Earnings Transcript for ROYMF - Q4 Fiscal Year 2018

Executives: Moya Greene - Chief Executive Officer Stuart Simpson - Chief Financial Officer

Analysts: Mark McVicar - Barclays Arthur Truslove - Crédit Suisse Andy Chu - Deutsche Bank Edward Stanford - HSBC David Kerstens - Jefferies Damian Brewer - Bank of Canada Alex Paterson - Investec Samuel Bland - JP Morgan William Howard - Berenberg

Moya Greene: Good morning, ladies and gentlemen. And welcome to our Full Year 2017/2018 Results Presentation. Nice to see so many of you here. This is my last one, and I can tell you it feels very good. This is a pretty challenging year I have to say. In my opinion, it was certainly the most challenging I've been through since privatization. We had to get through a long and complicated and arduous set of discussions with our people, with our unions and things that are critically important, the things that you know about. The retirement income, pay and it caused a lot of uncertainty, and you know everywhere for our customers, even though, I think we did an outstanding job at making sure we actually didn't have a disruption. But nevertheless, I think it did cause uncertainty and also for our people, and our managers who did an outstanding job taking the company through this. So it is really a tribute to our people. I used to say, but I think it's more true today than at any other time, this company is the tough that gets going when the going gets tough. So we have delivered, I think great results. Revenue now is a milestone for us over £10 billion of revenue, and we have maintained our leading position as the top delivery company in what is the most competitive jurisdiction for e-commerce delivery in the world, here in the U.K. We grew internationally, another very strong performance from GLS, and together we have delivered operating profit before transformation cost above our guidance. It takes a lot to get me to give earnings guidance. And at nine months, I did give earnings guidance, we're over that. We said we'd be at £680 million, we're at £694 million. Cash, as you know, from the very beginning that's what I look at most carefully. I think that tells you most directly how a company is doing. Our cash generation was strong at £545 billion take £100 million off that, because this month we've got a pay award going out, but still at £445 million, that's up £25 million over and above where we were last year, which was actually another good strong year for cash. So if I go to Slide 4 now, our strategy, as you know, has always been to build and develop a more resilient company. Our investments in GLS have made it even stronger. It's now a very significant engine for future growth for the company. As you know, it's about 30% of overall profit. Our investments in the IT backbone now support innovations across the board. It used to be that we all hold our breath. Think back four or five years ago when I made a joke, but it wasn't really a joke, and I used to say our technology was state of the ark. It isn't state of the ark anymore. We are now able like any other business to introduce monthly innovation, service, benefits, product changes without having a huge sucking in of breadth, okay, is this the time that the whole thing crashes. As a result, we have maintained our number one position in the U.K. parcels industry. We have taken that same strategic approach to cost reduction. As you know, about 3.5 years ago, we put in place the office of cost reduction to give us a multiyear perspective on that. We have delivered more than we thought we could over the three years. This year alone, we are going to deliver £235 million worth of cost reduction that's above our target of £190 million. And it's very important that our agreement with our union gives us now an opportunity to continue that and, in fact, to accelerate it going forward. And as I mentioned, our profit -- our operating profit strongly converts to cash. So this the strategy supports what I know is really important for many of our investors, and that is our progressive dividend policy. Slide five, I want to now turn to GLS. This is a story of continued strong performance. We go back as an outstanding entrepreneur, he has built a business over 30 years that is just a great business. How do they get to be a great business. He is a very prudent, shrewd investor. You won't see him paying 20x earnings for stuff. You will see him buying in companies that he's looked at over a long period time. And as a result -- as a result of that prudent approach, we are now seeing an underlying basis in the core business volumes up 9%, revenues up 10%. If you add in the acquisition that's 15%. Growth in new markets has actually changed the composition of that revenue. At IPO, you probably remember Germany, France and Italy contributed 70% of the revenue. Today, these three markets are 60% of the revenue that is because of the addition and strong growth in other geographies where GLS participates. In Spain now, GLS operates the second largest national express parcel network, thanks to the acquisitions of ASM. And you probably recall, this is a company that Rico looked at for six years and forced an operating performance improvement before he bought it, and of course, Redyser. So now if I turn to Slide six in the U.K. parcel market. There I would say the trends and the dynamics are largely unchanged. But there's one other thing that is unchanged, even with all of the competitive pressure in that market, we're still number one. That, too, is unchanged. In 2017, online shopping grew 4x faster than the U.K. retail market more generally. E-commerce parcels now in the U.K. two out of every three parcels sent are ecommerce parcels. Capacity is, sadly, still a problem, and it is, sadly, still putting pressure on price, but despite this and despite the difficult years that we've had, we have grown our volumes at the fastest pace since IPO. This is our reward, I think, for all of the improvements that we have been able to introduce over the past year. Now on Slide seven, what you will see is that volumes in the U.K. are up 5%. Account volumes, excluding Amazon, up 4%. Our share of volume from large customers has also increased. The share of our traffic that is international is also up. If we look at our tracked services, which is what we look at to sort of get the best comparator to growth rates in other U.K. parcel companies, we grew by 28%, that is significantly higher than overall general market rates of growth. Parcelforce new services as well, also supported our growth, new customers, but also they increase their share of wallet from existing customers. Let me spend a few minutes on international because it's important, but also growing in importance. With 20% of parcel volumes coming through our international channel, this has been a key area of focus for us. This year, we generated about £50 million in new revenue from a new service, a service from Asia into Europe. We are extending that service to traffic from the United States into Europe, and we expect to see continued growth next year. Export is a very competitive market, but it's also the area where average unit rates are very high. We are improving our offering there. We are rolling out service enhancements. You'll see, I -- some of you have already visited our international processing hub at Heathrow is