Good morning. Thanks for joining us. I'm gonna take you through the financial performance in the last six months. I'll focus a little bit on our recovery in sales, talk a bit about costs, our thoughts around cost inflation and what we're doing about it. And just outline our return to profitability and cash flow after what's been a fairly extraordinary two years. Let me start with the P&L. The overall income statement, we made a profit in the first half of the year of GBP 120 million. The comparator, of course, doesn't really mean anything here because it was beset by multiple closure periods. Strong profits in the six months, and certainly starting to make real inroads on building back to where we were before the pandemic. If I look at like-for-like sales on this slide, by month.
Now, of course, we've had varying levels of VAT through the last year. What you can see here is in the sort of orange bars gives you our reported like-for-likes, and then the blue line shows you an underlying sales performance. It strips out the impact of the rates of VAT changing. As you can see, most importantly and very encouragingly, a consistent build in our sales performance since we reopened last summer. You can see the little bite that Omicron took out of those in December last year. Apart from that, a very robust and consistent building back of business. We're now in growth against pre-pandemic levels of 2.2% in the last five weeks, and that, of course, is at a full rate of VAT.
Food remains stronger than drink, suburban and rural, a little bit better than city centers, although I have to say that gap is narrowing. We're starting to see people come back into city centers, particularly in younger venues. Sales continues to be driven by spend per head and premiumization over volume declines. Now, one thing we do know is that the future is gonna remain quite dynamic for a while and certainly very uncertain. To that end, I think it is worth emphasizing the wide breadth of the M&B stable of brands and locations. Be that covering food or drink occasions, whether we're looking at premium or the value end of the market, or whether we're looking at urban, suburban or rural locations.
We think that diversity and that breadth should give us a strong measure of resilience in what are gonna be very volatile and uncertain times for the next few years, I think. Costs, of course, a focus of much analysis and debate at the current time for very obvious reasons. We'd like to spend a bit of time here just picking through how we think, see things and what our sort of planning assumptions are. Now to be clear, what we've got on this slide is we set out the headwinds for the current year and we look at next year. For the current year, that's a three-year cost headwind increase. It's based on FY 2019, so that I can anchor it to a stable start point. It's important to understand what these represent.
These headwinds do assume some sort of tactical mitigation by us, whether that's leveraging our buying scale with our supply chain, whether that's trying to manage down some energy volumes or increasing our labor efficiency. There's a little bit of tactical mitigation here. To that extent, these numbers are probably lower than overall general inflation in the market. However, what they do not include is any specific mitigation, particularly coming from Ignite or any other initiatives like that to reduce our cost base. Based on that, in the current year, we've got about 11.5% inflation over a three-year basis, so that's 3.7% annualized across those three years. Of course, these headwinds won't have been consistent throughout, and particularly they'll have been back-ended into the last year with energy, particularly in the last 12 months.
Next year, we see headwinds being a little bit steeper at around 6%, driven by wages in particular. We know the living wage went up by 6.6% in April, and also food in particular, which is running at very high levels of inflation. I think the big swing next year . I mean, I'm just not really in a position to call it. That could exacerbate the situation or it could, of course, help to mitigate the situation if we see some sort of reversion to where we were 18 months ago in the energy markets. Those headwinds really compare to what we were always talking about pre-pandemic as our long-term rate of cost inflation, which is around 3.5% per year. Slightly in excess this year and in excess next year.
I don't think there's any reason to move away from our long-term rate there. T erms of cash flow, it's really encouraging to be back generating positive cash flow and reducing our net debt. Over the last 12 months, so that's since the equity raise, we've reduced net debt by a further GBP 200 million to GBP 1.253 million, excluding leases. We haven't revalued our properties at the half year. We did see some reversion in those valuations at the end of the last full year. At least our net assets at GBP 2.2 billion, representing just over GBP 3.70 per share.
