Greencore Group plc

on our website as of 7:00 AM this morning. You could follow it live on the webcast, as well.

And also, I would like to draw your attention to the forward-looking statements on Slide 2, and it [Indiscernible] for this morning's presentation that you can find on Slide 2. So, with that, thank you, and I'll hand it over to Gary.

Good morning, everybody. Thanks Jack, and very much a big hit.

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Of course, you are aware, we announced the 3rd [Indiscernible] in Greencore, and in March 2022, [Indiscernible]. has been an outstanding leader for over 17 years in the business.

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They have helped deliver the growth needed to [Indiscernible] and perhaps [Indiscernible] for sensitivity. On a personal note, I would like to recognize expense, parts, and relationships, a topic that I myself have enjoyed.

And has expanded to many hiring’s and some significant challenges over that period, and will be printed over two mg per meter plan to comelier but again that is. As you would expect, we activated our contingency plan immediately upon the news.

I will take a more active role in the business and will assume the role of Executive Chair from the 31st of March of 2022. And I'm delighted that our Chief Commercial Officer, Kevin Moore, has assumed the role of Deputy Chief Executive.

Probably most of you know Kevin. Kevin is here.

Those online obviously can't see him, but he's the good-looking guy on the right from the chart, with his name underneath it. So, between Kevin and myself, we will manage the transition seamlessly in the intervening period without the benefit of Patrick continuing to lead the executive team as CEO.

We've also initiated the search process immediately to appoint a new CEO, and we will update you on progress as soon as we have it. So, with that, Patrick, I will hand over to you in terms of financial year for more highlights.

Thank you.

Thanks, Gary, and thank you for your kind comments. As you said -- as you say, hopefully we will have plenty of opportunity between now and the end of March to -- you and I and for the wider business to reflect on my time here.

That's not the purpose of today. The purpose of today is to talk about the 2021 results and to set out how the business is currently trading and what that means for outlook for the year ahead.

I mean, in that context, I want to thank so many of you for coming in person today and the -- for those of you joining by conference call, we have about 25 people or so in the room here today. We've got everyone here safely.

I think people are learning how to take [Indiscernible] tests, travel safely, but people are getting back and being mobile again. That's good for all of us individually.

It's also good for the Greencore business. And in that context, we were very keen to have the results session today, we held physically rather than just virtually as we go forward.

As Jack said earlier, this presentation builds on the Greencore results which were released at 7:00 AM this morning, and the annual report, which has also been released this morning. And indeed, later on today, we'd be releasing our 2nd annual sustainability reports, and I'll say more about that later in the presentation.

But over the next 35 minutes or so, Emma and I are going to run through these results and I'm going to make a couple of introductory comments around where the business is and we'll run through the results. I'll come back in on a strategic and operating review.

And Emma will finish by going through our thoughts on outlook for the year ahead. For those following on the conference call, I'm now on Slide 6, which is the executive summary.

The year has been all about momentum or all about progression. If I take just 3 economic metrics by way of example.

On revenue, in the first half of the year, our business was down 19% year-on-year. In the second half of the year, our business was up 35% year-on-year.

And indeed, as we finish the year, and I think this is probably the most important single revenue piece of news, we were back, as an overall business, to a higher level of volume and higher level of revenue than we would've been pre-COVID. There are some nuances across different parts of the portfolio.

But overall, our level of volume output was back to pre-COVID level as we finished FY2021. And we also have been seeing a path of rebuilding margin and rebuilding profitability, we'll take operating profit as a metric.

In the second half of FY2020, we actually lost money. In the first half of FY2021, we broke even.

And in the second half of FY2021 we made $39 million of profit. In other words, the full profit for the financial year was in the second half.

From an operating margin perspective, we went from 0 in the first half to 5.2% in the second half. We have further to go on returns and margin, but the trajectory is positive and the build back of returns and margin is underway.

Partly, and I think perhaps most importantly from a financial perspective, has been where we have got our balance sheet as we finish the year. If I take this time last year, as many of you will know, we actually went to the market to raise incremental equity.

We wanted to do that to give us headroom for the uncertainty that lay ahead, and it turned out to be pressed into actually given the lockdown that was imposed in January '21 on a national level. But it also gave us the resources to continue to build the business and to run the business with a view to building and return over many years rather than just getting through FY2021.

But once we got to the second half of the year, and as volumes came back, if I could say so, the cash-generation, the business was absolutely spectacular. And we finished the year with net debt of $183 million and our net debt to EBITDA or leverage ratio from a bank covenant perspective, at 2 times.

That is our supply chain purchasing, and in particular, our finance team deserve enormous credit for that and put in effect we've taken our business back to the source level of leverage that we were at as we came into COVID, and we've done that. It's probably more quickly than we'd expected, I think it's very encouraging.

Notwithstanding those 3 financial metrics, the year has felt tough. I think anybody who is working in the UK food industry, in particular, through FY '20 and FY '21 has found it challenging.

The well-documented COVID challenges impacted on demand really through until late spring of 2021. But since then, most of the focus has actually been on the supply-side challenges rather than demand-side challenges, challenges which, in particular, hit an efficient, just-in-time supply chain, which is the way in which the UK fresh food industry and fresh prepared food industry is setup.

And working through that, I think has been demanding. I think we've done it nicely, but it's been hard, and it's been a real theme, I'd say more about that a little later in the presentation.

And while Emma is going to go in to our outlook statements in more detail, I might just make 3 comments in relations well, if I may. First of all, we've got good momentum as we've come into FY2022, good momentum on revenue and good year-on-year progress, which we need to have but which we are getting.

And in the context on the assumption that there is no material region -- multi-regional or national lockdown in the UK. And I don't think there are going to be, but on the assumption of they're are not then we are comfortable with the current market expectations there across the financial metrics that are in the market for our business and Emma will say more about that in a while.

And then lastly, given the recovery that we've seen in the leverage position on the business and we fully anticipating reestablishing capital return to shareholders this year. The exact mechanism by which we will do that will be determined by market conditions and Greencore conditions, as we go through the year.

But we do fully anticipate returning capital to shareholders, as we go through this year, which again is a sign of a healthy business and our capital management system working. Turning now to Slide 7, as everyone will know, who's followed Greencore central to Greencore is the UK Food to Go markets and our position within that.

We currently have somewhere between 65% and 70% market share of pre -prepared damages in Britain. And so it mattered how we rebuilt revenue through the period and people who have been following us over the course of the last 20 months, will know that we've repeatedly shown mobility data and we repeatedly shown the -- what that meant for Food To Go revenues for our business, recognizing that at various points through this pandemic, there have been legitimate question marks around the impact on the Food To Go market of how people are living their lives and how people are working across the UK.

What's reassuring about this is that, we now have Greencore Food to Go revenues, essentially back to pre-COVID levels. That's a function of the performance of our customers in the channels in which they operate.

Clearly, with some substitution between channels for our customers being a really important theme, in other words, suburban outlets picking up the slack that might previously have been in city centers. But that's been augmented, and Emma will go through the details of this -- in more detail in a few minutes.

By very successful new business activity and market share builds by Greencore through the period. Such that if you take the second half of FY2021, our food-to-go revenues were 59% higher in the second half of FY2021 relative to FY2020.

And let's say by the we finished the financial year, we're back to -- broadly back to pre-COVID levels in terms of activity. That's not to say that we haven't had decent and very strong performance in other parts of our business.

Our other convenience categories were up 2% on the year and were up 10% in the second half of the year. So, in summary, before handing back to Emma, if I wind back to this time last year, there were 2 existential economic threat to Greencore.

The 1st was about our markets, was the food to go market going to come back and was our position in that going to give us the basis to have a strong-scale growing business. And I think we have very clear evidence now that the market has come back and that our position in that is very robust.

