Good morning, ladies and gentlemen. Following COVID-19 and, of course, all the associated lockdowns, the continuing fallout from the war in Ukraine has certainly made the macro landscape challenging, to say the least. Despite that, we're actually quite pleased with the progress that the business has made. Had it not been for the eye-watering increases in utility costs last year, we would all but recover to pre-COVID levels of profit last year, despite the Omicron variant, which wiped out the most crucial festive season, despite the other exceptionally high cost increases, despite the delivery issues, and despite the well-reported people issues that we had to contend with.
We've also started the year, as you will have seen, very strongly, with 6%- 6.5% like-for-like sales growth over the first 10 weeks, which is incidentally 9.2% up against 2019. They are the reasons why we're very pleased with the progress that the business is making. We're trading ahead of the market again consistently. We have a solid capital program already up and running and in place, which is methodically raising the quality of our amenity. Ignite, our transformation program, is once again up and running and generating sustained improvements for the way we do business on numerous fronts. Despite the macro environment, we believe we're absolutely on the right path.
This morning, Tim is gonna begin by taking you through the financial results, and then I will return to bring you up to speed with how the business developed through the course of last year and to demonstrate to you why we're feeling so positive about the months ahead, which we believe will put us in a very strong position once the macro headwinds start to subside. I will then move on to the priorities we have for the business and our program of work for this year, which we believe will take the business even further forwards. Let me start by handing over to Tim. I missed my first slide, George. Can you come and do that, please?
One drop catch.
Managing.
Another test match last week. Morning. As Phil said, I'm going to take you through the financial performance of the group. We talk a little bit about the recovery in sales and what we're running at the moment. Some thoughts on cost challenges, which are, I think, front of mind, where we think that's going. Then our return to profitability and the cash generation of the group. Let me start with the income statement for last year. We made a profit of GBP 240 million. Clearly, the prior year was decimated with lockdowns and restrictions. That GBP 240 million represents a really encouraging and strong bounce-back of profitability. As Phil said, ex-utilities, that's very close to the levels that we were pre-pandemic.
Very encouraging across the whole of the year. As always, that recovery is built on sales growth since we, since we opened, since we first opened about 18 months ago. You can see that clearly on this slide. Now, the rate of that obviously changed, so it's probably better to focus on the, on the line rather than the bars. That strips out the impact of the change in that. What you can see is a really robust growth in sales over the whole of that period, and really encouraging to see the consistency of that. Where it has come off track, like Omicron, there's a very defined reason for that. That's continued at the end of the financial year into this year.
The first 10 weeks, as Phil said, we're now up at a slightly higher rate at 9.2% against FY19. It's also a really good start to the current financial year. In terms of the general themes of what's driving those sales, a few movements, a bit of volatility. Initially, our sales are driven largely by food. Latterly, drink has started to be stronger for us. Initially, suburban and rural areas were very much stronger. Latterly, we're starting to see footfall return to city centers. That's beginning to catch up. Initially, sales were very much driven by spend per head, premiumization, and price, whereas, again, latterly, we're starting to see volumes come back.
Whilst we're still some way below our FY19 volumes, year on year now, in the first 10 weeks of this year, we're ahead of volumes a year ago. Really good sales performance last year. Really great start to this year. I think I have to say we're mindful of the potential impact of the cost of living crisis, of course, on guests going forward. We don't know what that will hold, but it's fair to say that, it's not substantially evident as a risk in terms of what's coming through our tills at the moment. I think what we do know is that the future's gonna be dynamic and the future's gonna be uncertain.
It's probably worth re-emphasizing the wide breadth of brands and offers that M&B does have, whether it's a food occasion or a drink occasion, whether it's premium or value, and whether the location is rural, suburban, or city center. We've sort of got a presence in most parts of the market. That excellent coverage, I believe, should give us a measure of resilience as we go forward in a market and a sector that is going to continue to be sort of fast-moving, fluid, and volatile. If I just look at the moving parts of the P&L last year, we continue to invest in our estate. That's very important to us. We've not managed to execute as large a capital plan last year as we'd like.
