Newcastle upon Tyne / UK. (gs) British Greggs PLC, the leading bakery food-on-the-go retailer in the UK with over 1’850 retail outlets throughout the country, announced good growth and further strategic progress in its preliminary results for the 52 weeks ended 30 December 2017.
2017 Financial Highlights
- Total sales up 7.4 percent to 960.0 million GBP (2016: 894.2 million GBP)
- Company-managed shop like-for-like sales* up 3.7 percent (2016: 4.2 percent)
- Operating profit excluding property profits** and exceptional items*** up 4.6 percent to 81.7 million GBP (2016: 78.1 million GBP)
- Pre-tax profit excluding exceptional items*** 81.8 million GBP (2016: 80.3 million GBP)
- Pre-tax profit 71.9 million GBP (2016: 75.1 million GBP)
- Strong cash generation supporting investment programme for further growth
- Total ordinary dividend per share up 4.2 percent to 32.3p (2016: 31.0p)
* like-for-like sales in company-managed shops (excluding franchises) with a calendar year’s trading history
** freehold property disposal gains of 0.5 million GBP in 2017 (2016: 2.2 million GBP)
*** exceptional pre-tax charge of 9.9 million GBP in 2017 (2016: 5.2 million GBP charge)
Strategic progress
- Further improvements to product range, with specific focus on hot drinks and hot food
- Healthier options growing strongly, ‘Balanced Choice’ range accounts for more than 100 million GBP of sales
- 131 new shops opened, 41 closures (90 net openings); 1’854 shops trading at 30 December 2017
- Continued investment to consolidate manufacturing operations and expand logistics capacity
- New shop replenishment system successfully rolled out and supply chain solution piloted
Current trading
- Encouraged by the start to the year
- Company-managed shop like-for-like sales up by 3.2 percent in eight weeks to 24 February 2018
Chief Executive Roger Whiteside: «In 2017 we delivered another strong performance in challenging economic circumstances as rising inflation impacted both our own costs and customers’ disposable income. At the same time we continued to make good progress with our business transformation programme.
«Whilst the UK consumer outlook remains challenging, we are encouraged by the start to the year. 2018 will be the peak year for investment in our supply chain as we create the platforms for further growth. We also plan to open a record number of new shops as we implement our plan to grow Greggs as a leading food-on-the-go brand».
Chairman Ian Durant’s statement
Greggs performed well in 2017, delivering further like-for-like sales growth as well as expanding its estate of shops. This was achieved despite significant inflationary headwinds and alongside continued major investment in line with our strategic plan. These investments are creating the platform for us to deliver sustainable long-term growth for the benefit of all stakeholders.
Overview
Greggs once again demonstrated the resilience of its people and business model, delivering a solid trading and financial performance in the face of increased cost inflation and a strategic change programme. The development of our products and shop formats has opened up additional opportunities for growth in shop numbers and we expect this expansion to continue in the year ahead. We are investing significantly in our supply chain to enable this growth, whilst continuing to make improvements to our processes and systems that will deliver enhanced capability and efficiency to compete in the fast-moving food-on-the-go market.
Our people and values
In 2017 we began the investment in our supply chain that will enable us to deliver growth whilst remaining competitive in terms of the quality and price of our products. As I reported last year this involved taking some difficult decisions, particularly regarding the organisation of our manufacturing and logistics operations. We have worked hard over the last year to carry out the necessary changes in line with our values. There has been much challenge and dialogue but the whole team has worked together with the best interests of the business in mind, and I would like to extend my thanks to all involved.
Greggs has a long history of conducting its business in a responsible manner. We have made great strides in environmental management in recent years and are working with others in our industry to make further improvements. This includes finding solutions to increase the proportion of packaging that can be recycled and ensuring that more of our surplus food is channelled to those who need it most.
We have a strong reputation for sharing our success with the communities where we operate and direct much of this support through the Greggs Foundation, which celebrated its 30th anniversary in 2017. Representatives of the Foundation attended a Board meeting in the year to explain how they work with the Company and other partners. The Foundation makes a real difference to the lives of people in our communities and is given tremendous assistance by staff throughout Greggs. It is a great charity and one that we are very proud to support.
I would like to thank everyone who has worked for Greggs during the past year and contributed to the positive impact that it has had on all of its stakeholders.
