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

Good morning, and welcome to the NWF Group plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Chris Belsham, CEO. Good morning, sir.

Thank you, and good morning, everyone, and welcome to the NWF Group results presentation for the half year ended 30th of November 2025. I'm Chris Belsham, the CEO, and I'm joined today by Katie Shortland our CFO. I will start with the highlights of the period. So overall, I'm pleased that we have continued our strategic momentum, delivered solid performances in Food and feeds, all whilst navigating very difficult market conditions in Fuels. And if I start with the strategic actions, during the period, we have developed our growth plan for our food business to become a national network of scale, and I'll talk more about the opportunity later in the presentation. Meanwhile, in Fuels, we rolled out our regional operating model nationally, and we also did a couple of small bolt-on acquisitions. From a trading perspective, in Food, we saw solid performance with increased stock levels and higher pallet throughput, whilst in Feeds, we delivered a great results with consistent volumes and effective margin management. But in Fuels, we saw really difficult market conditions with suppressed demand for both domestic heating oil and commercial gas oil, and that impacted on both volume and margins. And that is reflected in the financial summary for the period. So as a reminder, the first half is our seasonally quieter part of the financial year. Revenue was lower, but that's mainly as a result of the lower oil price. The solid performances in Food and Feeds were more than offset by the impact of the difficult market conditions in Fuels, and that's reflected in our profit metrics, which were all lower than the prior year. Despite our investment in acquisitions, we retain a positive cash balance. And in line with our usual policy, we have declared an interim dividend of 1p per share. As a reminder, our dividend has grown by 45% each year for the last 14 years. We'll now quickly look at the individual business highlights, starting with Fuels. So in Fuels, the total U.K. market for heating oil, which is mainly used to heat domestic homes, was down 16% on the prior year, and heating oil is our highest margin product. At the same time, the total U.K. market for our second highest margin product, which is gas oil or red diesel, and that's mainly used in agriculture, is down 6% overall, but was actually down 30% after the first 3 months of the period. So the lower demand for those 2 products meant increased competition across all products, and that led to significant margin pressure and the need for us to walk away from some very low-margin volume. Now against that backdrop, I'm really pleased that we completed the national rollout of our new regional operating model. It wasn't an ideal time to start operating the new model, but I'll talk later about some of the benefits that we are seeing from making that change. And as mentioned, we undertook 2 small bolt-on deals, both in the Northwest, where there are opportunities for cost synergies through rationalization of both the fleet and depot footprint. In our Food business, we saw a solid performance. Our storage volumes increased to an average of 164,000 as we secured new contracted business. Now optimal storage for our current warehouse network would be about 170,000 pallets, which is circa 90% of our maximum capacity. So I'm pleased that post the period end, we've continued to secure new business from a range of customers. The increased storage we saw led to increased throughput, and that is the main driver of our revenue. But we then benefited from a lower cost base in our warehouse following the restructuring that we undertook in June. The team remained very focused on continued efficiency opportunities across both our transport function and our 3 warehouses to optimize our current platform and ensure we have scalable processes in place for future growth. And then in Feeds, we saw a lower milk price, but it was stable and still profitable for farmers. Our volumes were in line with the prior year, which was a really strong comparative period. So I'm pleased with that. That's underlying volumes. And we continue to manage margins and the cost base effectively. Our overall volumes were actually higher because our new moist feed products that we launched last year has continued to perform well ahead of plan. Now before we move on to our business model, it's probably worth having a quick look at the fuels market data. So if you look at this slide, the top 2 charts show the volume of heating oil and red diesel sold in the U.K. for this half year versus the last year. And you see those are down 16% and 6%, respectively, as I've already said. Now we don't believe there's any structural reason for this. And you can see that in the bottom chart. So the bottom chart shows the rolling last 12 months heating oil volume over the last 10 years. So what that chart shows you is that on the whole, the market stays at a pretty average level, but it can be moved by significant macro events. But once that's happened, it then reverts back to the mean again. So if you look at the chart, the first orange circle, which is in 2018 was the impact of the Beast from the East. Then the second circle, which is in 2020 and 2021 was COVID when people were at home with the heating oil. And then that sharp dip you see in 2022 was the height of the cost of living crisis and the high oil price following the start of the war in Ukraine. So you see after all of those, the orange line reverts back to the white line, it reverts back to the sort of average market conditions. So you can see at the end of the chart, we just see that dip that we've experienced in recent months, but we see no reason that market demand will not revert back to the mean again, which gives us confidence in future performance. Now before Katie presents the financial results in more detail, I think it's helpful to give an overview or a reminder of the group's business model. NWF Group exists to add value to supply chains by using expertise to connect customers and suppliers who otherwise would struggle to connect. That's mainly due to a difference in scale. We currently operate across 3 markets where we apply our expertise in the areas shown in the middle box on the slide. In Fuels, we connect domestic oil-heated homes and SME fuel users who are both bulk buyers of fuel with the major U.K. oil suppliers. In Food, we connect smaller grocery brand owners, manufacturers and importers with the U.K. grocery supply chain in the most cost-effective and environmentally friendly way through providing a consolidated storage and logistics solution. And in Feeds, we connect dairy, beef and sheep farmers with global agricultural commodity traders by formulating yield optimizing diets, procuring commodities, using those commodities to manufacture the diet and then distributing that feed effectively to farm in bulk. And as you can see from the numbers on this slide, all of our businesses have significant scale in their specialist markets, which are robust and resilient. And that means they all have scale and capability, barriers to entry. They need infrastructure, vehicles and deep expertise in their specialist market to operate successfully. I'll now hand over to Katie to talk through the financial performance in more detail.