The 2nd was about our balance sheet. Did we have the balance sheet that we would need and did we have the resources to be able to invest to grow the business and to protect the business through here.

And I think the progress we've made on cash flow and leverage is very reassuring in that regard. And so, with that, I'm going to hand it over to Emma, who is going to run through the results in more detail.

Thanks, Patrick. And good morning to everyone.

It's my second year as CFO of Greencore and this is actually the first time that we're doing this in person, so it's really great to meet all of the analysts in person, and have everyone here. And look at FY2021 was really a year of two halves for all.

My focus has been on managing the cost base, cash flow, and liquidity carefully through the Half 1 so that we could ultimately support the exciting growth that is now materializing and has come through as we've gone through the second half of the year. So, look in this regard, I've highlighted the key financial metrics on Slide 9.

So, some brief recollections on reflection belief, even before diving into the results in more detail. So pro forma growth is back in positive territory driven by food to go in the second half.

Adjusted operating profit of $39 million was at the top end of our guidance, so we're happy with that performance. And that drove adjusted EPS growth despite the increased number of shares post the equity placing in November '20.

Greencore followers will already know the cash generation is a particular priority for me as we grow back the business. So, after a period of cash protection during peak COVID, it was good to see this emerging in Half 2 '21.

And we made real progress on deleveraging 2 times net debt to EBITDA was a little below average level before COVID. And that's approaching FY2019 level, which was 1.8 times.

So, we're really pleased with that trajectory. And finally, while ROIC instill well-below historic levels of profitability recovers further, this should progress well from the FY2021 baseline.

So, moving on Slide 10, the detail of the full-year income statement. And with the UK and some form of lockdown for most of the first half of our fiscal year, the 4.8% revenue increase, which was 6.2% on a pro forma basis, was a resilient performance in what was a tough market.

And this growth was driven mostly by our food to go categories. And after its first half, where we were effectively break even.

So, 0 margin and we started to improve profit conversion offer, recovering revenue base in the second half. So, half 2 margin was 5.2% and we'll explore the drivers in more detail in later slides.

Our adjusted operating profits rose by £6.5 million, and we held on to most of this increase at the adjusted PBT line after a small increase in non-interest finance costs. The exceptional gain of £12.1 million this year was primarily the result of a profit on disposal of the molasses business in December '20.

And from an earnings perspective, we reported 5p basic EPS and 3.70p adjusted EPS, which is some improvement off a very low base in FY2020, despite the increased number of shares and issue in the periods. On the next slide, a look at our revenue performance.

So as a backdrop, we have to manage through a volatile UK trading environment during the period. And we felt this most in our food to go categories where demand was constrained by the impact -tiered restrictions and subsequent lockdowns across the UK, which persisted for most of the first half.

As the UK economy reopened gradually from March onward, our performance improved given our strong food to go presence in the grocery retail channel, and also the onboarding of new business wins. And you can see this very marked divergence in performance Half 2 versus Half 1 in the table at the bottom of the slide.

We executed strongly against new business wins, and this is a much more prominent contributor towards the end of the year. And I'll discuss that on the next slide and in food to go categories in particular.

And more generally, in food to go, we saw year-on-year growth in sandwiches and in customers with a balanced mix of urban and suburban locations. The worlds of several moving parts in the 2% advanced in full-year revenue from other convenience categories.

So, we had good performance in ready meals and that was offset in cooking sauces that was against a tough comp in the prior year. And we also had a better second half from Irish ingredients, which is commodity price driven.

And now on Slide 12, just diving a little deeper into the new business wins, we on-boarded several new customers and several new pieces of business from existing customers over the course of FY2021 and in particular, in Half 2. So, when we look at Q4 performance versus FY2019, our food to go pro forma revenue was 2% behind, in other words, 98% of pre-COVID levels.

So approximately 88% of that was underlying market recovery, and then the remaining 10% of this was contribution from our new business wins on-boarded through the year, and more than 1/3 of that is in our distribution business and indirect store. So, if we look at this another way, based on the Q4 run rates, the annualized revenue from these on-boarded new business wins in food to go is over 100 million.

There was a small portion of wins in the convenience and that would bring the annualized run rate based on Q4 to about a 120 million net back could overstate the run rate a little bit as we're using the seasonally strongest quarter, but nonetheless we're really happy with these wins and how they're onboarding to date. And as we've highlighted some of the key areas of our wins on the right-hand side and we can talk through those in a bit more detail in the Q&A.

Now, if we just turned profitability on the next slide. So absolute profit increases in Half 2 are marked in the red circles, which highlights the better profit conversion as volumes began to increase.

And while we focus internally on the absolute levels of our adjusted operating profits delivered for [Indiscernible]. It is important to note the margin outcomes and mainly that's an 8.8% EBITDA margin in Half 2 and it's 5.2% adjusted operating profit margin in Half 2.

And as we note in our statement today, adjusted operating profit is after specific COVID-19 related costs of about £5 million, which were incurred, in the most part, in Half 1. And finally, here 1 point to reiterate is the new business wins have a margin mix effect in that a sizable proportion of these are in our distribution business, our DTF, which is direct store and that comes with lower a lower margin.

Now, if we just turn to Slide 40, which outlines the waterfall of free cash flow movements in FY21. The two key drivers of our free cash flow were increased profitability and the substantial working capital inflow in the period.

The working capital inflow reflected the phased effects of a volume increase during the second half. And just to remind people the nature of our Food to Go business means increasing volumes, results in cash inflows from what's the negative working capital cycle.

There was also year-end effect, which is a benefit based on the timing of year-end that will unwind in FY22. Our maintenance CapEx was broadly in line with FY20 levels, so some of this is phasing as it moves into the first half of FY2022, and the other line items are much as expected, which resulted in free cash flow of £72.2 million.

And our free cash flow conversion rate was 78%. And this was to some degree assisted by the phasing.

It does outline the cash generation power of the business and underpins our longer-term targets of converting at least 50% of our EBITDA to free cash flow. flow, so we're pleased with that performance.

And if we bring all of this together into net debt, it was £167.4 million reduction in net debt excluding lease liabilities in FY2021. So strategic CapEx was £24 million, which is up from £13 million in FY2020 as we began to revitalize our excellence agenda and in particular, the roll out of our automation program.

So, in FY2021, we commissioned and installed modular robotic solutions across 15 lines in 3 of our food to go locations. And that was focused in particular on the high-speed sandwich skillet lines.

So, what we were doing was focusing on the more labor-intensive tasks, including leading, which is placing a top slice of bread to close the sandwich, turning, which is adjusting the sandwich 45 degrees to an even triangular cost to ensure that it cooks evenly, and then matching, which is placing 1/2 of the sandwich is on top of the other before it gets packaged. We also accelerated our investments in CapEx in Half 2 and we'll do so further in FY2022, which is supporting our new business initiatives.

We had talked about the £30 million capital investment to support ongoing new business, which will be on-boarded in late FY2022. So, we'll be progressing that further in -- on some of the spend on that £30 million has been deferred into FY'22, actually, but that will come through in the first half.

And in November, we completed a very well portioned equity placing. And on that rate and £87 million.

So, while we also completed the sale of our interest and our molasses business, and we disposed of an investment property, which also generation further proceeds. So, where we landed as a result of all of this, we ended the year with net debt excluding leases of a £183.1 million, which compared to £350.5 million, at the end of our last fiscal year.

So really, really pleased with where that leaves us. And if we just look at Slide 16 and our balance sheet and liquidity position, so strong deleveraging has occurred, which Patrick referred to at the start.

So, 2 times net debt to EBITDA, which still approach FY2019 levels. We securely exited the covenant waiver periods.

We increased our liquidity by over £200 million year-on-year. So, we now have £433.6 million at year-end, and post year-end we extended the maturity of our revolving credit facility.

