts of Illovo was very strong.

The domestic sales and regional sales were very good. The development of the retail route to market continues.

We get better and better at branding and distributing sugar to the final point of purchase. We benefited from restructuring activities, which reduced costs and simplified the business in many respects that we undertook last year, particularly around our Head office build down all over.

Sugar prices then just for reference, they bounced around a lot, but they’ve gone up a lot too. So like most commodity prices as the pandemic started, they absolutely crated but were then -- were up to around £0.19, £0.20 at the moment, and I don’t think they’ll come down much in the medium term.

I don’t think Europe will produce enough sugar this year to do much about the tighter inventories in the European market, and I think with very high oil prices there’ll be a lot of ethanol produced in Brazil out of sugarcane. So we think sugar prices will be high for some while.

We also think that ethanol prices will be high and that’s great because sometime in the early part of next calendar year, we will be reopening this beast. Of course, it’s a -- we intend it to be a nicely profitable venture.

It achieves the equivalent. The ethanol that comes out of the peer will reduce the carbon produced by the U.K.

car fleet by the equivalent of 260,000 cars. Scaling that, that’s how many fully electric cars there are in the U.K.

and you won’t have to build a single new car to get that saving, number one. Number two, and it’s a sort of the back of the envelope calculation I just did yesterday, we reckon that that energy saving is the equivalent of about 17% of ABF’s total carbon output.

It’s a big deal. Moving on to grocery then.

Revenue growth despite last year’s higher sales levels. Twinings Ovaltine, we just cut and pasted the line from the last 15 presentations.

We’ve been reinvesting some of the growth and some of the margin back into marketing in a number of places, Twinings in -- of course, but also World Foods brands, Acetum and Yumi’s in Australia. We cut some of the marketing spend to save cash in 2020.

We’ve put all that back and then more. We’ve had a difficult time in the U.S.

commodity as oil prices went up as fast as could be. And I’ll come back to that in a moment, but the margin compression in the United States.

And then of course we’re seeing considerable cost inflation at the moment and supply chains are difficult. On that latter one, we’re managing but it isn’t easy and the cost of it all has gone up.

So Twinings Ovaltine, strong revenue growth, particularly in China, which we’re delighted to see. The development of the Wellness Tea ranges, both hot and cold, is progressing very nicely.

And it’s worth pointing out for the first time ever we are now the leading tea brand in France. Ovaltine continues to see good sales growth.

They had a good sales year at Ovaltine in emerging markets, particularly but not exclusively in Thailand. And then the route to market work in Germany, which has taken us the best part of the year is important.

We’ve put in place our own sales force. We’re no longer be going to market through a distributor and we think that Ovaltine and perhaps particularly Crunchy Cream -- what we know it resonates very well in the South of Germany in particular, but I think there is a lot of potential for Ovaltine generally to grow in the German market.

And we’ve given our sales the capability to push that growth. Let me just show you an ad some of you might have seen already in support of Superblends, so Wellness teas.

As you already know, that’s Nino SLG performing Prison Walls and promoting Twinings Wellness Tea. Going on with grocery and picking up some highlights.

World Foods had a record sales year. Reinvested the benefits of that into marketing spend both in the U.K.

but also particularly into the U.S. where we’re seeing very encouraging growth of both Patak’s and also Blue Dragon.

They’ve had a good year. And then Acetum where the task is to grow the Mazzetti brand over the years, that work is going very, very well.

And they’ve had a good year of growth on the back of good advertising, lovely packaging, and development of routes to market. Allied Bakeries, so lower sales following the exit from the Co-op.

We have a new bakery partnership with a leading U.K. multiple retailer.

I’m not sure I can be any more specific than that, but it’s very good news indeed. And then I think it’s worth pointing out that Kingsmill is leading in the use of recycled material in bread bags, so that’s No Crusts 50/50 with bread bags using recycled bread bags.

There’s a limit to how much recycled material you can put next to food product, but we’re there first. Grocery.

Sharp increase in corn commodity prices last year. We’ve now got price increases.

We’ve now got the price up to offset that. But there was a gap, a timing gap, I think almost inevitably, which led to that profit compression in the back half of last year.

