Wynnstay Group Plc (WYN) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Wynnstay Group plc investor presentation. [Operator Instructions]. Before we begin, I'd like to follow I'll now hand you over to Alk Brand, CEO. Good afternoon, sir.

Good afternoon. Good afternoon, everybody. My name is Al. I'm the CEO of Wynnstay and with me, Rob Thomas, CFO. It's a pleasure to talk to you today. It is a pleasure to talk about our half year results, 2026. And I'd like to start by saying that we are very, very satisfied with our half year results, particularly because of all the headwinds, I'm sure most of the investors are well aware we have to cope with. Some of them just to name a few was really softer market conditions, massive inflation in logistics, energy and labor, very mild winter, a drop in very prices and overall margin pressures, but this has proven without any doubt that Project Genesis is delivering. We saw an increase in our margins. In the meantime, we create a huge capacity in our treatment and fertilizer business we saw significant cost savings. Our grains trading business, which is now a combined platform has been a great success and the half year 1 proved long operational and financial discipline in our business. So at that time, actually pleased to take you through our presentation. And I'm going to hand you over to our CFO, Rob Thomas, which will kick off. And I will jump in later and then we will sort of phase between the slides depending on the slides between us. But it's really a pleasure to talk to all our investors, and we're looking forward to today.

Thank you, Alk. So I'm pleased to say that in the first half of 2026, Project Genesis is delivering Wynnstay had a much more resilient and robust business. dentate profit growth with our adjusted PBT up 11.7% versus the half year of 2025 to GBP 6 million. That shows 59% growth versus the first half of 2024, and that's really the start point of when we instigated Project Genesis, we've delivered in tough markets, as an mentioned, we faced pressures from labor costs, logistics inflation, energy cost increases, but they've been offset by the efficiencies and the commercial performance that through Project Genesis. We're also pleased to say that we've improved the balance sheet from the first half of 2025 with net cash generation of $600,000. It's really good to see strong cash generation in what's been an inflationary environment. And off the back of the strength of the results, the strength of the balance sheet and our confidence in the outlook, we've included lease our dividend of 5.9p per share, which is a 3.5% increase. That's consistent with our progressive dividend policy. And whilst this is the interim dividend, it's the 23rd year of successful dividend increases that Wynnstay has put through since it listed in 2004. So we are also confident that the outlook for the full year and the second half. We're maintaining our profit guidance, but we have confidence in further progress based on a strong fertilizer order book and continued Project Genesis benefits. Let's look at the results in more detail. Our revenue remained broadly flat at GBP 302.1 million, we improved our absolute gross profit to GBP 42.3 million, which is just under 1%, a 0.7% increase. We've also increased our unit margins both on a pound per ton and percentage basis compared to the first half of 2025. As I mentioned, adjusted PBT of GBP 6 million is up 11.7% versus the first half of 25, and our net cash has increased by 5.8% to GBP 10.9 million. Our adjusted EPS 20.9p represents a 15.5% increase and the 5.9p of interim dividend is a 3.5% uplift. If we now turn to segmental performance, we can see how Project Genesis is benefiting the entire group. So let's start with seed and grain. We think we've had an excellent performance in seed and grain. It's been driven by a really strong performance in our grain trading platform, GrainLink. So as a recap to those who follow Wynnstay, one of the key things of Project Genesis was that we have integrated our trading platform across the former Wednesday glass