The Board
As we announced last year, our Retail Director Raymond Reynolds stepped down from the Board at the AGM in May 2017 but remains a key member of the Company’s Operating Board in his new role as Property and Business Development Director. Raymond was a member of the Board for ten years and I would like to thank him for his important contribution throughout that time.
Otherwise the composition of the Board was unchanged in 2017. We continued to spend a significant amount of time overseeing the major programmes of change that support the Company’s strategic plan, particularly the investments under way in our internal supply chain. Other reviews included emerging risk areas, including the uncertainties around exiting the European Union, and examination of customer preferences and behaviours and our resulting plans.
The Board also visited Northern Ireland in the year to see for itself the progress that Greggs has made establishing a presence there. It was pleasing to see the same levels of enthusiasm and commitment to doing business the right way that we experience in more established trading areas.
Directors continue to be encouraged to visit different areas of the business and experience it through the eyes of our colleagues and customers. This helps to ensure that Non-Executive Directors’ contributions to Board discussions are well informed, supporting open and constructive dialogue with the management team. This year I also spent time with an employee panel, a particularly helpful experience given the significant changes that we are making in our supply chain.
Further details of the Board’s work are included in the Governance and Committee sections of the Annual Report.
Dividend
Our progressive dividend policy targets an ordinary dividend that is two times covered by earnings, with any further surplus capital being returned to shareholders. Our Finance Director, Richard Hutton, outlines the expected application of the distribution policy in more detail in the financial review.
In line with its progressive dividend policy, the Board intends to recommend at the Annual General Meeting a final dividend of 22.0 GBPence per share (2016: 21.5 GBPence), giving a total ordinary dividend for the year of 32.3 GBPence (2016: 31.0 GBPence), an increase of 4.2 percent.
Looking ahead
Greggs continues to demonstrate its resilience in the face of economic uncertainty. This environment seems unlikely to change in the short term as the UK negotiates its exit from the European Union, with the associated risks to consumer confidence and further cost inflation. We are alive to these risks and working hard to mitigate the possible impacts where we can.
Looking beyond this we remain optimistic about the growth potential for Greggs and are currently investing to support this. The benefits of our major change programmes are beginning to show and will give us much greater capability and capacity for further growth in the years ahead.
Greggs continues to be a strong business with a great team. I am confident that we will make further progress in the year ahead.
Chief Executive Roger Whiteside’s report
In 2017 we delivered another strong performance in challenging economic circumstances as rising inflation impacted both our own costs and customers’ disposable income. At the same time, we continued to make good progress with our business transformation programme, investing in new systems and processes as well as increased capacity and efficiency in our supply chain. We are successfully developing our product offer to meet customer needs and investing in improved customer service, in addition to accelerating growth in shop numbers.
Financial performance
Total sales grew to 960.0 million GBP in 2017, up 7.4 percent. Within this company-managed shop like-for-like sales (defined in Note 10) grew by 3.7 percent.
Underlying operating profit, excluding property profits and exceptional items, grew by 4.6 percent to 81.7 million GBP (2016: 78.1 million GBP). Pre-tax profit (including exceptional items) fell by 4.3 percent to 71.9 million GBP.
Market background
Economic conditions became more challenging in 2017, with business cost inflation rising significantly due to food ingredient and labour cost increases affecting the entire sector. We were able to leverage our scale and deliver productivity improvements to mitigate some of these pressures but, as expected, saw some year-on-year margin slippage. The market generally saw price inflation returning to the food sector, which resulted in a slowdown in disposable income growth for our customers.
Whilst the food-on-the-go sector remains highly competitive, a further year of unbroken growth in like-for-like sales demonstrates the continued relevance and strength of the Greggs brand.
Delivering our strategy
Greggs is a strong and trusted brand and we draw on our heritage in fresh bakery to compete successfully in the food-on-the-go market. Our purpose is to make good, freshly prepared food accessible to everyone with the aim of becoming the customers’ favourite for food-on-the-go.
We are committed to conducting our business in a responsible manner and, in doing so, to have a positive impact on people’s lives. Our strategy has four pillars:
- Great-tasting freshly prepared food: Greggs products are differentiated by the way we freshly prepare food each day in our shops and by offering outstanding value for good quality, great tasting food-on-the-go. Making good, freshly prepared food accessible to all income levels is embedded in our core purpose as a brand with outstanding value meal deals setting us apart from the competition. Our product strategy has been to nurture and protect our market-leading reputation in long-established traditional bakery categories adapted to food-on-the-go whilst developing new reasons to visit Greggs by offering quality and value in new growth areas. Our traditional categories, including fresh baked savoury snacks, freshly prepared sandwiches and delicious sweet bakery treats, remain our best-selling products and are being supported by strong growth in new categories.