So the prices are now up. The bakery ingredients, which boomed across during COVID lockdown when Americans baked at home as well as the Brits, they’re still well ahead of pre-COVID levels, so that’s great.

George Weston Foods in Australia. They’ve had a more aggressive lockdown and less sympathy shown to food production than anywhere else in the world of ABF.

We’ve had operational disruption particularly in the State of Victoria. We lost Dandenong bakery for a good part of the week just about 3, 4 weeks ago and the meat works at Castlemaine, which is still operating with restrictions.

Shut down for 219 days in Melbourne has led to some really very difficult situations with some of our staff cocooned with the isolation that’s come along from there, and there’s been a focus on employee well-being. Coming out of lockdown for some people is as hard as going in was for others.

The new animal feed mill in Western Australia, the construction of that is well underway, still looking good. And another year of strong growth for Yumi’s, our dips business, and we’ve made our first ad there.

Great food values. It is market leader in dips in the category, which is still primarily branded in Australia.

Moving on from grocery to ingredients. Mauri had a good year.

Strong margin and profit growth, all the Souths: South America, South, and South East Asia well ahead of previous year. John mentioned the joint venture in China, that’s great and is working.

And it’s very important to tell you we’ve opened our new Global Technology Centre in the Netherlands, which on my trip to see Roosendaal, I also went to visit. This is, I guess, the intellectual heart of bakery ingredients in AB Mauri.

It’s where we develop the technologies that we will then roll out across the world. I saw a very convincing sugar-free muffin.

I ate some of it too and that kind of technology it’s not easy to take sugar out of baked products, sweet baked products but that work is here. We don’t think there’s another with -- anywhere in the world, which has the capability that we have to invent new science and translate it into product that we’ve got at Etten-Leur.

Staying in ingredients, yeast extracts growth in ABF I was again very encouraging driven by flavorings for meat substitutes. Our yeast extracts have a meaty note and that obviously appeals to those people producing meat substitutes.

Enzymes had a record year with growth of products with bakery, food, and the textile markets. It’s technology that is important for enabling customers to improve their environmental footprint.

We’re working hard with the pulp and paper industry to formulate out chlorine that is currently used to bleach paper in particular, and that’s a technology that’s coming along nicely. A lot of innovative new products produced at our yeast business.

We’ve built a new pilot plant, which will allow us to bring those to market and to full-scale production much faster than we have been able to before. And here it is in Rajamaki in Finland.

Important facility for us. Right.

Onto agriculture. We benefited from higher commodity prices and good feed volumes in the U.K.

as food service has returned and driven chicken volumes in particular. The higher commodity prices, the volatility of commodity prices gave an opportunity for our trading company Frontier to do well and they did.

I wanted to just to point out 3 other parts of the agricultural business, which are growing well and I think points to the future. AB Neo is a business that specializes in technology for young animals, chicken, pigs, cattle, and it’s building well, building its sales capability and the technology it possesses.

China feed last year was well ahead. They’re recovering in China from African swine fever.

We’ve opened a new mill in a place called Fangzhuang in China and I think that business has got a lot of future growth as well. We’re building a new animal feed mill in the east of England.

Production -- there is an opportunity to consolidate factories into the new one and also there is commercial opportunities there. And then, we probably have more capability both in arable, but also increasing in dairy around precision agriculture.

We probably have more capabilities than almost anyone else in the U.K. market and we think that it’s going to be very exportable know-how that we’re -- that we currently possess and are developing fast presuming agriculture again important to allow farmers to get more out of less.

So just to summarize the food businesses, we’re working hard to manage the very significant cost inflation and the supply chain disruption. We’re developing well the geographical reach, brand growth, new products.

Acquisitions have been an important part of the growth of our food portfolio over the years, but fewer of those I think are likely to occur with the very frothy price multiples that are evident in the marketplace as well. We’ve entered auctions for a number of assets over the last 12 months, and have been amazed by just what extraordinary prices others have been willing to pay for assets.

Increased organic investment though. Sugar, a major new project in Tanzania agriculture, new feed mills in Australia and the U.K.