the most highly automated in our network. And we are investing now to increase our capacity. With our international initiatives, we are targeting for growth next year. We will need to see what transpires. We're, kind of, like anybody else in a bit of a wait-and-see moment as far as Brexit goes. And the customs union, these are important discussions. So we need to wait and see, and we need to see the impact of any exchange rate movement on trade flows. Now letters. Different types of mail, as you know, have different characteristics. They have different sensitivities to GDP, different sensitivities to pricing changes or to rates of these substitution. Performance in letters was better than we thought would -- it would be at the beginning of the year. Volumes were down 5%, revenues down 4%. This is something that we test regularly. Assiduously, we look at every stream of mail volumes they perform as I say in different ways. So we can say that our guidance is unchanged. We think that the rate of decline will be between 4% and 6%, but we will likely be at the top end of that rate of decline, closer to 6%. We think we're at the upper end of the range because the new data protection requirements give us a little bit of uncertainty. They may have an adverse effect on marketing mail volumes as some of our customers tried to embed the new compliance demands in their products. [Indiscernible] though, in terms of marketing mail, we are bucking wider trends that you see in terms of marketing spend being down. It's down around 17% for print, it's down very importantly for broadcast as well. In fact for mail, our revenues are up 1%. And this is the result of initiatives that we have introduced to prove the value of mail, especially for marketing purposes. It gets mind space and, therefore, the return on marketing spend from a well-designed piece of mail is just better. So these initiatives have now come together for us, and they've given us a positive result. Another area that we test very rigorously, actually every single month is customer satisfaction. So even though we had a difficult time this year with the dispute and with the worst weather I've seen since I've been in the UK, our customer satisfaction scores are up, way up. They are the best customer satisfaction scores that we have had since privatization. 88% of people say they trust Royal Mail to deliver their parcels. And there are Net Promoter Scores, which is a key metric for people to look at how likely are friends, relatives, how likely are people to recommend your company for a particular service. Our Net Promoter Scores are outstanding. They have actually doubled since privatization. More on letters, Slide 10. This result in relation to customer satisfaction is, as I say, particularly gratifying, because this was a tough year. We were against a lot of challenge. If you get snow at Easter, I've been here for eight years, you've been here for, what, much longer. Some people said it was 92 years since we had a snow at Easter. Well, that is a real problem because it closes major arteries, it closes major highways, it even closes airports. It's hard for us, even people like us who are very resilient to deliver in the face of those kinds of transportation disruptions. And sadly, that caused us to miss our quality targets. But if it had not been for the snow in Easter, we would've actually gotten ourselves back on site, and so that is a very big disappointment and, thankfully for us, it didn't show up in overall customer satisfaction scores. Now I'm on Slide 11, I'm on investment. That has been a key enabler of our growth, that investment program. You know if we go back to 2010 this, was a company that was chronically under invested. So we had to have a very rigorous detailed approach to regenerating the asset base of the company to get ourselves going, and this was across the board in the operation, equipment, vehicles, but also very importantly, as I mentioned, the technology backbone. But now with a much more stable IT backbone, we can bring service enhancements and new products to market much more quickly, meeting customer needs, now on a monthly basis. And our PDAs, which we rolled out a couple of years ago, now play a critical part in this, and they give much more flexibility to our employees as they are out doing their job. IT is also supporting many of the initiatives under our new agreement. And we will be working in conjunction with our unions and our people to deliver those initiatives as fast as possible. Another area that has served us very well is, as I mentioned, the strategic focus on cost. We take, as you know, a multiyear view of this. We identify opportunities, we set up and resource specific projects, we monitor very closely for successful delivery and as a result, this is a program that has delivered more than we targeted when we started little over three years ago. It has saved £640 million over three years, in fact, this year, as I said, we avoided £235 million of costs against a target of 190 million. Now we can make lots of efficiencies in the core network and, in fact, 60% of the savings came from the core network. But 40% came from central services, procurement, sharper contract renewals, marketing, Parcelforce, international and property. So this desire to make sure that we are doing things better, more effectively at lower cost is now part of the DNA that is embedded all across the company. With the long dispute, I don't think it's surprising that productivity took a hit. In fact, this was probably the lowest year since I've been at the company. Our productivity improvements were only 1%, but we're ready now to go at an accelerated pace. Changes that we'll get productivity up toward the top end of our guidance range. We'll be up towards the 3% improvement. And that's how we intend to absorb the shorter working week. I want to spend a few minutes now on the agreement. Our pensions, pay and pipeline agreement. These were arduous negotiations, no surprise there. We had some very, very important topics that we had to find a way forward on. Very, very significant issues on the table probably the most important of it -- of which was future retirement income. It took a long time, but we came to a good result. Everyone now has a much clearer picture of what we have to do to be successful in the future. It was very helpful, I think for Terry Pullinger, the Deputy General Secretary of our union, when he was talking to our people about the agreement, he was very clear. He said, this is not a no change agreement, in fact, there is a lot of change that has to happen over the course of the next three years for us to be the successful company, the best employer by a country mile in our industry. So we're now in the implementation phase, as you know, Sue Whalley is the CEO of the U.K. business. She is highly experienced in running the operation. She has ran the operation for the past 4 years. She is respected widely, and there is no better person to position the U.K. Business to go forward. I think what the agreement does for us is it gives us a new platform for cooperation, and that's actually key. You cannot bring these projects on board successfully, if you don't have people pulling in the same direction with you. With that, now I'm going to turn things over to Stuart, who will take you through the precise numbers.

