Bid Corporation Limited (BID) Earnings Call Transcript & Summary

Good morning, everybody. Hopefully, all the technology works, and the conference has started. Welcome to our trading update for the 10 months. I'm actually in Rotterdam at the moment in the Netherlands. My apologies upfront. I'm not feeling all that great. I've got a bit of a bronchial infection, so if I start coughing in the middle of it, I do apologize. Hopefully, I'll be okay and can hold up okay for the next hour or so. It's a relatively easy update to give. We've put a SENS announcement out an hour or so ago, which I think is very self-explanatory. And fortunately, whatever we tell you today which probably isn't all that different to what we've been telling you in the past, and it's a continuation of the same thematic that we spoke about at our interim results in February. Growth has continued to remain very robust. However, like we did say, we are now cycling through some very strong months in the prior year, and we need to just adjust our thinking a little bit in terms of what the results look like in terms of the growth trajectory because we've got very used to phenomenal results in the 40% and 50%, which obviously wasn't sustainable in the long term. So we are still seeing growth, we're still seeing very, very strong growth, but it is tapering off as we start cycling through the higher months. The rate of increase is tapering off. I want to -- I know I'm covering off the same words. I just want to be clear that I'm getting the message across that we're still in a growth phase, and we're still in a relatively strong growth phase, but we are cycling through some very strong months when the rebound happened last year, which basically started in April of 2022. So up until February and March of '23, we were still seeing those phenomenal percentage increases, and that started normalizing from April onwards. The business is in great shape. The business continues to be in great shape. We're performing well across almost all geographies. There are some areas that have a little bit more challenged than others. We'll cover that off as we do the geographical segments. But suffice to say, we're very pleased with what our teams around the world have done. And at this point in time, I'd just obviously like to thank them for the fantastic effort our 26,000 people around the world who do make it happen and continue to make it happen and have continued to make this company so successful and vibrant and such a wonderful success story. So the message that I want to give today is that we're absolutely on track. The business is tracking almost exactly where we thought it would be at this point in time. We nearly finished the financial year. We've got 11 months under our belt, so we're pretty comfortable with what we're saying here. We can -- we've got quite good visibility over where June is tracking and where we think we're in a good space. What we've done in the past is certainly benefiting us. And we're very comfortable with the position we're in, and we think this is a great story that will continue to be a great story. One of the issues, which I'm sure David will cover off a little bit more on, is when I talk about the numbers, I'm generally talking about them in constant currency, in home currencies. Please bear in mind that the rand has deteriorated quite significantly over the last month or so. And I think the spot rate at the moment is about 10% or 12% on average, weaker than the average rate that we are converting our numbers at. So if you had to convert our numbers for this current year at spot instead of at the average rate that we use, the number would actually be another 12% stronger. Now I'm not making any calls to what the rand is going to do going forward, but obviously, that has a major impact on the rand-denominated earnings. When I talk, I generally talk in constant currency and home currency of the businesses that we operate in because that's the way we manage the businesses. What it adds up to in rands at the end of the day is an arithmetic type of exercise, for which we have no control. We control the business in constant home, local currencies. So maybe the easiest thing to do is just going to a regional overview, do a region-by-region overview, and then I'll hand over to David. And after that will be Q&A in a normal fashion. Send your questions to Ashley. She'll send them through, and we'll answer those as best we can. If we look at it on a market-by-market basis, let's start with the most difficult, which is the Emerging Markets segment. And that's probably the place that we are seeing the most challenge for various different reasons. In South Africa, the trading environment is tough. The load shedding electricity situation certainly doesn't help us or our customers. The environment is a negative environment, and it's tough. However, I will say that we will end the year higher than last year. Last year was an all-time high, and we'll end this year even higher. But it is tough and it's becoming increasingly tougher to maintain the -- that performance trend, but we will end the year higher. We are looking for a more positive year next year as some of the issues get cycled through in the Crown Ingredients business against this very tough economic backdrop. I think our South African team has done phenomenally, but South Africa is a tough place to do business. In Greater China, the borders reopened. The COVID restrictions came off in, I think, it was about December. We just haven't seen the rebound. China hasn't seen the rebound or Hong Kong that the rest of the world experienced post-COVID. And I think that's largely