Ingredients, we will be spending a lot of money improving the capability and the capacity of our yeast extract business. And then Grocery, we’re out of capacity in a number of different areas, which we’re putting right.

So outlook for the group. Absent store closures and I don’t -- personally, I think we are unlikely to face them.

Sales and profitability of Primark will improve significantly. We think their operating margin is going to be above 10% through this year.

Cost inflation and supply chain challenges will cope with them and there’ll be broadly mitigated, and we really do have a lot of confidence in the medium-term growth prospects, and I hope we’ve conveyed that enthusiasm too to you. Food.

We’re working to mitigate the cost increases, and we’ve got to complete these investment projects well. ESG, the reopening of the bioethanol plant is a great step forward I think, and in the next investor briefing, which will be on the environmental factors, most -- the most material environmental factor of the group I think it will be March or -- I think we’re still trying to find a date, but it’s coming reasonably soon.

So we will see significant progress for the group in adjusted operating profit and adjusted operating earnings per share, both at the first half and also the full year. I would point out to you that it is -- I think it was last week a year ago when the U.K.

shut down for the first time. So were lapping zero sales in our biggest market now.

So that will drive profit -- it was driving profit improvement right now, and then we think will generate a lot of cash again this year. Thank you.

Let me have a glass of water and go into questions.

Thank you. So, we’ll take -- so Warwick Okines to the front.

It’s Warwick Okines from Exane BNP Paribas. I’ve got 3 questions, I’m afraid.

The first is on Primark. Could you be explicit about whether your Primark margin aspiration for this year assumes no like-for-like price inflation, please?

Secondly, you’ve made a couple of comments on inventory already, but I’m just wondering if you could say where you feel inventory is today at Primark relative to last year. And thirdly, on the capital allocation policy.

It’s clear that under -- under 1x net debt to EBITDA means that you will indicate surplus cash. But how should we think about the well under 1.5x comment that you also make?

Are you basically saying that you feel 1x is about the right number to aim for?

Okay. Let me just say and say helpfully that we don’t expect -- sorry, we won’t put prices up in Primark this year.

We don’t need to. We’ve got cost inflation covered by savings and by currency.

Inventory, John would you...

Well, actually, inventory, we were a bit lower than we wanted last year. We’re actually broadly in line year-on-year, but still probably not quite the stock cover that we’d like.

So if that’s makes sense. So -- but it’s not one of those -- we’re well down this year compared to last year.

So that’s broadly what they are.

It’s very hard to tell what the shortages in certain products. Our costing is in sales because we know that people substitute very willingly in the Primark store.

So you might not have t-shirt -- a white t-shirt in your size but there’s probably another t-shirt in your size. And we do have gaps in that t-shirt range at the moment.

And then some of the -- some of women’s fashion on the more sort of basic end.

From the capital allocation, right.

Yes.

So I think if I heard your question well. I think so well below 1.5x is something that we put out.

Below 1x the same look, we’re looking into the territory of surplus capital. One of the things that I do want to make very clear though is that we don’t see 1x as a target.

So in other words, if you saw it as a target then you’d be saying well, okay, if you’re below it, then you would actually do return of capital to actually get back to that. But what we are saying is below 1x that’s the area where the Board will say, look, I think we’ve got surplus capital here, and let’s consider.

And then you know what we’ll be doing? We’ll be looking at what are the potential opportunities for investment or whatever.

So it’s not an automatic but it’s telling you that’s the area where we are. And look, just to reiterate it, this capital allocation policy is new for ABF, and so it’s one of the things to just highlight today.

Thank you. Richard.

Richard Chamberlain, yes.

Richard Chamberlain, RBC. Couple of questions, please.

So one on Primark. I wonder how we should think about the -- any potential need for sort of cost to come back into the business in particular sort of staffing, labor cost as the revenue sort of rebuilds.

And then on Grocery, Twinings Ovaltine. I wondered if you could maybe give a little bit more color on sort of recent trends in sort of the price mix volume and what exactly is happening to marketing cost.

Did they sort of dip and then you sort of rebuilt the -- actually, you’re sort of stepping that up and we might then see that now as a sort of accelerated top line because of that marketing investment?