Stuart Simpson: Thank you, Moya. Good morning, everybody. Thank you very much for coming. Just to reiterate, this is a really good set of results that Moya and I are very proud to be presenting against a very difficult background of industrial relations. Now to take you through the financials. Just to reiterate, this was the first year, this business got through £10 billion in revenue. Something we're really proud of, 2% year-on-year growth. The operating profit pre-transformation beat the guidance we gave of £680 million, primarily due to a little better sales performance in that last quarter. The transformation costs lag behind where we thought we'd land. Again, this is related to the last quarter, where after the deal, we expected to see a little upswing in voluntary redundancy. That didn't come through. That means on a post-transformation basis, again, we're up year-on-year, probably slightly ahead of what our people expected. our margin on an underlying basis is up 20 basis points. If you look at the in-year trading cash flow, Moya already mentioned, this is a very strong performance. Just to remind you, you have to back out the £100 million timing of the back pay related to the prior year. On a net debt basis, we actually finished the year with a net cash position of £14 million. Again, you have to adjust that for the £100 million timing. So, on an underlying basis we have a net debt around minus £86 million. We've recommend a dividend of 24p, 4.3% increase year-on-year. Just looking at the top right of the slide, just to remind you, we talked of our adjusted numbers, this reflects the cash cost of the pension, not the IAS 19 pension charge. We do that because we believe that gives a better reflection of the performance of the business. Just to remind you of the underlying movement and profit and how we look at things. Starting at the left-hand side of the slide, you can see last year's operating profit. We then make an adjustment for working days, we make an adjustment for any one-off or significant legislative changes, then we adjust for the foreign currency, and that gives us a new base against which we compare things. In this case, an example, the operating profit pre-transformation, up 1% year-on-year. Turning to the segmental results starting with UKPIL. Really strong performance in a really tough environment. Revenue is flat after two years of decline. So despite that environment we're working in, the consumer stuck with us, the customer stuck with us. A really good performance. If you look at the operating cost, flat. This shows the resilience of the business, the ability to find ways to reduce the cost even when we can't make the operational change that we'd like to. Again, transformation costs down, as I mentioned. Post-transformation underlying basis, up 4% year-on-year to £390 million. Our margin up 20 basis points. Just to call out the outlook, if you look at that transformation spend, we expect that to be at the upper end of the range next year, primarily because we haven't done as much operational change this year, there's a bit of catch up from last year than the normal BAUs that will just drift up. This is not related to the new trial that we're putting in place. This year, we're trialing new things with the union. As per the agreement, those will come through in the future years. Looking at the UKPIL revenue. As I said, flat after a couple of years decline, parcels growth offsetting the letters decline. Within parcels, a very strong volume growth, 5%. Revenue up 4%. A couple of highlights within that, our account parcels, excluding Amazon, was up 4%. This again reflects the customers was sticking with us despite the challenges we had, despite the little wrinkle on quality of service, our customer satisfaction remains very high. Moya has already mentioned the international cross-border, a new stream of traffic we put in place, £50 million and last year, we expect that to continue to grow. I think also to note Parcelforce grew. Just one challenge in some of these areas that are growing, they bring a little bit of variable cost with them. Account because of track and trace, more IT spend, cross-border, because of more terminal dues, Parcelforce because it got a more variable costs model than the core network. If we look on the letter side of the business, we will bang in the middle of that 4% to 6% range. That was flattened slightly because we had a general election. We don't expect to see that next year. We also have the issue that Moya referenced, the GDPR. So of course, we're in great shape, how our customers adapt, and something that gives us cause of a concern. So hence, rather than thinking we'll be in the middle of that range, we see ourselves being at the top of the range of 4% to 6% decline next year. Moya has already mentioned really strong performance in marketing mail. Other traditional media are under a lot of pressure, we're actually above that trend and growing year-on-year. Looking at UKPIL people costs on an underlying basis, we take out the Apprentice Levy, the headwinds reflect pay rise, paid less management bonus this year, the cost avoided. We had the lowest level of operational change we've seen for some time, hours out only 0.9%, but we found ways in management restructuring to, again, offset people costs. Turning to non-people costs, a really strong performance. So as we work through the year, we could see we were struggling on operational change. Everyone was looking all across the business, this is not one silver bullet, this is many initiatives across everywhere to find out where we can save money. Really strong performance here, leading to non-people costs down 2%. Turning to '18 and '19. There are some significant headwinds. You already know about pay in a shorter working week. If you look at the nonpeople, we've been signaling depreciation will continue to drift up a little bit, £10 million. We see around £15 million in increase cost in IT. This is related to track and trace, and Moya mentioned that track and trace volume that grew 28% last year. So it drives a little bit of IT usage, also new services, text message to consumers. Again, it just puts a little bit of cost into the business. Against that though, we have the office of cost reduction that works very well, well integrated across the whole business, we're targeting avoided costs of £230 million in line with this year. So we're continuing that pace. I think as Moya and I have often said, we have a lot of opportunity here, it's deciding what we go after in what order. And that's a reflection of our continued confidence on the cost reduction. Turning to GLS, another really strong year. Volumes up 9%, revenues up 10%. If you note the costs, there are more variable cost model than the UK core network, hence the cost drifted up as well in line with our volume revenue. Operating profit up 10% on an underlying basis. Operating margin, which was squeezed a little bit in the first half, we have a strong sales in Q4, stronger than anticipated. So the margin actually performed better than expected. Another really good performance. Looking at GLS revenue. On an underlying basis, it was a 10% increase, however, if you add in our acquisitions that was 15%. Two of the top three countries performed very well, Germany growing at 6%, Italy 19% driven by selective B2C growth, France has been challenging again. Revenue did grow, only 1%, however, losses increased. However, France remains an absolutely vital part of the GLS' pan-European network. Eastern Europe and Denmark continue to drive strong double-digit growth. Overall, we are really pleased with the progress being made in GLS. Turning to the costs and more variable costs structure. You say this primarily in distribution and conveyance costs, this is because GLS has an outsource models, so those labor pressures come through that line. We're seeing them all across Europe driven by historic levels of low unemployment, also in the U.S. Other costs, you'll note, are down year-on-year that relates to a provision release in GLS this year and last year had some significant acquisition costs related to GSO and ASM. Turning to group profit after tax. Just to note the finance costs of net £16 million related to our €500 million bond. If you note there on the tax charge, effective rate 22% last year and 20% this year, driven by the statutory reduction in UK and a catch-up on some R&D development credits. Turning to the specific items and pension adjustment, key point I've already addressed, is the last one on the page, this difference between the pension charge to cash difference. The other thing just to note is the employee free share charge that is unwinding. This relates to how you account for the shares that were gifted to our employees. It's a noncash item. Going to in-year trading cash flow. EBITDA again a strong performance just over £1 billion, up £20 million year-on-year. If you look at the trading working capital, which shows an inflow of £74 million. That's the line item where you see the £100 million timing difference on the pay. You can see that reflected at the bottom of page where we backed that out that gives you an underlying in-year trading cash flow, 444 million. Again, up year-on-year by 24 million. If you look at investment. Investment was down year-on-year driven by a couple of things, the transformation spend was down as we already referenced, little bit less they are, but also we became to the end of the IT backbone replacement. So our replacement CapEx reduced. I say investment going up next year to around the 500 million as we start the trials and get ready to deploy what we learn from those in the following year. In addition, a little bit extra voluntary redundancy next year. Turning to the uses of cash. We started the year with a net debt close to 340 million. Strong in-year trading cash flow performance. 40 million cash in from disposals. We spent 18 million buying PEX and Redyser and paid a dividend. That gives us a final position of net cash 14 million, however, again, you deduct the 100 million for the timing of the pay, you get to a net debt underlying of 86 million. Just turning to the pension. Just to remind everyone our RMPP, our defined benefit plan pension, is now closed. This is amazing job by Moya and the team and the CWU. A fantastic result for both the people and the business. Just to remind everyone, the assets and the liabilities of that will stay on the balance sheet. If we look to the transitional arrangements, they are in place. We have a cash contribution of 400 million from an accounting perspective that will still be a pension charged to cash difference, it will be around £90 million next year. This is because there is still a defined benefits scheme. Looking forward, we're working very well with our union colleagues, we are pushing hard to get CDC scheme in place. It's a great solution for the business and a great solution for our people. When it comes in, it will be off the balance sheet and there will be no pension charge to cash difference. Turning finally to property. On Nine Elms site, we sold two of seven plots, it represents around one third of the acreage, £100 million receipts from that, £30 million been reinvested in the infrastructure of that site. The other sites we'll also go through that similar processes where we have to make some reinvestments post sale. If you look at Mount Pleasant, we've sold two third of the site for £193 million. The cash flow is timed to meet our £100 million investment in separating our operations from where the new residential buildings will be. And there's a final lump sum 2024. Just to note, Paddington that we sold several years ago for with the planning permission for the development came through, we actually got an overage on that of 20 million. So just to wrap up, I think a really good set of results in a tough environment. I think, I just like to take a moment to publicly say, thank you, from the business, but also personally to Moya. It's been an absolute pleasure to work with Moya. I think she's done an absolutely incredible job as a steward and a leader of this business. We were balance sheet insolvent. We were burning cash. We're now at FTSE 100 with an incredibly strong EBITDA with great prospects. We would never have got this IPO done without Moya's political savvy and know-how. Without her regulatory insight, how to navigate through these corridors and without the tenacity and drive that pushed everyone above and beyond what they thought they could do to get this business IPO-ed, after many years of trying. I think, Moya got us to do the impossible. At all times, I think Moya has done this with the greatest respect for our people, particularly the frontline colleagues and the CWU. This was a business with a history of industrial conflict, and we've had eight years of industrial peace, which I think is unheard of in this industry. Absolutely fantastic, and that's because the frontline are always upfront of Moya's mind. The pension there was a great reflection of that. It's a solution that is incredible for the people and also great for the business. On a personal level, I'm very sad that this is the last time we'll share a stage, Moya. You've been an amazing support and mentor, generous with your time and insight. It's been an absolute pleasure. So thank you from me and the rest of the business.