to do with the fact that they were closed down for so long and isolated for so long. But firstly, there's not a lot of inbound traffic going back into China or Hong Kong. And secondly, there's a huge amount of outward movement from both markets. I think over the Easter weekend, I was told in Hong Kong there was about 1 million people who left the country and only about 100,000 nonresidents who came back into Hong Kong, visitors who came into Hong Kong. So there's quite a large imbalance in Hong Kong, China. I hear it's getting a lot of mention in the press that Chinese growth is below expectation, it's a bit sluggish, it hasn't bounced back post-COVID like the rest of the world. We see this as a timing issue. It will rectify itself at some point in time. Our business is doing fine. We will -- once again, we will end up higher this year than last year, our performance will be better than last year, but we're just not seeing that strong rebound in China, Hong Kong as we did in the rest of the world post-COVID. Turkey obviously had some issues with the earthquake, which was devastating, we spoke about that last time, which had an impact on the economy in general. They've also had a month of political uncertainty with the elections, which has now passed, and our performance there was muted for a few months. But we're starting to see some very strong numbers come through over the last few weeks, so we're happy we're on course there. In the Middle East, our sales growth is very good. We are having some issues, and we spoke about it -- I have spoken about it before, that some of our trading issues were very special over the last year. We had some opportunities that were very special, that our teams were nimble enough to take advantage of from a trading opportunity. And these things are one-off. So you get the benefits, and we've had the benefits, but when you cycle through it, it doesn't look all that great. So we're cycling through some of these one-off opportunities that we took advantage of a year or so ago, which won't repeat themselves. So in effect, it doesn't look great, but the core business is still fantastic and doing well, and our team remains enthused. Singapore, Malaysia are doing fine. There's no issue to report on this. South America is doing okay. We have had a few issues in Chile that probably, to be perfectly honest, are more self-inflicted than market related. We got into the niche category a couple of years ago. Maybe we didn't have enough back-office support, enough structural support. We've got a few purchasing decisions wrong. We've taken the medicine on that. But once again, it's very short term, and it's not major. It actually doesn't shift the needle at all, but it's all part of the school fees that you pay of getting into a new category, which is often a lot cheaper than buying a business. So we do expect to make a few mistakes and, yes, full credit to the team that identified that they've made a couple of mistakes, rectified them very quickly, and we're moving on. So margins were slightly impacted for a few months, but that's basically reversed itself out. So the Emerging Markets probably is the place where there's the most difficulty, and the difficulties are not all that significant, which is a great thing to talk about. Moving on to Australia and New Zealand. They continue to power along. They both exited the large QSR customers in about October last year. I think the New Zealand one was about 7% of their total revenue on an annualized basis, and Australia was about 4% or 5%, if I recall correctly. Those were exited, and the results are exactly as we would have anticipated. We've created capacity. We've filled that capacity. The businesses are performing really, really well. Against an economy -- a consumer economy that's may be a little bit muted, interest rates, I see New Zealand put them up -- their interest rates up a few weeks ago. Australia went up another 44 basis points today. So you still got this tightening, and the consumer is starting to feel it. And the press was certainly talking about the negative consumer environment, but quite honestly, we're still seeing good solid growth in our business, real growth, real volume growth. Maybe we're taking market share. I think we are. I think we're doing what we do very, very well focusing on what we do. So the Australia and New Zealand businesses are both performing very well, both at record levels, and the teams there have done a fantastic job and will continue to do a fantastic job. Moving on to the U.K. Top line has been phenomenal as we bedded down the new contracts and new wins and some acquisitions. We've done 3 bolt-on acquisitions in the year. One of them was reasonably sizable in about January. They're all going according to plan. And what we are seeing in the U.K. now is the benefit of whatever has been done. We spoke about before that the U.K. is one of our businesses that's more slanted towards the larger national customer, and your price increases in an inflationary environment take a little bit longer to filter through. But we are seeing that happen, and our performance over the past few months has been strong and in line with the expectation. The forecast for the summer is strong despite all the negative press, whatever else you read. But the feeling is we're in for a good summer, which brings us to Europe. I've been on holidays in Europe for the last few weeks. And in May, they're experiencing volumes that we would have only experienced in the peak of summer before. So tourism is -- I don't know what you could say, it's out of control. The place is pumping. We've been to a few countries, and