Now, I'd like to say a few words for a wrap up on pensions, particularly because, you know, after many years of paying GBP 50 million a year into this fund, there's perhaps some glimmer of light at the end of the tunnel now. We have a triennial as of last March, as of a month or so ago. We'd expect to see some pretty strong progress there against the deficit that we had previously three years ago. Let's talk about our main plan. That's our biggest plan. It makes about 80% of our liabilities. We're putting in GBP 40 million a year. Under the current schedule of contributions, we need to do that only for another 18 months till September next year.
The plan is largely de-risked and hedged, so we would hope it has some stability to its performance. We'll look forward and see where we get to with this triennial, but we hope we're getting close to fully funding that plan. The executive scheme's gone a step further because we actually announced a buy-in that we did in December last year, so we've largely de-risked that. Our contributions are going in at GBP 12 million a year, again, until September next year. But some, we hope they're not all gonna be required now. We'll have to see, but we hope they're not all gonna be required. They're actually going into a blocked or escrow account, which, if they aren't, will allow them to be returned to us, rather than getting locked inside the pension fund.
Before I hand over to Phil, I'll maybe just summarize. I think, you know, what's really encouraging here is a strong and consistent sales recovery since we reopened a year ago. Cost outlook is certainly gonna be challenging looking forward, and it's gonna be uncertain, but we've got a number of initiatives to deal with that, and Phil will start to talk you through those. We do overall, though, think we're really well placed to face whatever the future holds for us. We've got a strong balance sheet. We've got a great portfolio of brands and diverse locations, and that allows us to look forward to the future with a degree of confidence.
Thanks, Tim, and good morning, ladies and gentlemen. After the two years that we've all just endured, I guess it would be easy to focus on nothing but the disruption we've seen in the business and our tale of woes. I don't know about you, I'm sort of getting fed up with looking backwards and bemoaning what might have been. Today what I intend to do is just share exactly with you where we see ourselves today, focus on what we're doing, and get across to you why we're confident about the coming months. Now, there's no denying that the COVID-19, Brexit, and now the awful war in Ukraine has had a big impact on our cost base, which undoubtedly will put a squeeze on our guests' pockets as well as their own cost base.
This is a macro issue, and we take the view that there's nothing we can do about that, so we're focusing on the things that are in our gift to control. Let's start with sales. As Tim says, we have made steady progress since we reopened the doors last summer, apart from that five-week blip over Christmas caused by the Omicron variant. I'm delighted to say that we finished the half year with like-for-like sales growth of 1%. Now, ironically, for those who were there, it was a day after our prelims that, just after I'd stood up here and said, we got a clear run at Christmas, we'd have a strong performance, that Sir Chris Whitty went off script and told everybody to stay away from Christmas parties.
The impact was immediate with cancellations of Christmas bookings, particularly hitting beleaguered city centers. To recover that lost ground by the half year is extremely pleasing, obviously helped by 7.5% VAT reduction on food and soft drinks through to the end of March. With regards to our performance versus the wider market, the trend we reported at the prelims continues, with us outperforming in restaurants and pub restaurants, but slightly underperforming in pubs. Now, as explained last time, we have very strong and proven brand formats in restaurants and pub restaurants that had pretty much recovered as soon as we reopened the door last summer.
It's in the pub Cohort where there's a wide range of offers represented, and it's the sort of late-night young people's market that's performing particularly strongly where we're not overly represented, where the strong growth's coming from, where suburban and workforce-related businesses are still recovering lost ground. However, we believe these wet-led businesses are recovering and will continue to recover as confidence to venture out post-COVID continues to build. In terms of our brands, we've made progress in each of our markets since the prelims with premium food businesses such as Miller & Carter and Browns leading the way.
However, what I think has been most encouraging to me is the continued recovery of city centers, as offices have returned to work, and London has had some weeks of growth, which bodes really well for the summer, particularly if tourists start to return. In the five weeks since the half year, with VAT back at 20%, we're delighted that we had to say that we have continued to see like-for-like sales growth of 2.2%, as Tim said. Now, this means we've continued the path of recovery since last summer if we normalize for VAT, and that is key for the future. There's no denying that across the sector, we are no different, that sales growth has been driven by spend, and that volume remains in double-digit decline, sorry.
