Hilton Food Group Stock

Okay. Good morning, everyone, and thank you for joining us. Matt and I are pleased to present our '26 interim results today. As usual, there will be a chance to ask questions at the end of the presentation of both of us and maybe even Samy, our Chief Operating Officer, who's with us today, I'll pass the difficult questions to him. Over the next 25 minutes or so, we'll take you through our financial performance and the progress we've made since announcing our updated strategy 5 months ago.

It's early days, but I'm encouraged. I'm pleased how our colleagues across the organization have supported the strategy and are working on its delivery.

Let me start with the first half summary. We're getting on with doing what we said. There's always much more to do, but I'm pleased with what we achieved so far. Profit was up in our core meat businesses. This includes further strong growth in the East region particularly in Australia and our fresh prepared foods business serving Central Europe. We're also realizing initial benefits from improvement plans in the U.K. at [indiscernible]. These can't be seen in the numbers yet, but we expect to see visibility in the second half. The challenges of [indiscernible] will continue into the second half. And against this backdrop, we will assess all options for the future of this business.

Despite this, group adjusted profit before tax from continuing operations of GBP 32.8 million was ahead of expectations. And on the back of this, the Board maintained our dividend in line with our progressive dividend policy. This first half performance gives us confidence in the full year outlook. We now expect PBT from continuing operations to be in the range GBP 66 million to GBP 71 million. This is despite the ongoing Foppen challenges. This compares to our previous range of GBP 60 million to GBP 65 million. It includes the removal of expected losses from Dalco and a foreign currency tailwind. We're also making good commercial and strategic progress.

Importantly, in the first half, we extended our commercial meat partnership with Tesco in the U.K. This follows previously announced contract extensions in both the Netherlands and Denmark in late '25.

The Acronym, SVV short for seafood, vegetarian and vegan will be short-lived. At the end of July, we announced the disposal of our vegetarian and vegan business, Dalco. This is expected to complete in quarter 4 '26. It's a step towards simplifying the organization and a move towards our core strengths in meat and fresh preferred foods. We continue to invest in projects and develop platforms that will drive the future growth of Hilton Foods and deliver attractive returns. We're updating our plans to further increase capacity in Poland to meet the rapidly growing demand for fresh prepared food products in Central Europe.

Canada is set for launch in January '27. Bacon is also planned for later in the year. Our joint venture facility in Saudi Arabia is set to go live in quarter 4 this year. I'm excited by the opportunity that these new projects and partnerships bring for Hilton Foods. I'll come back to this, but now I'll hand over to Matt, who will take you through our first half performance.

Thanks, Mark. Good morning, everyone. It's great to see you all. I'll walk you through our 2026 1st half financials, as usual, highlighting the main drivers of volume, revenue, profit, cash flow and net debt, and I'll cover the 2026 full year outlook. The results were underpinned by good performance from our meat and fresh prepared food businesses. This is where our core strengths lie with our experts, committed teams utilizing scalable and automated facilities to produce high-quality products for our retail partners. Whilst our seafood, vegetarian and vegan businesses continue to face challenges, we're taking action. We've agreed the sale of Dalco and we're starting to see the results of our performance improvement plans in Seachill.

Moving now to the numbers. I'll focus on continuing operations, so excluding Dalco and of course, Fairfax Meadow, which as you know, we sold in September last year. Volumes were up 2.1% and with prices still at high levels than 12 months ago, revenue was up 11.5% on a constant currency basis. Operating profit of GBP 45.8 million was 3.4% lower or 6.6% on a constant currency basis with higher core profit more than offset by the impact of the challenges in Foppen. I'll go through a profit bridge shortly.

The resulting operating profit margin was 2% compared to 2.4% last year. Profit before tax of GBP 32.8 million and adjusted earnings per share of 25.7p were both down compared to last year, consistent with our lower operating profit but ahead of expectations. As Mark said, we've declared a flat interim dividend of 10.1p and net debt was slightly improved compared to the end of the first half last year. This chart shows volume and constant currency revenue growth in our new regional structure, specifically East, which includes Australia, New Zealand, Central Europe and will include Saudi Arabia; West, which includes the U.K., Ireland, Netherlands, Sweden, Denmark and Portugal and will include Canada; and seafood, which includes Seachill and Foppen.

We've also provided a slide in the appendix of the packs bridging last year's revenue and operating profit comparatives from the old segments to these new ones. In the East, volumes were up in all markets. Growth was particularly strong in Central Europe, where fresh prepared food volumes were up 26%. Higher Australian beef prices were the key driver of revenue growth of 15.3% with mix relatively stable between categories. In the West, volumes were slightly up. We saw good performance from the Nordics and our JV in Portugal, which offset lower volumes in the U.K. and the Netherlands. Although raw material inflation has largely slowed in Europe, prices remain at historically high levels.

The impact this had on revenue was partially offset by negative mix movements as we saw some customers trading down within beef categories. Overall revenue was up 9%. Seafood volumes were up 6%. Inflation continued to weigh on demand for whitefish and shellfish, but sales of salmon and prawns were up. Foppen volumes were also up as we met customer demand from our facility in the Netherlands. However, we experienced pressure on margins. Moving on to profit. On a constant currency basis, overall core meat and fresh prepared food profit was up compared to last year, with growth in the East region more than offsetting lower profit from the West.

In the East, we drove materially increased profit in Central Europe from Fresh Prepared Foods, while Australia and New Zealand again delivered good volume growth. In the West, core profit was down, reflecting competitive pressures in Ireland and unfavorable mix movements in the U.K. In response, we are working with our customers to deliver targeted promotions in half 2 while constantly reviewing our cost base against current volumes. As expected, seafood operating profit was down. This almost entirely relates to squeeze margins in Foppen, resulting from unfavorable movements in salmon pricing and FX, whilst improvement plans in Seachill are starting to take effect. Central costs were down with lower costs relating to share-based incentive plans. And with interest charges similar to last year, group PBT on a constant currency basis was down 8.9%.

However, translational FX movements were positive for us in the period, particularly from the strengthening of the Australian dollar and adjusted PBT on a reported basis was down 5.2%. Our updated full year guidance reflects the anticipated positive impact of FX rates over the second half of the year. Now moving on to exceptional items, which are excluded from our underlying results. We incurred exceptional costs of GBP 7 million relating to Foppen in the first half. Around half of this relates to the relocation of production from Greece to the Netherlands to ensure continuity of supply to our customers in the U.S. We remain focused on minimizing the impact and expect to stop exceptionalizing these operational costs in the second half of this year. The remainder of the Foppen cost relates to the additional cost of air freight, which we stopped in April and a one-off loss of inventory due to a fire in a third-party warehouse in the U.S. Across the group, we incurred exceptional reorganization and restructuring costs of GBP 3.2 million, largely related to redundancy.

We also incurred transformation costs of GBP 4.6 million as activity ramps up to drive efficiency, strengthen our operational capability and drive growth. We expect exceptional cash transformation costs of around GBP 10 million per year over the next few years. In addition, there was a GBP 16.7 million noncash impairment relating to Dalco, which is now classified as held for sale. Moving to cash flow and net debt. EBITDA was down in line with total profit with typical seasonality in working capital resulting in outflows in the period. We didn't repeat the last year's first half investment in inventory. However, we have taken the decision to purchase additional inventory in the U.K. in half 2 to ensure supply for Christmas 2026 and Easter 2027.

We remain disciplined on capital investment in our existing facilities with fewer new projects, net core capital expenditure of GBP 15.4 million was lower than last year. As a result, adjusted free cash flow was positive. We're into the last year of major investment in our new Canada facility. In total, we've now spent GBP 80 million with operations due to commence in January 2027. We expect to spend around GBP 25 million in the second half of the year to complete the core project with CapEx relating to bacon being spent in 2027.

Total CapEx will be higher than originally assumed a year ago, which includes both changes in scope and incremental inflationary pressures on building materials and automation equipment. We expect the project will generate significant value for the group and it provides an important platform for future growth and long-term returns.

We also paid GBP 3.6 million towards the joint venture project in Saudi Arabia in half 1, with remaining payments expected in the second half.

Net bank debt was a little under GBP 200 million at the half year, lower than at the same time last year. This equates to leverage of 1.4x. Our balance sheet remains strong. As we said in March, we've strengthened our access to funding with GBP 450 million of revolving credit facilities for at least the next 5 years, providing flexibility to deliver future growth. In addition, these bank facilities are enhanced by the ongoing benefits of our lease and customer supply chain financing with margins typically 0.5 to 1.5 percentage points lower than our bank facility.

Before I hand back to Mark, let me cover the outlook. Overall, trading from our core meat and fresh prepared food businesses were strong in the first half of the year. In addition, improvement plans are starting to deliver in Seachill. However, significant challenges continue in Foppen. As Mark said earlier, we now expect to achieve full year adjusted PBT from continuing operations in the range of GBP 66 million to GBP 71 million. This is higher than our previous range of GBP 60 million to GBP 65 million despite the ongoing challenges in Foppen and reflects the removal of Dalco losses from continuing operations and the favorable FX movements I talked about earlier.

As previously guided, we expect net bank debt to increase over 2026, it will also now include the impact of the additional second half investment inventory, though we expect to remain comfortably within our targeted 1 to 2x leverage range. Full year CapEx is still expected to be around GBP 100 million. Core CapEx is trending to be at or below the lower end of our GBP 50 million to GBP 55 million guidance alongside further CapEx in Canada as the project nears completion.

Looking at 2026. We expect first positive earnings contributions for our investments in Canada and Saudi Arabia next year, alongside the resilience and growth potential of our existing core business, this provides a good platform for the future.

Thanks for listening. I'll now hand back to Mark.

Thanks, Matt. So an encouraging first half. I'm pleased with our performance. Let me now touch upon our strategic progress. Our vision is to be the global partner of choice built on our world-class red meat capabilities. We believe this is an apt description of what Hilton Foods is, particularly with the high growth potential from fresh prepared foods. Our competitive advantage comes from our strong capabilities and positions in red meat, moves into adjacent categories with good margins will be aligned to these. Let me remind you of the 3 growth levers we laid out earlier this year. These will be the cornerstones of our growth plans.

The first is maximizing the core, essentially continuing to utilize our existing structural advantages as well as driving continuous improvement. The second lever is enhancing the mix. We are focused on increasing our exposure to sustainably higher margin and growing segments. We'll do this through scaling in areas where we already have existing relationships and capabilities. For example, in value-added meat and fresh prepared foods. Enhancing the mix is also about ensuring our portfolio is optimized.

This includes resolving challenges in our seafood businesses, particularly in Foppen. The third lever is geographic expansion, replicating our partnership model in new underdeveloped markets. We'll do this through differentiated quality, efficiency and innovation. We've made good initial progress against each of these growth levers. It's important we continue to focus on maximizing the performance of our core meat businesses. This is our Heartland and where our inherent strength lies. In March, we said we drive further manufacturing excellence throughout the group. We continue to invest in automation to improve efficiency. A good example is the use of our line control technology in our factory in Huntington. We've materially reduced [ mince ] waste by utilizing machine learning to continuously optimize pack weights. This is being rolled out across our product lines and factories. We also said we continue to focus on product innovation and category leadership.

This is increasingly a feature of the food supply chain. Food and innovation has always been core to what we do. We continue to develop new targeted product ranges for our customers. These respond to the wider economic environment and changing consumer trends. In the first half, we introduced mixed protein mince in Denmark and the Netherlands. This comes with a lower price point. We also introduced a new flavored mince product in the U.K. This provides customers with a differentiated value-add product. We're expanding into adjacent categories. This includes slow cook products, which are increasingly popular with customers. Although still a relatively small percentage of the U.K. sales, slow-cook volumes were up 6% in the first half. This remains an area of potential growth for us.

Our focus on quality, efficiency and innovation is the reason why our retail customers choose us. I've already mentioned that we extended our meat partnership with Tesco in the U.K. in the first half. We also continue to seek new commercial opportunities. We plan to roll out the supply of products to our partners, New Zealand, South Island stores in the second half. This is in addition to our existing supply to North Island stores. We're now supplying Burger King Sweden. This follows our investment in frozen burger lines in '25 for our retail partner, ICA. This is an example of how we can use existing capacity to add profitable volume with new customers. These are just some examples of how we're maximizing the value of our existing core operations.

This helps us deliver volume growth against the backdrop of continued high raw material prices. Moving on to enhancing the mix. A key component of this is optimizing our portfolio. We said in March, we'd look for solutions to resolve challenges in our seafood and vegan and vegetarian businesses. Our overarching objective is to reduce earnings volatility and improve group returns. That means creating greater flexibility and optionality for future value realization from these businesses. In July, we announced we had agreed to sell Dalco to live kindly for GBP 5.4 million. The transaction is expected to complete in quarter 4. Dalco has good facilities, but the market requires consolidation. I'm pleased that Dalco is going to a buyer whose vision is aligned with this.