tourism is back. People are back. People are still spending at strong -- hotels are expensive. Restaurants are expensive. Notwithstanding that, they are full and doing well. So our Europe business accordingly is performing exceptionally well. They did nicely through winter. And winter, you always expect to be a little bit more subdued, and they performed in excess of our expectations for the winter. And certainly, the spring has been exceptionally strong, and we are forecasting a very, very strong summer across all the geographies we operate in. Now all our businesses in Europe, and I'd say all of them, are performing okay. I think we'll have a record year in absolutely all of them. That trend is continuing. I don't want to go through them each individually because they are all doing well, and the teams are doing great. And the challenge that they're actually having is a capacity issue, how did they cope with this huge increase in demand that we've experienced over the last year or 2 because -- over the last year because you can't put the capacity in quick enough. And that's a longer-term process, and that goes to our capital decisions and our adding infrastructure, but that has a 2-, 3-, 4-years time lag which we need to take into account. So we are squeezing a little bit at the moment which in the short term is great; but in the long term, it's not sustainable. I did talk about the fact maybe a year ago that our labor costs were unrealistically low and unsustainable because we just couldn't find labor. That's starting to rectify itself. So we are seeing our cost base go up, but so is our productivity going up because, actually, we can find labor now. We are retaining people for a much longer period of time. We are seeing those productivity gains. So you get a greater cost, but you get a greater productivity. And it was not sustainable running the way. We were, which wasn't out of choice. It was purely the fact that we couldn't put staff on quick enough. We couldn't find staff quick enough. On the rest of the cost base, there is inflation, but there's also not inflation, energy prices, for example, that have come down, fuel prices have come down. But that's offset by general inflation particularly on the wage side, where we still have relatively strong inflation but nowhere near what it was historically. So on the inflation story, and obviously, there'll be a lot of questions on this. Food inflation still seems to be running hotter than general inflation, and I don't know why, but it is -- the rate of increase is trending downwards. It's not deflating, but the rate of increase is coming down relatively quickly, as is the overall inflation seems to be coming down relatively quickly across most geographies. We are seeing deflation in some commodities, which is certainly expected, where you had increases of 100% or 200%. Like with cooking oil, when the Ukraine war commenced, the price of cooking oil went up and for 6 months continued to go up and went up significantly. I think it more than tripled, if I'm not mistaken, but it was a huge increase. And obviously, that's being given back now. And it's not just on oil, it's on a few other commodities, nothing significant other than we got the benefit when the price was going up, and we've purchased well, and we continue to purchase well, and you make some good margins. You have to be equally nimble and take your pain on the way down. There's no way that you're ever going to pick the top of the market. You have to accept that sometimes you're going to buy out the market, and you just have to balance your margins. But we are doing that. It's not having a real impact on the overall profitability. And the general food basket that we sell is still inflating but at a much lower rate than historical. And some jurisdictions are higher than others. The U.K. does seem to be probably the highest. Europe is probably the second highest. And in somewhere like China, Hong Kong, it's very low food inflation. I think in the Middle East, there's also relatively low food inflation. So yes, it's just not really for us to try to explain it. Those are just the facts of inflation. It's a bit of a mixed story. We do see overall that inflation will continue, both on the food side, on the sell side and on the cost side, but at a much lower rate than where we were in the last year. Our internal predictions -- and we are not experts at this, our prediction is probably a whole lot less accurate than yours -- is maybe we're looking at inflation rate on average of about 5% or 6% for next year. But who knows, we're certainly no experts in that. And we're not making any real decisions based on that because it will be what it will be, and we'll have to adjust our thinking accordingly. So overall, we're in a good position. We will report record results for the year, as we've outlined in the SENS announcement. Our positions are correct. We believe our strategy is correct. We've got the correct customer base. We've seen strong growth. We've maintained margins. We are theoretically picking up some market share, which I think is correct. We're not seeing a whole lot of acquisition opportunity. There are a few that we're still looking at, but at this point in time, there's not a whole lot on the agenda. There will be some bolt-ons, but it's not opportune at this point in time, but that changes very quickly as well. As circumstances change, as things happen, opportunities arise, and we're very alert to them. I'm going to let David take over. I'm struggling a little bit. I'm going to let David take over, and then we'll come back to some Q&As and hopefully answer your questions. Thank you.