This does not mean that we have simply put up our prices because this is against an FY 2019 base. We have driven our sales by doing a lot of site conversions and also by product laddering within each brand where we introduce more premium product and allow our guests to trade up or have an additional starter or dessert. In fact, we took very modest price increases last month compared to many of our competitors, as we've decided it's better to stay on our tried and tested approach to pricing, and because we are yet to understand what the impact of inflation's gonna be on household budgets and on propensity to eat out.
Now, we have a scale advantage against a lot of our competitors, and we believe staying focused on providing value for money in each of our brands will serve us best for the future. Pricing remains an option to us, but we'll continue to focus on building market share and reducing volume decline. We believe there is still potential to build market share if we deliver and sell our offer as well. The fact that there is still sector-wide volume decline tells us there's still a big chunk of our guest base who have yet to return post-COVID. Market supply will inevitably come under more pressure in the coming months as the cost pressures begin to hit and as the squeeze comes on through repayment of bank loans and back rent. That can only be positive for those of us that remain.
Now, winning market share is about delivering superior customer experiences, which relies on many factors, including your product, your price, your service, location, et cetera. We're therefore very encouraged that we have the highest customer satisfaction scores that we've ever had with all of our brands now sitting over four out of five. Now, this is very encouraging because there is a clear correlation between customer satisfaction and like-for-like sales, so this is critical to our longer term goals. I have to acknowledge the outstanding job done by our teams over, up and down the country in the face of unprecedented pressures. The fact that our team engagement has also grown in the last six months gives me a lot of confidence that underlying health of the business is good, and I know we'll be ready to take and retain business as the market recovers.
However, we accept that the macro landscape is challenging right now, in particular the cost inflation that Tim talked about. However, we have proven methods of mitigation in our Ignite and capital programs, and we believe that by remaining focused on getting the business back to doing what it was doing pre-COVID, where we had solid momentum and we're de-leveraging year- by- year, that we will position ourselves to succeed. To remind you, we have three broad strategic objectives. Firstly, to maintain a balanced portfolio. Now, six years ago, this was about playing catch up on our development program. But now we have very few distressed assets or underinvested assets, and so it's more about systematically raising the quality of our amenity, ensuring that we keep evolving each of our brand propositions based on deep customer insight and accelerating the expansion of the most successful brands.
Secondly, we want to have a commercial edge to the way we do business, which is about being clear on how every pound of sales converts to bottom line profit and with the guest at the heart of everything that we do. Finally, it's about driving an innovation agenda. Now, we have invested a huge amount of capital upgrading our systems in recent years, and we want to make sure that we sweat that investment by optimizing all the functionality that each component brings. It's also about making digital marketing the engine room for the business that it should be. Now, we've come a long way in this space in recent years, and we now have the tools and expertise to be far more sophisticated in the way we attract and retain our guests.
It's also about genuine new product and new concept development, and about having an ethos that accepts we won't always get things right, but that we by constant experimentation and evolution, we will move each of our brands forward. Now, these principles have stood us in good stead over the last 6 years and will do so again going forward. The two main pillars that enable us to realize our ambitions are the capital and Ignite programs. First with the capital program, this talks directly to our balanced portfolio ambition, and we aim to invest in every business on an average six-seven year cycle. Now we would aim to see payback within five years, so we generate true return in years six and seven before reinvestment.
Our ROI before COVID was around 28%, and the early signs are that the current program is in the same ballpark. Investing across the portfolio ensures that no brand will ever again become tired, and it also means we don't swamp any operational team with too many developments at one time, which usually results in the eye coming off the ball on the core business. However, we do look to accelerate the highest returning developments, which continues to be Miller & Carter, although Browns now has an investment template that we are very confident in too. Indeed, we intend to open our first new Browns restaurant this year since I joined the business, trialing the offer in suburbia as opposed to its traditional city center locations.