That's entirely due to logistical supply chain reasons and frustrations getting planning consent. It's very important to us to maintain investment in our estate. What dominates this picture, of course, is cost inflation. This is across three years, remember, from 2019 to 2022. A GBP 70 million increase in energy, so nearly doubling in our energy bill, and an overall cost headwind of GBP 218 million. That represents a very stiff challenge for us. I'll talk a little bit about what we think the future holds. We had a bit of government support, just over GBP 50 million. Almost all of that is the reduced level of that.
We've got what we've managed to achieve, and that is, I have to say, despite the impact of Omicron, which cost us, you know, the lion's share of last year's festive season, we've still managed to generate efficiencies, drive sales improvements and premiumization and price as well to arrive at GBP 240 million for the year. The costs and what costs hold for us are very much front of mind, I think a key focus. If we look forward to the rest of the current year, and I have to say, I have to stress really that, you know, we're giving you our best view here, but it's feels somewhat brave at times, and it's difficult to predict with any certainty.
This is just our best view of what we're sort of heading into. We think across a GBP 1.8 billion cost base for M&B, we suspect our headwind of costs will be about 10%-12%. Call it 10% on a sort of base case scenario, you know, maybe 12 on a downside scenario. Energy is a big part of that. We're gonna benefit from the energy cap in our first half. Whether that gets extended or not, we'll find out in a few weeks' time, we'll at least have it for the first half.
We've got 45% of our energy brought forward for this year, but we still expect, despite the cap and despite that, we still expect a small increase in our energy bill for the whole of this year. Labor is a big cost for us, always has been. It's probably the most stable and predictable actually, though, as we look forward to the next year. We know that living wage is gonna go up by 9.7% to GBP 10.42 an hour. That'll be first of April, that will only impact the second half of our year.
longer term, I mean, I see no reason why these levels of inflation are going to continue and why it shouldn't revert to what we've always talked about as our sort of historic cost headwind norm of GBP 65 million, just over 3%. Indeed, you know, in the next year or two, I would hope we'd get some form of energy deflation if we come down from the very high levels we're at the moment, and we might even be below that trend for a year. In the light of that cost challenge, I think it's really encouraging to see our cash performance. We generated positive cash in the year. We've reduced our debt further by just over GBP 70 million. We're now under GBP 1.2 billion debt, excluding IFRS 16 liabilities.
That's GBP 350 million lower or 20% lower than we were going into COVID. Our balance sheet absolutely does continue to strengthen, and we'll look to drive down that level of debt further. We've revalued our property portfolio, as we do at least every year, resulting in a small downward movement, but we still have net assets across the group of over GBP 2 billion, representing about GBP 3.60 a share. A strong underpinning of the value of the group. I think before I hand over to Phil, I would like to say a few words about pensions, which after many years of paying GBP 50 million into deficit recovery, we're sort of now starting to believe that we're beginning to see the light at the end of the tunnel on this.
Our most recent triennial is at March of this year. We're very close to signing that. We have a degree of confidence in the outcome, although it's not completed. We expect to see a significant improvement in the funding position. Our main scheme that constitutes about 80% of our liabilities, we've been putting GBP 40 million a year into that scheme. We're contracted to do that till September next year, another 10 months. We're well on track for that to be the end of the contributions. Indeed, once we've signed this triennial, we'll look to start to divert those contributions into a blocked escrow account rather than to the scheme themselves. The executive scheme, which is the other 20% of our liabilities, as you'll know, we achieved a buy-in a year ago, so that's been substantially de-risked.
It's very limited future funding requirements. We've already been putting our contributions into a blocked escrow account and, you know, we would hope perhaps one day we can even sort of recover some of those contributions at some stage. Overall, I think a really positive movement in terms of our pensions position and we're sort of tantalizingly close now as a group, I think, not to have this GBP 50 million a year cash outflow that we've had to carry as a constraint. That really is it. I mean, pulling it all together, I think really encouraged with how sales recovered last year and how we started this year ahead of what were our initial plans.
The costs are gonna remain a challenge and that outlook is uncertain, but we've got a number of plans to try and deal with that. Phil will take you through those in some more depth. I think we benefit from the fact that we have a great diversified portfolio of strong brands in good locations, which leaves us really as well-placed as anyone to face the challenge that we have coming for us in the future. Thank you.
