NWF Group plc (NYY.F) Earnings Call Transcript & Summary

Welcome to the full year results presentation for NWF Group. This is for the year ending May 2020. My name is Richard Whiting. I'm the Chief Executive of the Group. And I'm joined by Chris Belsham, our Group Finance Director. In our presentation, I'll be taking you through the operating highlights. Then Chris will give us a detailed financial review, and then I'll come back to talk about our strategic development plans. NWF, as you recall, is a specialist distributor of fuel, food and feed. And in the presentation, I'd like to highlight some of the key achievements we had in the year. In Fuels, we completed 3 acquisitions in the last 12 months in a fragmented market. In Food, the significant expansion of the new Crewe warehouse that you saw in the video. And in Feeds, we launched the NWF Training Academy in 2019, which is training future nutritionists in the U.K. Then moving on to the results themselves. I'm very pleased. It's a very strong set of results, and these are ahead of market expectations. First of all, revenue, up 2.4% to GBP 687.5 million, and that's higher activity levels in each of the 3 divisions, offset by lower commodity prices, that's the price of oil and also the commodities in our Feed business. The key number that I always focus on is the headline profit before tax number on the top right-hand side. So you see up 36% to a record GBP 13.2 million of profit. Equally as important as profit is always cash, and I'm very pleased to report that we converted that higher level of profit into cash. Our cash conversion rate was 113% in the year. So what you can see is our net debt level was GBP 12.3 million, lower than expectations, and that's a 0.7x headline EBITDA, and that's the same level of leverage that we had last year, still a comfortable level of debt for the group. Finally, on this page, just highlight the dividend. So we're recommending an increase in the total dividend for the year by 4.5% to 6.9p, and that's 8 consecutive years that we've increased the dividend by a similar amount. So then move on to talk about COVID-19 and the response and impact. I think the key thing to remember is we're very much supplying basic products to the U.K. economy. We're feeding and fueling the nation. So all of our employees were classified as key workers. All our operations were fully operational during the whole period. And I'm very proud of the response of all of our people and all of our teams across the business, who absolutely went the extra mile in terms of delivering products and services during this difficult period. As I say, all our operations were open. All our staff, where practical, were working from home. And also importantly, we didn't utilize any government support, and we didn't furlough any employees. And we took this decision in early March, and that really has set us up for the position we are today. In terms of what happened, the impact of lockdown, in our Food business, this is delivering ambient groceries to the supermarkets. Initially, there was a huge a peak of demand, an unprecedented increase in demand as everyone bought more UHT milk, pasta, tuna and the like, which was going through our warehouses. That then stabilized and calmed down, and it's now running at a slightly higher-than-normal level and stock levels have returned to normal level. In Fuels, there was a significant increase in demand for heating oil. That's as everyone went to working at home and living at home, people needed heating oil to heat their homes. And we delivered 37% more deliveries in the March to May period than we did in the prior year. The commercial volumes obviously dropped as businesses stopped operating, and I'm pleased to report those are now coming back on stream. And finally, Feeds, the volume was broadly stable. There was some concern about food service outlets closing, the likes of Costa Coffee. And there could have been an impact on milk prices, but the volume of feed through the period has been robust. And now we're out of a hard lockdown, we return to very much normal levels. So if we now turn to the operating highlights in the businesses, and I will start with Fuels where we really had an outstanding performance and also continued the strategic development of the business. Prior to lockdown, so to the end of February, as we reported at our half year, this division was trading ahead of expectations and ahead of prior year. So that was positive. Intentionally, in our commercial sales, we've increased our share of gas oil. So gas oil is red diesel, and that's a higher margin than the road diesel that we supply. So that was positive. And we also increased our heating oil sales, both from acquisitions and as a consequence then of the increased consumer demand during lockdown. There was also a significant volatility of the oil price, which, obviously, we're all aware of. And what I've done is actually