- Breakfast: Breakfast-on-the-go continues to grow strongly and Greggs has established a leading position by focusing on offering outstanding value with our breakfast meal deal starting at just 2 GBP. This remains our fastest-growing part of our trading day and we continue to build increased spend and visit frequency through menu development. Strategically it plays an important role in diversifying demand patterns, making us less reliant on general shopping missions and less sensitive to weather.
- Hot Drinks: Led by coffee at breakfast, our reputation for quality, value and service in this growth category continues to build, enabling us to extend our drinks menu choice. Hot drinks feature in all of our meal deal offers and it is this outstanding value that differentiates us from our competitors.
- Balanced Choice: Growing public concern over obesity is driving increased demand for healthier choices in food-on-the-go. Greggs has a key role to play in encouraging healthier food choices, making good quality freshly prepared food accessible nationwide at outstanding value. Sales of healthier options, including our Balanced Choice range offering fewer than 400 calories and good nutritionals, continue to grow as we extend menu choice and take steps to encourage healthier food choices through disproportionate space allocation and promotion in our shops.
- Alongside development of our Balanced Choice range we have adopted a proactive approach to supporting the Government’s Childhood Obesity Plan and making significant efforts to reduce salt, fat and sugar in our products and to encourage greater consumption of vegetables in the diet.
- Hot food: Hot food is another area of growing customer demand, providing food-on-the-go solutions for all times of the day. Sales of hot sandwiches and hot soup are growing well and provide a platform for further menu development, which we intend will create the opportunity to extend trading in Greggs for longer in the day as our reputation grows.
- Good Food: Customers increasingly care where their food comes from and, because we make the majority of our food ourselves, we are well placed to deliver food they can trust. Unlike the majority of our competitors, who resell bought-in finished products, we are a large-scale food manufacturer in our own right dealing at source with base ingredients.
- We have invested significantly in recent years, gaining independent accreditation for our sourcing and manufacturing credentials and have set out to lead the food-on-the-go sector in eliminating or reducing unnecessary ingredients at the same time as providing full information to allow customers to make informed choices.
- Looking ahead: Once again we have a strong pipeline of new product developments planned for the year ahead, strengthening traditional product areas and continuing to build our reputation in new growth categories.
- Best customer experience: As well as offering great tasting great value food, Greggs is loved by customers because of our fast and friendly service. Working in a Greggs shop is very demanding so we rely on our amazing teams to deliver fast, friendly service under pressure. We continue to invest to simplify our processes and increase productivity to release time for service, with significant gains last year from our new shop ordering process in addition to a best practice programme that we call «The Greggs Way».
- Our most loyal customers are signing up in rapidly increasing numbers to our award-winning Greggs Rewards scheme. The insight that this provides now includes satisfaction ratings and is helping to inform decision making throughout the business, helping us to better meet customer needs every day.
- Our shops: The key consideration when customers choose where to shop for food-on-the-go is convenience. Being within easy reach for customers when they need us is a prerequisite and we are working hard to increase shop numbers in order to provide easy access everywhere. In 2017 we opened 131 new shops (including 45 franchise units) and closed 41, growing the estate to 1’854 shops trading as at 30 December 2017. We opened our 202nd franchise shop and extended our company-managed shop reach to new territory in Devon, in addition to opening further shops in Northern Ireland.
- Refurbishment of our shops slowed down last year as we reached the end of our programme to transform our legacy bakery shops to our food-on-the-go format. We completed 132 refurbishments and franchise partners refurbished a further ten units. We also successfully developed a new Drive Thru format that will allow us to compete effectively in this type of location as we seek new sites.
- We have a strong pipeline of new shop openings for 2018 and are planning to further accelerate our shop growth, aiming to add in the range of 110-130 net new shops in the year. In keeping with recent years, the majority of these new shops will increase our presence in travel, leisure and work-centred catchments. At the end of 2017 34 percent of our shop estate was located in these catchment types.