All right. Thanks, Tim. As I said in the introduction, we're pleased with the progress the business is making, and once the macro headwinds subside, we think we'll be in a very strong position. To explain that, I'd like to begin by giving you the reasons why we are feeling so confident about the months ahead. As Tim said, we finished the year with like-for-like sales growth of 1.1% versus FY19, which when the VAT is stripped out, demonstrated a gradual build through all four quarters. As you know, initially, the food-led businesses in our suburban locations fared better than wet-led and city center businesses did. As the year progressed and as society learned to live with COVID, that gradually changed. Towards the end of the year, our wet-led businesses started to fare better.
Now, for example, Nicholson's, the brand I'm sure you all know well, was really struggling a year ago when the city centers were relatively empty, the work from home mantra was being peddled in the media. There was almost a total absence of foreign tourists. A year on, Nicholson's finished the year very strongly, beating all of our expectations, and it's now in solid growth, and arguably is probably leading the way for us. We're seeing our premium food-led businesses with a flatter performance at the moment as they compare to last year when they shot out of the blocks when our customers were making up for lost time. Of course, if we normalize the 12.5% VAT they were enjoying at the time, then they too would be in solid growth right now.
This illustrates, I think, the shifting picture that's been going on across the sector with more people returning to offices, city centers becoming stronger, and older guests becoming more confident to venture back out and go back to their locals. This is the first reason why we are optimistic about the future, as we see a strengthening demand as society learns to live with COVID. Last year was also challenging in, on a number of fronts. Notable amongst these was the people issues, the well-reported staffing issues that the sector was facing, driven by losing people during furlough to other sectors and by the absence of the EU talent pool post-Brexit. This put a lot of pressure on our recruitment, particularly for back-of-house roles.
As the year progressed, those recruitment challenges improved, apart from certain hotspots around the country where we had to beef up our recruitment campaigns. As recruitment started to ease, retention became a bigger issue than it had been historically. We put this down to people just struggling to get back into work life again after periods of lockdown, and that is and will continue to settle down. This is the second reason why we are confident about the year ahead, because we achieved last year's results despite huge people issues. Today, while there are still some issues, they are far less impactful than they were last year. Success in hospitality is inextricably linked to customer satisfaction, with the correlation between superior guest scores and strong like-for-like sales being irrefutable.
When we reopened our doors after COVID, we were delighted to see our guest review scores strengthen from an average of 4 pre-COVID to 4 out of 5 pre-COVID to 4.3 post-COVID. Initially, we put this down to us enjoying a bit of a honeymoon period, that people were just pleased to be out again, and to the pared-back menus we were operating that allowed us to get the food out quicker. However, as the year progressed, we were delighted to see those guest scores maintained, with critically every single brand being over 4, with scores ranging from 4.1 to 4.6 out of 5. This is a great foundation to build upon, and all brands are now focusing on strengthening this even further.
The trust in and love for our brands is the third reason why we're very confident about the months ahead. Clearly, as COVID-19 refuses to disappear entirely, we are keeping fingers crossed that there is no repeat of last year's stay away from Christmas party soundbite, which destroyed the last festive season. I think we're getting close now. Hopefully, that's not gonna happen. Sir Chris Whitty's ill-timed comments last year, you may remember, resulted in immediate cancellation of Christmas bookings. Last year's result was achieved despite the loss of the most crucial festive season. As long as there's no repeat, we expect a very good December, and so far, so good. Christmas bookings are looking solid, as people are looking to make up for their sort of lost Christmases over the last couple of years.
This is the fourth reason why we're optimistic about the current year. To recap, the strengthening propensity for our guests to come out as they've learned to live with COVID, the gradual improvement in the recruitment market, the improving guest satisfaction scores, and a good Christmas season ahead of us, are all reasons to feel confident that we can continue to build over the coming months. However, there are some macro challenges to overcome, not least the unprecedented cost headwinds, the biggest of which are undoubtedly utility costs and food COGS. Utility costs for us moved from GBP 80 million pre-COVID to GBP 150 million post, which as I said earlier, makes up almost the entire shortfall to FY19 profits.