So we -- Primark, sorry Twinings Ovaltine marketing spend was down last year. That was both on our request to conserve cash, but it was also because some of the programs -- some of the marketing programs weren’t ready.

So they’ve fallen into this year. The sales growth in the Ovaltine brands in particular was as strong as we’ve seen it for years and years.

Twinings has had some specific issues in Australia and the U.K. with competitor action or fall out with customer.

This is normal stuff. So that’s been held back a little bit by that.

I think we will see the marketing spend increase somewhat particularly new markets in Ovaltine, new products in Ovaltine, and then the Wellness campaign in the U.K. -- sorry, Wellness campaign internationally, but starting with the U.K.

and Australia.

I mean, one thing to say about the market investment is always make sure that it’s really always been at a consistently high level for Twinings Ovaltine. We are seeing changes about the sales in Twinings Ovaltine, high single-digit growth in sales.

So I’m saying that number because it is such an important business for us. It had a very good sales here.

I think we’ve got -- well, I think there are 2 things going on in in-store costs at the moment. In some stores, we don’t have enough labor.

So the King of Prussia store, we’re running at about 60% of the ideal labor complement whereas getting staff in the States is really, really hard. But alongside that, there has been a very well-ordered set of efficiency programs in the use of in-store labor, and I think there are further gains to come from that.

Thank you. Clive Black.

Clive Black from Shore. I just wanted to say capital allocation policy also feeds into the wider thoughts about what you acquire and what you retain within the business.

Does it have implications for the broader portfolio, and within that respect, you said that returning capital is very important to the sugar business when you commented and clearly Primark’s immature business, but how important is returning capital to your judgment of Primark, please.

I think it is really, really important particularly as we roll out in the States. The opportunity to commit too much capital returning to little in America is -- well, a lot of other people have managed to achieve that.

And we’ve got -- I bet John and I are both bonused on Primark returns. The history of Primark rollout is that these stores stop producing a really good return very, very quickly.

So there is no good reason. It’s not as if you’re building up over a 5 year period of sales.

You’re -- what we typically see is that a new store maybe in Italy opened spectacularly easily, it falls away a bit for a year while we get the trading patterns right, and builds again from there. But we wouldn’t go near an opportunity in Primark to open a store, which we didn’t think has a good return on funds invested in it and didn’t have that pretty quickly.

No, you shouldn’t read anything into portfolio. The only right way of looking at portfolio is everything has to be looked at in its own -- on its own merit.

And if we don’t think we can make return on an asset in medium term then we shouldn’t have it.

Clive, one thing that I think I mentioned in my words at the beginning is we always have had quite a strict capital allocation policy within the business. So we’re not all capital projects.

We don’t just suddenly say, well, okay, go spend £50 million or whatever. Each project is looked at and in fact, somebody that helps us look at this is actually at the back of this will know.

So we do really have a focus on return on our investments, always have and always will, and it applies to Primark as well.

And that’s what driving down the availability of M&A that makes sense. People coming to you and saying, we think we can get a 15% return in year X, you just go, no, I think we’ll wait to come up.

Simon Irwin, please.

Simon Irwin, Credit Suisse. Can you just talk us through what the U.S.

business would look like with 60 stores? Can you get it all out of Bethlehem?

Does that mean a business with largely localized sourcing, et cetera if you can just kind of put a bit of color around that? Within Grocery, I kind of noticed your kind of optimism as it were in being able to pass through higher costs.

I mean, are there any kind of black swan events that would change that? Are there any kind of commodities or situations which potentially do worry you?

And just in terms of capital return, do you think the large shareholders have a preference between special dividends or buybacks?

So the U.S. business, you’re right to ask us about.

It -- the ideal sourcing mix for the U.S. isn’t the same as the ideal sourcing mix for Europe.

And -- but at the moment, we are sourcing still for both from the same factories. In particular, I think Vietnam is a more important Southeast Asian sourcing location for U.S.

businesses, and then the near broadly equivalent to Turkey for us here is Central America. So as that business grows, so we will invest our time in getting that supply chain optimized for the business.

The management now is primarily U.S. We’ve grown new store managers from departmental heads and more junior than that.