Thanks, Chris. I'll now talk through the financials for the half year, starting with the key headlines. Revenue is just over 4% lower in the period, driven by lower commodity prices in Fuels and Feeds that have been offset slightly by increased activity levels in the Food business. Headline operating profit of GBP 3 million is GBP 2 million lower than the prior year. The result reflects a solid performance in Food and Feeds, which has been more than offset by a disappointing trading period in Fuels. This reflects low market demand in domestic heating oil and commercial gas oil, which subsequently has a knock-on effect on overall margins, as Chris has already mentioned. Headline PBT finished the period at GBP 0.9 million, which is GBP 2.7 million lower than the prior year. This figure includes the year-on-year increase in lease interest costs that have previously communicated, along with slightly higher bank interest costs as we invested our operational cash in the first half. Net cash balance in the year is GBP 0.8 million, a strong performance when factoring in the seasonally lower half of the year for profit and cash generation and the investment in acquisitions and operational CapEx in the period. This flows through to an operational cash conversion of 76.7%, reflecting the cash available to support future investment activity. Headline EPS is 1.6p in the period versus 5.5p in the prior year, and our interim dividend per share remains consistent with prior periods of 1p. Return on capital employed has decreased in the year from 15.9% to 11.5%. This reflects the lower trading performance in the Fuels business. Moving on to the summary income statement. Operating profit in the period is GBP 3 million versus GBP 3.6 million in the prior year. Exceptional items at the half year reflects GBP 0.6 million profit. This includes the insurance claim of GBP 1.2 million related to the prior year conflict of interest, which I communicated in our year-end update, which has been offset partially by acquisition costs in Fuels. Amortization of intangibles increased year-on-year by GBP 0.3 million as a result of the recent Fuels acquisitions. Finance costs increased in the year by GBP 0.6 million, largely as a result of the fleet renewals across the group. The delivery of the fuels renewal program has continued into the current period, driven by delays from the OEM and should conclude before the end of the financial year. Bank interest has increased by GBP 0.2 million in the period as a result of a higher debt position in the half, driven by investment in operational CapEx and acquisitions in the period. We expect full year lease interest costs to be circa GBP 4 million. Pension scheme interest has reduced to less than GBP 50,000 in the year, driven by the scheme moving into an accounting surplus. Headline PBT in the year was GBP 0.9 million compared to a prior year of GBP 3.6 million and a reported PBT of GBP 0.9 million. Our effective tax rate at the half year is 25%. This allowable costs associated with the acquisitions will have a small impact, but not expected to be material for the tax rate. We expect our full year effective tax rate to remain at around 25%. I'll now spend some time talking through the half year performance by segment. In our fuels business, revenue was just under GBP 296 million in the year with a reduction from last year, driven predominantly by commodity prices. Headline operating profit decreased in the year from GBP 1.7 million to a loss of GBP 1.6 million. Volumes are 2.4% down year-on-year and operating profit pence per liter was impacted by this volume shortfall along with market challenges. The medium-term outlook for the PPL still remains between 1.2 and 1.3p once market demand stabilizes. Food revenue increased by 5.2% to GBP 46.2 million, reflecting the increased activity and storage levels with average pellet stored increasing from GBP 157,000 to GBP 164,000 as we continue to fill our network and manage the autumn peak. Headline operating profit in the period was GBP 3.3 million, which is 32% ahead of the prior period and reflects the progress made by the leadership team in generating new customers, managing existing customer activity and rightsizing the cost base to continue to drive efficient operations. The Feeds business had a decrease in revenue of just over 5%, which reflects higher volumes, offset by commodity price changes year-on-year. Underlying tonnes were broadly in line with the prior year with a larger increase in the year driven by the new moist feed product line, as Chris has mentioned. Overall operating profit was almost 63% ahead of the prior year as a result of the increased volumes and the lower production baseline. And as a result, operating profit per tonne increased from GBP 3.55 to GBP 4.91 in the year, as we enter the seasonally stronger second half. Moving on to cash and looking at the chart from left to right. Our headline operating cash flow in the period was GBP 2.3 million on a headline operating profit of GBP 3 million, reflecting a cash conversion of 76.7%. This conversion will be impacted in the period by capital expenditure, which on an underlying basis was GBP 1 million higher than the prior comparative period. CapEx spend was planned for and was focused on supporting operational activity across the group. It's also worth noting that the cash conversion in FY '25 benefited from the upfront rent-free period on our Lymedale lease in our Food business. The acquisition of Pinnock & Harrisons in the period required GBP 5.5 million of consideration. Remaining outflows relate to pension contribution and dividends. Overall, despite the poor performance in fuels, operational cash has been generated in the first half of the year, and the group's cash has been used to invest in supporting existing business as well as growth. In addition, and as a reminder, we have existing facilities of GBP 61 million with an accordion of GBP 20 million supported until May 2028, which are primarily invoice discounting. Board continued to support a net debt-to-EBITDA position of 2x, which provides plenty of headroom for continued growth. The cash generation of the business and access to facilities continue to place the group in a good position for further growth investments. With regards to the balance sheet position for the group, the key headlines to note are the strong cash and funding position I've already talked about and the continued strength we see in the operational cash generation of all 3 businesses. A continued strong asset underpin with net assets of GBP 272 million, an increase on the prior year, driven predominantly by acquisitions, providing support and stability for growth. And whilst group return on capital has been impacted by the fuels performance, the return in both Food and Feed has increased compared to the prior period. Fuels return on capital will improve through the second busier half and as markets start to return to more normal levels. Our cash generation and solid balance sheet continue to support our overall investment case and aligns to our capital allocation policy. We will continue to invest in CapEx across the group to support the ongoing business requirements, whilst also looking to invest in growth where possible. The group continues to deliver shareholder value through its dividend payment, which is maintained at 1p again for the half year. We will continue to utilize our cash facilities to support inorganic growth in the group as demonstrated with the 2 acquisitions completed in fuels in the year. Finally, where appropriate and where allocations elsewhere have been fully optimized, we will review the option to complete a share buyback. In summary, a strong performance in our Food & Feeds business that has been overshadowed in the period by performance in fuels. We expect to see the impact of challenging market conditions lessen in the second half as we enter the seasonally stronger half for the group. I will now hand over to Chris to talk about the group strategy in the period and investment case.