Thanks, Bernard. Good morning, everyone. But I think there's not a lot I can add over and above what we've published and what Bernard has covered off. We're showing you the sales trends, and here you can see that it has moderated against the months of April and May in certain cases. And that's obviously more a reflection of the higher base as opposed to the current rate of growth. Currency volatility, I mean, we've given you the details there. I think the key thing is that there's probably about an 8% impact on HEPS in rand terms versus what we're trading in terms of constant currency. And I think if you have to take it as you get it on spot, there's a significant uptick, probably around, on average, like 10%. So the currency will have some impact. But as we've repeatedly talked here about, we measure these businesses in the home currencies, and that's what's key for us, not necessarily what we're getting in rands. The GPs have come down a little bit, and we've given you the reasons. Therefore, I think the only thing that -- probably it's a little good news, maybe some of the stock issues that Bernard referred to in the Middle East and Chile which we've taken in the quarter, and those probably have a material impact. But the reasons in terms of sacrificing margin for volume and maintain those volumes and some of the operating international contracts in the high inflationary environment, those that have been with us for some time, we've spoken about them before. Our operating costs as a percentage of revenue have continued to track down and must be in line with pre-COVID and much better than what we were tracking against last year. I think that the size of impact on the gross has been made up of the efficiency on the cost base. And overall, that's had a positive impact on the year-to-date trading margins. EBITDA is at 5.7%, which is in line with what we were tracking pre-COVID and above the EBITDA percentage of 5.4% of last year. Working capital is not underlined by expectations in terms of certainly the higher activity levels. The increase in capacity that we've put in and some of that efficiency doesn't come through immediately. And you can see from the capital business that we made and we are continuing to invest significantly for now and the future, but I think from our perspective, yes, we should pull back a bit into the last few months of the year. But there will still be some absorption that's about full -- and I think it's really the reflection of overall higher activity level and, on a vendor relationship basis, having to hold more inventory and obviously trading higher with receivables and generally having a greater investment into working capital. The capital business are up, and that's been the trend we've seen for some time and has been indicated. Will we refresh the necessity for us to invest to cater for growth, not maybe now but obviously into the future, bearing in mind that some of these projects do take a year or 2 or 3 to get -- come on stream. Free cash flow is an outflow of ZAR 2.5 billion. But I think in the context of working capital absorption, in terms of the investments we've made and some of the bolt-on acquisitions we've concluded, it certainly is an outline of our expectations. I think the only other thing really to note is we continue to obviously raise capital. We did raise EUR 195 million out of the USPP, U.S. private placement, market. I think the investors, when they see us coming the market, they run for the hills because the first time we went into the market was the day that Russia invaded Ukraine. And when we repeated this in March of this year, SVB Bank went into bankruptcy. So they're probably a little shy. But I mean, generally, the interest rate environment, as everyone is aware, is significantly higher. It's changed dramatically in the last year. Although we've churned up one of our debt, we still use short-term funding in a number of places for working capital, the business into working capital. And obviously, there is an impact on the interest charges. But overall, certainly on the levels of gearing, well within our covenants and no issues from that perspective. So I think that's really what I really wanted to say. Bernard, I hand it back to you to take questions.

Thanks, David. I see we haven't got any questions. Now I don't know if that's a technical issue that they're not coming through or that they just don't have questions because we've put together such a fantastic department that answers everybody's questions. [Operator Instructions] Otherwise, we can wrap it up. I think just to summarize where we're at, we're absolutely thrilled with where the business is at the moment. We're absolutely tracking where we thought we would. Our story hasn't changed since we last spoke in February. We're still very bullish and optimistic about the business, its prospects, where we're at. There's no need for us to make any major changes. We're on the right path. We've got a great team of people around the world who are running businesses absolutely phenomenally in these times. And there are difficulties. We've still got some supply chain disruptions, although they're easing up. We've got inflation. We still have staff availability issues. So there are a few issues that are still bubbling along, although it is normalizing. We definitely see that next year will be a far more normal year compared to this year. Maybe we'll be wrong, who knows, but at this point in time, it looks like it's -- it will be a positive year with good growth but at far more normalized type of levels as opposed to the current year, where we had a really strong tailwind pushing volumes at a ridiculous rate. The other thing I do just want to talk about very quickly is our capital investment. Now a lot of people, a lot of our investors say maybe we're spending too much. I don't believe we are. We need to continue to put maybe between 