So there -- although they’re American, but they’re very Primark now. And I think we’ve now got a critical mass of stores that we can keep on promoting people that we’ve grown ourselves.

I think we’d be stretched at that level.

No, I don’t think so.

But there is expansion space in Bethlehem. I mean, where we put depots over time in the States is a major -- working that out is a major bit of work.

So I’ll touch on grocery, George. You asked about recovery of input inflation and then also what might be a black swan event.

Let me say this sort of in environment we are seeing. There is -- the pickup in inflation has surprised us.

I mean, it’s certainly over #2 in reviewing our businesses over the last 3 months. So inflation has picked up and across a very broad number of categories.

So it isn’t just a couple of commodities, it’s from energy costs. We’re very familiar with the gas prices here in the U.K.

right the way through to packaging and so on. So it really is quite widespread.

The confidence of recovery -- interestingly enough, if it’s a very slow level of inflation then it’s one of those things that previously I will just get on with it and sort it out. When it does become bigger?

The industry itself has to do something about it, and I think in a number of categories that’s really where we are and then you make your views as to the strength of the brands or the business positions that we’ve got to enable us to actually do that. You ask about a black swan.

It’s an interesting question, Simon. But gas prices in the U.K.

look pretty black swan to me. It went from 40p a therm to a 1p getting on towards £4.

It was like to turn footnotes going to come back down again. I think what we are saying is that we are abreast of that.

It is something to be managed across the piece, and I think in looking at maybe our food profitability next year just the experience we had with ACH this year when it’s going up like this, there is that lag effect. So just bear that in mind, but is it something that completely takes away the strength of our businesses?

I don’t think it does.

And then on the capital returns, I think it’s at modest levels. I think Wittington is indifferent.

Okay. I think we have some questions that are online.

So Andrew, if you could take the first one, please.

John, George, sorry I can’t be there in person. But I’ve got a couple for you.

First one is on the 10% margin on Primark. I was wondering if I can probe you a little bit on that.

Could you talk about the savings on lease costs and warehouse automation? I was wondering whether you can quantify those savings.

I think I’m right in saying you’re hedged on freight and currency. So if the H2 margin is already 10.6% just wondering why we shouldn’t be thinking about a margin that’s more like 11% to 12% next year.

Just trying to understand the puts and takes on the margin comment for next year. And then a second one is on Central and Eastern Europe for Primark.

You mentioned a number for the U.S. and for the growth markets but you didn’t put a number around Central and Eastern Europe.

Wondering whether you’re able to do that. And then just finally on the like-for-like.

I know it’s only 6 weeks paper, but it does seem like Spain and the U.K. have picked up a little bit.

Can you talk about how Spain is trading in the last few weeks?

George, touch on just the margin first of all.

Yes. Look, we get a number of lease renewal events every year and our experience over the last couple of years has been that lease costs have come down significantly at those lease events.

So I think there is a following wind of lease cost reduction, but we do have in many cases quite long lease terms.

And so we’ll see it over a number of years, maybe -- compared to maybe a few other retailers that have talked about this. Say, I think they’ve got a shorter period with more in, so I think ours will be -- it’s coming, but it will be over a longer period of time compared to those.

And then the automation projects give us a very good return, but we can’t do -- I think we’ll struggle to do more than one at a time. So again, following wind, but it will take time to come through into the margin, and I don’t doubt that there will be other increases in distribution and warehousing costs that will offset some of that saving.

George, if I could just say one thing. Everybody asks us constantly about sea container freight.

But just to say that we have basically contracted. So the guidance we are giving you is with costs that are -- we know through October 2022.

There are other costs in fabric in particular that, by and large, aren’t in the first half numbers because we are contracting 6 months in advance, but we’ll begin to come through later on in the year. We hope that the agricultural commodity prices will be a blip then they’ll return to more like normal levels in due course.

Central and Eastern Europe maybe 40 stores. We’re less certain about those areas because when you are into them.

And then you asked a question about the Spanish performance. Absolutely thrilled that last week we had positive like-for-likes in Iberia for the first time in a long while.

And yes, but it was the first.

Is that mainly a comp effect, George, that improvement in Spain or is it an underlying improvement?