Moya Greene: Well, let's get back to the outlook. Thank you very much, Stuart. Trading is broadly where we thought it would be, it's in line with our expectations. We are maintaining our guidance, as I've mentioned, 4% to 6% decline in letters, but it will be at the top end of the range. And then I -- I think it's fair to say, we're a bit worried about GDPR, we just don't know. And so there could be a month or so when we actually go beyond the 6%, but we will -- when we do all the puts and the takes at the end of the year we will be inside the 6%. The new pensions, pay and pipeline agreement, it does provide the platform for the next phase of transformation in our business. And this is a customer focused organization. In his first year of the agreement, we're going to be working with our unions and our people to implement a lot of operational change, to help retain and to actually grow our parcel volumes and to lay the foundations for future growth and productivity opportunities. The U.K. parcels market, it remains, as I mentioned, very intensely competitive, but due to our expected growth in our Tracked products, the international products as well as other initiatives, we anticipate that UKPIL parcel volume and revenue growth rate in 2018 and '19 will be at least the same, as they have been in '17 and '18. Stuart talked about our cost avoidance program, we're targeting to deliver about £230 million in avoided costs this year. And this will encompass productivity improvements at the upper end of our targeted 2% to 3% range, higher variable costs, as Stuart mentioned in some of our businesses, they have a different cost structure than the core network. These costs will be associated, though, with increasing volumes of Tracked and international products. They're expected to present a little bit of additional cost pressure. Transformation costs for the year will be at the upper end of our forecast, £130 million to £150 million range due to these expected productivity improvements. As you know, GLS has consistently performed strongly over the past few years, and we expect that good performance to continue in 2018, '19. Margins could be impacted a little bit by continuing labor market pressures and a pretty wider group of markets. Net cash investments is expected to be around £500 million in 2018 and '19, within which transformation operating expenditure will reflect the expected productivity improvements. Cash flow in 2018 and '19 will reflect the payment of the 2017 and '18 frontline pay award in May. And given the good cash generation characteristics of the business, we are very committed to retain our progressive dividend policy. And as in previous years, the outcome for the full year is always dependent on how things go in the important Christmas period. I just want to say formally, thank you to all of you, well, first, all of the amazing people at Royal Mail and GLS. And my team that you are just extraordinary group of people. We have all worked work very hard in the last eight years, all of us pulling in the same direction. We certainly could not be where we are today without that kind of commitment. And I think we -- as Stuart says, we've done a number of things. You can't ever rest on your laurels, things can change, but we have done a number of very important things to at least stabilize this business going forward. But it also falls to me this morning to say thank you to you, our analysts and our investors, because it's not always easy to stay with the company like us. We have lots of challenge that we have to navigate and it has been very gratifying to see you spend the kind of time that you have on our business, month in, year out. And to see that you have faith in our approach, it has really meant something to us. So thank you very much. Onwards. Okay, questions.