For our seafood businesses, we're taking a very focused and disciplined approach to investment and performance. In the U.K. at Seachill, we've been implementing a range of initiatives. These include improvements focused on increasing yields. We've also restructured some departments to rightsize the business. There's more to do, but I'm pleased with the progress made to drive this business back to profitability. In Foppen, we continue our efforts to improve commercial performance. This is key given the poor financial results in the first half of the year. We're also driving operational efficiencies.

However, we still await clarity from the FDA on the restart of exports to the United States from our facility in Greece. The outlook for Foppen continues to look challenging. We recognize the current situation cannot continue indefinitely. As a result, we'll assess all options for the future of the business. Now turning to fresh prepared food. We're also looking to enhance our mix by moving more materially into fresh prepared food categories. These are traditionally higher margin. They also have higher growth rates. The market in Central Europe is forecast to grow at 8% per annum. We continue to develop plans to materially increase capacity and upgrade facilities in Poland.

We estimated back in March that investment of around GBP 30 million would roughly double the capacity of our facility. However, we are assessing opportunities with our partners to materially increase the scale of this expansion. This would future-proof our long-term growth ambitions. This may result in higher capital expenditure but also higher profit expectations.

Full scoping of the longer-term project is expected to be completed around the end of '26. Subject to suitable returns we could start spending CapEx in '27 and operation could commence as early as the back end of '28. In the meantime, we've implemented capital light plans to meet growing near-term demand. Geographical expansion is the third growth lever. As you know, we have 2 current projects in Canada and Saudi Arabia. Both are expected to generate earnings in '27. I recently visited our new state-of-the-art facility in Canada. Fit-out is nearly complete, and it looks impressive. Once operational, it will be our most automated facility. We said it will be operational in '27. And I'm pleased to say we're on track to launch right at the start of the year, with production ramping up over the first half.

At the same time, we will work on installing the bacon production lines and they will come on stream later in '27. The facility in Saudi Arabia built by our partners, NADEC, is expected to commence operations in late quarter 4 '26. It's an important milestone for the group and this is for a period of at least 10 years. More broadly, we see further opportunity through our retail partners, international footprint and network.

So as I said at the start, we're doing exactly what we said. Let me close by outlining my confidence in the future. We have a resilient and cash-generative core business. This is supported by structural advantages and a strong record of execution. The first half performance of our core meat and fresh prepared food businesses helps demonstrate this. We have well-invested sites. We estimate it would cost well over GBP 1 billion to replicate our manufacturing capability. This strong platform gives us an envious position. We have a clear strategy to drive growth. This is built around maximizing the core, enhancing the mix and expanding geographically.

I provided you with some examples of how we're delivering against this growth agenda. We will apply a disciplined approach to capital allocation. We will only invest in opportunities that generate attractive returns and underpin our group return on capital employed target of at least 20%. This positions us to deliver sustainable profit growth, strong cash generation and reduced volatility. We believe this will deliver compelling value for our shareholders as we focus on being the global partner of choice built on world-class red meat capabilities.

That concludes the presentation. Thanks for your time and listening. I'll now chair the Q&A. As usual, can you ask questions via me and I will allocate appropriately, as I said before, the difficult ones to Samy. And can I also ask that you introduce yourselves and your institution, particularly for the benefit of those listening to the call. Thank you.

Damian McNeela from Deutsche Numis. Okay. So could we talk a little bit about the competitive dynamics in Ireland, please, Mark? And I know this might be a tricky 1 for Samy, but also how we should think about the volume outlook for the second half and how the retailers are thinking about Christmas relative to last year, given where the consumer is? And then just -- can you remind us about how much the bacon investment is in Canada and what the incremental sort of volumes are attached with that, please?

Looks like you're going to be busy, Samy. Let me talk about the sort of the landscape and the run-up to Christmas. Actually, if I'm honest, it looks pretty positive for us. And I think we spend, if we're not careful, a lot of time in this room talking about the U.K. And I said in the presentation that the business isn't just about the U.K. -- it's effectively a global business. The U.K., I think, is probably about 1/4 of the overall. But if we focus on the U.K. specifically, we're pretty optimistic about the second half. We see evidence that there is a lot of activity around promotions coming that we are working with our customers to deliver against. We think the second half is going to be particularly strong.

So if I hand over to Samy to talk a little bit about Ireland and the competitive dynamics over there and then maybe we'll both come back and talk about bacon at the end.

Yes. I think you raised the point, I mean, effectively in Ireland, which where we have had challenges and a lot of it is coming from volume a year ago. We've added actually volume we done, we increased capacity in that respect. And since then, volume have been under pressure, primarily from a competitive standpoint as our customers were effectively tendering opportunities, I mean, towards other options that they had. At this stage, I mean, it's a cost dynamic that we are trying to address, I mean, over there in order for us to be competitive and regain volume momentum I mean over there. We have a great facility. I mean let me put that in the perspective of the fact that Ireland more or less is about roughly, let's say, a bit of a 1/4 of the U.K., I mean, in terms of size.

So it is important. I don't deny that. It is a market where effectively the meat consumption is high. But on the other side, effect in terms of a group impact, it is effectively manageable within the grand scheme of things that we have. The volume dynamic is currently being addressed by reviewing all of the opportunity we have from a cost savings standpoint. I think Mark alluded to that in his speech relating to all opportunities we have on effective giveaway or effective productivity and line speed and automation and so on, which we are addressing at that stage to make our offer much more competitive and regain volume momentum. The expectation now is to effectively eradicate the impact of this volume dynamic that is hurting us, to be fair, and through effectively a stronger interventional cost, that's going to position us much more favorably in the future tender that are going to come across and so that we effectively regain volume momentum coming into the next year.

And Christmas, of course, is going to be an integrated part of that extremely important to the overall business dynamic in Ireland.

Okay. So if we talk a little bit about Canada, and I'll start and if I miss anything, Samy can come in. I'm going to start by saying there's been a lot of debate around the investment in Canada over kind of the last 12 months. And it's been almost seen as a negative. I would come from the opposite end of the telescope and say, our investment in Canada is a huge positive. I was over there with Samy a few weeks ago. Samy was there last week. I'm no doubt that come '27, there will be invites going out for you to come and have a look at it. This is a world-class facility by anybody's definition. I think it's going to set the standard for the packing of meat globally.

It's an impressive location. And yes, the costs have gone up. But ultimately, the costs get paid back through the model that we have. And if we want to go into the detail of that, Matt can probably articulate that better than anybody. In round terms, and this isn't absolutely specific. The incremental CapEx on bacon will be about GBP 20 million-ish. It will be there or thereabout. And the returns will be in line with our return on capital employed of kind of 20%. But let me just go back a while, and for those of you that have been involved in Hilton for longer than me, you'll remember that when we invested in Australia in the early days, there's a gradual buildup. So for this year, as an example, we'll start packing meat at the very beginning of January, and we'll ramp up production to get to about the half year before we hit anything like for production.

So you don't get the returns while you're ramping up. They come in years 3, 4, 5 when the business is established. And that is a typical Hilton model. That's what happened on every investment of scale that we've made in the past, and this 1 is no different. And then the final bit that I would say, yes, the costs have gone up. But could you tell me any building project globally where in the last 12 months, costs haven't gone up given the world that we live in, I don't think there's any. And maybe sounds like I'm being a bit defensive of it. I'm not -- actually, I want to be able to start talking about the real positive things that are going to come from this. Because if we get this right, the opportunities with Walmart are never ending. And that's where we should be focusing our attention, getting the launch right, getting the ramp-up right and actually demonstrating to people like yourselves and our shareholders, just what a great facility we've got.

Have I missed anything there, Samy? No. Thank you.

Charles Hall from Peel Hunt. You haven't said much about Australia in these sets of results. Is it just business as usual? And obviously, there's been quite a lot of price inflation for protein in Australia as well. It seems as though the consumer is more resilient in that market. And are there any more opportunities for future business or investment in Australia?

It sounds like we've been doing a lot of traveling recently because probably have. I've just recently been down to Australia as well. And Look, the Australian business is a great business. Got great facilities, and we've got a customer that really values what we do for them. I said in my speech presentation, that we are starting to supply in the South Island and New Zealand. That's happening as we speak. We're already doing some stores. We'll have all the stores under our remit, I think, by the end of October, November. So we're growing the business. We talk about inflation. One of the benefits of gray hairs and age is you've seen inflation and deflation lots of times over the years. We have to play the cards we're dealt, and wherever we operate, whatever country we operate in, you can only operate in that marketplace. And Australia is a good example where there is -- there has been inflation, but working with the customer, we've managed to grow volumes as well as have the raw material price increases.

And it demonstrates, if you work hand in glove with your partner, you can in whatever dynamics that exist at a particular time, do a really good job of generating value for both. I know because when I was over there, effectively the #2 was just about as complimentary to my team down there as I've ever heard a retailer about any team. That's a great place to be, and the results are speaking for themselves. And results are very strong in Australia and New Zealand.

And then switching to Seachill. Do you think you've now put the measures in place to turn it back into profitability? And can you just explain a little bit more about what you're actually doing to increase yields and what the impact on the business is? Yes.

I'm going to -- a small one to say this because I think people have started this year before and said that they've -- they've sort of. Look, I think we're doing all the right things in the business in terms of getting into a good place. We are focused on cost in terms of people. We've dramatically reduced the number of agency staff that we have on site. That's direct on to the bottom line. We've had projects looking at yield out of fish. One of the challenges with any protein is maximizing the use of all the parts. You've heard other people that work in the protein world talk about those things. We perhaps haven't been as good at that as we should have ought to have been and we've worked quite hard on that. We're working hard on making sure we're sourcing in the right way as well. It's a business improvement plan that runs right across the gamut.

You haven't seen an impact in the numbers, but we are already into the second half. So whilst we're reporting in September, we've got 2 months of the second half, and we can see the benefits that are coming through from the work we're doing at Seachill already. So it's a business that we should be interested in getting into the right place. If you look at the world that we all operate in now and you don't need me to tell you this, pure protein is becoming a more important part of the diet, particularly as more people get into GLPs, whether they're injections or tablets. Tablets are coming, and so that means more people are going to be doing it. And if you do get involved in that, one of the things that the medical teams tell you, you you've got to consume more protein because it impacts muscles as well as fat.

So if you said to me, what do you think about Seachill, I think we need to have a really good go at seeing if we can find a sustainable tangible business out of that business before we do anything else with it. And that's what we do and that's what our plans are focused on.

Matthew Webb from Investec. Sorry to be the one to ask some questions about Foppen. First, is there any update on getting regulatory approval for exports into the U.S. from Greece. Second, is there a route back to breakeven if you don't get that approval? And third, if you conclude that there's no way through here and decide that you have to close the business down, what would the practical implications of that be in terms of your contractual responsibilities and what do you think the cost of that would be?

So the first thing I'd say, Matthew, is that look, we are a bit like Seachill. We are looking at what the art of the possible is for this business. But we are doing it a little bit with hands tied behind our back. And in doing that, I'll answer the first part of your question. No, we haven't had any update. We had a -- I think I've probably said this to you before. We had a -- we submitted our response to the audit and then we got feedback with 4 other things that needed to be sorted. We resubmitted to dealing with those 4 things that would have been probably April time that we went that back around about April but don't hold me to that date. And we've heard nothing. And so -- in terms of your second part of the question, what can you do to improve matters? Really, we need that decision before we can fully roll our sleeves up and start to improve that is because what is absolutely clear, running [indiscernible] in Greece with little or no volume going through it and putting through the volume in Harderwijk in Holland is more expensive.

You've seen that in our numbers, and it's part of the reasons that we've got challenges in the second half and -- we're taking those numbers on the chin rather than putting them through the exceptional lines. They're in nice -- there lies the challenge. Do we see those -- do we think there is a way through to get the business to lease break even? Yes, there is definitely the way through. And very simply, you look at your cost base, you look at your -- our cost basis, where you manufacture, how you manufacture, how efficient you are in that manufacturing, how you source your product, et cetera, et cetera. You do all of those things and also you work with your customers to make sure that you are providing them with the right products at the right margin.

And in the U.S., we've got a couple of really very, very good customers that do give the reason give the business a reason to believe there is a route out of this. So we're focused on that, and we'll be focused on it in the coming months. Ultimately, we'll have to improve matters at Foppen. And what I would say very simply is during '27, Foppen will be dealt with.

Clive Black from Shore Capital. A number of sort of rather disparate questions. First of all, what's the components of the transformation ongoing transformation work? I think you talked about GBP 10 million ongoing. Secondly, there was a very big working capital movement year-on-year. In steady state, what would you see as a sensible expectation for working capital movement in the business? And then lastly, I think Central Europe has probably been 1 of the surprise features of this company in the last 5 years. What are the components driving Central Europe? And how do you see the prospects there? Have we traveled and arrived? Or -- is there more to go for?

Okay. Matt has been really quiet so I'm going to let him do the first of those, and then I'll do the glory one at the end on Central Europe.

There's 2 okay.

There's 2 of those.