and GrainLink brands into one platform, and that's driven some strong growth in both volume and margin. Our revenue was down slightly in this segment, and that was because of the definitive action you took last year to close loss-making businesses in our types feed mill and also in our glass dock specialty corn mill that made [indiscernible]. Those businesses were losing and by reducing the revenue, we've increased the gross profit contribution and significantly taking costs out of business to grow adjusted PBT to GBP 2.2 million. That's a 139% increase versus the first half if 2025. The significant asset base that would have utilized within those making activities is now out of the base of the business. And I'm pleased to say that our return on net assets has increased to 6.7% that's a 460 basis point increase. We've also created some significant capacity within our feed milling operations, which means that we have now a really strong platform to grow our feed and grain business over the coming years in line with our strategy. The arable segment has had a really strong first half of the year. I'm pleased to say that we've grown our revenue to GBP 88.4 million. That represents a 12% increase in our manufactured fertilizer volumes, which has been driven largely by our new first like the blending plant in even mass which is a port in Bristol. That's given us market share growth into the southwest of the country. We're really pleased to say that Avonmouth has now been operational for 12 months. It's performed in excess of business base and is contributing a strong week of the arable performance on the group as a whole. That's driven an improvement in gross profit as well. We also benefited from a strong spring trading period. We sold our stocks very well. We had a strong order book bearing into the season. and we've made significant progress in terms of volume and margin ahead of the market volatility, which came in March as a result of the Middle East conflict. That did mean there was a spike in fertilizer prices, we'd already sold the majority of our spring book ahead of that as strong margin. We did, however, have certain stocks available to sell, and that led to a modest improvement in profitability over and above where we would have expected to be. We estimate that was around GBP 0.3 million. We've managed the volatility very well. We've had no impact on our supply chain, and we're going into the second half have a good strong first life order book, and we have a square position. And what I mean by is that we've sold everything we've purchased and we don't have any exposure to any downward market pressures on fertilizer prices. prices in the second half. Our store performance was slightly more disappointing. We saw softer market conditions, which meant there was less demand, particularly around small bag livestock feed, which is the biggest selling products in our stores. we also faced margin pressure from inflation, and that was where our suppliers have used the Middle East situation to put their prices up. We also saw overhead pressures through wage inflation and fuel inflation. I'm pleased to say that we've made an improvement in Q2, and we continue to improve performance in the business in the second half. And importantly, the stores business is optimally positioned for growth both in the second half and in the midterm. [indiscernible] financial review. We believe we've made a higher quality level of profit and returns from the business that we have. This slide here shows our performance in the first half of 2026 versus the first half of 2025. I thought through a number of these metrics previously I would also just like to add that our [ RONA ] as a percentage, [indiscernible] on net assets has increased by 60 basis points, those two following today, you'll know that our mid-center target is to get 1 across the group to in excess of 10%. And we feel that on a positive trajectory. In the red column, we've highlighted where we believe the group would have been positioned that we've taken the actions and initiatives under Project