2% and 3% of revenue back into CapEx. There has been quite a lot of inflation in the cost of capital equipment, of motor vehicles, of trucks when you can get them of MHE equipment and land and buildings. And most of our CapEx actually goes into land and buildings. And there has been a fair amount of inflation. And that building cost has probably gone up between 50% and 100% over the last few years, but there's nothing we can do about that. And if you want to be in business, you have to invest. And we can afford to invest, we need to invest because that's where our future growth will come. Also bear in mind that our revenue is probably closer now to ZAR 200 billion. If you look at it on current spot rates, it's probably trending towards ZAR 200 billion. So suddenly, 2% or 3% of ZAR 200 billion, we're talking about ZAR 4 billion to ZAR 6 billion worth of CapEx on an annual basis. And we believe we need to continue to make those investments to continue to drive real growth in the volume. And the secret to this business is to continue to drive the correct real growth in volume and to get closer to our customers and to have the correct customers. And all the things that we've spoken about, we need to continue to do that and do more, but it's not something that has an absolute end to it. It's a constantly evolving situation that we'll need to continue investing to continue to get the growth. So our teams have done a fantastic job around the world. We -- once again, we applaud them for everything they've done. The business is in great shape. We're very optimistic about the future. Clearly, this year is going to be an amazing year. We're very confident about the look forward for the next few years. The fundamentals are good, and the business is in good shape, so we're very attractive though. I think we do have some questions through now, which we can try to take. Just give me half a second. And if I could download them, I would. Okay. Let's go through the questions. Are there any other notable contract exits we need to be aware of? No, we've got one in Belgium which happens in -- I think it's in June. It's about EUR 20 million, will have no profit impact other than a positive profit impact. It's not a highly profitable contract, and that's one that we've been trying to exit for a while. And we came to an amicable agreement, so that exits this month or next month. But besides that, there's nothing of any major consequence that's exiting. Next question. The revenge demand of post-COVID seems to be continuing somewhat despite macro indicators softening. What is the reason for consumer being so defensive even in the wake of tougher environment according to you? I don't know, but people are out there spending. We did see a research article, I don't know if it is from one of your -- one of the banks, which spoke about the out-of-home market, the food service market, the HoReCa market no longer being discretionary spend. That's now stable. People go out to eat the same as they go to a supermarket to buy things to make in the house. So they're looking at it through the same lens, and maybe that's what happened. It's just the way we live now. People spend a certain amount of their disposable income out of the home, and we're fortunate that we're in the receiving end of that. But that demand does seem to be strong. You can see it in the airlines with their record profits. They're running at full capacity. The cruise lines are running at full capacity. Hotels are running at high levels of occupancy. And I'm talking generally, certainly in Europe, in the U.K., I believe in America as well, certainly in Australia and New Zealand. So this is the underlying issue of the cost-of-living prices and consumer confidence not being great. But notwithstanding that, we're not seeing it in our business. So maybe people aren't buying something else but are still going out for a meal and some entertainment. You downplayed acquisitions a bit in your commentary, but the statement talked to possible deals in Australasia, Lat Am and Europe. That's correct. And like I said, maybe I didn't say it very well, there are acquisitions on the table, there's not a huge number of them. So there are 3 or 4 that we're actively looking at, at the moment, and there's a reasonable chance of most of those coming off. But the future look beyond that isn't really full of opportunities at this point in time. But like I say, these things change relatively quickly, and we remain alert to the opportunity. So there are some bolt-on acquisitions, there absolutely will be, but they're not flying at us as fast and furious at this time. Can you comment on how quickly the capacity created in New Zealand and Australia from the termination of contract to secure customers it will take? That's done. So both Australia and New Zealand are operating way ahead of where they were, I've got to go back pre-COVID. But the capacity has basically been full. The impact was almost nothing, and that was filled with other business costs coming out. And we have the same in Belgium, by the way, when we exited a large catering contract in July of last year. Maybe it took a few weeks to adjust a few things. We've created the capacity, and we haven't filled the capacity, but from a financial point of view, we're in a better position now than we were then. So financially, we filled the -- we've -- financially, there is no downside in exiting the contracts. And we still got the upside of the capacity still being available to be used, which takes a little bit of time. And it's just part of the network capacity that we have across the environment in which we operate. I see I've got some more. Let me make sure I'm just getting them all. What sort of time frame are you thinking about in terms of margin improvement in the U.K.? Has been at 5% previously. I don't know, hopefully, Andrew is listening in on this, and he can answer that