Yes. I'll start with working capital. So we'd expect for this year, probably a small outflow, modest outflow year-on-year. I think we touched on, we'll be purchasing some prime more in the second half to ensure we hit primarily Christmas, but that will flow through into Eastern and given where prices move, that probably gives us a small outflow, but modest. I would talk kind of high single-digit entering into double in that sort of area. So relatively modest. I think steady state, that's kind of where we should sit. Now obviously, first half into second half, we see different dynamics given where we kind of end the year at Christmas, which is kind of probably the most advantageous time for us given the dynamics of our customer base, but that's where I think we'd see it.

In terms of the transformation program, a number of areas here. We're looking at our kind of wider IT and data infrastructure across the business. So using data to drive decisions but enhanced technology, we have. That's a big part of the work stream. Then there's a wider organizational design piece focusing initially on central support functions, but beyond that, looking at what's the right organizational design for our business and where we sit is how do we get the benefits of what we have and the local focus we have, but then also utilize what is the strength of an ever-growing business as well. So where do we kind of -- where is the right fit between that local expertise and the central support functions. So that's on that piece as well.

And then there's kind of wider strategy work streams within that too. So that's an ongoing program as we said.

So if we do talk about Central Europe, this is a real sweet spot for us. I don't think we can deny that at all. I think last year, the business grew sort of quite a bit over 20% this year is growing yes, first half is growing over 20%. And that's against the backdrop where our meat business over there is probably flattish. All the growth comes from fresh-prepared foods. You say, well, why are you doing so well? Well, it comes back to the things that Hilton has historically been very good at. innovation. Our customers demand innovation, and we would be launching new products at a rate of knots. They demand you're efficient. And I think we run a very efficient facility there. And they demand quality and we deliver against those 3 criteria. And during this year, the expectations -- certainly from Zabka, which is the biggest buyer of the fresh prepared foods. But there are others that buy fresh prep from us.

Their volumes probably, I don't know, more than doubled during the year. And it's working with those guys that is encouraging us to lay down investment. And we laying that investment down in the form of a partnership not with huge commercial risks. So it is more akin to a typical Hilton longer-term contractual relationship than a short-term commercial relationship. So Central Europe is a really exciting place for us. Would we do fresh prepared foods and other places? -- some, but maybe not and definitely not here in the U.K. but we've got a very good business in Central Europe.

It's Anubhav Malhotra from Panmure Liberum. I have a couple as well. Firstly, on the guidance for this year. Obviously, for the first half, for the results, you said numbers are ahead of expectations, and you seem to be excited about the prospects of second half in the U.K., in New Zealand. Just why is the guidance kept stable on an underlying basis, I know there's benefits from Dalco and FX in there. Is it all due to the Foppen losses increasing? Or is there anything else? And then related to that, what's the extent of Foppen losses we should be seeing in the second half given some of these exceptional costs have been brought into underlying now?

I'll let Matt talk specifically about the numbers in a second. Maybe I'll talk about the principles. Look, the base business is doing very well. And I'm sure you picked up. We're happy with the way it's performing as a total. And anybody that operates businesses around the world and tells you every business is doing fantastically well. I would question whether the whether they're being straightforward. So we have businesses in some areas that are doing better than others, but that's the benefit of having the group. The fundamentals of our meat and fresh prepared food businesses are rock solid doing very well. But we have got a challenge at Foppen.

So we are being, I think, realistically cautious in setting expectations. And I suspect if most of you were sitting in Samy, Matt, my chair, you do exactly the same. So let's not get ahead of ourselves. We've got lots to do and getting Foppen into a better place and Seachill for that matter, are things that are on the agenda.

Matt, do you want to talk specifically about the numbers?

Yes. So sort of half one of this year, Foppen made low single-digit operating loss. And then, look, we talked about absorbing exceptional costs, be exceptionalizing I don't think if that's a word, but in the second half. So that will obviously add to that, plus I think we see a continuation of the challenges we've had in the first half as well. So that's kind of where we sit. And it's a meaningful movement for us as Mark's offsetting the strength of the core and some of the improves we're seeing in the Seachill business as well.

I'll just lighten the mood a bit. You wouldn't be -- you would be forgiven for thinking somebody is trying to have us over here because we get Foppen started supplying through boats rather than flying, which is a big cost reduction. We get product into the U.S. and then somebody sets fire to a warehouse with all our products here. You think what the hell is going on. So we have to -- having got the product there, we end up writing off another just over GBP 1 million in somebody else's warehouse. So rest assured, we're on with getting Foppen through a better place. It's taking some time and effort. But the challenges that I said to the previous question. We can't get it to a better place, but we need answers from the FDA to help us do that.

Can I just follow up on that? Do the FDA have to adhere to a time line to give you a response or not really?

What do you say -- I was going to be flipping that. I won't be no, they don't. And that's the challenge. They're not under no obligation to give us an answer in a month, a week or 6 months.

And then on Central Europe, can I ask, you mentioned some short-term capital light measures you're doing to maintain production volumes. Are there limiting profitability in any way at the moment of the business that could be released once you have proper capacity installed?

Look, if we could switch the brand-new facility on tomorrow once we've commissioned it and go up and running, the opportunity would be there to make more money. What we're doing is working with our customers, you would expect us to do to grow volumes with -- in realistic time scales and realistic capabilities. And we're working with them. I'm over there at their conference in 2 or 3 weeks' time. talk to the CEO of the group and the CEO of Poland about our plans. I think they're very happy with what we do for them. But of course, if you've got more capability, there's more opportunities, which is why I think -- when we come back and talk about the investment, I think I said in my presentation, the investment will be more than GBP 30 million, which is what we flagged up before, but the returns will be significantly higher as well.

Okay. No more questions. Thanks, everybody. Thanks for the questions. We are hanging around for a little while if you want to grab us individually feel free. And no doubt, we're talking to various sales desks and stuff over the next few days. So we'll see you then. Thanks again.

Good morning, everyone, and thank you for joining us. We're pleased to present our 2025 full year results today. Joining me this morning are Matt Osborne; Mel Chambers, COO for the East region; Samy Zekhout, COO for the West region; and Martyn Espley, Investor Relations Director. You all know Martyn and are getting to know Martyn, but I also think it's important that you get to meet more of the wider leadership team, and I'll ask Mel and Samy to say a few words about themselves when they present later.

I should mention Hannah Surtees is also with us today. Hannah has handed over the Investor Relations button to Martyn. Going forward, she's going to head up our communications team and work closely with me on our strategy. I'd like to thank Hannah for the sterling job she's done in recent years and say how much I enjoy -- I'm enjoying working with her.

Over the next 35 minutes, we'll take you through the key highlights of the year, including our financial performance and our refresh strategy. Then there'll be time for questions.

Let's start with our 2025 full year. Overall, we delivered solid financial performance in what has been a challenging operating environment. Adjusted profit before tax was GBP 73.2 million, which is down around 3% year-on-year. This reduction reflects the impact of the disposal of Fairfax Meadow together with the challenges in our seafood businesses and Dalco. Importantly, performance in our core meat operations in this challenging environment was stable. This demonstrates the resilience of our core business. We made good commercial progress during the year. We secured contract extensions in both the Netherlands and Denmark. This reinforces the strength of our long-standing customer relationships and the value we continue to deliver to our retail partners.

In terms of our growth investments, our projects in Canada and Saudi Arabia remain on track. These are important platforms for future expansion, and we continue to expect them to contribute from 2027 onwards. Alongside this, we are planning to invest up to GBP 30 million to expand capacity in Poland. This will enable us to benefit from attractive growth opportunities in fresh prepared foods. It will also strengthen our position in Central Europe.

Looking ahead, our 2026 outlook remains unchanged since the January trading update. We expect adjusted profit before tax to be in the range of GBP 60 million to GBP 65 million. This year-on-year reduction largely reflects continued challenges in our seafood, vegetarian and vegan businesses. We remain cautious on the impact of red meat inflation.

Finally, we've refreshed our strategy. Going forward, we will focus on growth plans and investment in our core meat and fresh prepared food activities. We will also implement plans in Seachill, Foppen and Dalco to improve performance and increase strategic optionality.

As part of our strategic refresh, we've also updated our financial framework. We have a clear focus on delivering sustainable profit growth, disciplined investment and compelling returns for shareholders. So while 2025 has had its challenges, we have made important changes in several areas and continue to position the business for long-term growth and value creation.

I'll now hand you over to Matt to take you through our full year 2025 performance.

Thanks, Mark, and good morning to those of you in the room and those of you listening in. I'll now walk you through our 2025 financial results, highlighting the main drivers of volume, revenue, profit, net debt and cash flow. I'll also touch upon the outlook for 2026 before handing back to Mark.

As we saw in the first half of the year, our full year performance was underpinned by continued resilience within our core meat and fresh prepared food businesses, which now account for around 90% of our revenue. This is a testament to the strength of our core business model and the expertise and commitment of our teams. As we've previously highlighted, our seafood vegetarian and vegan businesses are facing challenges and our strategic review, which Mark will introduce shortly, seeks to address them. Before then, though, let's take a closer look at the numbers.

First, the headlines. Volumes from our continuing operations, so excluding Fairfax Meadow, which we sold in September last year, were up 0.2% against a highly inflationary environment, which drove revenue up 11.9% on a constant currency basis. Constant currency operating profit fell by 4.4%, reflecting in particular the challenges in the U.K. seafood business, and I'll cover profit in a little more detail shortly. The resulting operating profit margin was 2.3%, down from 2.6% last year.

In line with the guidance we provided last November, profit before tax was GBP 73.2 million, down 2.8% and from continuing operations, so again, excluding Fairfax Meadow, profit before tax was GBP 69 million, down 1%. Adjusted earnings per share of 56p was 7.4% lower, reflecting a slightly higher tax rate of 30% due to the impact of truing up some historic tax allowances.

Our strong financial position and confidence in the medium-term outlook means we are maintaining our commitment to a progressive dividend policy with the final dividend flat, the full year dividend per share is up 1.4% to 35p. Net debt improved slightly year-on-year with significant cash inflows in the second half from divestment proceeds and a partial unwind of working capital. This was despite the planned increase in growth capital with 2025 being the main year of spend on our Canada project.

Moving to revenue. With volumes and mix broadly stable, an 11.9% increase in constant currency revenue was almost entirely down to increases in raw material input costs. On mix, we continue to see a shift in the U.K., in particular, with lower-cost products forming a higher proportion of our overall volume. However, multi-buy and promotional activity were a positive for us in Australia. The relative strength of sterling versus the Australian dollar remained a headwind, albeit partially mitigated by a strengthening of the euro in the year. Now moving to show volume and revenue by region. I've shown a version of this chart before, but I've split out our seafood, vegetarian and vegan businesses to demonstrate the performance of our core meat businesses. These numbers also exclude Fairfax Meadow. In the U.K. and Ireland, core meat volumes remained resilient and were only down slightly despite significant inflation in beef of more than 30%.

The impact of this inflation can be seen in revenue increases of 23.5%. European volumes were stable overall, including double-digit growth in fresh prepared foods in Central Europe and the benefit of new customer volumes in Denmark. Revenue growth was less material than in the U.K., reflecting a more diversified mix of meat products. And APAC again delivered volume growth despite the reemergence of raw material inflation.

Seafood, vegetarian and vegan volumes were down 2.6% with price inflation weighing heavily on whitefish volumes in the U.K. Foppen volumes were relatively stable as we continue to meet customer demand despite the regulatory restrictions on our facility in Greece. And Dalco volumes were up, albeit from a low base. Revenue was down by more than volume despite the whitefish inflation with market salmon prices 17% lower in 2025 than in 2024, reducing Foppen revenues.

Moving now to profit. Operating profit from our core meat and fresh prepared food businesses were slightly up year-on-year with the volume growth in APAC being the main driver, given the cents per kilo fee structure there. Seafood, vegetarian and vegan operating profit was materially down, however, with Seachill moving into a loss-making position, reflecting the pressure that lower volumes puts on gross profit. Foppen's underlying profit was stable, albeit there were material non-underlying costs that I'll cover shortly. We delivered an improved result of Dalco, although the business remains loss-making. Central costs were lower as were interest costs, reflecting lower market rates. Before the negative impact of FX due to the weaker Australian dollar, in particular, group PBT on a constant currency basis was down 2.8%.

After excluding the contribution from Fairfax Meadow, which we sold in September, it was down 1%. Nonunderlying and exceptional items excluded from the underlying results represent a net profit of GBP 29.3 million in the period, albeit there were a number of moving parts. The biggest cost related to Foppen. We incurred cash costs totaling GBP 9.2 million relating to the relocation of production from Greece to the Netherlands to ensure continuity of supply to our customers in the U.S. while also using air rather than sea freight to ensure an appropriate level of inventory.

We expect regulatory restrictions to be in place for at least the first half of 2026 and expect some further Foppen-related exceptional costs this year. In addition, we wrote off inventory that could not be delivered to the U.S. or resold elsewhere, resulting in an GBP 18.4 million charge. We incurred reorganization and restructuring costs of GBP 9.6 million compared to GBP 4.2 million in 2024, and this reflects the ramp-up of our transformation activity and group reorganization in order to support long-term efficiency and growth. We expect these costs to continue in the range GBP 5 million to GBP 10 million a year over the next few years, and this spend will help underpin our medium-term growth objective,s, and we'll provide some more detail on our transformation program in the strategic update section shortly.