With the quality of the offer, the service level, and now the amenity, we believe it's a winning formula for the current market. Now, these pictures show the recent remodel completed in Manchester, and the suburban businesses will have a similar feel. Successful capital investment takes a lot of time and planning. COVID has undoubtedly impacted many of the third parties that we work with, mainly in terms of availability of materials and labor supply. Of course, this sector too is seeing cost increases. That is why we are completing very detailed value engineering exercises for all of our investment formats to mitigate for all or some of the inflation we're seeing coming through. We are also intending to extend the capital program right through the year, whereas previously we finished most of our program by period seven or eight to minimize profit dilution.
We're now taking the view that although this may be diluting for this year, investing throughout the year is a far more efficient way of managing the program, 'cause it means we can now take seasonality into account. Brands like Toby Carvery lend themselves to summer development when demand is at the lowest. The other thing that we plan to do going forward is to invest in more upper floors and vacant land, looking at Innkeeper's Collection opportunities or third party rentals. While this may be dilutive to headline ROI, it's accretive to net asset value and so ensures that we sweat the assets that we own. Now, some may argue that cutting back on investment during different, difficult macro times is prudent.
We would argue that the current macro factors are temporary, and systematically and relentlessly improving our quality of our estate will serve us best over the long term. The other key pillar to the way we operate has been and remains our Ignite transformation program. Now, to remind you, this is something that we first put in place back in February 2016, and the program remains as full and as stretching as it has always been. It's built on the premise that there's no silver bullet to moving a business of our size forward, but it's progress simultaneously on numerous fronts that together in aggregate makes a difference. It's a program of constant improvement and innovation, and we currently have over 40 initiatives underway, and they've been recently topped up following an Ignite blue sky day that we held at the beginning of this month.
We now have an established weekly and monthly cadence to track the Ignite program, including a project office which manages the program and a SteerCo that effectively signs off on every initiative. Each initiative has a multifunctional team tasked and empowered to plan, create, and launch the activity into the business and to monitor progress post-launch. This has the added benefit that the quality of the input is that much better with a variety of people inputting and lessens the barriers to implementation as we have operational representation in each project. In terms of value, some projects may only grow profit by circa GBP half a million.
Others are forecast to improve incremental profit by over GBP 10 million, but all of them are important to us. There are a wide range of projects in train as we speak, from selling more and better coffee to making auto rostering work and hence reducing workload for our general managers and optimizing our labor deployment at the same time. We are extending our delivery footprint, which already has annualized sales of over GBP 45 million, and we are also now focusing hard on improving the performance of the businesses that already do delivery to get every site working to best in class levels.
We have Order at Table across all brands where we believe, which we believe are relevant to it, and we're now driving usage, as we know it improves guest experience by taking some of the hassle factors away, and because evidence suggests that spend per head is higher through Order at Table as guests have more time to look at the range of products and then choose to trade up. We've digitized the ways of working for our frontline teams so that all tasks are shown in one place and can be reviewed and managed far more easily by our retail business managers. This means we have far greater visibility on the implementation of key pieces of work, and it gives line management a one-stop color-coded shop to keep track of their to-do lists.
We're also releasing more table inventory to online booking and looking at how competitive socializing may play a role in underused spaces. We have a lot of activity underway, but we also want to ensure that we don't lose sight of our sustainability goals. We aim to be a net zero operator by 2040, to have zero operational waste going to landfill by 2030, and halve food waste by 2030 also. Food accounts for nearly 70% of our total emissions, and we are currently trialing menus with labeled lower emission dishes and testing to see whether this changes guests behavior in terms of the dishes they choose.
We've already made great progress on reducing our landfill, as we currently divert 96% of operational waste and are now working on the remaining 4%, and we're working with our suppliers to ensure that all packaging is recyclable. We're now looking to how we can move away from gas cooking platforms, and we've aimed to be able to start this process as part of the FY 2024 capital program. By the way, all of our businesses have been powered by 100% renewable electricity since 2019. Tackling food waste is a huge issue for the whole sector. We continue to streamline our menus by taking out what we call orphan products, i.e. those items that only appear in one dish.