put the oil price on the chart there on the right-hand side. And what you can see, it was tracking and this is Brent crude dollars per barrel, tracking at about $60, $65 a barrel really till sort of the end of February. And then Russia and Saudi had a fallout in OPEC as to what quota level they're going to operate to, and the price collapsed. You can see a drop-down to just over $20 a barrel, then it recovered and then dropped again. And in that period, we were able to pass on lower prices to all of our fuel customers, but also we retained improved margins. And that has given us some one-off gains, which Chris will come on to talk about in a little bit more detail. We also continued with our acquisition program, a key strategy for the group. And you can see we added 3 businesses: Ribble and Caldo in the north west of England, and Darch in the south west down in Somerset and Devon. And that's added on an annualized basis, another 120 million liters to our Fuel business or 20%. I'm pleased to report the acquisitions have been effectively integrated and have been performing very well. So on the right-hand side, you can see the key metrics for the division. So volumes up over 20%. And most of that volume growth was as a consequence of acquisitions and then the outstanding profit performance of GBP 11 million. If I now move on to Food. Here, we had a very solid performance and a significant investment. So the underlying business that we have here was trading ahead of prior year. And maybe if I just drop down to the profit number, you can see at the bottom line, you could see operating profits of GBP 1.4 million. Now we highlighted at the half year that we're investing GBP 0.5 million in our new Crewe warehouse. So if I add back that GBP 0.5 million of start-up costs, you can see we were trading ahead of prior year. That was both before lockdown and also as a consequence of that period as well. If you remember, back September last year, we had a peak level of demand because of concerns around Brexit. And in some ways, that helped our business as a bit of a trial run through the excessive demand that we found during COVID. In terms of overall activity levels, they're up 4%. In terms of power storage, you can see 3% higher. We increased our e-fulfilment operations, still quite small, but we've now got 10 customers in there, and we've got greater volumes and new customers coming in each month. And in terms of the Crewe warehouse investment, it's a 240,000 square foot warehouse that we've taken on a 12-year lease lined up to customer contracts, which are long term in nature. And it adds 35,000 pallet spaces to our business. As we said, the lease was commenced in February and a real commendation to both the team and also the contractors, who actually installed all that racking during lockdown. And it was critical that we're able to get the extra food into there to increase our supplies to the supermarkets. It was completed by the end of May, and it was also within that GBP 0.5 million budget and also within the GBP 1.9 million of CapEx that we'd established as the budget at the start of the process. So pleasingly, we now have a bigger Food business, 35% larger to 135,000 pallet spaces. And finally, in this section on Feeds, I'm very pleased that we've got market share gains, and we also launched our Feeds Academy. So in terms of volume, you can see our volumes are up to 625,000 tonnes. That's a record for the business and up 6% on prior year, and that is organic growth. And we've achieved that growth by selling more products direct to farm, more products to feed merchants and also more products to other compounders. So that's increased our market penetration, but it's critically a time when the market actually itself for ruminant feed was 6% down according to Defra stats, and hence, that significant increase in market share. It's also a year when we made an investment, and this is the NWF Training Academy. So you saw some of the team on the video. We actually launched this in September, and we've now got 18 people going through an 18-month training program in that academy, covering all aspects of feed nutrition, farm management and also sales skills. And that training program is carried on during lockdown. Obviously, it's gone through remote Zoom learning but still been very positive. In terms of the business, we were impacted by higher energy costs, so that's principally electricity costs in the year. And commodity costs did increase in the second half, and particularly, they spiked during lockdown, and that did apply some pressure on to margins. In terms of the market conditions overall, the milk price was reasonably stable at 27p per liter. Milk production down a tad, 0.8%. And as I said, the Feed market down 6%. And this business has now returned to very more normal levels through the summer months. I'll now hand over to Chris, who's going to take us through the financial review.