Last, but certainly not least, we recognized profits on disposal of GBP 66.5 million relating to the sales of Fairfax Meadow and Foods Connected. Both of these transactions are steps towards simplifying our portfolio whilst also realizing significant value for the group.

Now moving to net debt and cash flow. Net bank debt improved slightly in the year despite a free cash outflow. This includes the impact of material cash inflows from the disposal of Fairfax Meadow and Foods Connected as we realize value through portfolio simplification. Exceptional cash flows relating to Foppen and wider group transformation and restructuring totaled GBP 18.9 million, and we returned GBP 31.5 million to shareholders in 2025, consistent with our progressive dividend policy.

Net bank debt of GBP 126.7 million results in net debt-to-EBITDA of 0.9x, remaining at very comfortable levels. And in February of this year, we successfully refinanced our bank facility, which now provides an increased GBP 450 million of revolving credit facilities for at least the next 5 years, providing flexibility to deliver future growth opportunities. In addition, these bank facilities are enhanced by the ongoing benefits of our lease and customer supply chain financing with margins typically 0.5 to 1.5 percentage points lower than our bank facility.

Let me touch on our free cash outflow. The group remains intrinsically cash generative and retains a strong balance sheet. This strength provides flexibility to allocate capital to benefit the group over the longer term. In 2025, this included the investment in inventory to ensure we'd be able to deliver excellent service levels to our customers during peak trading periods in the second half of 2025 and into 2026. It is important we continue with disciplined investment in our existing facilities, ensuring they run efficiently and continue to support growth.

Core net capital expenditure of GBP 46.5 million was lower than last year and included spend on capacity increases at Hilton Food Ireland. It also included further investment in Sweden, where we've installed frozen burger production lines, a new category in our partnership with ECA. 2025 was also the main year of investment in our expansion into Canada. We've now spent GBP 55 million in total on the project, with the remaining project costs being incurred in 2026. The project remains on track for full launch in 2027.

Before I hand back to Mark, let me cover the outlook. We've traded in line with our expectations in the year-to-date and continue to expect 2026 adjusted PBT in the range of GBP 60 million to GBP 65 million, unchanged from the time of our trading update in January. As we said at the time, the expected reduction in profit is predominantly due to continuing challenges in Seachill, Foppen and Dalco. Our core meat business continues to prove resilient and volumes over the first part of this year were solid. However, given the economic backdrop, it is right we remain cautious on the impacts there may be on meat demand due to inflation. We are also mindful of any potential direct or indirect impacts of the current situation in the Middle East. We would expect net debt to increase in 2026. Core CapEx will be GBP 50 million to GBP 55 million within our expected range.

However, total CapEx will remain elevated as we complete our project in Canada and expect to commence spend on our planned capacity expansion in Poland. Both of these projects will create value for shareholders and are expected to contribute to earnings in 2027. One of the reasons we remain positive about the medium-term and long-term outlook for the group.

I'll be back later to summarize our refreshed capital allocation framework and medium-term financial targets. But for now, let me hand back to Mark.

Thanks, Matt. Mel, Samy, Matt and I will now take you through a summary of our strategy. This is based on the review we've recently completed.

We aim to be the international red meat partner of choice. Aligned with that, in certain appropriate geographies, we have a developing fresh prepared food business that we'll invest in where the returns are attractive. What gives us confidence in this ambition is the structural strength of our core meat businesses. We operate long-standing partnerships with leading retailers. We benefit from high barriers to entry in our markets. We have a proven operating model that is delivered consistently over time. However, this strategy is not only about defending what we already have. We also see significant further growth potential, which we will unlock through a combination of portfolio optimization, targeted investment and the evolution of our operating model.

Simply put, this is a strategy that builds from a position of strength and our core capabilities. Importantly, we will be very deliberate about where we invest to drive future growth and attractive returns. Before we provide a bit more detail on our growth potential, let me put it in context against our recent track record. As you can see from the chart on the left, operating profit from the group's core activities excluding Fairfax Meadow, Seachill, Foppen and Dalco has grown by 4% on average since 2022.

This demonstrates the strength and stability of our core meat and fresh prepared food operations. On the right, you'll see the building blocks that underpin future growth. The expected reduction in profit in 2026 compared to 2025 is largely down to the challenges faced by Seachill, Foppen and Dalco. We expect profit from our existing core business to be relatively stable and remain so moving forward.

This will be supplemented from 2027 by our projects in Saudi Arabia and Canada. We expect to realize the full benefits from these in 2029. We also expect to deliver growth from our focus on our fresh prepared food product offering and multi-customer models in certain markets. We'll provide some color on this shortly. All this results in mid-single-digit average operating profit growth per year with potential for adding additional growth beyond from value-adding investments. Here are the 3 levers that will drive this growth over the medium term. The first is maximizing the core. Here, our focus is on reinforcing our leadership in retail meat by maintaining the structural advantages we built over many years. At the same time, we're driving continuous efficiency improvements to maintain margin resilience. This ensures that the core business continues to generate stable and predictable cash flows.

The second lever is enhancing the mix. We are actively increasing our exposure to higher-margin segments where we have an opportunity to win. This is particularly the case in value-added meat and fresh prepared foods. These categories offer faster growth and attractive returns. They allow us to better serve evolving customer and consumer needs. Mel will talk about expansion plans in our Poland business shortly.

The third lever is geographic expansion. We will continue to replicate our partnership model in underpenetrated and high-growth markets. We will work alongside anchor retail partners to leverage our expertise and scale. Taken together, these 3 levers create a balanced growth profile. They support stable cash flows, high margins and faster overall growth while reducing our reliance on volume alone. While the framework itself is simple, the value creation potential from executing it well is significant. A key part of enhancing our mix is optimizing our portfolio, particularly in seafood and meat alternatives, where performance has been volatile and unsatisfactory. These businesses have limited synergy with our core meat capabilities. We are taking a very focused and disciplined approach and will limit future investment across the 3 businesses, Seachill in the U.K., Foppen and Dalco. Across these businesses, the overarching objective for the group is consistent to reduce earnings volatility, improve returns and create greater flexibility and optionality for future value realization.

In Seachill, our priorities are operational recovery, cost reduction and product focus. This should allow us to rebuild margins. In Foppen, we are operating in an increasingly consolidating smoke salon market. Our focus here is on driving volume through best-in-class quality, customer service, competitive pricing and continued innovation. We will also address the challenges that are continuing into 2026. We resumed sea freight shipments to the U.S. and are actively rebuilding the stock pipeline.

We continue to engage with U.S. regulators to lift the restrictions on our Greek facility. Encouragingly, underlying retailer demand remains strong. In Dalco, the priorities are to improve operational performance and win new business. We're aiming to put the business in a stronger position operationally and financially, giving us greater flexibility in how we create value from it. I will now hand over to Mel, who will then hand over to Samy to help bring our growth strategy to life with specific examples from our East and West regions.

Thank you, Mark, and good morning, everyone. Having recently stepped into the role of Chief Operating Officer for the East, I'm extremely excited about the opportunities that lie ahead in my region and the refreshed group strategy. More broadly, I bring with me more than 25 years' experience from across the food industry with a strong focus on operating globally.

When I joined Hilton Foods in 2022 as the CEO for the APAC region, I spent considerable time strengthening the customer relationship, building deeper alignment and developing a regional leadership team for future success. As we move on to competitive positioning, there are 3 key areas of focus that will underpin how we maximize our core meat capabilities.

First is manufacturing excellence. We are driving continuous efficiency and improvement across all our operations, and this is supported by a clear automation road map. At the same time, we are maintaining a very disciplined approach to cost control, particularly within central functions, and this ensures that we avoid any unnecessary or duplicated overhead.

Second, innovation and category leadership. We continue to enhance our capabilities in value-added products, working with our partners to develop new target product ranges that align closely with consumer demand. We are also expanding into adjacent categories such as slow cook products, where we see attractive growth opportunities. And third is our security of supply. We will continue to develop our global red meat sourcing center of excellence, which allows us to leverage our scale more effectively while also using our local sourcing capabilities to ensure resilience and availability in each of our markets. Together, these initiatives will ensure that we improve our competitive advantage, continue to support our retail partners effectively and position the core business for sustained market outperformance. This slide now provides a clear example of our strategy to enhance our mix through our planned investment in Poland. We see a compelling opportunity in fresh prepared foods in Central Europe, driven by strong underlying demand and forecast market growth of around 8% per year.

At the same time, our retail partners are increasingly looking for value-added solution, which plays directly to our strengths. Our planned investment of up to GBP 30 million over 2026 and '27 will expand capacity, increase automation and enhance our processing capabilities. Importantly, this will allow us to differentiate our offering through improved shelf life and product innovation. And from a financial perspective, this is a highly attractive investment.

It is expected to generate returns well above our cost of capital with return on capital employed above 20% over the life of the project. It will also be accretive to the group's margin mix. And this is a good example of how we can deploy capital in a disciplined way to drive both growth and returns while strengthening our competitive position. I'll now hand over to Samy.

Thanks, Mel. After 30 years at Procter & Gamble, my most recent role was as CFO and Deputy CEO for 6 years at Nomad Foods. I'm really pleased to have the opportunity to step into this role from my nonexecutive position. After having been exposed to Hilton Food Products, facilities and people over the past several months, as a Board member, I felt that there was a huge opportunity to contribute if we got the strategy right and properly executed to reignite value growth for the years to come.

Our investment in Canada comes under my remit and represent a step change growth opportunity for the group. As you probably know, we are developing a new facility to support a long-term 10-year partnership with Walmart with the sites scheduled to launch fully in early 2027. Progress on the project remains on schedule. Product development has been completed and tailored to customer requirements, and we will begin production testing of equipment and systems in the second half of the year.

From a financial standpoint, this is an attractive opportunity. We expect return above our cost of capital with return on capital employed over the life of the contract, consistent with our refreshed capital allocation framework. The project will begin contributing to profit from 2027 with a full contribution from 2029 and beyond.

Importantly, this is not just about the initial contract. We also see further opportunities in adjacent value-added categories within Canada. More broadly, we see broader potential through all our retail partners' international footprints. So Canada is both a significant stand-alone investment and is a good example of international expansion. To support the delivery of our strategy, the newly appointed executive team is behind our plans to evolve our operating model through what we call One Hilton. This is about embedding a consistent value creation mindset across the organization, ensuring that all parts of the business are aligned around delivering returns. It also involves building a more integrated and scalable global platform allowing us to leverage our international scale more effectively while continuing to execute strongly at the local level.

At the same time, we are preserving and strengthening what differentiates us particularly our deep partnership with leading retailer and our unique collaborative business model. Overall, this transformation ensures that we can scale efficiently as we grow without losing the strength that underpin our success.

Let me now hand over to Matt.

Thanks, Samy. Now let me spend a few minutes taking you through our refreshed capital allocation framework and medium-term targets. Everything is underpinned by our desire to maintain a strong balance sheet, ensuring we have appropriate headroom to withstand any market shocks and provide flexibility for future investment. I'm comfortable with net bank debt, excluding leases, in the range 1 to 2x EBITDA through the cycle.

This is significantly below our bank facilities financial covenant of 3x. We will continue to invest in our facilities to maintain and enhance our operations, underpinning core organic growth through improved automation and productivity and the development of new product categories. This investment will be in the region of GBP 45 million to GBP 55 million per annum and will fluctuate depending on when and where investment makes economic sense.

Our strong balance sheet and cash-generative model then provides flexibility for further incremental value-adding and strategically aligned investment. This could be in material new capacity expansion, such as the project we're planning in Poland or in geographical expansion, similar to our entry into Canada and Australia and New Zealand before that. Our benchmark for these investments is high. Returns need to be materially ahead of WACC and any investment must support our group ROCE target of greater than 20%.

At the same time, we also recognize the importance of cash returns to shareholders. We are maintaining our progressive dividend policy with the intention to move back to around 2x earnings cover over time through adjusted earnings growth that our strategy is expected to deliver. Our dividend policy means we retain flexibility to seek further value-adding investment opportunities in line with our strategy.

However, in the future, should no attractive opportunities exist, we would consider returning any surplus cash to our shareholders. In addition, we would continue with our progressive dividend policy. Let me now cover what the strategy means in terms of medium-term targets. First, as Mark has already said, we are targeting mid-single-digit operating profit growth on average each year, recognizing though that the nature of our investment means it won't be a linear progression. This growth will be underpinned by our ongoing investment to improve and automate our facilities and the contribution we expect from the new facilities in Saudi Arabia and Canada from 2027. It excludes any benefit from material incremental investment in new geographies or in large-scale capacity expansion.

It also excludes any contribution from the improvement plans we have in place at Seachill, Foppen and Dalco. We expect these businesses, which we anticipate to be marginally loss-making as a whole in 2026, not to become a sustained drag on earnings. Second, through continued good working capital management and a focus on cash flow, we expect cash flow conversion, so free cash flow as a proportion of net income to be around 100% on average over the years.