Thanks, Katie. Our strategy is based on building from the strong foundation provided by our business model. And we're doing this by focusing on 4 key areas or strategic pillars. And the first 2 in the top half of the page are internally focused. So commercial effectiveness is about selling well through ensuring our services meet our customers' needs whilst making sure our sales processes are as effective as possible to maximize our commercial opportunity. In terms of operational efficiency, we have lots of vehicles and infrastructure. So we need a continuous focus on using those assets as efficiently as possible whilst maintaining or indeed improving service to deliver increasing operating margins. Our second 2 pillars in the bottom half of the page are more externally focused and relate to using our strong balance sheet to invest in growth. The growth investment pillar is about seeking opportunities to invest in growth through new services, new products, new geographies as well as initiatives in the first 2 strategic pillars. So examples could be a new warehouse, manufacturing a new feed product, putting fuel tankers into a new geography or investment in upgrading IT systems. And last but not least, targeted acquisitions are about growing our market share through step change and bolt-on acquisitions in existing and adjacent markets. Now over the last few years, our focus has been on consolidating the fragmented U.K. fuel distribution market, but now acquisitions have a major role to play in significantly growing our food business. Over the next few slides, I'll give an update on our activity around the 4 pillars, starting with commercial effectiveness. So as I've already mentioned, in Fuels, we undertook the national rollout of our regional operating model in the period. And we previously operated a federated depot model. And in practice, this meant we have no or limited visibility of sales activity and margin management by our salespeople who are spread across 30 depots. We now have that salespeople concentrated together in specialist teams based on a much smaller number of regional hubs. We're able to see their call activity, their call conversion and their volume and margin performance in real time. And therefore, we can make immediate adjustments on a regional basis. So an example may be if we have high domestic demand in one region as we are seeing at the moment, then we may increase our margin target for commercial volume in that specific region and have the team focusing on building new business development relationships because we don't need or want to push for immediate commercial volume when our tankers are already busy, but they can be doing useful work to ensure that volume will be there in the future. The converse can be true if we're short of demand, then also we can let the sales team know immediately actually to just drop their margin aspirations a little bit in order to drive more volume. So it's given us levers that we didn't previously have. Then in Food, we've invested in a commercial team for the first time. Previously, we relied on the work coming to us through word of mouth or being invited to tender. And that team has 3 key areas of focus. Firstly, it's about more proactive customer management. So we're making sure we understand our customers and we're meeting their needs and therefore, giving us the opportunity to get paid for it more. Secondly, it's about getting an increasing share of wallet from the existing customers. So that could be they've got other product lines that they're storing with somebody else or it could be they want additional services such as e-commerce or repacking of product. And third and perhaps most importantly, it's about new customer targeting. So we've now mapped our market. We have a detailed target list for each product category, and we're starting to work through that. And I'm pleased to say that we're already securing new business. Then moving on to operational efficiency. And in Fuels, in effect, we have the operational side of the regional operating model kicking in. So again, this has given us more visibility and control for this time overall tanker fleet than we've ever had before. So that meant during the period when we were experiencing low demand, we were able to keep our driver cost down. Then as demand increased in late November into December as the weather got colder, we were able to move drivers around the country to deal with spikes of demand in different regions. And moving forward, that greater visibility we have over fleet utilization will enable us to manage when vehicles are off the road for things like planned maintenance and MOTs more effectively and to reduce tanker numbers over time through better capacity planning. So again, it's given us a lever that we didn't previously have. In Food, we reduced the warehouse cost base through a restructuring in June, but that lower cost base has been able to manage a higher level of storage and a higher level of throughput through more efficient practices. In transport, similarly, we've increased the number of pallets that we have delivered whilst reducing the size of our fleet through better planning. We have an ongoing program of balancing stock locations across our 3 warehouses to create even further transport efficiency. And we have planned investments in transport and warehouse processes and systems to make sure our business is scalable across a larger network. And the reason we are doing that is because we see significant opportunity to grow our Food business to be a national network of scale. So NWS Food business, which trades as Boughey Logistics, so you'll probably see the vehicles going up and down the motorways, is the leading specialist ambient grocery consolidator. I originally drafted this to say we're the only specialist ambient grocery consolidator. But I can't prove that definitively, but I'm not aware of another specialist. And that's really important because we focus on customers who are either too small to have their own dedicated supply chain into the retailers, i.e., this is businesses with sales up to about GBP 250 million per annum. And most of our competitors are either very large generalist logistics groups, and they would rather run a dedicated warehouse for a brand for a retailer or we're competing against smaller players who don't really have the scale or expertise to match our service. So we've got a really nice sweet spot in the market. And