- Competitive supply chain: In January 2017 we communicated details of the next phase of our major investment programme focused on increasing logistics capacity and consolidating our manufacturing operations into centres of excellence in order to support shop growth. Once implemented this new supply chain platform will deliver improvements to product quality, our competitiveness and, alongside systems investment, will complete our transformation from traditional bakery to food-on-the-go.
- Overall our expansion plans will create thousands of new roles in retail and distribution operations but will result in fewer jobs in manufacturing. Decisions such as these, which impact our people, are always difficult but our teams have shown commitment and professionalism throughout these changes and we have been able to agree a way forward on a basis of voluntary redundancy in the majority of cases.
- This investment phase is a complicated programme of work which will take until 2020 to complete. We have made a good start in 2017, completing the transfer of our Edinburgh operations to our Glasgow bakery, which has been extended to become a centre of excellence for ‘Yum Yum’ production, and extending our Leeds bakery to create a centre of excellence for cake and muffin manufacturing.
- The year ahead will be the peak year for investment in the programme including the creation of our centre of excellence for doughnuts in our Gosforth Park bakery.
- Strategic change of this magnitude is always challenging and I am grateful for the commitment of our teams who have been making these changes whilst maintaining service standards to our shops.
- First class support teams: We have made further significant progress in the fourth year of our major process and systems investment programme.
- In 2017 we successfully deployed our largest ever systems roll out, replacing our traditional shop ordering with a new central forecasting and replenishment process. We have already seen benefits in improved product availability for customers and expect to see savings start to come through in lower wastage figures as we become more experienced with the system’s capabilities.
- In the second half of the year we successfully deployed pilots in both logistics and manufacturing which will be rolled out alongside our supply chain investment programme.
- Scoping work has also begun for the remaining SAP support modules, with human resources, payroll and property management to be implemented in 2018.
- Having a positive impact on people’s lives: Greggs has a long-standing tradition and reputation as a socially responsible business and as such we want our actions to have a positive impact on people’s lives. This ambition covers a broad range of stakeholders and in 2017 we made further improvements in all areas and were pleased to achieve an increase to a ‘4.5 star’ rating in the Business in the Community CR index in early 2018.
- We encourage healthier food-on-the-go choices: As a leading bakery food-on-the-go retailer we recognise that many of the products we sell are traditional favourites best eaten in moderation. As such we aim to capture as much of the demand for these products as possible in a highly-competitive market but at the same time we are taking steps to encourage customers to see Greggs as a food-on-the-go retailer selling a variety of products, including healthier options.
- Our range of Balanced Choice products offers that choice at below 400 calories with good nutritional values and now represents over 100 million GBP of sales. We are committed to encouraging customers to make healthier food-on-the-go choices and are taking active steps by offering this range in all of our shops nationwide, providing access to all and allocating prominent and disproportionate space to bring these products to customers’ attention.
- Alongside Balanced Choice we are working on sugar reduction, in addition to the salt and fat reductions seen in recent years. Other initiatives include working with New Cross Hospital in Wolverhampton to redesign the retail format of our shop there and the product range to meet the requirements of NHS guidance. In addition, in 2017 we made the ‘Pledge for Veg’ in partnership with the Food Foundation, through which we will help customers to increase their vegetable intake through design of our salads, soups and cold sandwiches.
- We care where our products come from: All the tea, coffee, hot chocolate, orange juice, apple juice and bananas we sell are certified Fairtrade. We source our prawns and tuna from sustainable sources and have recently maintained our ‘Tier 2’ status, despite increased requirements, in the Business Benchmark on Farm Animal Welfare. In our internal supply chain the majority of our manufacturing sites have achieved AA standard on version seven of the BRC Global standard for food safety.
- We share our success with the community around us: We continue to share our success with the local communities in which we operate. In 2017 this included increasing the amount of end-of-day food that we donated to good causes by 45 percent and continuing to support the work of the Greggs Foundation, which celebrated its 30th anniversary in 2017. Through the generous support of Greggs and other donors and fundraisers, including our staff and customers, the Greggs Foundation was able to distribute 3.1 million GBP to support a wide range of initiatives that improve the quality of life in our local communities. These included the award-winning Greggs Breakfast Club programme which, with support from 80 partners, now provides six million free wholesome breakfasts each year to children in over 465 primary schools.
- We aim to use energy efficiently and minimise waste: We hold the Carbon Trust Standard in recognition of our work on carbon efficiencies and our Environmental Management System is certificated to ISO 14001. We continue to trial technologies that could help to reduce our carbon footprint even further in the years ahead.