Third, we continue to target a group ROCE of at least 20%. This figure was 20.1% in 2025, and we expect it to drop below 20% in 2026, given the level of preproductive capital related to the Canada project. Any further material incremental projects may also have a shorter-term impact on reported returns. So over the medium term, we believe this is an appropriate target to benchmark the group against. Let me now hand back to Mark.

Thanks, Matt. To summarize, we believe we are well positioned for the future. We have a resilient and cash-generative core business. This is supported by structural advantages and a strong track record of execution. We have a clear strategy to drive growth. This is built around maximizing the core, enhancing the mix and expanding geographically. We will apply a disciplined approach to capital allocation, ensuring that we invest only in opportunities that generate attractive returns. Aligned to this, we have a highly engaged, skilled and talented workforce.

Taken together, this positions us to deliver sustainable profit growth, strong cash generation and reduced volatility. We believe this will deliver compelling value for shareholders over the long term as we focus on being the international red meat partner of choice. That concludes the presentation. Thank you all for listening. I'll now chair the Q&A. Can you please ask questions by me and I'll allocate to the appropriate person. Can I also ask that when you ask a question, you introduce yourself and give us the institution that you work for. Thanks very much.

Matthew Abraham from Berenberg. First question just in reference to the FY '26 guidance. Just wondering if you can outline what your expectations are for that raw material price inflation that's trapped up in the second half of the year, please?

Mark, do you want to answer that?

Yes. Look, I think we recognize that there are inflationary pressures, but the basis for the guidance we issued in January hasn't really changed, and we're confident in that GBP 60 million to GBP 65 million PBT guidance.

Okay. So does that then infer that there's the expectation for a deterioration in elasticity as it has been from the first half of the year to the second half of the year because there will be that sustained high price backdrop? Is that the expectation given that this inflation backdrop is likely to persist?

So we recognize the resilience of the core product we produce. We recognize that there could well be some inflationary pressures, but I'll come back to the guidance we issued in January, took into account our views on inflation.

If you go back to the presentation, I think in one of my sections I talk about, we are mindful of the ongoing position on red meat is as an example. That mindfulness is built into our numbers and forecasts that we've put into the market for this year. So we feel comfortable where the guidance is, and we feel comfortable that we've taken into account what -- where we think the inflation -- inflationary nature of our products are going to go and the impact on consumers' purchasing habits.

Okay. That's helpful. And it was obviously impossible to account for it in January, but one thing that's obviously changed is the freight dynamic. Can you just talk about your exposure there and what you're doing to mitigate those pressures given that, that's a new factor post January?

I think that's a really difficult question to answer. And if I went around the room and asked everybody to answer that question, I think we probably get a lot of different answers. Suffice to say that in our business, we're in the very lucky place that a lot of our contracts are cost plus. So they go automatically to our customers. And where necessary, we're looking at holding the mirror up to ourselves, looking at our internal costs and taking costs out where we can. I don't think anybody can predict what's going to happen as a result of the Middle East. We're very -- as we said in the presentation, we're very mindful of the situation and we will react accordingly. I think the most important thing is outside of that, we are very comfortable with where our numbers are for this year.

Charles Hall from Peel Hunt. A couple of questions, if I may. Firstly, can you just talk a little bit about the red meat market, what your customers are doing to respond to the higher price points and what you're doing in terms of product positioning?

Okay. I think that depends on geography. And maybe in a second, I'll ask Mel to talk a little bit about what's happening in Australasia. I think that's important. In the U.K., which is a fairly substantial part of our business, actually no different than Australia. But what's typically happening is people are trading down and Matt talked about that.

I think one of the benefits that we have, we're probably the lowest cost producer of the product in the U.K. that supports our customers' ability to be consumer aware. And if you look at the shelves in Tesco, they're doing a range of things to give real value to consumers. So what we've typically seen is people trading down, moving down the portfolio towards mints, et cetera. But there's still a top-tier purchasing habit that people are buying into premium cuts, maybe eating out less than they were and consuming it at home. We see that trend to -- continuing. We saw evidence of it last year. We expect it to continue for this year.

Mel, do you want to quickly talk about Australia?

Yes, absolutely. I think you nailed it overall. But I mean, we've seen 3% growth in Australia. We haven't seen it slowing down, but they are definitely changing the mix. So lots of 3 for $25, 3 for $20 offerings, promotions in store, and we're working strongly with the customer on co-creation of that middle tier and how do we build the value in that middle tier.

Great. And Matt, last year, the inventory increased fairly significantly building up ahead of Christmas and Easter, I think. And partly, obviously, that's pricing, but also availability. How do you see that panning out this year?

Yes. So as we would have talked about before, we built inventory to ensure we had sufficient available to us to hit both Christmas and now Easter peak. So that's largely unwound. We'll have seen, as you rightly say, an increase in the stock value just because of inflation as well. So comfortable where that sits. And so see that unwind now. Now clearly, we will work with our customers to ensure that we can meet their demand and meet peak trading periods and how that looks really depends on availability of the market and some of the challenges we may face into, but comfortable with where we sit, comfortable with us delivering for our customers and the [indiscernible].

Let me come in just to add something to that. There was a lot of noise around that -- those purchases last year because there were surprise. And 1 or 2 people since I've been involved has said could that happen again. What is absolutely clear is if -- particularly in the environment that we touched on at the moment where there's lots of uncertainty, if opportunities arise for us to buy meat ahead of any inflationary pressures, that's exactly what we'll do. We'll explain it to you guys. We'll explain it to shareholders. But if it's the right thing for the business, that's exactly what we'll do.

And lastly, Mark, the SPV, I think we'll now call it, is how much do you think you can improve the profits? And how long will it take to get change in those segments?

There's a -- so we didn't really discuss it in the presentation, but I've got a dedicated team working in that area. It's got its own effectively, it's leader. We're already seeing evidence in those -- of improving trends in those businesses. We've won new business in Dalco in recent days as an example. We've got a cost-out program in the Seachill that's starting to pay dividends. Foppen is actually a different set of problems. But as you heard in Matt's presentation, we're already using sea freight as opposed to air freight.

That starts to normalize it. We are working very hard with the U.S. FDA to get our protocols reassessed. That's happening. We put it in 2 weeks ago. We're waiting for the results. But we're also challenging some of the -- some of the things that are perfectly acceptable in the U.S. for example, dipping fish in saltwater that on the face of it are not acceptable in Europe and the U.K., but we think we found an opportunity to make them acceptable in the U.K., and we're going to be working on that.

So we've got a range of activities in each of the businesses that we're already on with that will start to deliver improvements now. Will they get to the stage where at the end of the year? I think in Matt's presentation, he said that they will be collectively loss-making still by the end of the year. Will we get to the stage where they're profitable by the end of the year, question mark, but we're working very hard to make sure that, that's where we get to. We want to give ourselves choices in these businesses, and that's what the -- all the work we're doing, it's about giving ourselves choices.

Sorry, Darren Shirley from Shore Capital. Just a question on one of the areas where you talk about enhancing the mix within the business. You talk about scaling value-added meat. Can you just outline exactly what that means? Is that an opportunity you haven't been taken advantage of previously? Or is that a new opportunity...

I guess we -- a bit of both, Darren, to be fair. Just as an example, we use Sid in that area where we've been very successful with it, but there is greater opportunity to do it in more places around the world. some of the work that we're doing in Poland will enhance our capability to deliver against that as a product line. There's opportunities -- further opportunities in the U.K. And the interesting thing is you don't have to manufacture it everywhere. You can manufacture it in one place and export it to the neighboring countries. So as an example, and Mel can probably give you more detail than me on this, we will upgrade our facilities in Poland, but that gives us an opportunity to sell into neighboring countries from the Poland facility, which is a low-cost will be automated solution.

Okay. And then Poland, GBP 30 million, what exactly are you expanding there? Is it the meat side? Is it just the fresh prepared side? Is it new capabilities. Just a bit of color what you're getting for GBP 30 million.

I feel a bit sorry for Samy because I'm passing all these questions to Mel, but I promise I'll give one to you in a second, Samy. Mel, do you want to just talk about what we're doing in Poland?

Absolutely. So it is an expansion of our fresh prepared foods business that we currently have there, which is next to the fresh meat factory. So it's expanding the footprint of that, which allows us to be able to have more capacity so that we can keep up with the customer demand. And as Mark touched on, it can act as a hub that can then serve other markets from there. And so what we're looking at doing is advancing the technology within that facility and also the automation at either end.

In terms of the products, Mel?

Yes. So the products, we're looking at sous-vide, we're looking at the ready meals. We do sandwiches, pizzas currently through there. So a lot of the fresh prepared foods.

And then just one last one, if you don't mind, is, you talked about there being additional exceptional costs associated with Foppen this year. Could you give us sort of a ballpark number in terms of what we're thinking.

Yes. So current run rate is around EUR 800,000 to EUR 1 million a period. Now that will have included air freight costs as opposed to sea freight costs. And as Mark touched on, we're moving away from air freight at the moment. So we see that reducing over time. As you know, we are operating out of the facility in the Netherlands, which has increased operating costs as well. So that's where we see it.

Clive Black also from Shore Capital. Darren's Younger brother. A few, if I may, Firstly, to follow on from Charles' question about working capital. Are you looking at a similar positive outflow this year? Or is it an improvement year-on-year? Maybe start with that 1.

Do you want to answer that one?

Yes. So based on where we sit today, we'd expect there to be a modest improvement over the year. Now as Mark said, though, we will reserve the right to make purchasing decisions if see it's the right thing to do to ensure we're avoiding inflation or ensuring supply for our customers.

And then not to keep Samy out of it, I think you talked about long-term opportunities from international retailers. Just flesh that out what that actually means for investors?

John?

Yes, sure. Absolutely. I think we -- we declared in our third pillar that there was effectively an opportunity to expand geographically. And I think you've seen that in the move that we are making now today in Saudi and Canada. And the idea there is to leverage what we are doing that as a benchmark, if you want for future opportunities either to selling into new geography or expanding effectively into new category within those geographies as well.

Okay. So that could mean for the product categories and further plans in those markets? Is that whst you alluding to?

Yes. I mean all options are being considered and we'll be effectively investigating the opportunity on the basis of, let's say, the best opportunity from a value creation standpoint, absolutely.

Just to be clear, that those opportunities will be in fresh meat, our core capabilities or fresh prepared foods, the list that Mel articulated. We're not going to go into sort of wide categories. We'll focus on the things that we know and understand, and that's where we'll invest. Just to maybe put a bit more flesh on that, 1 or 2 people have asked in recent times, will we spend more in Canada?

The answer to that question is we might. And the reason we might is because we might win incremental business there. So that is not a definite, but there is a chance that we win incremental business there. That business, so if the cost -- the capital costs go up, they're going up because they'll deliver improved returns.

But the probability will be with existing customers rather than new customers?

I think in the main with existing customers, but I think it's fair to say that we've got a team with suit cases traveling around looking for opportunities in appropriate geographies. These are long pipelines though. You don't have an idea today that gets delivered tomorrow. As you've heard in the case of Canada, that's probably been in the making for 3 years before we actually started the development. So we're working on long-term projects.

And again, in your presentation, you talked about a global red meat sourcing capability. What does that actually mean for shareholders?

So the one thing that shareholders should draw from that is we actually have a very well-run, efficient sourcing team based in Huntington that source red meat from South America, from Australasia and around the world. I would say that we are at the top end of capabilities in that area. Look, as the supply of meat declines in the West, in particular, that, I think, will come more and more into ton. and it gives our shareholders and us as a business, a degree of comfort going forward.

And does that sourcing capability need to be replicated in fish?

I think, kind of to a degree, it is already there in fish. I think the fish challenges are much more here and now operational, customer product so that we're looking at the business on a relatively short-term basis to solve some of the challenges that we have. Ongoing sourcing capabilities are a thing that we'll look at, but they're not in the immediate to-do list.

Okay. And then just the last one. Again, you talk about your production platform around the world. How consistent is that to the extent -- we've been to Huntington and 1 or 2 others have been to other plants around the world. But across the globe, how consistent is your production capability?

I think if you traveled around the factories, you'd see similarities in all the factories. One of the things that I think Sally talked about one Hilton. One of the things that we're addressing full on at the moment is our ability to make sure we're getting synergies from the skills we have in the various locations. You might argue Hilton hasn't historically done that. Each of the businesses has done their own good work, but it hasn't been translated across the group. We're already seeing benefits of getting it group-wide rather than business-wide.

And I think we'll continue to do that. I think the fundamental factories, if you walk into our factories, you'll see similarities everywhere, and you'll see the same focus to efficiency, yield, give away, all the things you would expect to see in any factory. And the fact -- the reality of it is if you take Walmart as an example, they didn't just sign a contract and say, we'll go and work with Hilton. They went and visited lots of these facilities, saw it themselves, saw something that is different than what our competitors offer and then sign on the bottom line. So that isn't me saying it. That's a very big highly competent retailer saying we want to put our eggs in the Hilton basket.

Matthew Webb from Investec. Can I ask about the -- or any operational implications of the strategic review and the very clear distinction you've made between core and noncore. I mean, are these businesses already run very separately? If not, are they going to be separated out more clearly to give you that optionality of selling the noncore when the -- when profitability improves?