we estimate that our addressable specialist market being ambient grocery consolidation is worth about GBP 1.5 billion per annum. And on that basis, our market share is about 4% to 5%. And if you look at the pie chart to the right on the chart, you can see that we have similar market share across most of the key ambient product categories. The slight quirk is in pasta, and that's mainly because there aren't many U.K. registered pasta companies. So actually, our overall share of the pasta sold in the U.K. is probably similar to the other categories. So in summary, we're the leading specialist in a large market with a market share that gives us plenty of scope to grow. So a great opportunity there. And to make the most of that market opportunity, we need a national network. And you can see on the map that we currently service a national customer base from 3 warehouses all in the Northwest. That's where the blue circle is on the map. And this means we are missing out on significant transport synergies, and we're not able to target some customers because of our location. Therefore, our strategic plan is to build a national network with facilities close to each of the big U.K. population centers, which is also where the retailers have their own distribution centers. And this will give 2 main benefits. So the first is around transport synergies. Currently, our fleet cannot get to all our delivery locations and back in a day. And that leads to something called tramping, which is where a driver is parking up and spending the night in a cab, which means as a business, we're paying for a vehicle which isn't moving and we're having to pay extra cost to the driver because they're having to stay out overnight. So that is inefficient. In addition, because we want to pick up a backhaul, so we're not running back empty, we have additional empty running miles because that driver and truck need to go and find somewhere to pick up a backhaul to bring him back. So it adds complexity, it adds extra running miles and adds additional cost. And all of that means we also have lower fleet utilization. By contrast, if we have a national network, our drivers can leave each of our sites, they can deliver a trailer, collect a new one, get back to base and then the driver can go home and sleep in their own bed but another driver can jump into the cab and be using that vehicle 24/7. So huge transport synergies to go for. The other key benefit is around customer expansion. So whilst we effectively service a national customer base from our current Northwest location, some potential customers do want proximity to their manufacturing facility or port of entry. So by having a national network, we would expand our addressable customer market. And that's particularly the case for products that are imported into and mainly sold in the South of England. So how are we going to go about building this national network? Well, firstly, we have to make sure our current operations are as efficient as possible and that our systems and processes are scalable. We then have a range of options. So targeted acquisitions of providers in other geographies will probably be the fastest way of getting there. We have a target list. These are generally family-owned businesses, and we're starting those approaches. So we're starting to have those conversations now. But acquisition is dependent on someone wanting to sell and at a price that makes economic sense for us. So we're also exploring strategic partnerships with those other providers. For example, that could mean we make use of some space in each other's facilities to try and access some of those synergies. Potentially opening our own new warehouses could be part of the strategy, but it won't be the only way we'd go about doing this. So it'd probably be in tandem with other options. And then as part of the transport synergy, we could look to have a national network of transport yards where we at least spot trailers and get some of the benefits that we would have from a national network. So we're looking at a range of different options because as a Board, we believe the growth of the food business represents a significant opportunity for the sustainable long-term development of the group. So why should people invest in NWF Group and why now? Well, firstly, we're a leading player in each of our specialist markets with scale and capability barriers to entry. Secondly, the group is focused on continuously improving our financial performance through strategic focus on commercial effectiveness and operational efficiency. And we're seeing that already. We're starting to see the benefits from the developments we've made to the Fuels operating model and the actions we took and are taking in food are driving improved performance and will create a scalable platform for growth. Thirdly, we are constantly looking for opportunities to invest in growth. And in particular, now we're looking to grow our Food business to develop that national network of scale. And lastly, we deliver consistent financial -- attractive financial returns. All of our businesses are profitable. We generate cash. Our asset base gives us a strong balance sheet, but we deliver a good return on capital employed on that balance sheet, and we have an excellent track record of growing our dividend. I'd also add I don't normally comment on our share price. But at the moment, I'm pretty confident to say we look pretty cheap as well. So great time to invest in NWF. So in summary, a solid financial performance in Food and Feeds, offset by a weaker performance in Fuels. Strategic momentum has been maintained with the growth plan in place for food and the national rollout of the Fuels regional operating model. And we have a robust financial position to support ongoing strategic activity. In terms of outlook, we're now in our busier winter period. We have seen normalizing demand for heating oil and fuels as the weather got colder, whilst the commercial market still does remain competitive. Food is bringing in additional customers. And in Feeds, we're managing volume and margins as we look to the summer where the milk price is expected to reduce a bit. Now those factors mean that the Board expectations for the full year remain unchanged, and the Board is confident in the future prospects and strategy of the group. I can see we've had a number of questions submitted. So we'll probably move on to answer those. That finishes the formal presentation.