As you expect, we have a number of initiatives underway to try and reduce consumption without detracting from the guest experience, of course. Voltage optimizers and EndoTherm, which makes water boilers more efficient, are examples of capital-driven initiatives that we have in place to drive down usage, with voltage optimizers alone projecting an 8% electricity consumption reduction. On top of that, we have a network of energy ambassadors across the country who work with each site to audit the energy efficiency of each business and to produce an energy action plan specific to that business. These plans will include everything from when to turn the ovens on in the morning, to how to reduce drafts and improve insulation.
There's a program of work underway to improve that insulation, to replace thermostats, and to give each business a chance to optimize its energy consumption. With food costs, we're currently still faced with high commodity costs across all lines. However, we are flexible in the way we procure, and we're constantly looking for ways to limit exposure to those lines that have the highest price inflation at any one time. This may mean we have a higher level of product substitution than we would normally have, or we might reduce some items entirely. For example, lamb was taken off the carving deck in Toby Carvery for a period of time. Pleased to say it's back on now. That's the sort of thing we can do to try and limit exposure to particular costs.
We also look to use our scale purchasing power where we can, we look to procure across all brands that gives us some scale advantage. Food costs, COGS, I'm sure, will remain inflated while the war in Ukraine continues, we believe we will see some easing this year as the COVID and Brexit-driven side of that cost equation starts to subside. The next major concern or macro concern is what impact the current cost of living crisis will have on consumer spending, as Tim alluded to. There's no denying that our guests will be feeling the impact of rising energy costs, rising food bills, and now rising remortgage payments too.
It's also fair to say that we are yet to see any impact on our trade, but we expect this likely to be January when the festive season needs to be paid for, energy bills will be at the highest that any impact may be felt. Our sector has always proven to be resilient in previous recessions, as people tend to cut back on other luxuries before compromising on day-to-day activities. There's also the fact that there's still a gradual return to our sector post-COVID for some of our guests, and that we think this will partially offset any drop in frequency. Finally, the high utility and food costs will accelerate supply coming out of the market, which undoubtedly benefits those that remain. We remain cautiously optimistic in our ability to withstand any consumer spending issue.
We continue to work on our three key strategic priorities that we believe will ensure we can deliver on our aims. Firstly, maintaining a balanced portfolio so that we're not overexposed to any one market segment, and that our brands are kept relevant and grounded in deep customer insight. We aim to invest in each business on circa seven-year cycle, and that when we do invest, that we invest fully, looking at the externals, the toilets, and where possible, bringing unused parts of the business back up to scratch. The second priority is about driving a commercial edge to the way we do business, and this for us is about ensuring that the guest is at the heart of all our decision-making, and that we're constantly listening to their feedback.
It's also about being clear on how each pound of sales is converting to bottom line profit. For example, when the business opened post-COVID, it allowed us to be forensic about analyzing how each promotion we ran was really working in the business. The final priority is about driving an innovation agenda across the business. Firstly, sweating all the technology that we already have deployed. Secondly, ensuring that digital marketing is an engine room for the business, and that we stay ahead of the competitors in this space. Finally, ensuring that we invest in new product and new concept development and be willing to take that, the learnings back into our core business. To achieve our priorities, we have three levers that we pull each year, namely the strategic decisions we take around pricing, menu content, and offer development.
Secondly, the capital program, where we decide how much capital to invest and where to deploy it. Finally, Ignite, our change program, which seeks to ensure that we have multiple initiatives underway at any one time, that together in aggregate add up to a big, big number. How are we doing? Let's start with menu development. We've been really cognizant of the current high food cost inflation, and we also try to reflect the need to reduce menu complexity so we can keep up our speed of service. Most brands have a menu change in the autumn and again in the spring, whilst some simply run on an annual cycle supplemented by seasonal specials.
Now, we have taken more price than we traditionally do during this latest cycle, moving price on food and drink by circa 5%, although we've worked hard to protect entry-level items where we can. We've not just bluntly moved price, but sought to introduce more premium items at the same time and hence maintain value for money. Whilst well below headline inflation numbers, this is still a large increase by our standards, and we've worked hard to ensure that there is still something for each of our guests. So far, the guest reaction has been very good, and we can't see any deterioration in frequency, but we're remaining very focused on guest sentiment and trying to ensure that service levels and the amenity makes the overall experience positive.