And then related to that, I think you mentioned that the investment priority would now obviously be on the core side of the business. Clearly, when it comes to expansion, that's what we would expect. But if there was a, say, a big automation project that would improve the profitability of the noncore side, would you go ahead with that? Or would you be wary of doing that if the ultimate plan is to sell?

Well, I think the last -- start with the last point first. We haven't said that the plan is to sell. So let's be clear about that. What we have said is we need to work very hard on these 3 businesses to deliver optionality. They're already now. It was one of the first things I did when I put Mel and Samy into their roles, took out these 3 businesses and manage them separately. They have a management team looking after them that are focused entirely on improving those businesses during this year. So if you wanted a view on the capital question, if the capital pays back in less than a year, then the chances are we'll probably say yes. If it's a long-term capital investment, then the chances are unless we've done the short-term stuff, i.e., got the businesses to a sustainable position, we are not going to be investing long-term capital in these businesses.

And that's -- I think the team would probably agree. I've been very clear with the team. We will invest, but sort the businesses out in the first place, and that's where we've got to get to. And I've said a few times, this is all about giving us optionality. Improving the current situation through a range of measures, and then that gives us choices going forward, choices to keep the business, but also to do other things as well. But be clear, there has been no decision to sell any of these businesses.

Just a follow-up for me, if I may. So you mentioned the desire to improve the businesses, and there's been improvement initiatives implemented in these businesses over a number of years. What's different in the approach that's being outlined today? But yes, I guess that is the first follow-up, please.

In some respects, I'm probably the wrong person to ask that. They're not here. But if you ask the team, I am sure they would say there's a very different approach in the rigor and challenge that goes on in their businesses to that, that has been historically done. So it's a rigor, it's a focus. It's a accountability, it's an empowerment that maybe didn't exist before as we look to improve them. Now there is -- as I've said already, there's a range of things that we're working on from cost out at one end to volume in at the other, and they're all different depending on the business that we're talking about.

Okay. And then maybe just one more follow-up, if I may. So there's a greater concentration of investment going into what appears to be a high-returning business in the core. But the ROCE target is unchanged. Like why would there not be a better ROCE profile if more investments going into a better returning component of the business?

Maybe I should pass that to Matt, but I'm not going to. I'm going to answer it because we believe that, that level is a satisfactory acceptable return for us that work in the business and for shareholders as well.

It's Darren Shirley again. Two areas of the business, which haven't been mentioned, obviously, you crystallize value with Food Connected early this year. But within that sort of bucket of sort of other investments you've got Agito in there and Cell Ag. I mean, where do they sit in sort of the new Hilton?

Well, I think it's very clear from what we've said that they're not core in terms of investment. They are important, though, because not necessarily as a shareholding point of view, they're important to the running of the business.

Agito is intrinsically linked to our developments around the world, and it forms a big part of what we're doing in Australia.

Cell Ag is a start-up, and it's a business that's very interesting from a personal point of view, but it's not necessarily that interesting for the view of a public company. And what being absolutely blunt, we would like other partners to join us in the Cell Ag investment.

And then just a point of clarification because you mentioned cold red meat on a number of occasions. In APAC and in Canada, fish, am I right in thinking seafood will continue to be part of the broader offering you bring it to Woolworths in Canada and Australia?

Seafood is going to be a continuing part of the offering in Australia. May not be in Canada.

Does that represent sort of a downsizing of the thinking in Canada?

No. 'm not -- at this stage, I'm not going to say any more than that. You shouldn't worry about what I've just said from Canada. It is integral to the offering that we have in Australia. And in Australia, it works really well. I think the difference between Australia, it is a very simple, straightforward cost-plus model. What we operate in the U.K. is different to that.

Because there were ambitions to expand the seafood after an APAC, would those ambitions still be there?

Do you want to talk about that, Mel?

Yes. So the seafood works well in New Zealand as a food park. So we have the red meat, the poultry and the seafood. And due to it being a smaller location, less stores, it serves being able to serve the whole country out of that one facility. In Australia, due to the diversity of travel time and transit time, the seafood model wouldn't work long term because it's fresh, it's not frozen. So when you're looking at trucking for 12 hours from there to there, your shelf life is obviously shrinking. So it works well in New Zealand, but it's not something that we're progressing currently in Australia.

Any more questions? We're going to be around for a little while if there's any individual questions you want to ask. I'm conscious 1 or 2 of you have got to get after another presentation. Good business that is as well, by the way. Thank you for your time. Thank you for your questions, and feel free to come back to us on any points over the next few days. Thank you.

Good morning, everybody, and welcome to Hilton Foods interim results for 2025. I'm Steve Murrells, Group Chief Executive, and I'm joined today by our Chief Financial Officer, Matt Osborne. I'd like to start with an overview of our performance for the period, which has seen us continue to deliver a solid performance and strong strategic progress despite some operating challenges in the market. Over this first half, we've delivered another robust set of numbers, progressing volumes, revenue and profit. Volumes were up 2.5%, and this reflects both the relevance of our core ranges and our ability to adapt to market dynamics.

Our return on capital employed remains robust at 20.8%, an improvement of 0.6 percentage points compared to half 1 in 2024. And earnings per share increased by 5 percentage points, reaching 26.5p. Revenues grew strongly, up 10.4%, demonstrating both the scale of our business and the strength of our customer partnerships.

Profit before tax was also up by 3% to GBP 33.6 million. Our balance sheet remains strong with net debt at 1.3x EBITDA. Finally, we are proposing an interim dividend of 10.1p per share, represents an increase of 5.2% year-on-year, underlying our confidence in the long-term growth prospect of the business and in line with our progressive dividend policy.

In the first half of the year, we saw a good performance in red meat and convenience with volumes growing 3.1%. This was above market growth and reflects the strength of our customer partnerships, our operations and our winning product ranges. In contrast, we've seen softer demand in whitefish, mainly as a result of raw material inflation with higher prices dampening demand. At Foppen, we've seen an impact on operations after certain batches of products did not meet the U.S. import requirements due to the detection of low levels of Listeria.

To address this, we've relocated our smoked salmon production from our facilities in Greece to the Netherlands for the near term to ensure that we protect availability and our customer service levels. Demand for the product in the U.S. remained strong, underpinned by our supportive customer relationships. We've made good progress in addressing this issue, and we're working closely with the FDA to restore uninterrupted supply from Greece.

Now turning to our tech stack. We were pleased to have brought in a new investment partner into our Foods Connected business. This is an important step that will help us unlock and accelerate growth and deliver more value from the platform.

Looking globally, our expansion plans are progressing well and both remain on time with our Saudi joint venture with NADEC launching in the second half of 2026 and our Canadian launch with Walmart set for early 2027. At the same time, we've commenced a project that focuses on sharpening our future priorities. This includes optimizing our organization to support expansion and create long-term sustainable value for all. Work on these plans is progressing well, and I look forward to updating once complete.

So while we navigate some local issues, the overall picture is one of continued opportunity strategic progress and future focus. Before moving on, I'd like just to take a moment to share a bit more detail on the market that's helped shape our performance in the first half of the year.

Now throughout half 1, we've experienced significant protein inflation with around 60% in cod and haddock and 30% in beef. At the same time, consumer confidence has weakened, which means people are more cautious with their spending. We're also seeing shoppers switching products more frequently, trading down or changing categories. And finally, availability across protein supply chains has remained volatile.

In the face of these dynamic market shifts, we've leveraged our core strengths. Our international reach allows us to balance performance across different markets and benefit from the scale. The shift towards more meals being bought from supermarkets and prepared at home, supported by our strong retail partnerships has worked in our favor as this is the backbone of our business, creating more opportunities to continue to drive volume even in the face of inflation.

In conjunction, our broad product mix and commitment to innovation mean that we can adapt quickly to the changing consumer behaviors and continue to bring new solutions to market, such as our new barbecue ranges, great value minced products and premium tier stakes.

Lastly, our global sourcing expertise ensures we can secure supply and manage volatile better -- volatility better than many others in the sector. Together, these dynamics shape the backdrop of this performance and guide how we focus our priorities moving forward for the remainder of the year.

Now I'll hand over to Matt for a deeper dive into the numbers.

Thanks, Steve, and good morning, everyone. It's a pleasure to be here to walk you through our financial performance today. As Steve mentioned, our performance in the first half has been underpinned by the strength of our meat business, which accounts for around 80% of our revenue and the expertise and commitment of our teams. These key ingredients have enabled us to overcome the impact of market dynamics within the seafood sector and deliver continued volume growth overall.

We've been able to capitalize on market opportunities by staying close to our customers and consumers by driving innovation, improving efficiency and continuing to create value for our stakeholders. With that in mind, let's take a closer look at the numbers.

We've delivered volume growth of 2.5%, with strong revenue growth of 10.4% on a constant currency basis against a backdrop of significant inflation. On a constant currency basis, operating profit rose by 1.9%, driven by sustained volume momentum, particularly in our retail meats and convenience categories, though operating profit margin decreased from 2.4% in the first half of 2024 to 2.2% in the first half of 2025, impacted by the performance of our seafood business with margins in our meat business remaining broadly flat despite raw material inflation.

Although reflecting our ongoing focus on efficiency, our enhanced conversion margin has increased by 0.5 percentage points.

Profit before tax was up 3% to GBP 33.6 million. And after factoring in the impact of the strengthening pound was up 0.3% on a reported basis. Adjusted earnings per share grew by 5% to 26.5p per share, and our interim dividend at 10.1p per share is up 5.2% on last year.

On the balance sheet side, net debt rose to GBP 202 million following tactical investments in inventory and capital deployed developing our new facility in Canada. Leverage remains comfortable at 1.3x net debt to EBITDA and capital expenditure for the year stood at GBP 41 million, an increase of GBP 15 million versus half 1 of 2024 and included GBP 15 million invested in Canada.

Overall, revenue grew by 10.4% on a constant currency basis. Alongside volume growth from our meat and convenience food businesses, the primary driver was raw material price inflation in meat across all 3 regions and significant white fish inflation in the U.K. We've also seen some negative mix impact from lower cost products forming an increasing proportion of our overall volume as shoppers clearly look to manage their everyday spend.

The strength of sterling remains a headwind with revenue at actual FX rates up 7.6%. And for reference, we've included our average FX rates as an appendix in the slide pack for you.

Now turning to regional performance. In the U.K. and Ireland, we've seen significant inflation in both beef of more than 30% and white fish of around 60% year-on-year. Despite this, retail meat volumes have been resilient and everyday products have remained stickier in shopper's baskets. However, white fish volumes have not been immune from the impact of wider inflation, with the U.K. affected across primary white fish, coated and fish cakes and that's held back overall volume growth.

Across Europe, beef price inflation of 27% has also been a primary driver of revenue growth. Though the operational disruption we've experienced in serving the U.S. market from Foppen, has also impacted volumes. In contrast, our convenience business in Central Europe has continued to go from strength to strength, delivering another period of double-digit volume and revenue growth.

In APAC, we've continued to see strong demand even in the face of significant raw material inflation, demonstrating the resilience of our markets there.

Overall, group operating margins have decreased from 2.4% in the first half of '24 to 2.2% in 2025. In the U.K. and Ireland, we've seen solid profit progression in meat but overall performance has been held back by weaker profitability in seafood.

In Europe, upsides we've seen from the growth in our core meat category and our convenience food ranges has been offset by the impact of reduced volumes from Foppen following the disruption there. And in APAC, where we earn an overall cents per kilo fee, profit increases reflect continued strong demand with increased volumes being processed in our facilities.

After allowing for increased central costs and the benefit of reduced interest costs, group PBT for half 1 on a constant currency basis was up 3%.

Non-underlying costs for the first half totaled GBP 3.3 million compared with GBP 0.3 million in the same period last year, and these are excluded from our underlying results. The biggest driver is Foppen, which accounts for a total of GBP 2 million of these costs, and that relates to the transition of our operation from Greece to the Netherlands, increased inventory provisioning and increased logistics costs as we're airfreighting products to the U.S. to maintain service levels to our customers. We expect these costs to continue into the second half as we recover that business.

The second item is linked to future focus projects that Steve talked about, with GBP 1.3 million costs in the first half. This reflects the commencement of the work stream and some initial reorganization of positions within the business, supporting long-term efficiency and growth with work continuing in the rest of the year and beyond. Overall, while these non-underlying costs have increased year-on-year, they are tied directly to protecting supply, ensuring continuity for customers and investing in future success for the group.

The group's balance sheet remains strong, allowing us to continue to invest in growth. This has also enabled us to take tactical decisions to increase inventory ensuring we'll continue to deliver excellent service levels to our customers during peak trading periods in the second half of 2025 and into 2026.

We, of course, continue to make targeted investments in our existing facilities, keeping our operations running smoothly and efficiently and also supporting capacity expansion and our wider growth. In the first half, we invested GBP 26 million in core CapEx and GBP 15 million in our expansion in Canada. With our progressive dividend policy, we've also returned GBP 22 million to shareholders in the first half of the year.