[Operator Instructions] Chris, thank you for your presentation this morning. [Operator Instructions] I would to remind you that recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. Chris, could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.

Yes, delighted. So the first question is, have you ever considered expanding the Feeds business outside the U.K., maybe Northern France, for instance, and Northern Ireland? So this predates me. I think we have looked at the Irish market in the past. However, the structure of that market was different and that would have to be through acquisition really. So that's not something we're looking at the moment because I don't think there would be synergies there through doing such an acquisition. And then similarly, the second question said, have you ever looked at acquiring any fuels businesses in Northern Ireland? Again, that's something that was looked at in the distant past. The market for oil in Ireland is Ireland as an Ireland. So it would be moving into a significant new market. So again, we wouldn't really have synergies through doing that. So it's not something we've actively considered for a long time. Third question is asking to what extent lost fuel volumes in the first half were due to previous customers going over to heat pumps and solar? And the answer to that is very, very, very few, if any, at all. So you may or may not be aware that the government has had a scheme for a number of years to support people putting heat pumps into their properties, and they published the data on the take-up of that. The take-up is very, very small, and that's available to both oil and gas heated homes. So we're just not seeing significant conversion of oil-heated homes to heat pumps. It is a significant investment even with that government grants, it's a significant investment for the homeowner. So that shortfall in volume and shortfall in demand we saw in the first half, I believe, is linked to the weather. We had a mild spring, we then had summer and then we had a mild autumn. So if you bought oil in the, say, March time, you just really haven't used very much of it before the colder weather kicked in at the end of November. And as I say, we then see normalizing demand. So if you think back to the chart I showed you on Slide 6, that shows generally the market does trend back to the mean, and we expect that to happen over the next few months. And fourth question is, to what extent would a potentially lower oil price affect profitability? And the answer to that is it doesn't really. So actually, if anything, a lower oil price is helpful because the absolute cost for the customer of buying the fuel is cheaper. And all we're looking to do in our business model is make an absolute profit for the service we're providing. So to some extent, we're indifferent to the price of oil. We like a little bit of volatility because that enables us to nibble away and get some extra bit of margin. But generally, a slightly lower oil price is better because it makes the customers a bit less price sensitive. But within a range, we're fairly ambivalent to what the oil price is. So if you think, again, back to the chart I showed on Page 6, that dip we saw in 2022 was when oil prices were very, very high and inflation was very high as well on the back of us coming out of COVID. So that's a point where we've seen that has pushed down demand because of very high cost. But generally, the oil price has limited impact on demand for fuel. The next question is, have you ever looked at moving into adjacent industries, for example, LNG [indiscernible] removal services, waste removal, et cetera? So at a high level, we have looked at that in the past. I suppose I view that as a broader range of services we can provide to the rural market, but we have no expertise in any of those areas. And I'm not entirely convinced our customers would particularly see us as a better supplier of that than anybody else. So I think if we were going to move into those areas, we would have to do so through acquisition. In terms of LNG or that might mean LPG actually, that is very similar to the fuels market, and that has been largely consolidated already. So that won't be something we'd look to move into. Next question is, is the dividend safe and the 15-year track record intact? So at this point in time, the analysts expect our dividend to increase in line with what has done in previous years, and we are comfortable with the analyst assumptions.