A - Moya Greene: We have microphones. Yes, Mark?

Mark McVicar: Two questions, really. You've given us quite clear guidance on what you think the key volumes are going to do. Could you give us a little more sense on where you think pricing and yields may end up across the core letter and parcel products? And what sort of tailwinds or headwinds do you see ahead?

Moya Greene: Well, in -- on the parcel side in the U.K., we still have excess capacity and that puts general pressure on prices. But I think it's important to say that Nick and the team have really not just protected AURs in our business, but he has grown them. Because we have introduced more service attributes to our products this year, everything has happened much more quickly for us on that side, every month there is some new release that is going to help us to stay in the number one slot. So the average unit rates that we have seen in the account side of the business, for example, have been pretty good. But as I say, I think that is because we've had just a wonderful year of introducing a new technology, new apps that give more service attribute to our business. I think on the international side, it is going to be challenging in one way on price, because it is the export side of international that has the highest AUR, and that is, of course, the most competitive side. I think we have a lot to go after there. But you know the side where we are very strong, the consumer side, for example that's where you're seeing a little bit more volume pressure. So in terms of swings and roundabouts, we will probably -- I think we'll come out on the positive end of it, but just barely. I wouldn't want you to run away with pricing on the parcel side because in the U.K. it's just really, really competitive. And even on that transporter side, we're introducing whole new products, and they are really capturing a lot of new business for us and that has helped. There's no question about it. And expanding that service now from the U.S. into Europe as well will help. But I don't let people run away too fast on where our average unit rates are likely to go because the same pressures that we have seen in the business now for a couple of years are there.

Mark McVicar: And the letter segment?

Moya Greene: The letter segment, we have done pretty well. We're very astute, Sue and the team, the pricing team. I mean, this is an unbelievably highly structured exercise inside Royal Mail. And we look at every single stream of letters traffic to figure out where do we have pricing opportunities. And you have some, and we take them, we don't like to think that we're being silly about it. But you do have to be prudent, because if you price up too fast, you will cause in an 18-month period a dip on the volume side. Marketing mail is a kind of more pressurized environment because the dynamics in that business are very different from, say, business mail. But even there, I think we have done very well. Sue and the team on the marketing side have introduced a whole new set of incentives to get people to increase the volume of their mailings or some of our customers who may not have been big in using marketing mail have introduced it. So I think that has helped us offset what we have seen as a normal pricing pressure in marketing, generally, and has helped us grow the business.

Mark McVicar: My other question was really on the £230 million of avoidable costs. Could you give us a couple of sort of hard examples, the things that are going to happen this year, that will deliver that?

Stuart Simpson: A good example, Mark, is every year we normally do a large national network review. We actually couldn't do that last year. One of the reasons we were shifting a little bit more into other areas of cost reduction, as Moya highlighted, it's a bit more outside the core network than usual. So that's an example. We have a bit a catch-up on that last year. We'll continue to look at distribution all across. So we've run on national network. We're now pushing that professional way of measuring and monitoring and scheduling vehicles all the way down to a local level. So that's quite a big initiative. Just generally, just a bit of catch-up, so there's all the stuff we wanted to do last year, the business as usual from last year, plus this year's business as usual working with the people as the workloads, their efficiency, Moya said this many years, the squeezing down in every office...

Moya Greene: Thousands of goals everywhere...