We work with an organization called FareShare, who distribute food that would otherwise become unavoidable waste to charities and communities that can use it. Whereas this tends to be from further up the supply chain, at site level, we're already working with an organization called Too Good To Go in our pub restaurant brands, where unsold food at the end of the day can be packaged up and sold at cost and collected by their customers, and we're already up to 10,000 meals a week. In terms of community, we're building strong charitable partnerships with Shelter and Social Bite, both of which focus on helping people impacted by homelessness, including opening up work opportunities which give people a genuine chance to rebuild their lives.
All new company cars from last month will be fully electric or hybrid, and we are systematically raising our awareness for our sustainability goals throughout the company. We also have found a member of the sector's Zero Carbon Forum, where it makes sense to pool ideas to ensure hospitality plays its part in delivering the nation's goals. We believe that all of our sustainability goals must just become part of what we do, and the way we work, as opposed to sitting separately from our day-to-day business, and we're pleased with the progress we've made to date. In summary, we remain in strange and difficult times, there's no denying that, where the macro issues we're facing make it almost impossible to predict with certainty what will happen to consumer confidence, the supply chain, the labor market, et cetera.
However, rather than retrench and risk inertia, we believe the current situation will be temporary, and we need to press on with our agenda, and incrementally and relentlessly improve M&B across the whole spectrum of our business. This will put us in the strongest position to capitalize when the market becomes buoyant again. We're very pleased with the progress we've made to date and are making in this financial year so far, but we do recognize we need to keep growing that momentum. That is why we've put so much effort into, and focus into reestablishing our capital and Ignite programs of work and into getting back to the operational routines that have served us so well in the past. We're building momentum again, and despite the macro pressures, we remain confident in our long-term ambition to create sustainable shareholder value. Thank you.
We will now take your questions. I think someone's going to come out with a mic, so if you could sort of announce who you are and where you're from, and then ask your question. Thank you.
Thank you. Morning, Tim Barrett from Numis. The first question on page six, it's really helpful to see those cost categories, but it'd also be useful to get an idea of the cumulative Ignite offsets. I guess you've got three years of savings, so a reminder on that would be really helpful, please. Second question, perhaps a bit longer term, you talked about a GBP 49-50 million swing possibly in the cash flow statement once pensions are funded. What would be the priority for that cash flow? What's the board's early thinking on how to use it?
Yeah. So I mean, the quantification of Ignite benefits is really difficult. Some of those projects Phil talked about are in flight. Others are just ideas at the moment or somewhere between an idea and a launch project. Clearly, when we do launch projects, we have targets we're looking to hit within them, we quantify that benefit. They're sort of eye-wateringly large numbers, actually. They tend to come out with them. I'm a bit loath about putting them out because they're not necessarily incremental to where we are today because in their absence, you know, the floor would be falling away. We haven't previously quantified the benefit of Ignite, and I don't think we can. I think all we can say is
You know, we'll look to mitigate the majority of those cost headwinds, you know, through what we can do. As we say in the outlook statement, that there's still likely to be a residual negative effect in the short to medium term on margin or earnings. In terms of use of cash, capital allocation going forward, could it be lovely not to have to write those checks for GBP 50 million. I think we've always said, you know, that our priority is cash allocations, firstly, to meet our fixed charges, so that's debt service and what have you. Next up will be investment in our estate and development of our estate. Then once we get through that, when we start having optionality on anything else we'd like to do.
I think it makes further investment into our estate more affordable, and that could be expanding the estate, it could be refurbishing the estate, it could be developing parts of the estate, you know, upper floors and what have you. We'll certainly be looking at that and see where we are at that time really, and you know whether we have enough investment opportunities or not. I mean, it's not a decision we can make today. It's sort of two years away. Who knows what trading conditions will be like in two years as well. It's a better place than we are now, so that's good. We can't really call what choice we're gonna make in a couple of years' time.
Can you remind us what the leverage target is medium term?