Current volumes are very strong versus last year. Sales after 10 weeks are tracking 6.5% like-for-like sales growth, as I said earlier, 11.1% if you normalize for VAT, also up against 2019 at 9.2%. Pleasingly, we're also tracking ahead of the market on the Peach Tracker again, which is the data pool that maps about circa 60 of our competitors on a weekly basis where we share our sales confidentially. COVID has distorted the ability of the tracker to have clean comparative data, so it used FY19 as its base year, which gave an advantage to all the brands that had grown their delivery business since that time.
Despite that, you can now see that the gap to the market that we had pre-COVID has emerged again, and we would expect this to strengthen further when Peach starts to use 2022 data in January of next year. Our capital program is also well underway. As previously reported, the construction sector was also massively impacted by COVID and now by the war, so cost and availability of labor and materials has been an issue. The planning authorities are also struggling with a huge backlog of applications, which is slowing development down. We still aspire to have a full program this year, which will enable us to get refurbishment back underway in each of our brands. As predicted at the interims, we opened our first Browns restaurant in a suburban location, converting a Vintage Inn in Beaconsfield.
The site has been open for circa 12 weeks, We're delighted by the sales uplift we're seeing and the customer comments we've had. With Christmas around the corner, which is for Browns is ideally suited to, we have very high hopes. A second suburban Browns opened in Ruislip last Thursday, and it's already booked out for Christmas Day. The ROI from last year's overall program is difficult to calculate given the disruptive base years, but the sales uplift have been very strong, suggesting returns have strengthened. This year, we also intend to invest in solar panels for some of our sites. Final capital allocation is still being determined. Moving on to Ignite.
Ignite has served us very well since its inception in 2016, and we currently have between 45 and 50 separate initiatives live in the business or in train within the business, from enhancing order of table capability and optimizing Christmas trading between Christmas and New Year, to focusing more forensically on our top 300 businesses and looking at food and drink surpluses in a different way. As mentioned before, we have also labor rostering being rolled out later this year, which potentially drives a big efficiency gain, but also ensures that our teams are optimally deployed to reflect the patterns of trade.
We're pushing on with our delivery and click and collect plan, which together drove over GBP 45 million in sales last year. We've opened a trial of our first Toby Carvery dark kitchen out of O'Neill's in Clapham. We've also opened our first competitive socializing dark concept called Arrowsmiths out of another O'Neill's in Solihull that has got off to a very impressive start. Ignite remains the umbrella term for a high energy program of very varied initiatives. Together in aggregate will drive a meaningful incremental profit. The point to remember is these gains are sustained. Ignite is also a program that systematically raises the bar in terms of the quality that in the way that M&B does business.
Meanwhile, despite the challenging macro environment, we remain committed to our ambition to enhance the sustainability of our operations and to reduce our environmental impact. We've made good progress during the year with our greenhouse gas footprint, including Scope 1, 2, and crucially, 3 emissions, now sitting at 36% below our FY19 baseline. We're on track to achieve our target of zero operational waste to landfill by 2030, with 96% diversion in the year just gone. We've reduced our food waste in our supply chain and our sites combined by 29% against FY19, putting us on track to deliver our target of halving food waste by 2030.
We have a number of initiatives live in the business, including reduction of food emissions, trialing of all electric kitchens, and trials of on-site renewable energy generation to ensure that we continue to push on in this area, and ultimately make sustainable operations just part of doing business for the future. That is the backdrop to the year ahead with a lot of activity already underway. Whilst we feel confident in where we are and what we plan to do, we are acutely aware that market sentiment for our sector is very poor at the moment, presumably for the macro reasons stated earlier.
It's worth reminding you that we are still a business backed by 83% freehold or effective freehold estate with strong brands valued at between GBP 4 billion and GBP 4.5 billion, with GBP 1.2 billion of debt, and with a pension deficit that should disappear by the end of next year, or end of this financial year, and which will no longer require any contributions. We've got off to a good start this year, running at 6.5% like-for-like sales growth, we believe the underlying health of the business is very good in terms of trading. The macro headwinds, which we can do little about, are and will be temporary. While short-term profit has been negatively impacted, the potential for quick and full recovery once the macro issues abate, is very strong.