Slow down. I’m just translating the word comp.

Yes, it is a 2-year like-for-like, but it’s the seasonality that’s the point as well.

Yes, and also the -- we’re past the tourist season. So the drag of that in the numbers has been largely removed.

So the domestic trade, but it was great to see Gran Via. I think it was in the sort of mid-90s like 2-year like-for-like.

Three from me, please. The first one was just on the digital initiatives that you’re talking about through -- for Primark where you talk about being able to give the consumer the range availability, are you talking about like a light stock availability on the website or is that more about what ranges are available in which stores.

And am I right in understanding that we really shouldn’t be expecting any sort of connecting reserves initiative or anything in the next say 12 to 18 months? That was the first one, please.

The second one is just following on from the prior question. Are you able to give a sense of where those like-for-likes actually are trending on a sort of a 2-year basis at the moment, please?

I think the exit rate in Q4 was around minus 10. So is it fair to see it has improved since that exit rate as well as the kind of overall Q4 forecast?

And then my final question was just a bit broader thinking about as we go into the period of sort of inflation in food and essential items in particular, how would you expect your consumer to react to that when you look at history like perhaps going back to 2011? Do you think they will actually be spending more with you or do you think that they will actually end up spending less thinking about pressure on essential items.

Just any sort of high-level thoughts on that would be really appreciated.

Georgina, the -- I’m not sure that we got every part of that, but if I’m right...

Was it size availability? I was -- so I think Georgina, I thought your first question was about what will the website give in terms of your -- the consumers understanding of what’s in the store?

No, we intend to tell consumers whether a style is ranged in the store that they ask about. That will be the limit.

So we think that giving size availability isn’t possible given the rate of sale of stocks on busy days in particular. That would require RFID technology, which we’re not planning to invest in at the moment.

Click and reserve, no. This is about information for customers and we think that it’s a good end in itself.

John, do you want to pick up the 2-year like-for-like?

The 2-year like-for-likes, Georgina, we’ve had 6 weeks of trading in the new year and I really do come back to -- I am incredibly loathed to give only because we’re seeing a lot of volatility in like-for-likes. So it isn’t like I just don’t want to say, it’s I just think I’m always worried about the thing being misleading over such a short period of time.

But let me put it -- and it depends on which week you’re looking at or whatever. The trend has improved over those 6 weeks.

And let me just put it this way, the last few weeks, better than the exit rate for last year as well. So if you asked about the minus 17 for the quarter, the exit rate was minus 11, it’s better than both.

Rather marvelously, last week was good because of weather. We haven’t talked about weather affecting this business for the longest time as you know.

Welcome back, weather.

Welcome back, weather. Consumer reaction to inflated food prices, typically people save -- they try to economize and they do so in 2 ways, what they buy and where they buy it are the big ones.

Multibuys become much less attractive to people whose budgets are stretched. They look for discount ranges in discount outlets.

Sadly, all too many families economize by cutting down on fresh fruit and vegetable.

Thank you. So we’ve got I think a couple of more questions.

So we’re going to take the next one, please.

George and John, and my apologies for not being there in person. A couple of questions from me as well.

The first one is on your like-for-like, but more like the medium-term like-for-like profile because pre-pandemic you were running at a slightly negative like-for-like for a couple of years and now you have a pretty nice and ambitious store rollout plan. So are you confident on the fact that you’re going to be able over the medium term to expand in all these countries, and then at the same time being able to maintain a positive like-for-like over the medium term?

That’s question number one. And then my question number 2 is a little bit more high level.

So I just wanted to know whether you believe that the volatility of Primark sales over the past year was uniquely due to the COVID-related restrictions and situations overall or whether you believe that perhaps you might have lost some market share to other players given that the apparel market is becoming more competitive, particularly online and undoubtedly there has been some permanent shift to the online channel. So I just wanted to understand how you’re thinking about this and the market share developments for Primark?

Elena, if I can frame the first question. Maybe, George, you want to take it?

So you’re asking, we did have a trend of like-for-likes that were negative in the lead up to 2019. George, you may want to talk about that.