We don't really have a leverage target because to my mind, you know, the right, in inverted commas, level of debt for business is the most affordable level of debt. That's a cash flow metric, not a balance sheet metric. Because of our securitization, as we de-gear, and even as that de-gearing accelerates, which it has been doing, our debt service doesn't come down, right? That stays at GBP 200 million because we just have a richer and richer level of capital within our quarterly payments. I think for now, you know, the next sort of three, four, five years, it is just to maintain the cash to pay down that debt.
I think once we get closer to the end of the securitization, then we start to have options around, you know, what does one replace it with? Does it look the same? Does it look very different? We're a way away from those because, you know, the costs of breaking the securitization early are very high to us. They, you know, we just wanna follow the curve for now.
Thank you.
Thanks. Jamie Rollo from Morgan Stanley. Just on the current trading comments, they look very encouraging. Are there any signs at all of the consumer trading down or delaying purchases or anything like that at all? Secondly, I don't know whether, Tim, you can quantify the sort of residual margin impact you talk about for the cost inflation, and also what sort of top line assumption you're expecting in that sort of commentary. Just finally, what is the plan B if we do get that nasty recession? Are you still expecting to sort of mitigate everything even if sales go down? Is that, you know, you talked about, you know, major mitigation earlier. I'm not sure if that's included in that sort of margin commentary. Thank you.
Okay. Well, I'll take the first one of those, Jamie. I mean, yeah, I think we are encouraged, particularly the last five weeks post the VAT moving. That sort of gradual progression is important. No, at the moment, I couldn't point to a change in consumer behavior because of the inflation number. That may yet come. I mean, household bills, utility bills, people will just be taking that pain now, so we'll see. But no, it's that trajectory is still there at the moment. City centers recovering slightly. Suburban still doing well, but probably the people who were in suburbia are now back in the city. There's been a bit of trade-off there. The wet-led businesses are recovering slowly, which is good.
London particularly, where we've got a big exposure, has got stronger. You know, there's some good signs really. In terms of recession, I guess this industry has been proven to be fairly resilient through recession. We remain cautiously optimistic. Because there's still a chunk of guests that are to return post-COVID, my hope is they will start to come back. That will partially also offset if there is any change of behavior due to inflation.
Margins, I mean, it's difficult to quantify. We flagged in the outlook statement that there is gonna be a residual impact. As to how strong that will be, I mean, firstly, first point I'll make is whilst we've tried sort of monthly to give you cost guidance, I mean, the volatility is huge, and I feel a little bit hostage to fortune, putting a slide up that someone will quote back at me in a year's time. You have to take that in the spirit in which it's given. Pre-COVID, FY 2019, our margin was just over 14%. In this half, it's just over 10%, 10.5%. Now, normally our second half margin is stronger than the first half. You'd expect for this full year, if things carried on, would be slightly stronger than 10%.
It's gonna leave, it leaves you with maybe a couple of percentage difference run rate now to where we were pre-COVID. I just don't see us closing that gap, you know, in the near term. Maybe it might sort of come open a little bit. In terms of top line, really encouraged by how sales have grown, you know, over the last year. You don't— I mean, that chart's really compelling on how it demonstrates that. We'd expect that growth to continue to rebuild at a certain level, you know, through the next year, obviously, absent anything horrific happening, you know, with the virus. We'd expect that to continue to build.
In terms of plan B, you know, if there's a recession, there's not a lot we can do to put in place for plan B. We just have to deal with what's in front of us. I think one of the things we've learned over the last two years is you can overplan for a lot of this. Probably the most
Important quality for us to have is to be agile and ability to respond to events that are unpredictable, frankly, going forward. We're just trying to put ourselves in a position to do that. We've acquired skills we never wanna have to use again on shutting businesses quickly and minimizing waste and opening businesses. But we've got those skills now. We're pretty sort of battle-hardened from the last two years, and we'll face that coming forward. What we do know is, you know, if anything horrific lies ahead, a recession or whatever, we're in a better shape now than we were going into the pandemic 'cause we've got much less debt, and we know how to deal with it. So we'll just see what happens. But for now, I don't think it changes what we do today.