That is why we're continuing on the same strategic path that we were on pre-COVID, as it is valid now as it was then. As I said in the introduction, and to remind you, we are trading ahead of the market consistently again. We have a solid capital investment program and track record, methodically raising the quality of amenity across the portfolio. Ignite, our transformation program, is once again in full flow, driving improvements that will be sustained for the way we do business on numerous fronts. Despite the macro environment, we remain confident the business is on the right path, and we'll now be happy to take your questions. Thank you. Is the microphone coming around, Jamie? Thank you.
Thanks. Good morning, Jamie Rollo from Morgan Stanley. Three, which might all be for Tim, I'm afraid. Tim, first of all, just on the cost mitigation comments earlier, just in terms of the year that's gone, it looks like you mitigated about GBP 80 million of the sort of GBP 220 million headwinds, about a third. In the following slide, it looks like you plan to mitigate two-thirds with the arrow going down. I may have misread that, if you could talk a bit about that, because you've obviously not got the government support. Secondly, on the pension contributions, going down into the blocked escrow account, does that mean that GBP 40 million, if it carries on, won't come out of all free cash flow?
We won't, we just won't see it, and it stays in your consolidated group cash? Thirdly, just in terms of the covenant, I've not seen the securitization filings today, I think the covenants come back in next month. Do you expect to have the need to extend those a bit longer? Thank you.
Okay. I mean, in terms of costs, that's correct, Jamie, your analysis of last year and where you end up this year. I mean, we've got about 40 projects in flight at different stages. Some are robustly delivering benefits, others are at a very early stage. It's difficult to commit to a number. I think if you want to step back, we talked about in the current year a cost headwind of 10%, so GBP 280 million. We made GBP 240 million last year. I think I can talk about consensus for this year, which is an EBIT of about GBP 190 million. You've got about GBP 50 million coming down in profit.
That really represents your unmitigated cost headwind, with the mitigation coming both through sales or efficiencies. Sort of shapes your number, if you like. In terms of pensions, yeah, we're committed to make these payments through to the end of September. We hope that once we've signed this triennial, both schemes' contributions will go to a blocked escrow account. That, I have to be clear, that account is under the control of the trustees, not of us, right? They can call on their account when they want it. It is purely a mechanism such that if those are not ever required, it is easier for it to flush back. It's somewhere away from that being the case, but it would give a little bit of flexibility in that scenario.
We are still writing checks for those amounts for the next 10 months.
Into a bank account that is under someone else's control. There's still effectively like a contribution. Covenants. Yeah, so we're January next year is full reinstatement of the securitization covenants, we're already on our unsecured covenants. We talk a lot at length about this in note one to the accounts, which are going concern notes. What we say there is we have a base case forecast going forward. Under that base case, we would not need to re-engage with any of our stakeholders. However, we have to do what's called a plausible downside scenario, which is sort of the most downside that is still plausible. When we throw that scenario at it, then we probably would need to sit down and talk to some of our stakeholders.
We're still okay, I think it's important to say from a liquidity perspective, right? In that, you know, we're net cash, we're undrawn at the moment, so we've got a lot of headroom there. In terms of an earnings and a covenant perspective, we would need to have some more discussions and negotiations. We'd go into those with as much confidence as you can do, I think. You know, we've done it twice in the last two years. We've got a good relationship. I think if that's where we end up, it will be a macroeconomic issue, it's not going to be an M&B issue. It'll be affecting everybody. We'd have a degree of confidence, but it's not totally under our control, of course.
The second question. A year from now, we're still doing the payments from the view in the past.
I would hope a year from now you do not see any cash going out into the blocked escrow or any account. Right? It just ends as a cash outflow from the last one being September 23. Owen?
Morning, Owen Shirley from Berenberg. Three questions if I may, please. The first was just what year-on-year energy inflation you'd expect if you were to cover all of your needs today. Secondly, on the recent sort of 9.2% like-for-like, it sounds like maybe 5% of that is price and then the volume's stuck this time. Well, is that right? Also any comment you could make on impact from the World Cup. Finally, just how much profit do you estimate you lost in December last year?