Genesis. So we would have had a larger group because we have lost taking operations that we closed. However, we would have had lower unit margins and our margins as a percentage have been much lower. Our overheads would have been significantly higher in the cost that would have remained in the business, both in terms of operations in, but also we have more inefficiency in the way the group operates. And we feel that those overheads would have been up until [indiscernible] in an inflationary environment. We believe that had Project Genesis is not taking place. The profit of the group would have been under GBP 3 million at GBP 2.9 million. Earnings per share would have been only 9.9p. Our net return on assets would be and we don't believe we would have been in a position to pay progressive dividends. So overall, we think the project Genesis has been a success in the first 18 months. And as I mentioned, it gives the group a platform for growth going forward. If I move to the cash flow. As I mentioned, we're really pleased that not only have we delivered strong P&L performance. We've also driven strong cash performance. In the first half of the year, it represents the lowest point in the group's cash position. And that's because Wednesday's working capital cycle follows the agricultural calendar. As we enter the busy spring trading period, we buy forward stocks or fertilizer animal feed. And we also make sure that we have stock in stores ahead of the busy spring trade rate, as you would expect. Those sales are in cash. in Q3 and working capital rises in the second half of the year. And at the year-end, we reported a higher cash balance. So for the purposes of measuring cash performance, we've shown a year-to-year bridge. As I've mentioned, we've improved our cash flow to $10.9 million, and that's through strong operating profit performance, EBITDA and GBP 2.3 million of working capital benefits and I'll talk around other initiatives we have in working capital going forward. We continue to invest our cash flow in line with our capital allocation framework. We've got expansionary and maintenance CapEx of GBP 5 million, we have a dividend payment of GBP 4.1 million, and we've made cash exceptional charges of GBP 2.5 million. Last year, we reported a number of one-off costs and provisions those have flowed through the cash flow in the first half of this year, in line with our expectations. And we're pleased to say that the majority of our restructuring activities are now completed. There's a small sale of cash flow to follow, but it's all in line with the expectations and the provisions that we made at the end of last year. We just wanted to pause and explain how we're better position to manage volatility, we believe that we have the ability to control Wednesday regardless of the market pressures that it faces. And the Middle East situation in Iran and the straight fall moves on fertilizer is a good example of this. As I mentioned, we had a modest benefit in this particular financial year. Historically, Wynnstay has made [ Wynnfall ] profits when markets have spiked. This was a little bit different than we had sold more fertilizer into the spring season. So we have less stock to sell. However, as I mentioned, we were really pleased with the margins that we've achieved on those sales anyway. In 2023, we experienced a market correction when the market went down and we lost money. We feel we're better positioned in 2026 because we have a [indiscernible]order book. We're also making sure that the team maintains a tight position whereby if we've made the sale, we'll cover us immediately. We're trying to limit any long positions we have where we bought stock ahead of us in a falling or correcting market. We did also face inflationary pressures elsewhere in the business. As I've mentioned, it was fuel cost inflation where we've looked where appropriate to recover those through our sales, logistics and forage costs, and we also saw product cost inflation in our store network. I'll now hand over to Alk, who will provide an update on Project Genesis.