question. But we are impatient. Andrew is impatient. We understand what can be achieved through the rest of the world, and we don't believe that the U.K. is fundamentally too much different to that. So we're confident that in a year, 2, 3, and I don't want to be too specific on that, the U.K. business is absolutely capable of 5% plus. And we are working very hard on that. I think it is fair to say that the U.K. does seem to have had the greatest challenge in terms of inflation, cost increase, cost-of-living pressures, maybe compounded by the political turmoil there. So the U.K. did seem to go through quite a difficult period for a period of time. It seems to have stabilized, and our performance in the last few months has been exceptionally strong. So maybe the bounce-back to those levels will happen maybe a little bit quicker than we anticipate, but it's certainly a work in progress that we have a short to medium-term horizon. Are there any particular categories or particular regions where price increases have been particularly difficult to achieve given cost inflation? Not really because it's just the reality of life. So we're no different to any of our competitors. The reality is there's been inflation, there's been food inflation, and it's been passed on. That's just the way of the world. And I think us and our competitors in the market generally has got away with it because demand has been strong. And so you can pass the increases on. If demand suddenly falls away, I think it will be a little bit more difficult passing the increases on, but that will have the impact of lowering inflation anyway. So I think it's a bit of a circular argument on that. So we are getting -- we have managed to get the price increases through. We -- sometimes, we don't pass on all the pricing increases. We've taken a decision in certain markets, particularly when we deal with retailers, to sacrifice the margin in order to maintain volumes through -- particularly where we've got manufacturing capacity. So we've talked about that in the Czech Republic. We're talking about that in South Africa. So yes, not necessarily everything has been passed on, and we have absorbed a little bit. But that's all normalizing. As inflation comes down, that will normalize. Our customers are getting -- what's the right word? It's becoming more difficult -- environmentally difficult to pass on increases because people are getting sick and tired of accepting increases after a year or 18 months of it. But that's a general comment. I'm not making that to our business. I think a customer in a restaurant is saying, well, how often are the menu prices going to change? Enough is enough. And our customers are saying, well, the 18 months of price increases, when is this going to stop? But that's a much bigger macro picture that we can control. The one thing I'd just also want to emphasize once again is not all of our business is in the restaurant, hotel, discretionary-type market. There is 30% to 40% of our business is in nondiscretionary. It's in institutional, health care, government, education, military, et cetera, which doesn't have the same demand characteristics as the discretionary or nondiscretionary staple, restaurants, hotels, et cetera. With costs being as well contained as they are, what are your expectations for margin next year? Would you prefer to invest in volumes or keep some margins where possible? Look, we don't see next year being particularly different to this year because our view is inflation is going to come down. We've seen the adjustment to the cost base. The worst of the wage pressures are over, but the largest of the price increases are over as well. So I think the whole equation is going to balance itself out, which should translate at the end of the day to our net margins being relatively stable. So you can see through this whole process our gross margins have stayed more or less at the same percentage where they were before, but we are getting some efficiency gains in the cost base because of the volume increases we've seen. And we should hold on to those efficiency gains as we go forward other than we're not going to get huge -- we're not going to get the same huge volume growth next year. I don't think we're going to get the same huge volume growth. Maybe we will, but I doubt very much we're going to get the 15%, 20% volume growth. It will be wonderful if it does happen. So I think the thing regulates itself, and we're looking to maintaining our margins and obviously looking for improvement in those areas that still have improvement to make. So we don't really see margins coming back too much anywhere, and there's still some opportunity in some of our businesses to maximize margins. So I don't know if I've got any more. Where do you see inflation normalizing in the medium term in your developed market territories? Do you think that inflation in some form is here to stay particularly in these territories? I don't know. I'm not clever enough to be an economist. I don't think the economists have the figures, too. But let's just go back a few years. I mean, before COVID, there was almost no inflation in the developed world. Yes, you had 1% inflation for many, many years, maybe 2%. And that was tough as well for us, but we managed through that process. And then suddenly, you have COVID, which creates a whole lot of different issues, and then you had rampant inflation. Our belief, my belief is that inflation is going to come down. It's not going -- I don't think it's coming back to 1% or 2% quickly, but maybe it's going to come down to 3% to 5% within the next year or so. And we've always maintained that the sweet -- the inflation sweet spot for us is really maybe the 3%, 4%, 5% category. That's where we can maximize our positioning because you can pass the price increases on relatively easily and absorb the cost side and to maximize that. Once you start getting 