Stuart Simpson: That's to continue. I think the big thing for me is this year coming is when Sue and the operations are trialing the things for the future. So we've got several key trials that are taking place this year that will test the digitization and the insight that gives us to the operation. Those aren't kicking in next year. So from me, I think the £230 million we'll get, but it will be same as normal, lots of bits, all over the business, nonpeople will take another look at little bit of voluntary redundancy in catch-up, but the most important thing for me is how these trials go. And how we land and then set out for the future.

Moya Greene: Because that does lay the ground.

Stuart Simpson: That lays the ground...

Moya Greene: That allows the ground for, I think, a very significantly different operation going forward. Yes?

Arthur Truslove: Arthur Truslove from Crédit Suisse. Three questions from me please. Firstly on the Tracked mail, obviously you talked about the fact that there are marginal cost coming through that. Could you just talk about the incremental profitability of additional units of Tracked mail? Secondly, on the agenda for growth, I understand that expires in 2019. Can you just talk about how that's likely to play out as we move towards that and whether that's likely to continue? And also on the cost side, looking forward, obviously, you've laid out how those split between the network and the central cost up till now. Could you just lay out how you think that might be the case going forward?

Moya Greene: Let me deal with the agreement first. I mean, the agenda for growth agreement was a breakthrough agreement as important as this new agreement, because while we recognized that some of the protections that we're going to give our people would now become legally binding protections. It was also recognized and it was incredibly important for us this year, the company got a legally binding protection, too. And that legally binding protection was it there could be no national strike, until you had first exhausted all the ways to solve your dispute. And in our case, we have with our unions, we have selected a group of mediators who we can rely upon to come in and help us, if it looks like we're about to hit a wall. And I have to say that was so important for us this year, we had an outstanding mediator in Mrs. Lynette Harris. I think she helped both me and everybody in the management team and the executive of our union understand all the issues and how they were being seen by either side and get us out of our almost intractable positions. So that agenda for growth is a very important basis for what I think will continue at Royal Mail and that is a drive to resolve disputes without affecting our customers, without affecting our business. We're a big company and a big complex company. It's just not realistic to think with 140,000 people in the UK that you are not going to have disputes, that is inevitable. What is not inevitable is that you always push the ballot for industrial action and take your customers down into a disruption. That is not inevitable. There are other ways, and we prove that out this year. So I think it's a really important thing that, that agenda for growth is now kind of an embedded way of doing things at Royal Mail. And it was really gratifying because it was the first time that we had a judge preside over it. It was very gratifying to see that it held up. Because there is no other agreement like in the UK And so I hope that becomes forever and a day, the way in which we approach things. Certainly, it's important. So that will continue, I hope, but layered on top of it and at least as important is this new agreement because this new agreement is a platform for a whole new era of cooperation across many, many fields. And very importantly, that cooperation has got to show itself first and foremost in the putting in place of a new retirement scheme for our people. That is so important, I think we have the loyalty of our people very importantly, because we want to be a great employer, and we want to make sure that after people have given us a lifetime of loyal service that there is a level of retirement income that is respectful of what people have given to the company. And so the first thing that is I think the groundbreaking nature of this agreement is that it gives us a way forward to create a single retirement scheme that is affordable for the company, that puts the cash contribution that we will make at roughly the same where it is today. But it does much more than that. It is going to take a huge amount of continued cooperation to get that collective defined benefit scheme in place, but that agreement is a platform for change and innovation and improvement across a wide group of areas. And so as Stuart said, when we introduced the PDAs, when we changed the technology backbone of the company, we gave ourselves an ability to see more precisely how we might change things in various parts of the network. That is going to start to bear fruit as a result of this, as Terry says, it's not a no change agreement. So do you want to take the other one?

Stuart Simpson: Sure. Starting with the cost looking forward and the split, I think for this year it's going to be very much the same as what we've seen in the past. One of the things that are top of the list for the incoming CEO, myself and Sue to look at is what do we see for the next three or four years. So we're already working on that. The team is looking, Sue has got her team looking across that or across all the central functions and how does this involved. So that's why it's a top of mind for us, but we're not there yet, but when we are we're going to tell you. In terms of the Tracked mix and the margins, we don't give margins out specifically. The Tracked volume is growing. We're really, really excited by that, up again 28%. It's just to note that these products do bring them with a little cost because we're tracking them. So there's a little bit of human costs, because the posting so he's running and putting it through a lot of box, has to stop, scan it, scan the right bar code, that drives his costs, but also a little bit of IT costs. So no major change, but it just start driving a little bit of variable costs into what is essentially still a fixed cost network. There's a gentleman at the back, [indiscernible]for a couple of times, then we'll move across this line here. Next.

Andy Chu: It's Andy Chu from Deutsche Bank. Three question please. The first one is on the provision release and GLS. Could you quantify that please? And two questions on -- my last two questions on a cash flow, which obviously is pretty important. On slide 36, you mentioned that your net cash investment is for £ 500 million on that slide. You mentioned that you past the peak of investment last year. The net cash investment was at £ 445 million. So could you just square right the comment versus your guidance, please? Am I missing anything? And then in terms of sort of cash flow, given that you've got net cash investment -- a net cash investment target of £500 million, it suggests that the gross investment would be above £ 500 million, you spent GBP 485 million in the year just gone. So we think about the shape of the cash flow taking a base of £ 444 million, is it fair to say that you probably -- the gross net investment will probably hamper a little bit your ability to grow the cash flow from the base of £ 444 million?