Our average maturity on debt facilities is now 3.4 years. We've also made really good progress in our pension funding plans, with our 3-year plan agreed on our primary UK scheme.

There was also an overall reduction in pension liabilities as we closed schemes and consolidated our Irish liability so really pleased with the progress, we're making on managing those legacy. Defined benefit pension liabilities.

We're anticipating more deleveraging this year, so that allows us to think a bit more expansively about our capital base and capital allocation more generally. And as Patrick said, our intention is to recommence value returned to shareholders this year.

And on to pinning all our thinking here is reaching an appropriate leverage level for a business of our size and maturity in our type of industry. So, we have a bit of work to do to get there but it will be the guiding [Indiscernible] for us, as we think about capital allocation.

We'll balance the investment needs of the business with the capacity to return surplus cash to shareholders and on the Board will continue to assess these internal factors as the year progresses. So, in conclusion, we've achieved a loss in FY2021 in very challenging market conditions.

I would reiterate what I said in May at the Half 1 results. Our focus now is to manage the revenue rebound in the first instance, and then ensure we drive profit conversion and cash generation efficiently and effectively back to pre-COVID levels.

Our supply chain and labor availability challenges also need to be navigated. And if this is a key focus for us in the Company going on.

We're well set up to achieve this through FY2022 and beyond. That concludes this section.

I'll come back in for us, look at the end but for now, I'll hand back to Patrick for the operation and strategic review.

Thanks, Emma. For people following me on the conference call over on Slide 17 now, so I wanted to essentially be forward-looking for this strategic and operating review because Emma 's really set out quantitatively how we've done in the period.

And of course, as we've seen, particularly over the last four or five days, and we're all going to have to stay used to living with COVID. It's going to remain an impact on our personal lives, our family lives, and how we work.

But what I would say in the context of Greencore is that the -- our experience over the last 20 months or so, is that we have the resilience, the agility, what I've described as the kind of muscle memory in terms of knowing how to flex our business down and up, and how to manage our balance sheet and cash position through all of that, and also the sense of purpose to drive through this regardless of what will happen. I would also say that from a -- in the very near term, and I'll touch on this more in a few minutes.

We actually have a reasonable level of what I would describe as revenue headroom and associated within managing our way through COVID. What I mean by that is the way we are running our business at the moment is actually constraining demand.

We're choosing to make decisions around range and that is maximizing output but it's leaving a certain amount of revenue on the table. So were the market to fall 5% to 10% or so, in terms of them because of COVID mitigating public health measures, we actually could absorb that with little if any impact on Greencore revenue.

And I'll say more about why that is in a second. So, the 3 things that I'm going to touch on then are: 1.

How we're building back revenue and driving growth, 2. How we're managing through the challenges, particularly on the supply side, and 3.

I wanted to actually touch on some of the key highlights from our sustainability reports that we're releasing today before handing back to Emma. As have been a theme in everything that Gary, Emma, and I have said, we are encouraged by the demand recovery in our business.

I might go a little bit further than that and say, we are positively surprised by how strong and how quickly demand has come back. I think that -- I think our commercial teams and the customer relationships that we have that really helps us, in that context, I do want to acknowledge the work that Kevin in particular has done and continues to do in shaping our commercial relationships with customers and sustaining that way of working on that trust-based relationships, which is so important given all of the challenges across the supply chain that the whole industry is working through.

Notwithstanding the fact that it really was a year of 2 halves in terms of performance. If I take the measures for the full year in aggregate, what you see is on Slide 18 now, is that in a food market overall that grew by 3%, Greencore grew on a pro forma basis by just over 6%.

That's a function of the product category mix that we have, and the customer mix and growing customer footprint that Greencore has that's helping. Secondly, within the food to go market, which represents about 2/3 of overall Greencore revenues.

What you've seen here is a market recovery. I'll touch more on why that is in a second.

But very importantly, the part of the market that Greencore operates in, which is retail food to go, in other words, the sales of food to go items that go through grocery multiples, convenience stores, discounters, and high-street outlets. And the relative share of that part of the market has stepped up quite a bit in the period since COVID came, such that those outlets types that I've mentioned represent about 27% of the total food to go market now, they were 24% of the food to go market in September '19.

And the other piece that we've really learned here is that, the impact of working from home dynamics are very manageable for Greencore. And a big reason for that is the location of the stores like, Greencore products are sold, being very well represented in suburbs, shops to where people live, which is mitigating to a very large degree on any fall off in volume and City Center's associated the changing work patterns.

And then -- and if I look at Greencore's performance in relative to the overall Food to Go markets, you see that we've grown by 9% in the full-year, relative to 2% in the market, over all. That's a function of a favorable customer mix, and in particular, the regional profile of the stores that we supply but also the effects that Emma described a few minutes ago, in terms of the on-boarding of new business, that £100 million or so of food to go business on a run-rate basis.

We've been using, throughout this period in which we've managed our business and recovered our business through COVID, this mobility tracker to really draw people's attention to the strong correlation between food to go volumes and overall societal mobility. I stress that it's societal mobility and not whether people are working from home or not, because what we found is even with emerging and different are more hybrid working pattern, people are still moving around.

And it's the moving around the correlates positively with food to go volumes. And what you see here is that by the time we finish the year, as mobility has come back, food to go volumes have substantially come back to where they were on a pre-COVID basis.

I might just add, some just additional Greencore data's a bit, because it might be just helpful and it's more real time. So, every fort-night on a Sunday, we check-in with 500 foods to go shoppers to understand, qualitatively and quantitatively, what their experience has been in the previous fortnight and what their perceptions or views are for the period ahead.

Clearly, in the context of the news drop from the end of last week, that sentiment, I think it's quite important. So, I wanted to share some of that with you right now.

The 1st points to make is in terms of penetration. And what we mean by that is what share of those 500 foods to go shoppers were purchased at least one food to go item in the previous week?

The answer to that is about 40%. At peak pre-COVID, penetration was about 45%.

Trough mid - COVID penetration fell as low as 15%. So again, substantially back to notwithstanding some of the uncertainties, my concerns at the back-end of last week.

If I just go a little bit more qualitatively and forward-looking into that, there's 4 things I might draw your attention to. So clearly, 1 of the things that we're alert to, as in just in time, fresh food business that's made-to-order and not made-to-stock is, has there been a change in volumes ordered even since last Friday.

Short answer is there hasn't been. The volume orders that we've got right now, and I talked to Kevin about this this morning before beginning this presentation, have not fallen 1 iota relative to the orders that we would've had planned in the system this time last week before the news of Omnicron came to life.

What has changed slightly, is the level of concern or confidence that consumers have about leaving their homes. so, we track that, we've been tracking that every week.

And so, we have seen a slight fall this Sunday. Sunday, the 28th, relative to Sunday the 14th, in terms of confidence, leaving their home.

But it is a slight fall and it's actually fallen back only to August levels. So, we have people, not unsurprisingly, a little concerned based on all of the news flow, government announcements, and so forth over the weekend.

But it's not dramatic and it hasn't said true yet into volumes ordered across our business. Third thing I would -- or second thing I would say in terms of consumer sentiment is, an enormous level of pent-up demands and excitement about Christmas.

And we're really seeing that through with -- 41% of consumers have already started their Christmas shopping, 30% of consumers have already actually purchased at least 1, either Christmas sandwich or Christmas specialty drink in the period which is quicker than would normally be the case, at this time of year. Short feature is perception of availability.

And we're seeing an improvement in how the shopping experience of UK consumers. In October, 2/3 of all shoppers cited gaps and availability problems in the outlets in which they went into.