10% inflation, it's difficult to pass it on. We have been able to up until now, but you wouldn't want to be in that position for many, many years. But fortunately, we see the inflationary environment coming down. I'm not sure if we've got some more. Ashley, you sent a message here about Spain and Germany, but I don't have the question. I'm sure the questions will be how you're doing in Spain and Germany? Are they improving? Here we go. Technologies break when it works. How are Spain and Germany performing? Seriously, it's amazing. Is it as per expectations and are they positively contributing to profitability? And any update on Spain and Germany? They both are profitable, and they're both performing according to expectations, which is fantastic. And our teams there have done a great job taking very difficult situations and getting us to the position we're at, where we can start making decisions from a position of strength, not of weakness. So well done to our management teams in both Germany and Spain. In Germany, we've had a management change, which I think happened at the beginning of this calendar year. And that's been exceptionally positive for the business. Spain, we're still going through a few changes in management and still putting a few pieces together. But both businesses are profitable and are actually profitable on a -- if you look at a percentage margin basis, they're not far off their peers, our peers, our businesses, our comparable businesses in some of the European markets. But it does create an interesting dilemma now as to what you do from here onwards. So we've got them to this point, they're profitable, they're not causing us any pain, they're nice, solid businesses, but how do we scale them up. And that's what we're reacting with at the moment. In Germany in particular, we're a very small player, and we need to scale that up. So we will start looking at that far more seriously now that we are coming from a position of strength. But we do need to scale the business up and not just be a -- I think we're doing EUR 70 million or EUR 80 million worth of sales. In a market like Germany, it's small. And it's very difficult to be meaningful when you're that small. Spain, I think we've got a much larger base existing, and I think there's an existing foundation, an existing base upon which we can build, which hopefully we can execute on in the next few years. We don't want to go too quick. We are a little bit gun-shy after -- yes, after having a few years of difficulty in Spain, which was costly. But fortunately, we're at the end of that and now profitable. They're great markets. Both Spain and Germany are great markets. There's nothing wrong with the markets. It's just a question of how we can cost effectively, without betting the farm and with what's available, scale up and become a player of significant scale in those markets. So hopefully, that answered the questions, but they're profitable. How is the nondiscretionary segment receiving price increases relative to the discretionary spend segment? Once again, it's a difficult question to answer because it depends on the contractual format. And sometimes, the institutional business is easier to pass it on because it's just -- it's a contractual thing that just -- the pricing is based on supplier pricing plus the margin. So when supplier pricing moves up, we just increase the pricing. Some of the pricing is set for 3 months, some is set for 6 months, some is set for a year. But overall and on average, the ability to pass on the increases in the institutional market mirrors the other markets. So on average, it's the reality of the situation, and we are getting the price increases through. And we will continue to do this, and we are reviewing contracts with customers in a collaborative way. What it also enabled us to do, this inflationary environment, is have some very meaningful discussions with customers and give them opportunities and opportunities to save money, which historically maybe you didn't get that opportunity to have that conversation, which enables us to put forward alternatives that will save them money and might be better for us, like house brand or preferred products or in-house manufactured products, et cetera. So we are getting those opportunities out of the fact that we are having these pricing discussions, that we can give alternatives to customers to save money that benefits them and, to a degree, benefits us as well. There are no more questions. So thank you, everybody. There's only 3 weeks left in this financial year. We think we've got it in the bag, so that's looking good. And next year is next year. I look forward to talking to you all at the end of August when we go through the results. Thanks for your continued interest. And if you do have any questions, I'm sure you'll reach out to David, like you normally do. And to the degree we can answer them, we will. But just to summarize, once again, we're exceptionally happy with where we're at. We're very proud of the team. My thanks go out to all of them. Once again, they've done an awesome job. The business is in good shape. We are highly profitable. We're cash generative. The balance sheet is strong. The future looks bright. We're in the correct segments. There's no need for major strategic changes. Our technology, which I haven't spoken about, remains on track, and we're doing some great things on the technology side. And AI presents a whole lot of opportunities in a business like ours where you've got a high volume of transactions and complex transactions, pricing decisions. There's a whole lot of benefit there for us, and we've got a lot of data that we need to use to our maximum benefit. So we're excited about the future. We're -- yes, we're enthused, the team is enthused, and I look forward to seeing you all at the end of August. So thank you for your attention, and see you soon. Stay well. Thank you.