Thank you, Richard, and good morning, everyone. I'll now take you through the financial highlights of 2020, starting with the income statement. So revenue increased by only GBP 16.2 million or 2.4% in the year, but that really reflects the impact of 2 large opposing impacts. So firstly, we have just over GBP 60 million of increased revenue from M&A and increased activity, but that was offset significantly by a GBP 45 million reduction from lower commodity prices and particularly that lower oil price in the final quarter of the year. Richard's already referred to the margin benefits we achieved, and you can see that's in our headline operating profit, which increased to GBP 14.3 million from GBP 10.2 million last year, and that's all as a result of the outperformance in fuels. And you probably see that best if you look at the table at the bottom of the chart. So this will be familiar to many of you where we talk about our EBIT pence per liter, so how much money do we -- EBIT do we make for each liter of fuel that we sell. And typically, we're trying to aim for 1p per liter. And you can see back in 2018, when we had the Beast from the East and all those weather events, we achieved 1.3p and made a lot of extra profit as a result. Well, in FY '20, it was 1.6p. So we had 0.6p of extra one-off profit that we made as a result of that oil price fall. And if you do the math, that equates to about GBP 4 million of additional profit. Exceptional costs in the year just related to deal costs, so GBP 0.5 million. Those were all cash in the year and mostly not tax allowable. And that gives us a statutory operating profit of GBP 13.5 million. It's probably worth just picking up at this point on the impact of IFRS 16 on the income statement. So in common with many businesses, we've converted to IFRS 16 this year using the simplified transition method, which means we don't have to restate comparatives. So the impact on this year's numbers is that our operating profit is GBP 0.2 million higher. We'll have GBP 0.4 million of finance costs going in. And therefore, our headline PBT is GBP 0.2 million lower. And that's as a result of swapping out GBP 6 million of operating lease charges to GBP 5.8 million of IFRS 16 depreciation, plus the GBP 400,000 of IFRS 16 interest that I just mentioned. So if we then turn on to the lower half of the income statement. You can see in the finance costs, the impact of IFRS 16, so that GBP 400,000. In terms of real bank interest, that was up by GBP 0.2 million in the year, and that's reflecting the investment we've made in the acquisitions and also in the Crewe warehouse. And that gives us a headline PBT of GBP 13.2 million versus GBP 9.7 million last year. Our tax rate in the year is high, and that's as a result of the government reversing the proposed reduction to corporation tax. That was supposed to go down to 17%. As you know, the Chancellor in March maintained that at 19%. And that meant there was an increase in our deferred tax liability. So we have a one-off charge of GBP 0.5 million in the year in respect of that movement in terms of the deferred tax. Our underlying corporation tax rate before exceptionals is 20.8%, which is in line with previous years. And as you know, we tend to guide that our tax rate should be about 1% to 2% above the statutory rates. So in line with that, and that's what we'd expect going forward. This is very much a one-off charge in the year. That gives us a strong headline EPS of 20.3p, and that gives the Board the confidence in continuing our policy of increasing the dividend with a 4.5% increase this year to 6.9p, which is 2.9x cover. Moving on to the balance sheet. Fixed assets increased in the year, largely as a result of IFRS 16. So you can see the right-of-use assets of just over GBP 27 million coming in, but also with the acquisitions that we've done and our investment in the Crewe warehouse. As we went into lockdown in March, we did clamp down on nonessential CapEx given the uncertainty and the desire to just have control of our cash. So we probably underspent CapEx in the year by about GBP 0.5 million to GBP 1 million. I don't think we'll have catch up in the current financial year. And I think in reality, that expenditure has just moved out to the right. So going forward, I'd expect our underlying level of CapEx to be about GBP 1 million below normal depreciation, i.e., excluding IFRS 16 depreciation. Our working capital reduced slightly in the year by GBP 1.4 million. That was partly due to commodities, but also because if you cash your mind back to last year-end, we'd have a short-term outflow as a result of the date the year-end fell on, and our suppliers taking direct debits a little bit early in the Fuels business. That clearly reversed in the current financial year. So we've not done anything different around working capital. However, it is very pleasing given the economic conditions that actually, we haven't seen a deterioration in that. Net debt and pension, I'll come back to on later slides. So the net effect of this is that our balance sheet has strengthened once again. Total assets up to GBP 178.4 million, and net assets of GBP 51.1 million. And despite that increase in assets, because of that extra profit we've made, our return on capital employed has increased to 16.7%, driven by that performance in Fuels. Now clearly, given there is one-off profit benefits in Fuels, the return on capital employed will drop back down a bit here as we drop back down to normal levels of profitability, but still very strong return we're making from our capital employed. It's also worth pointing out in respect to Food. That return is suppressed by the fact that we incurred GBP 0.5 million of set-up costs for Crewe in the year and also invested in the assets there. If you strip that out, the underlying return on capital employed for the Food division is 7%, which is in line with last year. Moving on to the pension deficit. They tracked lower actually through most of the year, but the movement in the discount rate in the last few months with COVID-19 has increased the liabilities. So the discount rate down to 1.65%. Our next triennial valuation is to December 19. So the work on that is already well progressed and