That's now fallen to 49%, so you are seeing the industry and the UK in retail food industry is really good at adapting. And you're seeing that feed through in terms of how shelves have been stocked and what that means for consumer experience from the go shopping.

And finally, and I think this will definitely it connects to what we're doing in terms of sustainability. There has been a marked step-up in the impact of that consumers are placing on climate action on the part of the suppliers of their food and beverage.

51% of the people that we spoke to on Sunday, indicated that their shopping behavior will be influenced, by the perception of the climate actions of the brand that they are buying. That is the highest it's ever been in a survey that we've done.

I think it's important in signaling, notwithstanding all of the COVID noise, a real cup through actually coming out [Indiscernible] 26 in terms of the consumer impact on -- and the consumer's desire and interest in engaging in climate matters. Now, if I -- so that's the kind of macro demand recovery in some of the consumer sentiment.

But I wanted to touch on now is how are we managing this demand. And you'll see the set out on Slide 20.

So clearly, a key feature of the demand, as we've highlighted throughout the presentation and throughout the year, has been the volatility. Huge changes in terms of underlying demand at different points through the year.

But in effect, if demand volatility was the big challenge from -- for the first half of the year and did even the first three quarters of the year, applied volatility has been the big challenge of the last quarter and will be the big challenge as we see us through FY '22 We're in solution mode as an industry and as an industry leader in this regard. We have done a ton of work on bespoke ranges, where they focused really being on maximizing output, even if that means some more constraining overall choice at the margins that are feeding through, either to our customers or from our customers, spend through to suppliers.

We sit in the middle of a just-in-time, efficient, made-to-order supply chain, so transparency and engagement backwards with our suppliers and forward with our customers is really important. And I think we have now got to a point where, while availability isn't perfect, it's pretty good in meeting in meeting consumer and shopper expectations right now.

But it will remain a big focus for us and other players in the industry through the year. If we were to try to give you the benefit of the judgment of people like Kevin and I in terms of what does this mean, and I mentioned this earlier.

Our best judgments, and this is a judgment, it's difficult to back it off entirely with data, is that the effect of all of the demands, managements, metrics and measures and profitability that we're putting in place with our customers is that we're probably tapping or missing the underlying on constrained demand by somewhere between 5% and 10% points right now. And so, if I talk about the kind of risk looking forward here, if you were to see some modest falloff in consumer demand, it's very unlikely you'll see that actually hit Greencore revenues until it falls by a margin that's greater than not.

And nothing gives us a little bit of buffer as we think about some of the uncertainties, particularly on the demand side, in relation to COVID. Second big feature, the demand management side is the positive impact of new business wins.

And Emma has set out quantitatively what that looks like, though I just wanted to touch on what it means for us strategically. And here, if you'd allow me, I'm going to just move everybody back to the Capital Markets Day that we did just over 2 years ago, when we spoke about the strategic developments of our business from a channel and product perspective.

And actually, we've done a really nice job of executing against that through the COVID period. Parts of that was what I might describe as sort of filling in the customer category matrix from a product perspective.

In other words, where we had very strong customer relationships, where we didn't supply them with damages or we didn't supply them with ready meals, we didn't supply them with solids. We found a way to fill in [Indiscernible] and that image of a matrix there.

And we've done a very, very nice job. The most market in [Indiscernible] and has been what we've done the same, where we're currently putting in place a capacity solution that will enable us to become a very material, ready - meal supplier with them on a much bigger, solid supplier with them alongside the very strong sandwich and food to go business that we have with them for some time.

We're also doing the same with Tesco on plant and solid. And we will continue to work to fill in with existing customers where we have product competencies that we haven't quite been stepping up to equivalent scale as we normally do in [Indiscernible] in other product areas, and that's an important part of our new business agenda.

The 2nd part, though, is around accessing new channels. And in particular bringing our food to go business into the convenience store channel and into the coffee shop channel.

And we've done that with new customers. Nero and coffee shop and Shell and convenience stores would be examples of that.

We did not supply either of them before COVID, but we're also doing with existing customers. We've done that through our relationship with [Indiscernible].

And you'll have seen last week. M&S announced, the fact that they're going to put M&S products into coffee shop stores.

Most of that product will be Greencore manufactured. So, in effect, we will be working with M&S to step up our business in the coffee shop channel through their relationship going forward, which will come on board in the springtime.

And again, very material. So, the net effective of that, is that Greencore will become, by far, the largest supplier of food to go items into the UK coffee shop channel, by far.

From a position where we had almost no position, 2.5 years ago, some of the words are equivalent share in coffee going forward will be about the same actually as the share that we have in retail. And as an example, actually, I was using the COVID period to strategically develop the business and set ourselves up on the other side.

And then the last piece I'd say, on the demand side is what are we doing in relation to product competencies? And here, we've got a big focus across our business and stepping up what we're doing in salads and plant-based offerings.

A huge part of that is leveraging the capabilities that came with the acquisition of Fresh Thyme, and just over 2 years ago. You've seen -- we've seen our business from a salad and plant-based products solutions increase with all customers through the period, but much of that is on the back of the capability that we have from Fresh Thyme.

And I think as we look forward strategically, and we look at some of the things that are happening more broadly in the UK, around the -- what are the product competencies and nutritional requirement for the coming out of the national food strategy, where we're going to need to get to in terms of the types of products from a climate perspective that we're going to need to have in the markets. And the competencies that we've got and we are building in this space will come more and more important.

So that's thing, demand side actions that our business is taking. If I just touch on the supply side now, and the context for this is very important, and the people in the room, who I have been speaking to for a while, but who deeply understand how the UK fresh food supply chain is configured.

And I would say by the way, Britain went into COVID with a fresh food supply chain that was the envy of the world. It was an efficient, just-in-time fresh food system that delivered remarkable food safety outcomes through the UK consumers, as well very, very good fresh food choice.

But some of the pressures that we're living with now are putting near-term and, indeed, longer-term stresses on that system, and I wanted to touch on what some of those pressures are and what we're doing about it. Part of it, and by the way, many of these trends are not UK specific.

Some of them are amplified in the case of the UK, but most of them are actually global. So, the pace of COVID recovery, in terms of what it means for demand on the pressure that's putting on supply chains, that's an impact.

The pace of the online, which has been relatively slow for good social reasons of COVID support, and what that means, in particular, for labor availability. Residual levels of sickness, announcements through contact tracing, which is still a feature for across the UK labor market.

Labor availability, generally, with vacancies in the UK, now running at a 20-year high. And finally, the impact of immigration policy choices on welfare, meaning for labor availability, both through the year and the peak seasons.

And so -- and the effect of all of those factors is putting pressure on the whole UK food industry, but particularly on the fresher make-to-order parts of the system. And in the context of Greencore, that's most acute in our sandwich supply business, which is very much a short shelf-life, made-to-order supply system.

Some of these factors, by the way, play out to a greater or lesser degree in certain regions versus others. So, for example, if I take in the context of Greencore, we actually been really well fest in London.

But under greater pressure in Yorkshire, for example. And even within that, actually, you see different regions, different towns, different cities in the UK, where those impacts are more acute.

Dealing with these issues from a supply perspective, how the short-term dimension, which we're on with. Critical to this is the engagement initiatives that we have across our business.

On that context, actually, our Board, our senior team were delighted to see very, very positive progression on our engagement score when we tested across 13,000 people in the summer. But it's also going through to retention metrics and to labor rate decisions and labor benefit decisions that we're making both nationally and regionally in order to actually secure and underpin the workforce on supply chain that we need.

Fifth, we'll also feed through to longer-term actions. Emma has touched on us 1 element of it earlier, which is the level and pace of automation and what that means for the configuration of our future network.