Stuart Simpson: So provision release at GLS was low single-digit millions related to a very technical case in Czechoslovakia or it's not a big deal. In terms of the guidance, the 500 million, I think what we're seeing is the deal that we've got to with the union has unlocked a level of change that we maybe thought wasn't there in the short to medium term. The trials are going in this year, so there may be a bit of drift up. So I use -- for me, while I think about this in a minute, is that 500 million is probably where we are for now. And I think that's reasonable because there will be a little bit of an increase. Because if these trials work and actually we can say with more precision how to run the operations, as Moya said, then you have to invest in that change, you want to take advantages of it. So if you think it's going to stay at 450 million would be wrong. I say it...

Moya Greene: And take it back a couple of years when it was at 670 million. So that's where we were at the real peak of dealing with what had been a 10 year chronic under spend. Correcting the technology backbone of the whole company was a big arduous five year effort. And yes, we have to keep adding now technology so that our services stay current, but that's at a lower level of spend than what we had to do four or five years ago.

Stuart Simpson: Yes. So it's materially down.

Moya Greene: It's materially down...

Stuart Simpson: And then in terms of how does the future look from a cash flow perspective. The first thing to note is we've got very good dividend cover. So I don't see this [Indiscernible] on our dividend. We remain very, very committed to that progressive dividend policy. I think cash flow will stay strong. If we see an opportunity to invest to accelerate change, we'll do that excessive writing from business in the medium to long term. We -- maybe move across there.

Edward Stanford: Two questions please. First of all, on the proposed pension deal with the unions, it does require the -- your political savvy that was referred to earlier. How are you getting on, and is there a timescale for this to happen? And secondly, just can you help me understand a little bit more about the import, export volumes? How transitory and how fickle are they are relative to exchange rates and so on and so forth? And how do we think about that?

Moya Greene: Well, on the CDC, we're getting on very well. And any conversations that I or Sue has had with people in government have been positive. I don't want to give a precise month of when we're going to have everything nailed down but, right now, I'm thinking that we should be there in a year or so. It's a fair bit of work but we're sticking to it. And I got to know the U.K., and I started my career as public servant, as you know, and so there are certain similarities between public service in Canada and public service in the U.K., but I had to learn the U.K. The lady that is the CEO of the U.K. business, she knows everything there is to know about U.K. And in fact, she was the first person that I spoke to. I actually spoke to Sue Whalley before I was hired, because in Canada I had no regulator, and my interactions with government were, let's just say they were more precise, and there was an envelope, but they didn't stray beyond that, of course, that's not true with the U.K. business. And so the woman that will be taking over all of that and is sticking into it right now knows way more than I will ever know. So don't worry about that part of it. It's just staying on the mountain of work that we have to do in order to get there. But, I think, we will get there.

Stuart Simpson: Regarding the new stream info, international business. First of all, we were -- and this is a sector that a lot of people play, and we won in it. So we've got into it. We've gone from nothing to £50 million. I think it will grow next year. We've got some great plans in place. We've some really good people running it. As a great question, is it transitory? So who knows where the currency movement is going to go, potentially, but the minute we're comfortable with it, we'd provide great service, we provide great quality at a fantastic price. And we are actively out, are marketing it and winning customers. Nothing, as Moya mentioned, the shift to be able to point this at the U.S. as well is really interesting. So we're comfortable with it, there's no CapEx behind it. So we'll take the chances. And if we can, we're building long-term customer relationships. Thank you.

David Kerstens: It's David Kerstens from Jefferies. Three questions, please. First of all, regarding the service levels, which you mentioned were on the pressure due to adverse medical conditions as well as through epidemic. What would be the financial impact of these two factors and what do you expect [indiscernible] costs in the first quarter this year to recover those service levels, particularly since you highlighted snow at Easter? Then secondly, the economic impact on your letter business, you don't really see that on the volume side, but what about the mix? I think you highlighted price mix was plus 1%, I think your stamp prices were up 2%, your business mix was up 7%. So what is the driver behind the negative mix effect, and where are you now in terms of the first-class and second-class stamps? And then finally just on the stamps, the impact of the data protection rules coming in place. Do you see some negative impact potentially on the advertising -- adverse advertising mix from customers who want to switch to unaddressed? And how it would have impact your business? Is that mainly mix or sort of direct impact on volume?

Moya Greene: Let's deal with mix issues, first. On GDPR, where we have a little bit of uncertainty. You don't have the same personal data consideration with what we call door to door, which is the unaddressed Mail. So I can see that people might move some of their volumes in that direction, but you do get a much better return on marketing spend by a precise and properly designed addressed and personalized piece of mail. So I think we have to take a bit of a wait-and-see attitude toward it, but the reason why I have called out that we will be at the top end of the range and there could be a month that we may, in fact, flip over a little bit beyond the top end of the range is because of that uncertainty. In terms of the price and the mix issue that you see in other mail and business mail, there is no question that when you increase your prices, you do see some downtrading, you do see people move from first class to second class. Overall, what we try to predict all of that because, as I say, we have a team that is second to none on looking at every stream of traffic and looking at how those sensitivities are likely to play out on every stream of traffic. And so when we predict our letters revenue, we take all of that into account, including the downtrading, and I think, that's what you saw here. And the third question, just remind me.

David Kerstens: It was the quality of service...