That one for me?

I think that is one for you, yes.

Okay. So the next question is, when do you expect group contributions to the defined benefit pension scheme to fall? So yes, you'll have seen in the presentation that we've gone into an accounting surplus in the half. We will be undertaking our triennial valuation, which will be effective from the end of December '25. So as part of that process, we'll review our strategy then. So we expect to look at that and provide an update later on in the year.

Okay. And the next question is why are milk prices set to reduce? They are so low anyway. I probably won't comment on the second part of that. But the main driver of milk price is how much milk is being produced and what is the cost of production. So actually, at this point in time, the milk price to feed price ratio actually is reasonably good, which means farmers have been able to make a reasonable profit. I won't get into the debate around the politics of that, but that ratio is at a reasonable level compared to historically. That incentivized farmers, therefore, to produce more milk. And that has meant there is now quite high milk production. And therefore, the dairies are reducing the price because actually there's more milk than they need. So they're not wanting to encourage additional production. But that will vary from dairy to dairy. It will also vary depending on what type of contract individual farmer is on. So we're seeing quite a range of milk prices predicted for the next few months. Clearly, if milk production starts to fall and that will rebalance back up. So it's a very simple supply and demand factor. Next question is dividend growth has been slowing over the last decade as inflation has been rising. What should investor expectations be over the next decade? Well so has dividend growth been slowing? No, it's been growing at sort of 4% to 5% per annum. I guess, on a relative to inflation, yes, that is -- it was higher than inflation, inflation has increased, predicting the dividend for the next decade is pretty tough to do because as you can see from our strategy, we're keen to significantly grow the group. But at this point in time, we have no plan to change our progressive dividend policy. It's probably the best way to answer that question. Next one is how the current valuations for target acquisitions look relative to history, what are your expectations in terms of activity levels over the next 12 months? And I think you can deal with the last part of [indiscernible]. So in terms of acquisitions, we are very focused on starting to talk to Food businesses. So I'm unlikely to be announcing what we're buying a Food business in the next month because we need to build up those relationships, et cetera. But that is something we are pushing ahead with. In terms of Fuel acquisitions, we are not looking to buy anything at the moment in Fuels unless it would be very compelling from a synergy perspective. So that probably gives a feel for activity level in the near future. Clearly, we're keen to grow our food business. So I would hope in the slightly longer future that we -- longer-term future that we will be looking to do something in that space. In terms of multiples in that space, every deal is different and every deal is a negotiation between the 2 parties. It's not a sector that has hugely high multiples. But clearly, whatever deal we do, it would have to be at a level that makes economic sense for us. Just want to...