If I tell you, do you want to do the energy one, Tim? I mean, just in terms of let's start with go in reverse order. In terms of what did we lose to festive season? I think broadly, we saw, I think the Omicron impact negated or netted off against the VAT benefit, the way we look at it, and they're pretty neutral. Sizable, in other words, because it wasn't just the festive season, it rolled into Jan, Feb as well. That's sort of the way we look at it, one nets off the other. The 9.2%, yeah, I think that your split is probably about right in terms of price and volume. It's across all our businesses, which is good to see.
As I said earlier, you know, driven at the moment by the wet led ones. I think with World Cup, as you, as you probably know, a normal summer World Cup is probably neutral to M&B. With that broad portfolio that Tim's slide shows means that for every site we have that gains, we have another one that loses out normally. Having the World Cup at Christmas coming into it, none of us really knew. We were trying to second guess, would it be good? Would it be bad? So far, I think it's been mildly beneficial to us. We've done very well on the England games. That first England game, which was on a Monday lunchtime was perfect. It filled the pubs and people stayed in there. Sorry, some of you probably stayed in the pub more.
That did very well. I think, you know, with Saturday, this coming Saturday is gonna be negative for us. I think no escaping that because whilst the pubs will do very well, the food business will do less well. However, because it is getting near Christmas, maybe there is enough demand for the restaurants to actually have a decent Saturday as well. We'll see. I think when the World Cup finishes, we'll conclude as being mildly beneficial. No more than that, because we are so well sort of well hedged, if you like.
In terms of energy, Owen, obviously in the first half we enjoyed the benefit of the cap. We know where costs are going to be. There is a prospect that cap may be extended, particularly for this sector, but we can't rely on that. There's a prospect to that. We'll get to second half, that's the summer, that's helpful, but you'd expect some rates to ebb a little bit. I think overall, you know, based on expert forecasts that we use, we'd expect this year, you know, maybe a GBP 20 million increase on the GBP 150 million from last year, something like that. We're starting to buy forward into the summer quite shortly.
I think your question was, you know, if we closed it all out today, what would it cost us? That would cost us more than the GBP 170 I'm talking about because, I mean, it seems to us quite clear that you're paying quite a significant premium now to buy your energy forward too far just to take risk off the table. We'll stick with the policy we've got, which is a gradual buying from six months out. Tim, yeah.
Hi, Tim Barrett from Numis. Two things on cash flow, please. You made a comment around CapEx that you might have spent more if you could have done. Can you just sort of enlarge on that and say what your plans are for 2023? Coming back to the pensions point, if you hadn't had that this year and you're hopefully not having it next year, what would you have spent the cash on? Would dividends have been on the table? Would buybacks have been on the table?
Well, in terms of CapEx, so we spent GBP 122 million in the year just gone. You know, our ambitions were to get straight back onto our seven-year remodel cycle. That's a little shy of that. I mean, the frustration in executing it has been both in the supply chain, in getting materials and getting labor, so getting people to bid, but also in planning as well. Where we've needed that, there's been quite a lot of general planning. So that's what sort of slowed down naturally. I think those are hopefully easing as we come through the current year. Talking in the RNS about maybe spending GBP 200 million this year, so really beginning to accelerate and get that back.
I have to say that GBP 200 includes sort of between GBP 10 and GBP 20 of buying out the remaining equity in the joint venture. It's not all refurb. Probably take GBP 20 off that, if you like. GBP 180 is the normal refurb spend. That's where we'll plan to get to. As I say, I think the pressures are easing, but probably the risk is that we underspend that, not that we overspend that, you know, if when I'm standing here in 12 months' time. In terms of pensions, I mean, if we didn't have the pension outflow, I don't think we'd be paying a dividend today. No.
I think particularly in the environment we're in and the cost environment we're in, I think that's a long way from front of mind for us as a board at the moment.
Good morning, both. It's Joseph Thomas from HSBC. Just a couple of questions, please. First being, you talked about the benefit or you're talking about the 9.9% capacity that's exited the market. I was wondering what practical benefit you're actually seeing from that, and it, h ow much of an uplift, to the extent you're able to quantify it, is coming from that, or is it sort of secondary capacity? I was also wondering on liquidity. In the going concern statement, you, Tim, you say you've got enough headroom for this year. I just wonder how much of that is, by the end of the year, you know, would you be expecting to be drawing down on any of that short-term debt?