Reflecting our investment in inventory and planned increased CapEx, net debt at the end of the half was GBP 202.4 million, an increase of GBP 65 million from half 1 2024 and GBP 71 million higher than the end of the year. We remain focused on sustainable growth, continued operational excellence and delivering value for stakeholders.

Our investment program is key to maintaining our competitive edge and accelerating growth. Our core capital expenditure includes GBP 12 million of maintenance CapEx that continues to protect the core of our operations by maintaining the market-leading standards that our teams and our customers expect and trust. The remaining GBP 13.7 million is focused on growth and efficiency, including capacity increases in Hilton Food Ireland and further investment in our Swedish facility, where we've installed frozen burgers production lines, which is a new category for us in partnership with ICA. Alongside this, we've spent GBP 4.6 million on other efficiency projects across the group.

We've continued to invest in our facility in Canada and have spent GBP 15 million during the first half of the year, bringing our total spend to date to GBP 21 million. Our total investment this year is now projected to be around GBP 40 million, with our overall investment expected to be around GBP 80 million. These increases result from shifting economic conditions, which have led to higher-than-anticipated equipment and infrastructure costs. However, the opportunity remains highly attractive and continues to exceed our hurdle rates.

Our disciplined approach to capital allocation ensures we remain at the forefront of our industry, balancing the requirements of maintaining our competitive advantage, driving our efficiency and supporting growth, delivering value for our customers, partners and investments -- and investors alike.

Our financial strategy is built on a solid foundation of comfortable leverage and a resilient balance sheet, positioning us well to support both our existing business and new ventures. Reflecting tactical decisions we've made to build inventory and progress in our growth ambitions, as I've said, our net debt has increased by GBP 71 million compared to the end of 2024, with leverage increasing by 0.4x versus the end of last year. But this for me remains at comfortable levels. And with reducing interest costs, interest cover increased to 5.4x.

As I said, we have comfortable leverage, and I remain confident we have the financial strength to continue to seize growth opportunities as they arise. We have a well-structured funding framework. And as we've previously shared, our bank facilities are enhanced by the use of lease financing and supply chain financing provided by our customers where we have margins that are lower than our bank facilities.

The group's underlying business model is highly cash generative and in a robust financial position, supported by a strong balance sheet and comfortable leverage, which gives us both the confidence and ability to invest in future growth. Our commitment to a disciplined approach to capital allocation gives us a framework to ensure that our investments are targeted to protect our core business, maintaining the high customer -- the high standards our customers expect and unlocking sustainable growth opportunities driving attractive shareholder returns through supporting business development, enabling geographic expansion and selective complementary M&A.

In conclusion, these results demonstrate our resilience in the challenging market, delivering robust performance today while investing for tomorrow. Supported by the strength of our business model, we remain confident in our ability to drive sustainable growth and deliver long-term returns.

I'll now hand you back to Steve to take you through the business update.

Thanks, Matt. These are the 4 strategic priority areas, which have continued to guide where we focus our efforts: growing our global footprint, expanding our multi-category offer, building further expertise as a supply chain partner and leveraging tech as a key driver of value. Now let's take a closer look at what we've been working on and how far we've come, starting with growing our global footprint.

Hilton Foods Canada in partnership with the world's #1 retailer, Walmart, remains on time to launch early 2027. We held the ceremonial groundbreaking with great support from the senior team at Walmart Canada and representatives from local government agencies. They all supported the project and the progress that we're making. The build is now well underway.

As part of our continued range planning, we've already completed over 80 product evaluations and we've kickstarted the packaging at work process. We expect returns to exceed our hurdle rates, and this growth opportunity remains highly attractive despite the raised capital spend mentioned earlier.

Looking ahead, in quarter 4, we will begin the fit-out process with our automation teams commencing work in the building, and we expect to see revenues and profit contribution from this project in early 2027, to be in line with those guided at our full year results back in April.

Our joint venture with NADEC in Saudi Arabia is making very good progress as well and remains firmly on schedule. As you will recall, this is a capital-light entry into a new market where we are developing a primary butchery facility alongside secondary retail packing. This will enable us to process and supply high-quality meat products to a growing number of retailers, many of whom are expected to move away from in-store butchery over time.

Our projected return on capital employed is in line with hurdle rates and we are confident that this initiative will deliver strong returns and secure a valuable first-mover advantage in the market. Construction of the main facility and the joint venture packing plant is advancing well, and we're preparing for equipment installation, commissioning and testing to begin in quarter 4.

Alongside the build, we're developing the product range and packaging for both the NADEC-branded meat offer that will allow us to tap into strong local demand while also engaging positively with local retailers to expand private label opportunities further. This combination of branded and private label supply positions us well to serve a fast-growing and attractive market. We expect the first revenue contribution to come through in the second half of next year and profit contribution from 2027.

The breadth of our offer, combined with the exciting new product launches, is driving the strength of our multi-category proposition and ensuring that we meet evolving consumer needs as some households seek greater value whilst others seek premium ranges for more special occasions at home.

As part of this, we've launched a new marinated to cook range designed to encourage bigger basket spend through strong promotions such as 3 for AUD 20, supporting Woolworths in winning market share. And in Europe, we've successfully launched frozen burgers in Sweden, which is performing well and builds on our food park offer.

Across our private label ranges, we've introduced mixed meat options to deliver great value where we've incorporated low cost proteins such as pork and chicken and combined it with beef in minced, in burgers and in meat balls across Europe and APAC.

We've also strengthened our trade partnerships with retailers worldwide through seasonal promotions and exceptional execution, including Easter campaigns in the U.K. and limited additional seasonal convenience ranges in Central Europe. These initiatives highlight how we're adapting to market conditions while delivering value, choice and growth for our business and customers.

Our focus on premiumization remains unwavering, guided by insight from different markets. In the U.K. and APAC, we've expanded our premium range with Wagyu steaks, burgers and grass-fed beef offering high-quality options that elevate the dining experience. In Ireland and the Netherlands, we've refreshed our barbecue offer, extended our ranges further on trend flavors and brought a level of convenience through oven-friendly foil trays. These initiatives consistently deliver premium, relevant and engaging products with a strong pipeline planned for the second half of the year.

Now turning to supply chain resilience. Our leadership remains critical to ensuring both security and long-term growth, with markets tightening across Europe and inflation on the rise, our global procurement expertise has been critical in helping us mitigate local supply shortages for our customers.

Looking ahead, we expect these skills to remain important in the second half of the year. A good example is in Sweden, where we've expanded the Hilton Hacksta brand, offering high-quality meat sourced globally at affordable prices. As a reminder, back in April, we signaled a softening of our white fish demand across the sector. Our front-footed approach has enabled us to get ahead of this through operational efficiency and sourcing.

Over the past 6 months, we've continued to successfully pass through cost impacts and previous investments in automation are brought about supportive yield and labor efficiencies. In addition, we've opened up new geographical regions for sourcing cod and haddock and commenced early trialing of alternative species. At the same time, we've continued to grow our seafood ranges in the APAC market. While this has been ongoing, our focus on innovation to kick start demand in the U.K. has continued and starts with the launch of Harry Ramsden's brand later this month.

Another good example is the recent work completed on minced packaging, where we took an end-to-end approach in our Australian business. This created many savings. The highlights being a reduction in plastic of 200 tonnes, a reduction in emissions and costs and improvement in store productivity. At the end of July, we secured a strategic investment in Foods Connected from the Apax Global Impact Fund. As a result, the business will receive GBP 22 million in cash while retaining a 26% stake in the Foods Connected business. This partnership will build on Foods Connected success and accelerates its next phase of growth by bringing in capital and Apax' technology expertise. As a reminder, the platform delivers real-time data to optimize supply chains, improve cost efficiency, quality, risk and visibility and, of course, sustainability.

Foods Connected continues to be a key enabling tool and delivers exceptional service to our business and our customers. Apax recognizes Food Connectors potential to scale globally, supporting businesses that tackle social and environmental challenges as well. This investment creates value for all, while allowing us to retain an attractive stake in a high-growth enterprise.

Additionally, we continue to deploy automation to improve efficiencies, trial AI in our manufacturing operations and we've recently initiated a rollout of our enhanced factory management ERP system across our global operations, enhancing connectivity and scalability.

Turning to ESG. We remain committed to delivering our sustainability goals and are aligned with our customers' priorities. Earlier this year, we published our second stand-alone sustainability report, built around the 3 pillars of people, planet and product. Further to this, we've been recognized with the CDPA rating for supply collaboration and shortlisted for awards for manufacturer and net zero strategy of the year. This reflects both our ambition and our progress.

Our people drive this important work and I'm grateful for their incredible dedication to the business. They are our greatest assets, and I'd like to thank them for their unwavering commitment. We continue to invest in them building our talent pipeline, using apprenticeships, internships, and graduate programs, which builds the leadership capability and the cross-cultural experience that we need going forward.

Finally, as you can see from this slide, within our own operations, we're making progress on lowering our energy and gas usage, enabled by our international team sharing best practice across the group. These achievements highlight our commitment to driving meaningful impact delivering progress through our close collaboration with our customers, our suppliers and their communities.

Looking ahead, we expect our retail meat business to continue to perform strongly. Nonetheless, we do expect market headwinds in seafood to remain while we manage Foppen's operational challenges. Our focus is on delivering our full year results, supported by our growth pipeline across 2 new geographies, built on a resilient core business. Overall, we are well positioned with a differentiated and scalable business model underpinned by our sharp focus on the future.

Finally, I wanted just to turn to our investment case and our inherent long-term strengths. At the heart of this business is our track record of maintaining long-term partnerships with some of the best retailers in the world. Our meat business continues to outperform the market in all the regions that we operate in. Our strong balance sheet allows us to unlock new opportunities with access to a large addressable market outside the U.K. and our ROCE performance driven by our ability to deleverage quickly drives exceptional returns. When combined, it is these attributes, which I believe represent a powerful combination to achieve our long-term growth and value for all.

At this point, I'll open to the floor for questions and just ask that you could share your name and the institute that you represent. Thank you.

Charles?

Charles Hall from Peel Hunt. Steve, you mentioned sharpening future priorities. And I know you're going to talk about this more in the future, but can you just give us a bit more color on what areas you're looking at? Is this cost? Is this products, regions, customers?

So look, we're now into my third year. The first 2 years was all about getting this business back to health and coming through the difficult period of '22. I think we've done that well. And we're set much stronger than we were when I came in. This piece of work now is about the future and actually us looking about where we want to go, what we want to be over the next 10 years, so we can make sure that we are as strong and relevant as we have been over the last 10 years. And so it will be a full end-to-end review, Charles, across everything that we do, but most importantly about where we think the market will go in the mid- to the long-term.

And when do you expect to give more details on this.

That will be in the new year. The work is progressing well. But I'd like to think that we could announce an update certainly at the full year results.

And will this bring some cost savings as well as sort of some changes in direction?

Well, look, cost savings isn't something that we suddenly think is a good idea. It's a continual piece of work that's going on in the business. It's about making sure that we are fit for the future and that we're structurally set up to do that.

And Matt, just on the return on capital on Walmart Canada, understandable that those -- the CapEx cost has increased. But can you just talk us through how it still meets your return threshold with that higher cost base?

Well, so it was an attractive investment for us in the first place. And the increased cost there, we're talking about it today. We're working closely with Walmart on the build and ultimately, the protections we have, and they have within the contract allows us to be confident in terms of returns going forward and how that plays out over the long term of the contract.

Damian McNeela from Deutsche Numis. First question is a general question on U.K. consumer, perhaps for you, Steve. And just how you're seeing the current environment and what the outlook for the rest of the year is and how that matches with your anticipation around Christmas?

And then the second one is specifically around where do we think we are in the journey on the sort of white fish inflation journey and your ability to sort of deliver new products to help offset some of that volume decline?

Yes. Thanks, Damian. There is no doubt. I mean we -- and I think I said it, there is a softening in consumer outlook. But as you've mentioned, we are, as always, well set for a good Christmas. And I think what we've been able to do is whilst there has been a softening overall, we've still been able to find opportunities where we can premiumize our offer, and we've still been able to make sure that we can help our partners provide the best value for money so that they can help their customers whose purse strings are getting a little bit tight. And I think that comes back to one of our core capabilities around insight data and working back from what the customer needs are.

So whilst it is softening across the piece, we think we are well set with our ability to grow relevant ranges, be with the right retailers who obviously have their golden quarter coming up shortly. And so I think as I've echoed we've got capabilities to move through this. It's not for the faint hearted that we can grow volumes in an inflationary market in the way that we've done, and I think that sets us up for the second half of the year.

On the journey on whitefish, the opportunities that we've already put in place to move from Pacific cod and haddock to Atlantic, but more importantly, to now start looking to introduce basa as a replacement or hake, and just to give you some form of context, basa is around about 50% cheaper than cod and haddock, and hake is about 15% to 20% cheaper. What we're doing though, bear in mind that, cod and haddock is a bit of the mainstay of what people have grown up on is through our own brands, testing the market and helping customers get comfortable about the product that's now started to evolve. I think that will go down well because people do need help and then we'll accelerate quickly in bringing those alternative species on board.