I think the way in which we configure our network in the fresh food parts of our business, which naturally evolve over time to, by which I mean, we will probably move from a site-focus that's principally driven by customer to a site-focus that's principally driven by production confidence, such that we have a -- we've got a way, actually, of maximizing output and giving ourselves more contingency against pressures on either individual ingredients or labor availability. All of these points impact on the pace of recovery in terms of our returns, our returns on capital, and our returns on sales.

And it is true, self-evidently, based on the results that we're sharing and the outlook that we're showing that the pace of revenue recovery, has been quicker than the pace of profit recovery. And we think that will continue to be the case, but we are pushing hard to bring that pace of recovery and returns forward, recognizing that in the second half of the year we saw very significant improvement on the first half.

We went from 0% margin to 5.2%, but we need to keep pushing that on, and the management of some of these factors will be an important part of that. Of course, in addition to all of that, is inflation.

And what we're seeing now, is continued build in likely levels of inflation for FY2022. So, we've been having this conversation a couple of months ago.

We would have gone, hey, we think total inflation level across raw material, utilities, distribution, labor, is likely to be mid to high single-digits. And now, we're pretty confident it's going to be low double-digit.

It has stepped up pretty materially, even in the couple of months since too -- and that we've been trading in this financial year. And of course, and we shouldn't lose sight of this, everything that we're doing doesn't need to recognize that we should be trying to protect consumers, particularly the hard-pressed consumers for whom value is very important, in terms of what it means.

In terms of pricing through its consumers in the availability of fresh, nutritious foods through to UK consumers. Of course, and it's important, but we've got to protect our own business, as well.

And we're doing mash by pushing the pricing lever with our customers very, very hard. And to date, we're where we need to be in terms of inflation recovery, it's a big task for our commercial team, but it's one that our customers understand and we're pushing through price increases hard, consistent with that level of forecast around where inflation is going to be, and that will be a sustained and continuing journey, we think, at least through the next couple of quarters.

We'll see where inflation is perfect by the time [Indiscernible] to next summer, but our sense is between now and next summer, further inflation to your pressure will necessitate further push through of pricing. I'm not a big part to blossom.

Kevin and I and Kevin's team are doing with customers. And I have to say the progress that we're making there is where we needed to be.

I'm not trying to pretend it's a walk in the park, but it's where we need it to be and we need to keep it there. So, turning now to slide 22, and I think it's important there's that kind of bridge from what I've just been saying, around inflation recovery that it matters how we manage our customer relationship through all of this.

Our task is not just to optimize performance in FY2022, it's to a have a vibrant, growing business where we are relevant and where we have growth plans and appropriate long-term partnership agreements with our customers for many years to come. And that's how we're managing our business [Indiscernible] we always have, through these pressures.

In that context, we have re - assessed and lengthened several of our biggest commercial agreement through FY2021, and that's giving us the context and indeed the tools to deal with some of these short-term pressures around range optimization choices and inflation recovery. And we think it's giving us a platform to continue to develop our business in the growth areas that I mentioned earlier as we progress through '22 and into '23.

And we're also -- and I'm unfortunate that we have the resources to be able to do this, where there are opportunities to invest with customers, we're taking it. And so, one particular example of that is the £30 million capital investments that we're making across 3 sites to set up our -- what in effect will be a new ready-meal facility at 1 of our sites just outside Sheffield, an incremental, solid investment as well that will enable us, actually, to materially step on our scale and breadth of business with one of our largest customers that I mentioned earlier, as we go forward.

So just to finish that on a completely different area, which is what we're doing in terms of sustainability. Today, we are releasing our 2nd and standalone sustainability reports that are better future plan.

It's an exciting document actually, it is incredibly readable. And our team led by Andy Wright to put it together, I think you've done a stellar job both in setting out of the narrows up for what we're doing in sustainability, but also putting together with all of our leadership teams on board the right balance of process and quantitative metrics and targets in terms of what we're trying to do.

We made really nice progress in FY2021. And we put in place signed space targets against our carbon emissions, against scope 1, 2, and 3, we've reduced food waste in terms of output, we've got community action plans in place across almost all of our sites All of our sites will be onboard under the banner #starts with food.

We have brought to market in September the 1st completely plastic-free, fully recyclable set of sandwich skillets, with three of our customers. And we'd be rolling that out across more products with those customers and across more customers through FY '22.

And from a social perspective, we made a decision as a Board, in September, that we were going to find a way to make every Greencore like a shareholder. In Greencore, and we'll be implementing that in January of FY '22, as part of an aligning purpose and stakeholders across our business.

We've got new targets for FY2022, at some which we were already well on with. We signed up to Soy Manifesto.

We've signed up to the cage-free egg commitment. We will have net-zero roadmaps in place in every site.

And like I said earlier, we'll have rolled out our skillets and employee share ownerships schemes through the year. And then I think if I just finished on sustainability by aligning back to the point on demand around plants and salads, which is, we have made a commitment in the sustainability reports that, we're releasing today, that we will have reduced by 30% the quantity of yeast in all of our product ranges by 2030.

And it is not going to be profitable for the UK to meet its climate obligations, and nor is it going to be possible for us to deliver the nutritional outcome that the health professionals require in the UK without a material reduction in meat consumption in the UK. And we're committing to a hard metric between now and 2030 of taking 30% of the quantity of [Indiscernible] in our total product range out by them.

So that's the journey that we're on in terms of sustainability, it will be a big thing for Greencore, fundamentally. We believe we're sustainable business in terms of fresh food, low -- short supply chains, high nutritional outcome.

And we're going to continue to deliver against all of that. So, with that, I'm going to hand back to Emma for the outlook.

Thanks, Patrick. Look, I'll just briefly bring this together on Slide 25.

So, look, overall, when we think about the outlook for FY2022, we've had an encouraging start with the demand backdrop being pretty strong. We're progressing well on inflation recovery, but as Patrick said, that number is a moving target.

We're working hard on this and progressing well. The challenges do remain in supply chain and labor and that's not just us, it's across the whole industry but we are anticipating in FY2022, I'll turn in line with market expectations.

We expect to deleverage further, as we go through FY2022, and we are committed to what is a dynamic capital management model. We've strong positions in our markets and we're confident about our medium-term prospects.

So, thanks again to everyone for participating and for being here in person today, and we'll move to Q&A now.

Clive Black from Shore Capital. Thank you for the presentation.

Really distinctive, specifically moving parts you talked about there, Patrick, as someone who has looked in the industry for a long time. I just wondered, in terms of price recovery, where you stand on capacity alongside demand in the market.

And also, what that means for potential volume and mix with the magnitude of inflation you're talking about needing to be recovered. And it was at the inflation and the market that showed the product is very distinct.

Thank you.

Yes, just to -- so first of all, if you think about the pop through, if we have had 12% total inflation, we passed it through all in price. That's about 6% to our customers, and that's just the nature of the markup, right?

It's about 100% markup for our customer, so. And what we feature this inflation relative to the only equivalent period 5 in my 10-year enroll of very high inflation, which has bench of 2008 and 2009, is then it was all about raw materials.

Whereas here, it's probably about 40% to 50% about raw material, but actually labor, utilities, distribution is a very, very pronounced elements here as well. Which, of course, is a, traditionally -- is a different than traditionally trickier to recover in price through the UK food system or indeed the globe food system, which has to be that type of inflationary pressure, but isn't then raw materials would be recovered through either supply chain efficiencies or through operating leverage associated with growth.

And in this particular instance, to be candid, getting the supply chain efficiency, given the sum of the supply chain constraints and dealing with those pressures through incremental volume, given the fact that everyone is pretty full, is not possible, so you have to get it through price. And that's the investing environment and context in which our teams are engaging with customers, which is it has to be done through pricing.

And that's how we're implementing at the moment. Without getting too much into the tactic solid, 2 findings I have observed.