should complete in the first half of the current financial year. Our expectation is that the deficit will be slightly lower than it was the valuation at December 16, which was GBP 19.1 million. And therefore, our recovery payments are likely to remain at GBP 1.8 million for the next couple of years. So at that level, it is not a constraint on group development. And then moving on to the cash flow. And one of the things I'm really most pleased about this year is the fact that the extra profit we made in the final quarter was converted into cash. So you can see that in the fact that working capital actually reduced a little bit. And our cash from operating activities in the year was GBP 16.1 million versus GBP 6.4 million last year, which is a conversion rate of 112.6%. So really, really good. And given the economic uncertainty, we were able to convert that profit into cash. This statement is slightly confused by IFRS 16 here. So clearly, that impacts the May '20 results but isn't in the comparatives. But just to help you a bit with that. So our headline EBITDA in the year, i.e., old-fashioned EBITDA is GBP 18.7 million versus GBP 14.3 million last year. We did have significant development expenditure in the year, so we spent GBP 9.1 million on M&A transactions. And those transactions generated headline EBIT of GBP 2.3 million. So if you do the math, that's just under a 4x multiple. Clearly, we had some one-off gains in the year in those businesses. So I'm not promising that we'll continue to buy businesses for 4x, but it just shows that the acquisitions we've done have given a good return in the year. We also invested GBP 1.9 million in the warehouse at Crewe. And finally, we also bought some land adjacent to our site at Wardle for GBP 1.1 million. And as I've already referenced, we did underspend by about GBP 0.5 million to GBP 1 million on underlying CapEx in the final quarter. So this guidance going forwards, as I said, I would assume that CapEx is somewhere between GBP 0.5 million to GBP 1 million below non-IFRS 16 depreciation. And you can see that movement in net debt on the bridge on the right-hand side. So normally, I would guide that we would generate about GBP 2 million to GBP 3 million of free cash flow, i.e., cash generated before development expenditure, and that's assuming a normal level of CapEx and neutral working capital. This year, we generated GBP 9.6 million. That's partly because of that working capital benefit, partly the differential between depreciation and CapEx. But really, it's just the impact of that extra GBP 4 million of profit flowing through into cash. So as a result, despite that significant development expenditure, our net debt is still low, and we still have significant headroom in our facilities. And our facilities are the same as last year. We've not amended those as a result of COVID-19, although clearly, we continue to talk to the bank and stay close to the bank throughout that period. So GBP 65 million of facilities. The most significant element of that is a GBP 50 million invoice discounting line at 1.25% over the base. The one thing we did do in response to COVID-19 was we actually drew down our RCF facility so that we were in control of our own cash. So that's why that's fully drawn down at May '20 year-end, whereas last year-end, it was far less drawn down. The covenants in respect to those banking facilities, very standard, and we've got lots and lots of headroom on those. And clearly, as you'll see from the RNS, we've done an awful lot of going concern work around testing those. So plenty of headroom and a good platform for development. And at that point, I'll hand back to Richard.

Okay. Thank you, Chris. So now we're going to talk about the development strategy that we have. And just a few key things to remember about NWF. First of all, we have a diversified source of earnings. So the 3 groups reduce risk for the overall performance, and we generate cash, as Chris just talked about. We've got an experienced capable Board. And I think the critical thing for the group is we operate in these large basic markets. It is feeding and fueling the country. And those markets don't reduce during a COVID crisis or in a financial crisis that we saw some years ago. So there's real robustness and solidity to the group. We focus on total shareholder return, and we've got a very strong track record. In each of the 3 divisions, and I'll come into these at some detail, on Fuels, but Fuels is about consolidating a highly fragmented market. And our Food division, it's all about optimizing the customer mix. And clearly, in the short term, utilizing the additional capacity we've got in Crewe, which we've got customer contracts for. We will expand that business further backed by retailer and manufacturer contracts, and we're also looking to expand our niche businesses of e-fulfillment and Palletline. And in Feeds, remember, we are #2 in the market feeding 1 in 6 dairy cows in Britain, and we're looking to utilize and increase utilization of our national operating platform to increase feed sales across the country. Clearly, we've now got the academy members coming through, and those will start to increase volumes further. But we also have the opportunity to sell more products and services to the 4,500 farming customers that we supply up and down the U.K. Now turning on to Fuels in a little bit more detail. I'll start with the fuel market. And if you see the bar chart at the bottom left, that's BP's latest forecast for global energy demand. So you can see it's increasing significantly through to the end of this period, which is 2040. The red bars in the bottom highlight the forecast demand for oil over the period. So you can see oil is relatively stable. The growth in energy demand has to be taken up with more renewable energy and also nuclear and other sources. This is the global energy demand market. If you look at the U.K., it's similar. So critically, the demand for oil in the key markets in which we serve over the next 20 years is forecast by the U.K. government to be stable. We then move to the right-hand chart, that shows the market shares of the various players in the 35-billion-liter market, which is the market that we operate