- We know that coffee cup recycling is a significant issue and, as a responsible business, we are working hard to reduce our impact on the environment and do our bit to help find a solution. We are currently conducting a trial in 20 shops across Manchester and Liverpool city centres to establish feasibility for in-store recycling of hot drinks cups. This will give us the opportunity to ensure we have a robust and effective process in place before potentially rolling out further. In addition, we sell reusable hot drinks cups in all of our shops and offer customers a 20 GBPence discount when using a reusable cup. Greggs is also part of the Paper Cup Recycling and Recovery Group and is working with others in the industry towards delivering a long-term, nationwide paper cup recycling solution. We continue to work hard with our suppliers to further improve our hot drink cups to ensure that they are as sustainable as possible.
- Reducing the use of plastic in society is another issue where we are trying to play our part. As a vertically-integrated business we have a natural advantage in making most of our products ourselves and controlling the way in which they are distributed. For example, we distribute food to our shops using reusable trays and have separation processes behind the scenes to support recycling. Going forward we aim to reduce further the amount of plastic involved in our processes.
- We are committed to creating a great place to work: We pay all of our people more than the National Living Wage, including those under the age of 25. We share ten percent of our profits with employees and will be sharing a record 9.2 million GBP with our people as a result of our strong performance in 2017.
- Our Employee Opinion Survey engagement score has increased by five percentage points over the last two years; 81 percent of our people say they feel committed to Greggs and to helping us achieve our goals. However, we are not complacent and in the year ahead will be working towards achieving the National Equality Standard as part of our commitment to make Greggs an even better place to work. We are committed to supporting the development of all our colleagues, in particular our talented female colleagues, as we work towards reducing our gender pay gap, which currently stands at 22 percent. We have made good progress with this in recent years and at Board level have exceeded government guidelines with 43 percent of our Board being women.
- Further details of all of our actions in these areas are described in the annual report.
Outlook for 2018
Whilst the UK consumer outlook remains challenging, with industry-wide cost pressures expected to moderate but continue in the year ahead, we are encouraged by the start to the year. Company-managed shop like-for-like sales in the eight weeks to 24 February 2018 have grown by 3.2 percent, and total sales are up 6.2 percent.
2018 will be the peak year for investment in our supply chain as we create the platforms for further growth. We also plan to open a record number of new shops as we implement our plan to grow Greggs as a leading food-on-the-go brand.
Finance Director Richard Hutton’ review (excerpt)
In 2017 we delivered another good financial performance, mitigating the impact of increased cost inflation whilst managing a significant investment programme. The costs of this programme, along with continued growth in our estate, were all self-funded from our strong cash flow, whilst we also increased dividends to shareholders.
Sales
Total Group sales for the 52 weeks ended 30 December 2017 were 960.0 million GBP (2016: 894.2 million GBP), an increase of 7.4 percent. Sales in company-managed shops with more than one calendar year’s trading history (‘like-for-like’) grew by 3.7 percent to 817.5 million GBP (2016: 788.5 million GBP). We also saw like-for-like and total sales growth in our franchised shop estate.
Profit
Operating profit before exceptional items was 82.2 million GBP (2016: 80.3 million GBP). This included a 0.5 million GBP contribution from property disposals (2016: 2.2 million GBP). Excluding the impact of property profits from both years, the underlying growth in operating profit was 4.6 percent. The result reflects strong sales growth in a year when, as expected, we experienced higher than historical cost inflation.
Pre-tax profit before exceptional items was 81.8 million GBP (2016: 80.3 million GBP). Including exceptional items, pre-tax profit was 71.9 million GBP (2016: 75.1 million GBP).
Exceptional items
In 2016 we commenced the first phase of our major investment programme to reshape our internal supply chain, and this has continued throughout 2017. Activity in 2017 included the relocation of Yum Yum manufacturing to our Glasgow site, and expansion of that site to consolidate our distribution activity in Scotland following the closure in May of our Edinburgh bakery. In addition, we consolidated manufacturing of small cakes and muffins at our Leeds bakery and relocated our pizza manufacturing to our Manchester site.