Clive Black from Shore Capital. I've got 3 questions. I'll ask them one at a time, and the follow-on from Charles and Damian to a degree. First of all, in terms of your return on capital, building in Saudi Arabia as well. Do you remain confident that you can maintain at or above your aspired 20% level?

Just going with the 1 question, are we going to go with 3?

I'll do one at a time because I'm old and got bad memory, I won't don't remember the third.

Yes, very much so. We know that with the investment in Canada, we will see a dilution. We've clearly chosen to invest in inventory as well, which has seen a dilution too. But overall, confident long term that we'll be delivering returns in excess of the 20% hurdle rate without doubt.

Okay. That's clear. And then from Damian's question about white fish. I mean we can see that you've got a what hopefully is a one-off issue in Foppen, but in 2022, when you came into the business, Steve, I think you were a bit surprised by the informality of fish sourcing at Hilton across both white fish and salmon, how much formality have you introduced into fish sourcing? And to what extent does that give you confidence or a better feel for your supply chain going forward?

Yes, you'll recall that we very quickly upweighted and upskilled the capability of the team in Grimsby. And with the procurement individuals that we've now got I'd say they are leading in the understanding of fish stocks, fish movement, species opportunity. And that's important because we've got to provide solutions for retailers, because they can see the dynamic shift certainly in the movement of fish. And so we're well set, I would say, that's a much stronger muscle that we have today than we had 2 years ago, Clive.

And I think really important to make the point, this is a demand issue. And as we've demonstrated, we're finding smart ways to try and kick-start demand, but also dumbing down on the operation, making sure that our yields continue to improve, making sure our labor is really efficient. And most importantly, where that is obvious, making sure that our partners absorb the cost inflation that we're seeing.

Okay. And then lastly, turning to beef, are you surprised about the robustness of beef volumes given the price of beef? And how -- what are the driving forces from your perspective behind beef inflation? And do you see those stabilizing or persisting because obviously, you're a global player, so it's not just about beef in Britain and Ireland?

Yes. It's a good question. I think beef has shown itself to be extremely resilient, probably much more resilient if we've been facing this 3 or 4 years ago. But as we know, there's been a kind of a recovery in the sector. We don't really see it coming off a great deal. And as we've said, it's not just in the U.K., it's across Europe and it's equally across the APAC region. But again, in the APAC region, we see our meat business growing market share. We see great volumes coming through from that business. So again, there seems to be a resilience level that people continue to buy beef products even at the levels that they are today.

Now we have to be careful here. We have to keep on doing everything that we're doing, getting the balance between products that appear -- appeal to shoppers on a budget, but also where we can see opportunities in the offer premiumization in the ways that we've described. We'll continue to put our foot on the pedal. Driving all of this, we know are a number of issues. But in essence, the tightening of availability is what's behind the main reason. And I think that then plays to our strengths as being one of the best at how we procure a product on a global basis, how we start to look at complementing the beef herd with the dairy herd, and that work is well underway.

Matt in the front.

Matthew Webb from Investec. I wonder if you could just help me to understand the increase both in the inventory level and the CapEx guidance a bit more fully. To what extent in both cases is that driven by inflation, by higher costs, whether that's the inventory or the equipment? And to what extent is it your decision to take volume levels up, again, whether that's the volume of inventory or either the quantity or quality of the equipment? And on the CapEx side, to the extent that it's your decision is what is -- what will be driving that? Is it a reaction to the never-ending increase in labor cost in particular?

We'll tag team. I'll just do the bit about the inventory bit. So the most important thing for us is to make sure that we can provide the full availability at the right time and be able to cover the peaks that come when our partners really go after activity or during those seasonal events, Matt. And then secondly, the technology that is allowing a greater level of long-term storage, which by definition, matures and creates a great quality product has moved at such a pace that there is a much more opportunity to build stock when typically product would be short than ever before.

And the combination of those 2 things are actually what we're now describing in tactically facing into those important progressions. That will be very much done shoulder to shoulder with our partners. But it's designed to make sure that they delight their customers, and we don't let them down.

Matt, do you want to just come back on the capital.

Yes, in terms of capital and we're talking Canada here specifically, I think then the first thing to say, Charles, we work really closely with our partner at all stages in the build process. So all decisions that we're taking around investment levels, any changes we make specifications are all in conjunction with the partner. The driving force really is -- and this is an investment we're making over 2 years. There's significant inflation in the equipment costs. There's significant inflation in wider infrastructure costs. And actually, if we look in Canada, cost of delivery of an installation, cost of labor, et cetera, that has increased significantly as well. So it's really driven by that.

I think if we look at what we're doing, we could choose to make the facility less automated, less cutting edge. But ultimately, that doesn't benefit us or our customer in the longer term. So these are decisions that we're making over the course of a 10-plus-year contract, not necessarily off the back of kind of what we're seeing is relatively short-term economic challenges that we're facing into. And that's how we work clearly with our partners. These are long-term partnerships with decisions made for the long term, not in reaction to what we're necessarily seeing in the market today or tomorrow.

Got it. That's very clear. Can I just follow up there, does that have any implications for the likely future level of CapEx in other parts of your business? Because I'd imagine there's probably a regional element to cost, but presumably, there's some global issues?

Yes, there are some global issues and we are seeing prices increase. I think there's different dynamics in Canada as to what we may be seeing in Europe and APAC. But yes, so there are potentially inflationary -- impact on the -- again, it's a shorter-term point when we're investing. We're investing in these lines, these facilities for 5, 10-plus years. So making sure we make the right decision for the long term rather than short-term decisions based on where we see market.

I think it's -- the investment around automation, for example, isn't the panacea of everything. We're skilled at it. We do it well. We know that it drives down labor costs. But at the same time, you have to have a continual manufacturing excellence approach that's looking at how you can run these factories without spending a lot of money on a lot of kit and depreciating it through the P&L. And that's very much in the DNA of the business.

And making sure that we then share best practice across our regions so that we have a consistent approach. That's as important. I think for us, whilst as Matt says, we're thoughtful about where we deploy that capital spend relative to the country opportunities that are there and available.

Darren Shirley from Shore Capital. I wonder if you could just talk us through the time line of the -- how the challenges have evolved at Foppen and sort of how you see sort of the future time line as you get back to some more normal operation, please?

Do you want to start, or would you want me to start?

I think you can start, Steve.

Look, I think the first thing is to say that what we've experienced with Foppen is incredibly rare. But then I think equally, it's probably taking us longer than we thought it would do. And we've obviously learning how the process of testing and working with the FDA is longer than we probably anticipated. Important, I think, to say that the relationship with the FDA is very, very strong and has been really collaborative since the beginning.

Last week, we had a full weeks audit with their auditors. That audit went very well. There were no majors that came out of that. And that then allows us to now move to a stage where we can put our petition back to the FDA in order for them to effectively give us a date when we can start to supply unaffected out of the Foppen issue. So it's taking us a little bit longer than we would have thought. It's very rare for us, but we're doing it collaboratively with them. I, of course, want to get this done as quickly as possible. I think realistically, we know that will take a few more months for them to go through their regulatory protocols.

In truth, under the whole Trump changes, the focus on government costs has seen the FDA's inspectorship be reduced quite significantly, which has brought another slight headwind into the process. So very rare. We're confident in our action plan. We had a very good audit last week. We're working collaboratively with them.

And in terms of -- I mean how long is this?

So we had a -- the incident actually happened at the back end of 2024. As you know, we have significant stock already built up in the U.S. So as we move through this issue, we recognize that we had the stock already sitting there, which meant that there wasn't an impact to the performance of the business. As that stock, however, has started to flow through, and therefore, moving production out of the effective site to our Dutch facility, there has been a gap that's opened up in terms of refilling that pipeline. And it's the refilling of that pipeline from around about quarter 2 this year that's now starting to cause us some indigestion that we've already mentioned about.

And as Steve said, we've switched production from Greece and the Netherlands. I talked about it earlier, we're producing product there. We have air freight into the U.S. to make sure we're seeing uninterrupted supply. That will continue into the rest of this quarter and until we're back up and running in Greece, we'd expect normal operations to continue to conclude. Maybe unknown is -- I'd say unknown, it's out of our control the FDA processes are taking a little bit longer than we would have anticipated even when we were start talking to you last time in April.

And just a lot of the chatter coming into the results was around Foppen, but more about sort of tariffs and demand. I mean, have you seen any impact in terms of retailer demand at all? Or is it all about the supply and the challenges?

Yes. When we were here last, Darren, you're right, kind of tariff gate was building. Where it settled is that there was always a 5% tariff. There's now a 15% tariff. So an additional 10% has gone on. Our partners, all of them have accepted that tariff. So our margin is protected. And we've not seen a falloff in demand during that period of time. So this is still a product that our partners and their customers want.

It's Andrew Ford from Peel Hunt. Just a couple for me. And the first one, laboring a point on the white fish. I just wonder if you could give a bit more detail as to how difficult that transition is to the better product, which customers is it easy to get that products and customers easy to get that done with and why so much use hake over the other alternative? I'll start with that, and I'll come back to the next if that's okay.

It's an intuitive question because we are having to help our partners realize that this is an inevitability coming. Quotas are getting tighter on how to concord and we need to find alternative species. So we're guiding them because when you do make these moves, you have to make sure customers come on the way, but that's going well. I think this is probably worth to saying, this is a really good example of what we said about fish and that it's very price elastic.

So as we've talked about all morning, it's a demand issue on white fish, but I can equally sit here and say our salmon business where we've got deflation on a like-for-like basis is growing by 12%. So this is the normal rhythm of a commodity product that we see demand falling off when it gets to a certain level.

Now as we've already mentioned, beef has seemed to be a bit more resilient in that regard. But clearly, where we see prices falling, then demand goes up. But I don't -- I think this will be with us for some while and therefore, moving quickly to alternative species is the way forward.

Great. And the next one, a question on the Foods Connected sort of the new investment you've had from Apax. I just wondered what the mutual sort of obligations are around that? Clearly, it's an important investment for them and they can see the potential of the products. But what do they expect from you? And what are you expecting from them in more of a contractual sense? That would be helpful to understand.

I mean we're really pleased with this. We've always said that Foods Connected had potential for real value enhancing. And I think this collaboration with Apax will really now pump-prime this opportunity and allow us to go and spend our monies elsewhere, but also I think it keeps the balance sheet clean because we remain with a 26% stake. That's an incentive for them to scale really quickly. And what attracted them I think, about the opportunity was the importance that this provides to our retail partners. And very important, therefore, that the service that we continue to get from them and the Food Connected team is first class because that connection with our retail partners makes those relationships even stickier.

They can see the potential here. And as I say, they are better equipped to scale and pump prime this and so we're very excited about what they can bring to the table. We've got a tight governance structure in place so that we are working together. And I think it's a good example of how we're starting to think as an organization. This is, I think, a smart move for us, get some cash out, but keeps us very much involved with it.

Just following up on that, is there then a sort of a shared target for that for Foods Connected now? Sort of what were built into the underlying assumptions at that stage in those discussions. Can you give any color on that, sort of what you expect revenue growth to be for Foods Connected? Or is it still just more of an operational because before it's always just run as an operational functionality of Hilton Foods. So I just wondered if that has changed to more of a revenue...

I think, so from my perspective, we won't be booking revenue anymore. It becomes a share of their income. I think not for me to comment on what Apax' revenue targets will be for Foods Connected. But I think the point Steve makes is we see and they see real opportunity in this business. And the fact that we've brought in this investment doesn't mean it diminishes the value we see for our business as well. And as you said -- as you mentioned, the contractual obligation mean we will continue to have great service and support in all of the key aspects of Foods Connected as we've had over the last 5-plus years as well.

I mean we'd always see at least a 5x increase in revenues over the next 3 to 5 years. Apax see considerably more and that's because they'll put their shoulder to the wall. It's what they do. And as we've said that we treated this as the tech business, quite different to how we run this, the core business. and it was very much about getting out of the top line. So I think we all believe that this can move at pace.

It's Anubhav Malhotra from Panmure Liberum. I just have 1 question on the inventory holdings and the increase that you have seen in this half. Do you feel that this needs to be a permanent part of the business now, given the direction that beef herd has been going for the past few years. And given the quota cuts that you have been seeing and there's overfishing concerns across the board?

We're just looking at that for the reason that if we do think this is going to become more of a permanent issue from a sourcing point of view, then how we equip ourselves with cold storage capability is an important consideration. So we're just looking at that.

Just on that though, as well, I think these decisions we are taking, they are made in full discussion and agreement with the partners we're servicing as well. So this is not us going out and doing this without consultation. This is fully supported, making sure that we're clear with our customers that we're able to deliver the customer service they expect and the volumes that the consumers are expecting as well.

And you should be able to charge them for it as well as a service, in a way?

So we work in partnership with them. And for us, it's the right thing to do ultimately.

Good, I'm just going to check.

No further questions at the moment, so Steve, I'll hand back to yourself for closing remarks.

Great. Thank you very much. Thank you, everybody. I thought that was a really robust set of Q&A, and no doubt we'll get to see a few of you in the coming days. Thank you.