in. You can see we're the red slice, which is the third largest player, and our market share is only 2%. It has doubled over the last 10 years, but it's still small. And that big gray area, 76% are others. There's over 150 smaller businesses in there, and those are businesses that we can look to consolidate and grow our business. Try to do some math in the third bullet point to help you scale the opportunity that we face. If we say it's a 35-billion-liter market, on an average, let's say, people make 0.5p per liter net profit. And you remember, we're looking to target around 1p. But if you sit there with me 0.5p per liter net profit, that says the market will generate GBP 175 million of EBIT per annum. If you want to target 10% of the market using the 6x multiple that we're targeting, that would require funding of over GBP 100 million. That's not saying we're going to look for that sort of funding, but it's highlighting the scale of the opportunity, and that would only get you a 10% market share. So demand for oil is stable. And also importantly, customers buy from local fuel depots. We've seen that really strongly during the last few months and expanding the network is, therefore, key to our growth. The next slide, this shows the map of where our businesses are today, and we're operating across Great Britain. So in England, Wales, and Scotland is an opportunity. And over the last 12 months, you can see the depots that we've added, which is Darch, Caldo and Ribble. And we've now got an expanding national network. We paid GBP 9.1 million for businesses that we've acquired in the last 12 months. And that's a sort of guide going forward. That's the sort of level of expenditure we believe we can replicate for a number of years going forward. We've got a clear post-acquisition integration plan. We want to retain the brand in the customer-facing operations and then integrate the back-office operations, things like purchasing, IT, finance and credit control. And the bar chart at the bottom left shows you our track record. 10 years ago, just over 300 million liters. We just reported a full year result of 650 million liters. And if I take that on a full year run rate basis, that's now 700 million liters. So you can see that quite significant expansion, which we believe can continue. I'm now going to just hand back to Chris, who's going to take us through some of the acquisition process.

Thanks, Richard. There's 4 key areas I'd like to highlight around this. And the first is that we have very clear criteria for M&A. So we're looking to acquire fuel distribution businesses in Mainland U.K. That's it. We want to stick to what our core business is in the fuel sector. We're looking for businesses that have a good local reputation or brand and also for businesses that have a strong domestic or commercial gas oil customer base, because those are both a stickier customer base and also a more profitable customer base because of the products that's being sold for them. Ideally, we're looking for targets that have some potential for margin increase or cost savings, but our deal case isn't predicated on that. And finally and perhaps most importantly, we're looking for businesses that we can buy at 6x NWF EBIT. And when I say NWF EBIT, I mean, the profit that we think we will make from that business. But when we're calculating that, we're very prudent about that. We don't assume we'll have any significant cost savings or volume growth. So this is just where there's a little bit of opportunity for margin accretion. The second key area to highlight is that we have a standard M&A process, and we've now done 5 transactions and starting the strategy less than 2 years ago. That M&A process is led by the group plc team, who all have M&A experience, supported by the Fuels management team. We say -- use the same legal, financial and environmental due diligence providers. So we have standard reports. They understand our approach to issues. So we've got quite a slick way now of going in and looking at those issues. But our operational and commercial due diligence, we do in-house, because we know more about running fuel businesses than external advisers do. And then from actually the legal perspective of doing the deal, we now have standard deal documents, so that increases the efficiency around the process of doing that. And it's -- once you've done several deals, you realize it's the same issue on every single transaction. So we have the same approaches to those. The third key area to highlight is our integration process. So we have a standardized detailed integration plan. And as Richard said, our aim is to maintain the front end, the commercial bit of the business that the customer sees because that's what's made that acquired business successful in the first place. But at the same time, centralize the back-office functions, so centralized finance, credit control, IT and also make sure that the business is operating in line with our operational and health and safety and compliance standards. And the fourth key point I'd like to make about the acquisition process is the pipeline of opportunities. So we are both being approached by people, who want to sell their business, and we're going out and proactively knocking on doors. And we have a significant number of companies in that pipeline. Just before we went into lockdown, we had a number of live conversations. We paused those through the lockdown period, but we're now starting to reinitiate those conversations, and some of those people are coming back to us. In terms of where the COVID will drive more or less activity, I think it might persuade a few people, who were thinking of selling anyway that actually now is as good a time as any to do it. But I think the underlying dynamics of that, which were driving the market opportunity, will remain the same, which is a lot of these businesses are owned by people, who are close to retirement age and are looking to make a capital gain. So with that pipeline there, we're confident that we can continue to undertake transactions at a similar rate to perhaps we've done over the last couple of years. And therefore, we're looking to invest around GBP 10 million a year in 2 to 4 transactions per annum.