First of all, the industry is pretty full. So, the available capacity in the industry for others to pick up incremental business or for us to pick up incremental business from others right now is pretty limited.

And, of course, that's partly a function of what I might call the notional machine capacity of our sites, which are fuller than they've been for a while. But it's also a function of the labor markets, right.

And the ability to actually -- even if where you have machine capacity to source the incremental people that you would need in order to be able to take on lots of new business. By the way, we know we're taking on more business, because we've got the ramp up of that [Indiscernible] solid business and we've got the incremental M&S cost of business.

So, we -- we're having to plan for that from a labor perspective, if in any event. And then the other effect here, which to-date, where -- I'm going to use the term, relatively relaxed about, is of course, there probably will be some elasticity effect from this level of change on the assumption, which I think is a reasonable than in the end, consumers are going have to pay more for food.

And the reason I'd say we're relatively relaxed about that is not that we don't care about providing good value through to consumers. We really do care about that because it's often easy in environments like this in Central London with people like were talking to hear to not actually have empathy for the huge portion of the UK population for whom food inflation is going to be a serious stress on their lives.

And so, we do feel a responsibility to have a range that's relevant to everybody and not just people who can readily absorb inflationary increases. But actually, if we were to see some elasticity effect associated with this extra pricing, given the fact that we're having to somewhat constrained demand anyway, it doesn't feel like it's going to be a materially economic like effect for us.

And so, we're in -- that would be our current sentiment in regard to inflation now. So, this is a big, big task and we knew coming into the year, there was going to be a big task, and it's got bigger, because the view we had when our teams, led by Kev, put this in place was very serious, sharp, material intervention in quarter 1, we'd lock it away and then get on with things.

And what's happening is we're going to be -- we're going again for a second time in quarter 1, we're going in quarter 2 as well. And that's just the context of what's happening given the inflationary pressures across all media different areas.

Martin.

Thanks, Patrick. 2 for me.

Just for [Indiscernible] Thank you. This 5 to 10 is missing demand.

I want to understand what the constraint is, Patrick. And you've positioned it as a sort of downside mitigation, but is it symmetrical or asymmetric, if [Indiscernible] concerns turn out to be a flash in the pan and the businesses starts going up.

Does that mean you've got very nice operating leverage on that 5% to 10%? Does it mean you suddenly need to start change cost to services?

I wanted to understand the marginal economics of the business around that 5% to 10%. The longer-term question, just thinking about should we that being a strong point, if I may, is just what are your thoughts on the margin and return potential of the business, assuming a return to normality if we just positioned the H2 numbers, margins of 5.2, probably an H2 [Indiscernible] away provided a high est single-digit.

I think pre-COVID you were 8% return on sales and mid-teens. What -- Given that H2 was within range of pre-COVID levels on the revenue line, what's explaining that 200 but is it COVID on costs that will go away?

Or is the structural profitability of the business in some way degraded? Perhaps because of DST mix so, or something like that?

Okay. I'll deal with the first one, just a couple of higher-level comments on the second but I might let you come in and give more detail on them forward-looking view on margin and returns.

We're not delighted about the 5% to 10% mix to the unconstrained demand. And it's really a function of the management of some of the supply chain pressures that are in the business, some which we think are temporary and some which are going to require a different way over time of configuring our network and more automation, more specialty within our sandwich sites in terms of where we make individual type families of skews.

But what we're doing at the moment is, if I give you -- just to give you hard measures here is, we probably have about 20% less range than our customers would want us to have, in the food to go area. And the upside for them on that is that they are getting a greater level of overall units than they would be if we were managing to a to that total range.

But even against that reduced range, our service metrics, Martin, are probably 3% to 5% below where they would typically have been pre-COVID, right. And I wanted to become -- that is not all Greencore 's fault.

A lot of that is actually a function of inbound supply and pressures on other parts of this -- and other parts of the food system, both backward and forward. So, the combination of somewhat constrained ranges and by the way, I think the 20% is in some of that has sensible, but some of it is necessary if I can describe it in the somewhat lower level of service.

So that's where I mean -- notwithstanding the kind of substitution effects within the range of the days, which is why it's a judgment call is that's where we would see the 5% to 10% opportunity. Now, to unlock that opportunity there not -- if you didn't have any Omicron concerns, will require us to find solutions either to bring more people into our network than we currently have, or to configure our network in an away over time that requires somewhat less people.

And that's what we're working on. I think it is an important in near-term and longer-term opportunity for our business.

The reason I placed it in the context of Omicron is that, it is mathematically true that, if demand in the market [Indiscernible], we could, our service levels against that demand will go up slightly and we could choose to reintroduce some more products, as a hedge against that effect. Now, that -- and so that's where it's connected to Omicron.

The simplest way for me to put it is, that we were -- we anticipated, this is on margin and returns by the way, we anticipated the volume and margins was -- volume and revenue would come back more quickly than profitability, and it has done. There is an element of mix and match, which is that some of that volume that's come back is distributed items.

So, it's not quite a like-for-like volume. And that distributed item -- set of items has a different economic profile.

Decent pick fee for -- pick fee per unit. But because we take titles of the products, the percentage margin on it is a little bit lower.

But I think there are a couple of other factors that we need to get after as a business internally as well. So, 1 is, the some of the kind of direct and indirect consequences of managing through COVID from a cost base perspective as we're working to unwind, it's not all on bound yet.

And I think the other feature of our business actually is that, we have chosen to prioritize outputs. And I think there are -- there will be opportunities for our business, in terms of the cost below gross margin and below contribution to get after going forward, and I think that's a focus for our team and our Board.

And the point being this, and as we've done a stand back, both ourselves and with our Board here, we don't see any reason while why we can't guess the margin and the -- what I might call the like-for-like returns metrics. And I might even explain what we mean by that in a second, back to the position that we were at pre-COVID, post-COVID.

And obviously the quicker that we can do that, the better it will be new for sentiment towards the stock and the better it will be for our ability to get on with driving returns and rewarding shareholders. And so that's obviously a priority for us but.

My perspective on this, I mean, as we all know, we think through an incredibly tough there, it's took overs and working through all of the disruption impact now, bringing things for the top-line, having come back really focused on delivering operating process. I think we've been consistent in saying with margin will come thereafter, both the headwind of inflation, as we need to recover us.

We need to manage through all of the supply chain disruptions right now, and deal with them all of the consequences of that, and focus on, as Patrick said, rebuilding our leverage and looking at all of our cost base and how we manage effectively and takes the COVID disruption operation costs out of the business as well. When it comes to return on capital, I guess just structurally, they're a couple of things that are slightly different.

One, is the IFRS 16 accounting, which has an overall increase in investor capital. So, both does have a drag effect as you look forward.

And then with the higher UK tax rates to contend with as well, which will step up over time. So, I guess those are the 2 structural things that would have an impact.

But I think as, as profit comes back, we built return on this capital.

Do we [Indiscernible]?

I guess -- I've got a quick question -- 2 questions, if I may. First of all, is just trying to go back to the new businesses that you have onboarded.

I remember, last presentation you were saying that, obviously when you onboard a new client, you don't really reach the efficiency levels that you would like to reach as far as. Can you give us an update on that and can you give us an idea of whether the new business that you have onboard is so far has been margin accretive or margin dilutive on the second half?

Secondly, I was quite intrigued by what you were saying, in terms of the allocating, the way you actually produce your volume by product rather than customers. Is that something that just tried to have a sense whether there would be a higher level of CapEx embedded in the business as you transition away from the old way of production to perhaps a new way of producing, which might be more efficient.

And what are the push backs you're getting from the clients, if any? And finally, I'd like to go back to the recyclable skillet that you have launched at the back-end of last year.

What has been the feedback and what are the intentions, with regards to that item, rolling on to new customers?