Yes. So the second part of the question was how much firepower do you currently have to stay within comfortable leverage levels? So you have heard through the presentation. So we have our facilities of GBP 61 million with a GBP 20 million accordion. Most of it is invoice discounting. We do use some of that depending on where we are in our yearly cycle and also our working capital cycle through the month, but the majority of that would be available for us to support funding. We clearly have the 2x net debt to EBITDA, but that would still allow us to use a large proportion of those facilities. So we're in a good position from a firepower point of view.

Okay. Next question is with the benefit of hindsight, is there anything you could have done to improve performance in Fuels in H1? So very good question. Hindsight is a wonderful thing. I think the interesting thing is the market data is actually very good around the fuel space, and I've shared some of that with you, but it does come out 2 months after the event. So at the time it's actually happening to you, you're not sure if it's something you're doing wrong or actually whether the market just isn't there. So what subsequently been shown is we we're suffering from a real shortfall in demand, and that's what was pushing down market pricing. Could we have done a little bit more marginal volume potentially, do we have the visibility to do some of that now? Yes, we do. But I don't think that would have made a significant difference. It really was the impact of that lack of market demand. Clearly, there's an argument that we could have had far fewer drivers or salespeople there, but then we'd have had to ramp up really quickly at the end of November when demand did come in, which wouldn't have really been possible to do. Next question is, has the shortage of HGV drivers in 2021 being completely overcome? Short answer is yes. The slightly longer answer is, to be honest, that was overcome in 2021. So we haven't had a shortage of drivers for the last -- well, really since then, so for nearly 5 years. There is a longer-term issue in the industry of drivers are generally older. And one of the other reasons other than the costs to start moving away from tramping is that younger drivers don't want to be trampers. So it also benefits from a driving perspective, we start to moving away from that model. And then last question is, previously, there seems to be a very clear desire to expand Fuels as the primary growth driver. Why has this changed? That's not quite right. So we were using -- we were growing our fuels business. We now have a good network, and I'm keen to embed our new operating model into that business. At the same time, we were also very keen to grow our food business, but we needed to get that business in a place where it could be the right platform for that growth. You'll recall, we took action last year to strengthen the management team, brought in a new MD. We've also been working on the processes and systems in that business to make sure we have a business we can grow. And we look at our business, it offers us a really long-term sustainable growth business. So that's why the focus, which always was on food, but has shifted a bit more towards food from an M&A perspective. And then last question just sneaked in, and I think we're probably running out of time. Are you concerned private equity could try [ and value add ] for a cheap valuation before you're able to show improvement in Fuels business? It's a good question. We're a public company. Obviously, that means our performance is there for all to see as is our current market valuation. My job, Katie's job, my management team's job is about just running the business as well as we can. And therefore, really, we don't spend too much time worrying about that because it's not very helpful for us to do that. So we just need to focus on running the business as well as we can, generating the profit and therefore, hopefully, the valuation will then look after itself.

That's great. Thank you for answering those questions you can from investors. And of course, the company can review all questions submitted today and publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Chris, could I please just ask you for a few closing comments?

Yes. Thank you. So I'd just like to thank you all for attending and watching and also for engaging with the questions, which is really good. I do enjoy Q&A. I think that's the most questions we've had on one of those. So that was really good. So yes, I'd just like to reiterate really pleased that despite the difficult market conditions, we have kept things pushing forward. We saw a really strong performance in 2 of our businesses, and we're really excited about the strategic opportunity for our Food business. So thank you again, and we look forward to updating you all at our year-end results.

Thank you once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. On behalf of the management team of NWF Group plc, we would like to thank you for attending today's presentation, and good morning to you all.