We made very clear commitments around what we will deliver by the end of this year in terms of Project Genesis, and I'm pleased to say to our investors that we are on track against all our commitments. So on this spring, you all notice a list of commitments we set we will undertake. You will notice there are two solo ongoing. The first one of it is our manufacturing capacity increase in [indiscernible]. It was always focused on being another year. We've already created the extra 25,000 tonnes capacity in our main business and sold quite a lot of that. And there is more to come in sensor. We also have investment in our connive blending plant, which will partly be executed next year. You will notice that we have made significant progress on a lot of initiatives, and I just highlight a few of them. as fertilizer business is now fully integrated. As a reminder, it was a subsidiary of the logic lasting business, which we have been a subsidiary of intact because of supplies, which then was a subsidiary of the Wynnstay PLC Group. Now we have a flat structure our fertilizer business reports directly into the executive team. And -- but it's really been a success story and partly also how well we could mitigate is because of that direct contact with the team. I'd also like to point out but all unprofitable assets is now being divested, which includes the [indiscernible] on stand and know, which is part of [indiscernible]. So these actions have been taken, it's been completed. And now we actually feel that all our assets are fit the purpose and worthy of investment. And we are really excited about our very, very strong asset-based and great manufacturing assets and assets, including our stores, which will continue to generate very good returns for our company. And then also perhaps where to highlight is a commitment we make to add stabilizing capacity, we undertook the Avonmouth investments in fertilizer. We are very, very believe progress we might be. We have increased our market share in fertilizer in general, and that is a big part of it is because of the viability of fertilizer in the southern part of the country to customers, but also to our stores. So overall, we believe that we have leverage against uptime made at the launch of Project Genesis. We always say that we can't control the market, but we can control what we do on Wynnstay. And again, I would like to point out some headwinds, which we had to navigate through this year, which were significant. Clearly, there's a lot of agricultural market pressures. There's definitely lower farm profitability in some sectors. Commodity prices volatility is evident everywhere logistical supply chain volatility will continue. We have seen substantial fuel cost inflation. And obviously, the wage inflation and national living rate increases that's affected the business and we actually to handle that cost increases in our business. But at the same time, the benefits of project genesis has helped us mitigate all. We simplified the operating model, which is now a leaner structure. Our loss-making assets has been exited, and we already started seeing the benefits of it. We make significant manufacturing cost savings the branding integration has been completed, and the benefit of a combi business has been a big tax success. The totalizer integration has now been completed. We saw improved pricing and margin discipline all over the business. I mentioned the capacity expansion in milk and then from Avon and then Avon-systems data and business controls everywhere in the business. and improved working capital management is also evident in our improved cash flow. So Project Genesis benefits are now being offsetting external inflationary and market pressures. And this project has really been instrument to improve the financial stability of Wynnstay. So now we have financial stability we believe we have a stronger platform to deliver sustainable growth, and that's where instate strategy Genesis comes in, which is our 5-year Board-approved strategy. Just as a reminder, the medium-term targets we have on the strategy genes are on the screen. And when we say medium term, we mean by financial year 2029. We want to grow the business both in terms of revenue and gross profit we want to improve our operating margins and EPS growth. And the target I'd like to highlight, as I've mentioned before, is that our return on net assets will be over 10%. We want to double share of wallet is the amount of farmer spend we have from our existing customers, and we want to be a top 3 U.K. player in all core categories. So this slide shows in blue on the left where we've been in terms of our adjusted PBT in financial year '24 and '25, where our expectations are for this year 2026. And as a reminder, our expectations for the year remain in changed and where we're forecasting through our brokers or capital to be for financial year 2027. Our market forecast, we like to for a customer a conservative basis and we have confidence in our ability to deliver that. But we also want to show you what our ambitions are in the green section in the future of the group and how we can grow and we believe we can achieve our growth and ambition through Strategy Genesis. So that's growing through the existing capacity we have in the business, the capacity we've created through project and now we're ready to sell to grow. We want to grow the share of our pharma wallet, increasing penetration into our strong customer base, leveraging our relationships and using the really good strong CRM data we have in the business. to drive our sales performance. And as a recap, we'll also be focusing on the 7 core products, where we think Wednesday is best placed to drive growth and improve margins. We're very proud of our integrated business model, and it's important and we often get asked the question about