I'll take it quickly. Yeah, Douglas Jack, Peel Hunt. Two quick questions. The first one, can you just talk about pricing and what you've done there, and any plans and any use of tactical discounting? The second question is if you could just sort of break out the CapEx, for this year and how that sort of splits between maintenance and any kind of expansion or conversions as well. Thanks.
Yeah. Thanks, Doug. I mean, like I said in the script there, I think we've approached pricing as we've always approached pricing, which is probably twice a year we'll take a market view. We don't simply come at it from the point of view where our costs move, let's pass that back on to the guest because we've taken the view you could do that on paper, but if the guests stop coming, then that doesn't serve you very well. We've taken fairly modest price increases, I guess in the 2%-3% sort of range last month, that sort of range, probably nearer 3%, I would think. We've sort of taken the view that actually we'll continue to build back market share by doing that.
Price remains a legitimate tool that we can use down the line if we need to, and in the current climate may need to do it more frequently if the cost base continues. In terms of our discounting approach, again, it's pretty similar to where we've always been. One of the benefits of the lockdown, actually, in the last two years is a lot of the inherent and implicit discounting that sat in the business all stopped. When we reopened, we didn't put it all back in, so we've sort of got a cleaner P&L now and enables us to be quite particular about what discounting mechanics we run and when. We can manage them far more cleanly because we haven't got the same volume in the business. We'll continue to use that as a mechanic.
I think, you know, at the same time, there is a gradual return to the sector. Put all those things together, and with Ignite and with the capital, they're the things we're gonna look at to see where that's all coming out. Pricing remains a tool for us. Where I know some of the competitors moved by 10%, we would never do that. We typically try and protect entry points on our menus and try and ladder up through the menu. We say to people that actually there's some better dishes here at a higher price that you can choose, and people are choosing that.
We protect the entry points for people who are, you know, actually on a budget, and that's served us well in the past and we think will serve us well going forward.
On CapEx, I mean, the backdrop to CapEx is we've been very clear that it's very important to us to continue to maintain our investment in the estate and as quickly as possible to get back to the six- to seven-year remodel cycle that we were on before the pandemic. That, of course, continues to be the case, although for reasons not affordability, but of deliverability, that it's been very hard this year just because of supply chain issues within the construction sector. Our aspiration is to get back there and that would imply a level of CapEx around GBP 170 million-GBP 180 million a year, perhaps more with some of the price inflation in the construction industry. We won't get all that away this year for those operational reasons.
I suspect current year CapEx is gonna be closer to GBP 150 maybe, something like that, of which about GBP 50 will be the sort of maintenance infrastructure elements of it, and GBP 100 will be acquisitions, remodels, and conversions. Next year, you know, hopefully the supply chain eases up, we can get on to our GBP 170-GBP 180. Owen?
Hi, I'm Owen Shirley from Berenberg. Most of my questions were actually answered, but just one on the pensions point you were making, Tim. I think you said that versus 2019, you'd expect the deficit to be lower. I suppose we should hope that's the case, given the contributions.
Absolutely.
Sort of net of the contributions, do you think the position overall has got worse or better? I guess the question really is how confident are you based on what we know today that the last payment will indeed be September 2024, isn't it?
Yeah, yeah. September next year.
23.
Three. Sorry.
I think you're absolutely right. We'd be appalled if the deficit hadn't moved despite three years of contributions. I think the best thing we can say is that we believe we're on the right flight path. Obviously there's a flight path from three years ago to eighteen months' time. The exec scheme is now de-risked, and there may be a bit of upside, as I say, which is why these funds are going into a blocked account. Overall, we don't think we've come off that flight path adversely. We're where we think we should be.
Thanks. The assets are presumably fairly de-risked insofar as it's not all in equity, is it?
No, that's right. As I say on the slide, I mean, under 10% of the main plan assets are in equities, and that's declining over time. The exec scheme, well, asset is a hedged buy-in, so.
Great. Thank you.
Okay.
If that's it, then thank you very much for your time.
Thank you.