Okay. I mean, just to give you the reason here quickly.

The progress on new business is as we expect it to be, which I want to be a little careful in being too specific in my examples here, but the experience we have of where we onboard a fundamentally new customer, is that it takes you a while to learn how to do it. And notwithstanding the fact that this -- much of this should be in our wheelhouse in terms of capability, inevitably the supply chain, the order patterns, sometimes the ingredients, can be different, 1 customer from another.

And so that kind of rule of thumb that it takes about 6 months to get the business towards the kind of steady-state metrics in terms of performance is still about rice. Sometimes you can get it a bit quicker and sometimes we can't.

Where we have a customer where we're doing, for example, they're taking one of our products and extending it into a new channel. But the product is substantially the same then, of course, we wouldn't have a problem in them -- and shouldn't have a problem in that instance.

On the point, as to whether the new business is accretive or delusive and notwithstanding that transitionary effect, I think in general, the new business, the new channels that we took on started at a somewhat lower margin than our core retail business. Now, the truth is, the world has changed so fundamentally given the inflationary pressures since then of and our product and commercial agenda in those areas.

But importantly, the way this will work over time is that some of the fixed costs are required are already in the business. And so, the actual flow-through to the return to profile and profitability of the group, should be a positive over time, right?

Because you don't have to quite start to scratch on them in all of those areas. On your points on the CapEx and so we're doing -- maybe it is possible that, the whole world's new accept of mash, they we're going to be massive pressures on labor availability from April, May 2021 on and like we missed this.

I don't think that will happen, by the way. I think it's come as a huge surprise to everybody.

And the near-term mitigants that we're going with are a challenge, but we're delivering progressively better against them all the time in terms of getting the footprint on labor plans in place that we need in our key locations to get service to where it needs to be and to be able to onboard and make money from some of the incremental business opportunities that touch shot. But what that has brought into focus here is, and this will be a little bit simplistic and are connected back to [Indiscernible] point on the robotic technology across the 3 core tasks on 15 lines across what in effect is 4 different sandwich facilities that we're working on.

The essence of, I think how this will evolve over the next while, is there will be some customers within the Greencore [Indiscernible]. You wouldn't need to be a genius to figure out which one I'm referencing, where the importance of keeping a solution that's ring-fence joked for them is so central to their proposition that it's likely to stay that way.

But I think for customers that are already comfortable with the idea of sourcing products from several different Greencore sites, what you might well end up with us doing, is taking one of our sandwich sites for example, and moving as much on the automatable production to that size. And then in the sites, where we actually got more labor availability, doing some of the more the spoke products there.

So, in other words, we would have some customers who would currently take product from 2 different locations, and we might need to -- need them to move straight in products, in 3 different locations, sort of thing. And that actually could potentially give us a better return on the automation and also enable us to step-up overall output and de -risk that output somewhat to the kind of beggaries of labor availability.

Almost regardless of what happens in terms of some the government policy areas on them, on labor into the food industry. Last points around them, recyclable skillets, we -- well, both [Indiscernible] and Co-op, both issued a press release in September, talking about the fact, we were working with them on recyclable of [Indiscernible] skillet.

That's 2/3 customers, the customers. The third customer, I don't think did, so I'm not going to name them.

And the progress of those skillet operationally has been very good. And the consumer reaction to them has been -- there hasn't been any problem on -- in relation to product integrity or visibility of the products and so forth.

So, there's been no negative reaction to some of the things that were potentially a compromise. I wouldn't, Dorianna (ph), say that there's been a big positive reaction on the other side, but that's in part because the essence of the trial was to see whether it would operationally work for us and through the supply chain.

It then needs to be accompanied by a consumer engagement in education task, which will be largely driven actually by our customers rather than us. And I think they will be up for doing that as the -- as we complete the trial and demonstrate that there aren't any operational problems associated with what we're doing.

Andrew Ford, from Peel Hunt. Just a couple of questions on costs.

I know you've mentioned with labor the automation going forward. But in the short-term, what specific actions are you taking to ease pressure on labor?

Is a vacancy rate and where is the trend going for you? And in response to question, you mentioned energy costs.

Are you able to quantify that either as a percentage or an absolute? And lastly, on the structural shift in food to go, you able to compare it versus 2019, where you see that going, especially in light of potential pricing recovery next year.

I don't know if you see an element of food to go being a bit more discretionary for the consumer or if you're expecting it to normalize above 2019 levels. Thanks.

Yes. I mean, actions we're taking on labor the -- some we're doing nationally and some we're during regionally.

So, the biggest thing we can do on labor, is to improve our retention metrics. That's because, I mean, we're talking about people here, so I need to be careful and appropriately careful in matters of language.

But the point here is it's the net movements that really matters, right? So, it's how many people leave net, should against how many people arrive, so the most important thing that we can do is to improve retention.

And we have a series of different measures in place in that, including what I referenced as part of the sustainability report, which is a decision to actually award shares to everyone who works, 13,000 people, who work for Greencore. Individually modest, in terms of what we're doing, but we think it's an important and purposeful commitments and we referenced in last year's annual reports that, we wouldn't scheme in place for this year.

But over and above that, and we have a whole series of site-by-site or region by region initiatives, which include the labor race. In incentive programs to on recruitment greater flexibility around how we're configuring shifts.

And then on the other side that we've got a whole series of supply and range things to actually make the facilities run more smoothly, reduce changeovers, reduce complex products, things like that, but it is into kind of it. It's a game of inches site by site what I would say in our weekly engagements and monthly reviews, we are tracking, where do we need to be in nash numbers of people per shift per site, and we're building in line with our plans.

What it is -- but it's a task that's unfolding every day, in terms of how we would describe it. And I have to keep stressing that one of the features of us is that, even when we get that perfect, which we don't all the time by the way, but even when we do, if our suppliers don't get it perfect, and then we can't have people waiting around to make stuff, and we don't have any skillets, so we don't have any braid or our protein is in-line with spec.

And so, it's -- the chain is only as strong as its weakest link in the -- in particular, in the kind of very short shelf-like make to order business areas. And that's one of the reasons why having a somewhat more concentrated range with more contingency in terms of inbound materials is quite important in that regard.

Yeah. I mean, listen, energy and utilities are -- have -- it's a highly volatile market.

You guys will know better than me. Just track the -- even tracking the oil price every day and what's happened even in the course of the last week and thus, we're seeing a materially higher forecasts utility inflation, without getting into specifically what it is, than we would have had 2 months ago, at a level that we are required to recover it in pricing.

And that's what we're doing.

I mean, we've covered half and that, already. So, it will fix the price before OSB, additional, incremental price increases came through.

So, half of our winter energy kind of assumption was already coverage version. I mean, we're still seeing high kind of single-digits year-on-year and millions in increase in costs in energy.

Andrew, your last point was?

I was just [Indiscernible] shifts in [Indiscernible] especially [Indiscernible].

I mean, just to give you the benefit of my experience here, like is that -- it has not proven to be a product category that is -- where volumes are materially impacted by macroeconomic conditions or even inflation, if I take the last 14 years of looking at it. So, the -- I mean, clearly, the massive mobility impacts of COVID impacted volumes, but once people are free to move around, and it has not tended to be shopped in aggregate as a discretionary item that people [Indiscernible] when they're under economic pressure, that certainly was not our experience during the financial crisis.

I will conclude everything we can with our customers to mitigate the impact of inflation. So, it's not being passed on to the ultimate consumer, but the reality is that a level where we have to recover it in price, but you look at product and you look at what goes into it and you do all of those things that we would've done in inflationary period before to make sure that the value proposition available as well.

So, it's in the rig. Mike, is there anything on the call?

Yeah, there's a couple of questions.

Hi. Good morning, Patrick and Emma.