the importance of the second part of our business, whatever that might be, I believe that the Wynnstay model, which is now has is unrivaled. And the way we actually work together as an integrated business team can really tap into all needs of our customers. I believe that everything can start to see. We've got a progressive seed business. We are either #1 or 2 largest seller of gross seat in the U.K. depending on when you measure that. that can lead to great touch points about farmers in terms of grain trading, where we have ability to complete a transaction a back-to-back transaction to buy the going back before it's even planted. We are focused on solar health and protecting productivity on farms. Our fertilizer teams are trained to apply modern fertilizer technics analysis for our blending plants. We can do dedicated offerings to customers. And that we obviously know that very few of our farmers are only exclusively edible or livestock or a [indiscernible] so we have ability while we're doing all of their stuff to focus on our poultry offering, our offering in beef and lamb and also vary. Rob, as you mentioned, the 7 core products, at the same time, we can ever sell directly to farmers all through our store network of 7 core categories, which we are focusing on, which is our feed, our edible products, our harvest products of blocks and buckets range or animal health products, the most dates and supplements. That does not mean that we are not focused on ports of the need of mini including performing improvements hardware sales, tools, [indiscernible] and so on. We really have a unique basket of products we can offer our customers and that will drive our growth in the future. I now would like to spend a few minutes just to look after the reporting segments of our business, and I'll start the fleet and our grain trading business. We are really, really very proud of the success we had in other in trading business. We have now expanded our geographical offering through grinding, we increased market share through a single integrated platform. Our leverage has enhanced customer relationships, and we have the ability to improve our margins through scale and trading efficiency been in manufacturing fee, our pillage strategy growth integrated seed opportunity, and we are planning to grow our pullet offering to 2 million birds with both price recurring fee demand our contracted free volumes will improve through our demand planning and longer manufacturing neurons will improve our efficiency. This part of the business is a significant part of our revenue. estimated to over the 12-month period to be about GBP 300 million, so it's 51% of the group's revenue. And currently, the adjusted PBT will represent about 26% of EBITDA of the group. In terms of RONA, it's increased a lot since 12 months ago, and we believe that there's much to go for. So why does it make that? We believe that we can contract the volumes. We believe that we are now able to handle higher manufacturing utilization, better customer retention, it will help us to improve our margins and reduce our volatility in our business. In terms of [indiscernible] our focus is building a market share from an none manufacturing platform. Our fertilizer story has been a very, very successful one. even now provides 20% additional blending capacity, and we are now able to expand the gegographic markets and to continue to grow market share also in industrial and non-agricultural applications in the future. More capacity to more markets and more opportunities will lead to further stronger results. in seed or actually gone from a market-leading process facility. We have made additional investments to create capacity to grow TLC offerings and to strengthen our leadership team and our leadership in general in grass seed market. Our business is market-leading in terms of capability, and we will continue to invest for future growth. In terms of the edible industry in totality, we are absolutely focused on manufacturing excellence single manufacturing methodology across all in stage manufacturing plants, which obviously also include our feet milling. We are working hard to prepay multiskilled operators across sites which will reduce our seasonality and seasonal cost pressures and all focus on continuous improvement in efficiency. Manufacturing needs to be consistent, efficient and competitive. This is an important part of our business with 25% of our revenue over a 12-month period coming from this and about 28% of our group PBT and then which is slightly less from last year because of the investment in Avonmouth. So reducing seasonality will help us to diversify products and end use applications. are multi-skilled colleagues across the sites and disciplines we reduce our costs and expanding into new markets and geographical areas in the U.K. will help us with extreme [indiscernible] we now have a more balanced year around earnings profile in this category, and we are building a strong and more resilient edible business. Last EL stores, our stores has been a historical constating of our business. In terms of revenue, not the largest part of our reporting about 24%. But in terms of adjusted EBITDA, it has been and still is a significant part of our business. And right now, we need to need to go up as well. We have 51 stores in our stone network, in terms of financial performance, Rob has mentioned it in the beginning, not all our stores have performed equally well. We have a number of stores which needs a bit more attention. And a lot of work has been going into this in the last 2 or 3 months. We have had significant headwinds in this area in terms of very mild winter a significant amount of inflation on nearly every area, including labor cost and so on. But this is an area which really excites us in the executive team and the Board we are