Because I know you've historically had a reluctance to draw down on that. Finally, you were mentioning that I think you've answered this in response to Iain's question, but I think you said the volume's up a little bit compared to a year ago. Is that, s o that's the i s that the 5% on price plus, say, 1% on volume is getting you to the about sort of +6% like-for-like sales right now?
Yeah. Do you wanna answer that?
Yeah. Go on.
If you look at volumes against a year ago, drink's doing better. Its volumes are up about 5%, and price is up about 6%. Food volumes are also up about 6%, 7%. The price is down. The reason price is down is because we haven't got the VAT benefit. There's effectively a price deflation coming through on food. As to come to the point, they're both positive volumes, sort of 5%-7%.
Which talks to the point of people beginning to come back to the business now. I think that's one of the things we've been waiting to see, and that's starting to come through. What was the other question?
Oh, liquidity.
Liquidity, yeah. Yeah, look, I mean, it's funny, when you hit, see the headline capacity or supply numbers, you don't see an immediate read across. It's very difficult to quantify because a lot of it is secondary capacity. I think as you all know, when often when food led or restaurant type businesses close, someone will always come along and think they can do better and open up a new one, and then they. You still have people coming, taking trade, and then they shut too. There's no doubt secondary capacity has and will continue to come out, and it must benefit those that remain. It's very difficult to pinpoint. If a competitor opens on your doorstep, you can see the impact in your sales immediately.
When that competitor shuts, you do see a smaller uplift. You never see the full recovery straight away. It takes time. We sort of, we have seen that closure thus far. We think in the next first quarter of the new year, we're gonna see a lot more because I think it's going to be the smaller businesses that will really struggle.
Liquidity, I think, was your other question. I mean, you say we're reluctant to draw down short-term facilities. I mean, sort of right up to a point. What we've said is we didn't wanna pay dividends out of systematically drawing those. I mean, they're there for a purpose, and there would be no point having them if you were never gonna use them, right? We don't use at the moment. At the balance sheet date, we were GBP 190 million cash positive, no facilities drawn. As we stand here today, we're very close to that. We're about GBP 180 million, I think, when I looked on Monday. If we go through, we'll see what this year holds. I think if we manage to get that big CapEx number away, then we will start to draw those facilities.
It'll depend on whether we get that CapEx away, and it'll depend on, you know, where sales and trading remain. There's certainly a prospect that we'd draw those for this year.
David, any more?
Thank you, David Buckley from T. Rowe. Just one please on the property valuations, sort of more of a philosophical one. You know, the way the sector thinks about valuations through, you know, multiples and earnings numbers, your valuations have held up very well like others. Do you see any sort of transactional evidence in the sector to?
To, you know, to look at it from
Yeah
other capital values and other asset classes are coming off as interest rates rise. Do you see any transactional evidence to support?
Yeah. I mean, we undertake the valuation under close advice from CBRE, and we've got an expert in the room here. Simon's here somewhere. CBRE do look at market evidence, right? For which transactions. As you say, Mark, the valuation is a function of a multiple, and it's a function of an earnings that you apply that multiple to. If you look at this year's valuation, multiples are slightly richer. That is not 'cause we're moving them on. They're actually less of a discount from COVID, right? They're beginning to get back to where they were before COVID. The earnings numbers are slightly lower because up to now we've been doing our valuation on pre-COVID earnings, so sort of stopping at COVID. It sort of all seems a bit distant now.
We've had to go through this sort of intellectual exercise at this year's end of, how are we gonna start looking at the last 12 months? That's led to a slightly lower earnings number. The depression of the earnings number is slightly stronger than the, you know, appreciation of the multiple. That's why we've got a sort of smallish write down at this point. I think, you know, to our mind, they are, transactions we see are important, but they are sort of long-term valuations. They're not sales prices, by the way, you know. We wouldn't necessarily sell them at that value.
We just use all the information we can get in the market and try and come up with a sensible, sort of stable valuation going forward.
I think that is it. Thank you for your time.
Thank you.