Last couple of slides now. And first of all, just the NWF proposition really to highlight what we're all about here. This whole thing is about we're solid, robust, reliable, but we're also ambitious to develop and grow as a business. So first of all, we've got a strong management team with a good track record, including 3 acquisitions in the last 12 months. There are growth opportunities, and clearly, we've got a clear development plan, a strategy, which I've outlined this morning. We've got asset backing, gross assets of GBP 178 million, which helps Chris and me sleep at nights, but also gives us that very cost-effective source of funding you saw on the banking slide. We focus on return on capital, so 16.7%, very strong return on capital in the results this morning, and we also generate cash. And you can see that very strong cash conversion of 113% in the year. As a consequence of all of that, we look to deliver shareholder return by increasing the dividend. So finally, what we believe we have at NWF is a very strong platform for further development. The results we have today are very good, and they're outperforming expectations. But equally importantly, we've highlighted the delivery of strategy. With the Fuels acquisitions, the significant expansion of our Food business and the launch of the Feeds Training Academy. We've also demonstrated resilience where we've got a strong balance sheet with long-term funding. We were fully operational during lockdown, and we didn't utilize any government support. We're now into the new year. So 2 months have been completed. I'm pleased to report we're trading in line with the Board's expectations. In Fuels, we're not expecting any repetition of the one-off gains we saw in 2020, and we're trading in line with what we'd expect in this part of the summer. In Food, we're building up stock in our new warehouse. As at this morning, in our Crewe warehouse, we have 25,000 pallet spaces utilized. And in the total Food business 123,000 pallet spaces, and that stock hold is increasing fast. So we're absolutely delivering in line with our plan there. And in Feeds, pleased to report demand and pricing are both stable in these key summer months. So finally, we've got confidence in the future development and the outlook for the group. We've got a strong operational and financial base. And now critically, the focus is returning to developments and acquisition investment opportunities. So thanks for listening to the presentation. I'm now going to hand over to Tamsin, who's going to host the Q&A session.

Anne Margaret Crow from Edison.

Congratulations on a terrific set of results. I've got a couple of questions on the Feeds side. The first one was, you mentioned your goal of selling more products and services to farmers. I'm wondering if you could elaborate on that. And in particular, sort of what percentage of your offer at the moment would fall into the category of, I don't know, enhanced products and services? And then secondly, I can see that you're very rapidly expanding market share in Feeds, but was wondering if that was at the expense of margins. And if that was the case, what the rationale for that was?

Okay. Thanks, Anne, and good to have you on the call. 2 questions there. The first one in terms of selling other products. So feed is the majority of what we sell. A key thing we're looking to sell are more what we call traded products. So these could be things like additional health products. It could be supplements and vitamins, milk powder and this type of product. And our market share in those areas is a lot lower. So if we sell feed to 1 in 6 dairy cows in Britain, that's a market share of 16%. And some of these other product areas, we'll only have a market share of 1% or 2%. And there's a big opportunity to increase the penetration there. So it will be less than 10% of our total business today. That is an opportunity for growth because they are our customers. To that extent, we've increased our teles ales team in Wardle, and we've also launched the ability for customers to buy these products online through our website. So those are a couple of ways we're looking to do it. And we've also utilized a number of our academy members whilst we've been locked down to prospect for new business in that area. So it's an opportunity to increase our share quite significantly with additional products and services to our customers. In terms of the second question, have we sold more volume because we've sold it cheaply, the answer to that is no. Very much at the half year, as you saw there, our volumes and margins were robust. We've grown market share by selling on nutritional benefits to farmers, dairy farmers, in particular, up and down the country. Our margins did get squeezed, but that was as a consequence of commodity cost increases, particularly which spiked during coronavirus. So no, we're very pleased with the volume that we've grown. It's good business, which is sustainable and long term.

We have a question from Peter Ashworth at Stockdale Securities.

Well done, guys. A tremendous performance. Is the competition falling away in the various sectors? I mean you've done well in difficult markets, and you've done well during the pandemic, and Fuels is an exceptional performance. Is -- are you just better at it? Or was the competition falling away? It was just my general sentiment.