Including related exceptional property gains, the total exceptional charge in relation to this programme was 10.1 million GBP in 2017 (2016: 6.4 million GBP). After adjustments made for the reversal of prior year exceptional costs the total exceptional charge for the year was 9.9 million GBP (2016: 5.2 million GBP), comprised as follows:
We continue to expect the total exceptional cash costs of our supply chain investment programme, excluding any associated property disposal gains, to be in the region of 25.0 million GBP. Our expectation of non-cash costs (accelerated depreciation and asset write-offs) associated with the programme has reduced to 5.0 million GBP (previously 7.0 million GBP). Total charges so far have totalled 16.5 million GBP and we expect a further 6.0 million GBP in 2018.
A property gain of 0.4 million GBP resulting from the disposal of our Edinburgh site was treated as exceptional in the year because the site closure came as a result of the overall supply chain restructuring programme. We have now exchanged contracts for the conditional disposal of our vacant Twickenham site. Should this progress to completion then any resultant profit will also be treated as an exceptional gain. We continue to expect the total proceeds arising from supply chain site disposals to be in line with those anticipated in our investment plan.
In 2017 the total cash impact of exceptional items was a net outflow of 1.9 million GBP (2016: 3.8 million GBP cash outflow). We expect the 2018 cash outflow in respect of exceptional items to be c.12.5 million GBP.
Operating margin
Operating margin before finance expenses and exceptional items was 8.6 percent (2016: 9.0 percent). Including exceptional items, the operating margin was 7.5 percent (2016: 8.4 percent).
Gross margin before exceptional items was stable year-on-year at 63.7 percent (2016: 63.7 percent). We experienced high levels of food input cost inflation for most of the year but the impact of this on gross margin was partly mitigated by lower costs in our supply chain as a result of site closures. Including exceptional items gross margin was 62.7 percent (2016: 63.2 percent).
In an inflationary environment savings from our actions to make the business simpler and more efficient have become even more important. In 2017 we delivered savings of 9.7 million GBP (2016: 7.1 million GBP). Benefits were achieved through procurement initiatives and as a result of improvements across our retail and supply chain operations. Cost inflation will continue to be a headwind in 2018 and we will redouble our efforts to mitigate this impact through our efforts to make the business more efficient.
As noted above, in 2017 we recognised gains on the disposal of freehold properties totalling 0.5 million GBP (2016: 2.2 million GBP). These were in addition to the property gain on disposal of our Edinburgh site, which was treated as exceptional.
Financing charges
There was a net financing expense of 0.4 million GBP in the year (2016: 0.0 million GBP) reflecting the funding position of the defined benefit pension scheme, partially offset by interest received and exchange gains. In the year ahead we expect to incur a financing expense of around 0.2 million GBP relating to the net liability of the pension scheme at the start of the year.
Taxation
The Company has a simple corporate structure, carries out its business entirely in the UK and all taxes are paid there. We aim to act with integrity and transparency in respect of our taxation obligations.
Excluding the effect of exceptional items the Group’s underlying effective tax rate was 20.7 percent (2016: 22.5 percent). The overall tax rate for the year including exceptional items was 20.9 percent (2016: 22.8 percent). The year-on-year reduction in the effective rate primarily reflected reductions in the headline rate of corporation tax and settlement of prior year tax computations.
We expect the effective rate for 2018 to be around 21.25 percent and that the effective rate going forward will continue to be around two percent above the headline corporation tax rate. This is principally due to disallowed expenditure such as depreciation on non-tax-deductible qualifying properties and costs of acquisition of new shops.
Earnings per share
Diluted earnings per share before exceptional items were 63.5 GBPence (2016: 60.8 GBPence), an increase of 4.4 percent. Basic earnings per share before exceptional items were 64.5 GBPence (2016: 62.0 GBPence). Including exceptional items diluted earnings per share were 55.7 GBPence (2016: 56.7 GBPence) and basic earnings per share were 56.6 GBPence (2016: 57.8 GBPence).
Dividend
The Board recommends a final ordinary dividend of 22.0 GBPence per share (2016: 21.5 GBPence). Together with the interim dividend of 10.3 GBPence (2016: 9.5 GBPence) paid in October 2017, this makes a total ordinary dividend for the year of 32.3 GBPence (2016: 31.0 GBPence). This is covered two times by diluted earnings per share before exceptional items in line with our progressive dividend policy. Our policy on special distributions is outlined below under ‘Cash flow and capital structure’.
Subject to the approval of shareholders at the Annual General Meeting, the final dividend will be paid on 18 May 2018 to shareholders on the register on 20 April 2018.