planning to test a new more modern opportunities outside our normal store range we'll plan to talk about that much more in our February of the year, the full year announcement. We felt that we just wanted to point out to our investor audience that it's not a day which go past, which we're actually not considering new and more modern figures area, and we believe that it still continue to be a very important part of the business. Saying that our stores are one of the areas where we have incredible amount of working capital tied up and through collaboration with our suppliers and slight changes to our distribution model, we believe that we can actually help to improve the working capital of the group. And we will talk more about that in our February announcement of the full year results. So as I've mentioned, there's growth opportunities and development potential in each of our 3 business segments. I just want to talk a little bit about how we believe we can self-fund the growth and development in each area of the business by the leasing capital across the balance sheet. So one of the first things we did is the start of Project Genesis was the former full balance sheet review. We were looking for underperforming or nonviable assets, and that was one of the first things we did -- now what we've got, we're happy with, we just want to make it more efficient. And we believe there's towards of GBP 8 million that we can release over the next 2 to 3 years through improvements in working capital and through a strategy around our property portfolio. Let's look at working capital first. So the biggest opportunity for us is around debt reduction, so we've done some good work on Wednesday, over the last couple of years where we've reduced overdue payables, but we believe there's a further opportunity to do that, working with customers through more efficient tools using electronic statements, electronic payments in order to facilitate ease of payment -- we also think that we can use certain analytics tools that support the team and are automating a number of the processes making things easier, sending automatic reminders, which enables the team to foo the relationships with our core big customers working in conjunction with our sales team to mate the credit process. Through our store network and buying team, we think that there's a huge opportunity around stock optimization. We're looking at stock terms, making sure we have the right stock at the right time and leveraging suppliers for consignment stock which reduces the amount of capital that we say hold, but also like use of the inventory risk. And finally, through relationships with suppliers and using the purchase power that Wednesday has we believe the gunite to negotiate some of the favorable terms with our supplier base. Regarding property, we have a mixed property portfolio within the business. There are certain assets that will remain owned and we would always want ownership. So the prime example of that is feed mills where ownership of site and 1 is a real competitive advantage. However, there are certain areas such as stores, where maybe a lease or mortgage model may be more appropriate, and we can use that to free some capital that we can then invest into growth opportunities. And that's probably a timely reminder to look at our capital allocation framework. So this has been in place now for around 18 months. and it's given us a really good internal guide and hurdle rate to use when we're looking to deploy new capital. And I hope you've seen from the presentation, there's many initiatives and opportunities that we've got across stay. So I think it's really important to have a framework that gives us a template to work those through so we can prioritize to better returns. So just as a reminder, we invest for improved efficiency from our existing asset base. that's through maintenance CapEx and streamlining of what we have for better returns. We look at organic growth, so targeting investments to expand or modernize to a lot growth. So even now is a great example of that. We are open to disciplined M&A, where it aligns with our strategy. And finally, we remain committed to a sustainable and progressive dividend. As I mentioned, we're now in the 23rd year of consecutive dividend growth. In summary, Project Genesis is delivering change. Strategy Genesis is driving growth. Our performance of $6 million at PBT level at half year means a 11.1% increase versus last year. It's the first consecutive period of improvement. Project Genesis has been delivering the benefit of a lower cost base, better margins, integrated operations, improved cash generation and operational excellence. Totally, Genesis will continue to drive our growth. Our capacity expansion is focused on that. Market share guidance is targets for all our parts of our business. We will continue to use data and CRM advantage, which we do have in the business with a phenomenal data available. Our 7 core products will help us with our share of wallet focus. Our balance sheet is strong with net cash just on the 11 million. We have a progressive dividend, which we will continue to maintain. And our working capital opportunities to find growth internally, as just been mentioned by Rob, in terms of our outlook, we are confident, but our trading will continue to be in line with our expectation of the Board. We've got a strong order book. Our full year expectations unchanged and further improvement is expected from last year's financial results. We cannot control the weather that is also markets that we can control the way we're on instate that will continue to be our velocity in our teams. We practice bolsters in our business. Wines a phenomenal company to work for, to do business with and to invest in. So this now concludes the presentation, and we gladly will take some questions.