If my recollection would have been one of very small negative in the U.K., but maybe minus 1 or something, but then there was that very big negatives in Germany and you remember, we were looking to address those. George, if you wanted to add?

No, I think that’s right. Look, there’s a reason that we’ve emphasized the point that we haven’t reached post-pandemic normality.

So I think we’d be guessing if we said with any certainty what our belief. I don’t think we’d be honest if we said where this is all going to end up.

There’s a lot more capacity online. People have shopped online throughout.

We’re seeing something like 40-odd percent of all clothing now still in the last period of Kantar data bought online will not go down I think so, but I think we’re able to sort of wait and see. We were one of the very few clothing retailers who were shut through the second pandemic -- through the second lockdown.

Even my garden center got into selling clothes, the supermarkets put extra space in all sorts of people who had never sold clothes before got into the world of selling clothes. I think we’ll get most of that trade back.

It will take time, but I think it will come back to us. But I think over the next 12 months, certainly the much bigger effects are going to be holidays returning, confidence returning in people’s views of the risk of going to the high street and then tourism coming back.

In the longer run, we know we’ve got great growth prospects in these 4 growth markets and we will do our best to retain our market shares in the U.K.

And if I could just add to that point. I mean, I think just given the scale of the disruption to Primark stores to actually come back the way that the Primark stores have.

Said something about customer loyalty alone. Elena, of course, you’re right.

There has been a huge amount of change and churn in probably the U.K. Probably the U.K.

has been one of the most disrupted in where it is but for me the promise of Primark -- I think the addressable market for Primark is the whole of the apparel market. It gets in the offline market, which is reducing, and I think that is a key and that’s the way we look at it.

I’d also add 2 things that we mentioned in the presentation. We know we’re losing shoppers in their online journey.

We can get quite close we think to having a fair stab at just how many people drop out of our network because of the incapacity in the supply -- in the digital offering that we have and we’re putting that right. The second one is we know we’re losing shoppers who don’t think that we are as sustainable in our clothing selections as we would like them -- as they would like us to be.

And again, that’s why Primark has really is a consumer-facing proposition that’s important to us. And we think that those Primark Edit collections, that’s all new stuff.

Hone this new stuff. So there are sources of growth alongside challenges because of changes in some people’s shopping habits.

Just 3 quick questions given the time. I mean, you talked about only 70% of the range being available to see online.

I just wondered why it’s not 100%. Secondly, you talked about not wanting to invest in RFID.

Now a number of other retailers have, I would say, gone on quite length about the benefits of RFID. I just wondered why you thought that the cost benefit analysis for RFID was not worthwhile.

And then finally, I think you probably add to some of this, but all the town center locations, the drag that we were seeing before, is that drag getting slightly less on the overall group at the moment?

Okay, Adam, thank you. We’re not going to put 100% on because people don’t want to know that there are -- there’s underwear and socks available in Primark.

They already know that. So let’s not flash up their website with stuff that they don’t want to see.

RFID, we keep a very close eye on it. It’s about cost benefit at the moment.

We think it’s still too expensive at our price points, number one. Number two, some of the functionality is not yet where we would need it to be in order for us to make good use of it.

And then town centers is still a drag, but less so. That’s the big destination stores which are the drag with some town centers are fine.

It’s the ops of the streets and the Alexanderplatz of the world, which are the drag.

Just one from me, please. I’m just looking at the 530 store target you have for 2026, and if it’s 1 million square feet a year then the store size would be quite a bit smaller.

So about 33,000 square feet compared to the 45,000 you had last year. So I’m just wondering whether it’s going to be smaller stores going forward or you’re going to be putting down more like 1.3 million square feet for the year?

Okay. That’s very good question.

Firstly, I -- you probably know I don’t like the word target. It’s what we can see at the moment rather being a target.

You’re absolutely right. The smaller stores are driven by the infill strategy in Spain and smaller stores in the States.

We’ll be opening bigger stores I’m sure in Italy than that 33,000 average. But given how much of that new space will be, the 2 markets of U.S.

and Spain it pulls numbers. We opened Envigo just recently and I think it was 25,000.

Yes.

Okay. Good.

I think at that point, thank you very much, everybody, for your attendance this morning. Thank you.

Thank you.