Patrick, you've talked quite a bit about your constraints on servicing demand at the moment, so just wondering what that means or how we should think about that, given the new business still to come in during the latter part of next year. And in that context, are you able to give us some color on what the M&S agreement with customer, I mean, for Greencore in terms of revenues and margin profile, etc., and perhaps capital investment that maybe needed to support that new business?

Thanks.

Jason, thank you. Two things, I mean, in the -- if I look at the big chunks of incremental business for us through FY2022.

The first it's going to be the commissioning of the meals and incremental salads business, which I referenced earlier that is -- will be supplied out of the £30 million CapEx investments that we've referenced. So, and we are on with the appropriate labor planning and team building in the 2 core areas where the product is going to come from, which is Sheffield and then -- I mean, Lincolnshire.

So, your second point on incremental volume with M&S on the back of their announced business with Koster. Fortunately, 1 of the parts of our network where we do have incremental capacity is in North Hampton.

And so, it -- so we'll -- and that is largely, it's not entirely, but it is largely skews that we are experienced in making and that are sourced through M&S stores. And so, it's we're not anticipating a material incremental capital associated with doing that, there will be bits and pieces around the margin.

And we're building a workforce and labor plan to enable us to take that on as it comes on-stream in the spring of next year.

And any sense of size of the opportunity, obviously, you supply into the coffee network already now, but obviously costs us quite a big player in that market. Can you give us any column?

What do you think that might mean in terms of volumes and revenues?

And that'll really be for M&S to say. It's their customer.

And clearly, we're going through different scenarios with them, but it's -- but given the size of the state into which those products will be flowing, it's, obviously, helpful for our volume, as we look forward. And just, Jason, to join this particular question back to previous calls that we've done through this year, you remember in the summer, both in our -- when we did our interim statements and our Q3 trading statement, there was -- we spoke about ongoing business development activity and this would have been an important source in our -- in the comments we would've made then.

And so, as a result, it's the guidance that we would have had for the year ahead would have had the on-boarding of this business as a feature of our internal planning for FY'22. And it's obviously helpful to have it confirmed, like it was last week.

Thanks very much.

Good morning, everyone. Just going back to Dorian's question on new business.

Obviously, you've said that, it's going to be lower margin to start off with. Obviously, that came in before we had the labor issues, supply-side of issues, and inflationary costs.

Should we think that this is going to take longer to reach the margins that you might have hoped when you initially took it on? Is that a fair way to look at this?

And we'll say more generally, when there's -- when you're going for price increases, it's never even across all the categories. When you're looking at the business now, are there some categories where you may need to reconsider how involved you are in the -- given the precious you'll see?

Yes. Charles, two questions that the -- the answer to your first question is, no.

We're -- we don't see the inflationary environment as being a constraint on getting to where we need the margin to be. I don't want to go any further than that because it's subject to discussions we'd be having customer by customer, but we're -- the principle here is that the inflation that we are taking, we need to recover, and we're committed to recovering fully in price.

And we don't want there to be any ambiguity about that. Your second question, which was -- sorry, Charles, the second question -- just remind --

Did we make any cash-free choices?

Yes, we are. There will be -- one of the features of what we're doing here is that -- is that if we -- if we can't deliver once, we know we need to recover, in terms of pricing will we resigned the business.

And there are very small examples already of us doing that. So, it is not a position that our business can adopt here that we're go-to-market for these price increases and we don't get them go out less grand.

So, we'll just live with a lower margin. And so, there are -- in particular, there are some of the more commodity solid areas where we have -- we've gone with what we believe to be, and can evidence be very legitimate inflation recovery.

And 1 or 2 customers haven't taken us and we resigned business. And that's the policy that we're going to have here, which is that, our capacity is scarce.

We're not in the business here because we believe in long-term partnerships or what I would describe as, sort of egregious margin grabbing, but where the inflation is there. We need it recovered in pricing, and if we can't recover it in pricing, then we're not going to be able to serve.

And there are some examples of us, not huge in terms of quantum, but there are some examples, where we have already agreed with customers that we are going to step away from business where they won't support to some pricing. And that's the policy that Kevin and the team are working through.

Got it. Thanks [Indiscernible]

Hi. Thanks, and good morning, everybody.

I'll keep it to 2 questions, if I could. And maybe, Patrick, just your broader thoughts on the outlook for food to go through 2022.

I know typically there's a slide that's included in the presentation which includes that. And, I guess, taking the 88% of pre-COVID volumes at the end of September as the starting point, what's your outlook for '22?

And then just secondly, it might be one for clarification. I might have missed this.

Just on your pricing in your custom engagement, in particular in food to go, what percentage of your customers or your contracts today pricing aligns to that low double-digit inflation that you've called it?

Yes. Roland, I don't think we can say very much more on outlook for food to go, given the -- some of the macro uncertainties, except to say this substantially the volumes are back to where they were pre-COVID, and we have incremental new business that confirmed that, we will onboard through the year.

It is -- I think, we're very reassured about where it is, but we're also cognizant stash and COVID isn't gone, and there could be some impact associated with this. And, indeed, there could be some quite positive further volume upside depending on how that plays out, too, particularly with them overtime and some of the City Center on travel locations.

And we'll just have to see how that goes through. But in general, we're -- to go all the way back to where we started, on the assumption that there is not material lockdown activity within the UK, then I think our volume view for the food to go businesses is pretty robust and pretty positive.

On your point on pricing and customer engagement. I mean, the -- pretty much all of our commercial agreements with customers have a - either a formal mechanic or an agreed process by which raw material inflation and aspects of labor get recovered in some version of a pass-through model.

Very few of them would have a mechanism by which things like utility inflation, or distribution inflation, or more broad -- broader labor inflation to be recovered. And so that's what we're negotiating and working through right now.

And plus, the residual component of raw materials that might not be formally covered within a tracker and there always be some things at the edges that made -- that might not be tracked. The view we've taken here is just the aggregate effect of these things mean that we need to recover in pricing regardless of what is anticipated, are set out in the commercial agreements and actually in the vast majority of cases, our customers have got bash.

And while I've been delighted about is, we are working through pricing solutions with them and we'll continue to do that.

Okay. Great.

Thanks.

I don't think I've been described a veteran on this by too many people, so I think it's fallen on me, Patrick, to say a few more words to you. Firstly, the Chairman talked about ups and downs in our 17 years.

It'll be interesting to hear what you're up to. And also, just thank you for your -- the time you've given us.

You've always been very accessible, always had amazing insights and strategic overview. And just to wish you all the very best at SSP, and to wish the Chairman well in the search of the need to figure.

Thanks, Clive. And I didn't -- I don't want to make the result presentation -- our results engagement around this issue.

But just to say, there has been hundreds and hundreds about to answer your question. The -- its worth -- and it will be for someone other than me to recognize the business that Greencore was when I joined and the change that have -- the change that we have put through since then.

And the big ups for me would be the team that I've got to work with, the customers that we've got to work with. I've loved the capital market's engagement, capital's ways.

We are accessible. We like being accessible.

And so, the -- my main task in this job has always been to enjoy doing it. And I've loved doing this for 14 years as CEO.

And so -- and whether I'm -- as long as I'm here, and long after I'm gone, I will be a cheerleader for Greencore, which is a great business, and it has been the huge part of my life for, I'd say, for 17 years, and on a great part. That's all I'll say.

Thank you for your comments and for -- there are other veterans in the room here. I'd say that looking at Martin.

I'm glad you did.

as well, and there's people on the call, Nick Lamars, same Charles. So, there's [Indiscernible] Kenny, there have been people who have covered the stock from the very, very beginning, to earn yourself, and not quite the very beginning but pretty much it.

And it's -- hopefully that engagement has been positive for you, as has been positive for us. Thank you.

Bye.