[Operator Instructions]. And if I may just start off with the first question here, which reads as follows. I congratulate the management team on the robustness of the balance sheet. Do you have any power to utilize this bank?

Well, thank you. No. So as we talked about through the presentation, there's many growth opportunities. We've got a strong balance sheet. We've got plans to generate further capital relief that we can invest. We've got an established capital allocation framework now that we can look to deploy capital through. And we will continue to invest in maintenance, CapEx efficiency.

We'll look to organic growth, and we'll be maintaining the progressive dividend policy. And as Al mentioned, in each area of the business. We've got further work we can do around the capacity expansion in our feed milling business. There's further opportunities to grow organically through geographical expansion in the arable sector. fertilizers, which is really around replicating the success of Avonmouth in new geographies. And finally, in stores, I hope everybody can see the real potential in growing that network in a targeted geographic expansion around the country. So we're very happy both in terms of the balance sheet strength, but the excitement that we've got in the opportunity to use it to develop the group that we have.

That's great. Turning to the next question. Visiting the Wednesday stores leave the impression that online retailing has been a low priority, how much demand is there for services such as Click & Correct in the sector?

Yes, there's a lot of demand. So I'm sorry that, that is impression. That is not the case at all. Online retailing is a very, very priority however, to do it successfully from a consumer or customer first impression point also from the easy-to-use perception to allow deliveries to be in line with modern expectations to make sure that our product fulfillment and so on is right. We have done a lot of work and are still doing that work. So I can assure you we totally on it, but to do well, you need to have a proper system behind you. It needs to be fully invigorated from the supplier. The technology you use needs to be world-class as spot. So that is a priority for our business. that's take priority, which is a quick fix. We are absolutely confident that in the next calendar year, we will be able to talk much more about what we're currently doing. When they embrace technology and we believe that we have the ability to do a very, very strong online late and also using other modern technology tools to lead this initiative in our stores. So our current website does not index that or the since on that area. And I believe that you will see that there is much more to come.

The next question we have here is, how do they plan to increase share of pharma wallet while also focusing on 7 product categories and experimenting with smaller footprint store?

Well, the small equipment still is all exclusive from our -- our focus on the core categories, 7 core carats are categories, which I did mention and all of a share wallet. We have very strong data. Every customer which actually buy from us on private. We have a lot of detail about the size of the farm that we can establish how much of the strength of the pharma we can buy these 7 core categories from us. They actually buy and the difference is the size of our opportunity. So we're not saying that, that is going to be easy. [indiscernible] something which is potentially available and it's something which we feel we should focus on is always easier to do more business with your current customers than to give new ones, obviously, we'll continue to try to be attractive for new customers as well. In terms of the smaller footprint stores, which we will test, I think that will just be additionally ability to serve the customer base is potentially is even outside the geographical area today.

That's great. Just turning to the next question. When does see Wednesday stores, what changes should we see in the resell Project Genesis?

We tend to talk more about hospitals in our presentation, which we will do after our full financial year results. But I would like to say that I have made immediate spend a lot of time in our stores as well. I think those stores are phenomenal and I think my colleagues in our stores are exceptional. So I still doesn't look the same and they are things which we can try to improve from store to store, but it's not necessarily the same. Our focus for today -- the discussion of the day should be that we should provide world-class advisory knowledge we sit sharp prices. We have -- should have sold we need to have stock availability, which are acceptable. And yes, I did mention prices which is competitive, but simply our focus for now. And all new things will be discussed next year. But this is a very, very important of the business, and actually, we will continue to work out to be very competitive in it.

With a stronger cost position and improving cash generation, how are you planning on allocating capital moving forward? And how much earnings upside is within your control?

So I think the previous question I had actually talked a lot about allocation of capital. Just as a recap, we're looking to in the growth in each part of the business and there's a number of initiatives that we have -- regarding earnings upside and how much of that is within our control, again, just referring back to the presentation. So our forecasts for this year we've shown in terms of the GBP 10 million and the GBP 11 million forecast for 2027. So we are confident that we have that within our control. One of the themes of today's presentation is that whilst we can't control markets, we can control Wins day, and we think through the Project Genesis and strategy genesis initiatives delivering those market forecasts is in our control. In terms of the medium-term targets, we talked around and the RONA. That's our ambition. Obviously, we'll need to assess that into the medium term. But we remain confident that we can control this business, and we can improve that level of profitability as we've outlined today.

Perfect. In the results release, you mentioned that some costs have been absorbed as part of the investments in the business. What scale of these costs and what returns do you target in making such investments?

So we based over the last 12 months, GBP 5 million of net cash back into the business, so that's an absolute spend of 5.5% less on capital disposals that we've made in the period. We invest that in line with our capital allocation framework, which relates to a hurdle rate of 15% for investments. The idea being that if we increase the risk, we can improve the underlying return on net assets of the entire business. It's closer to 10%. So give an example of the [indiscernible] investment that we've made over the last 12 months, which has performed in excess of the targets we set through that capital allocation framework. So we're really pleased to see that flowing through into the group. And then in terms of when we're talking about costs that have been absorbed, we've also been making certain investments that aren't capital in there. So we've been investing in IT costs in establishing a food safety and compliance team within the business, and that involves a number of colleagues who we've recruited. So we've got a new IT director, a new group sustainability and technical manager who's dealing with food safety. And those do go on to the run rate of our costs, but we believe that we call them enablers, so they will enable the commercial performance that we're driving through strategy genesis to take the group forward.