Moya Greene: The quality of service. Well, Sue and her team would have met those numbers, I think, if we hadn't been flummoxed by what happened at Easter. We had some service issues that had evolved well before Easter. Because if you remember, Christmas it wasn't any great shapes either. On December 12, I had to cancel my Christmas party because my caterers couldn't get there because there was too much snow and the highway was closed. So Christmas was a bit of a worry as well. But Sue did put in place a whole set of measures that do imply a little bit of extra costs, but it's important to try to get yourself back on stream, if you can. And then, of course, we got flummoxed by the snow at Easter. I mean, this is a matter that our regulator quite rightly pays a huge amount of attention. We are the only company in our business that is regulated for quality. We have very, very stringent quality requirements that we have to meet. So we're talking to our regulator now about it. I think, that it's a great shame actually that we missed it because we came so close, and if we hadn't been flummoxed by Easter, I think, we would have gotten there. I don't think the cost is going to be -- the extra cost that we put in to get ourselves back on track, I don't think that's going to be a worry in terms of our margins.

Stuart Simpson: Not material. Maybe a little bit, but not material.

Damian Brewer: Damian Brewer, Bank of Canada. First of all, can I ask about parcels, can you give us some idea on the degree of parcels that work sort of mechanically sorted through the year, and in particular, what that looks like versus the exit rate? Secondly, on GLS, can you talk a little bit more about performance of the acquisitions? How many sort of network benefits are coming through in the European businesses? And is there any sign of a pseudo-critical mass link up effect in the U.S. acquisitions yet? On the dividend, can you elaborate a little bit more about what you mean by progressive? What the key parameters there are? And very final, cheeky one, and Moya, if you had one piece of advice for Rico as he takes over, what would it be?

Moya Greene: He doesn't need any advice from me. Honestly, he is an expert in his business. So not to worry. In terms of the other questions, we have now about 70% of our parcels are barcoded, and I would say around 50% of them are going through our automated facilities. And I think, Sue is about to bring another facility on board next year. So this will be an area of continuous enhancements. What was the other?

Stuart Simpson: So Damian, we've got five, six machines rolled out. We got plans to rolling out and...

Moya Greene: Keep going.

Stuart Simpson: The 12. But we constantly look. So I think the key thing for us is we're getting better performance at these machines than we planned. So we're really, really pleased with them. That actually opens up other opportunities. From a CapEx perspective, they're not particularly expensive on an individual machine basis. So really pleased. We'll roll out and they're doing a great job. I'm thinking GLS in terms of performance to the acquisitions that it may [indiscernible] over the last couple of years, we're starting with Spain. We're up to number two express in that market, fantastic job. Integrating really well, we bought another small one this year, really, really performing strongly. Looking at the U.S., we have put the two businesses together now with a bunch of costs associated with that. A small business that we bought up in the Northwest, we cleaned up some customers, we had some customers that we're not paying enough to cover the cost, so we've cleaned them out. So that subdues it a little bit this year, but in terms of the logic, which was linking up the whole West Coast, that is going really well. We're actually seeing good growth in that interstate traffic. So again pleased with that.

Moya Greene: Yes, I think overall, the numbers speak for themselves. This is -- it takes a while to integrate them and get the operating performance up, I think Rico and his team have gone up very quickly on that front, Spain's fabulous. And as I said, he is not a newcomer to any of this. He's been doing this for 25 years. So all good.

Damian Brewer: The parameters are progressing.

Moya Greene: Progressing, you ask that question every year. It goes up every year...

Stuart Simpson: It goes up. That's progressing...

Damian Brewer: I'll probably ask it again next year.

Stuart Simpson: We'll send you a dictionary next year to know the meaning of progressing. Damian, would you mind passing it the back? Thank you.

Alex Paterson: It's Alex Paterson from Investec. Congratulations on the results. Two questions if I may, firstly, looking ahead you talked a little bit about the trials and what the future may or may not hold, could you just elaborate a bit more if -- could you just sort of say what these trials are, when you think you'll be starting them, when you'll be able to tell us more about them, what might constitute success from them, and give us a set of a broad route map of what we should expect going forward when you might need -- sort of announce more. And then secondly, obviously, you have a very strong balance sheet, even accounting for the 100 million timing difference on the pay, how might you deploy that going forward, progressive dividend well covered by the cash that you're going to generating the CapEx cycle has peak and so on. Could you use that perhaps to buyback employee stock, which would be, I believe, the tax sort of threshold or vesting on that would come through in October, November this year. Is that something that you could do? Would you look at more acquisitions? Could you look at another return on capital to shareholders?

Moya Greene: Well, on the latter one, I mean, I think we have to leave that for Stuart and Rico and Sue to talk to you about it. The only thing I would say about it is we are never going to be lazy in terms of deploying our balance sheet. The fastest way to ruin a company with a high degree of operating leverage is to load it up with a whole bunch of financial leverage. So we're going to be sensible about what we do. I have known my colleagues here for all the time I've been here, and I don't know them -- either one of them to be racy on the balance sheet side. I don't think you need to worry about that or expect too much from that, depending on which side of that -- it depends on where you're sitting on. Then the other thing that what I would say is that matters of strategy, they evolve, not revolutionary, they evolve. And I think over the past two years, you have seen how strategy has evolved at Royal Mail. And I expect my colleagues are going to want to talk to you about that in the coming months. And so we just have to sit tight.

Stuart Simpson: So a couple of highlights in the trials. The first one is the PDA. So every person has a postal digital system [Indiscernible] small thing, essentially. The agreement that Moya struck with the union is to let us turn that on and see where they are at all times, which is already a big deal for postman. If you've been working, essentially unsupervised, unmeasured, unmonitored for the whole of your career, to have that visibility is a big deal for them. But the agreement says we can do it, the trial is starting over the next two to three months, where we will gather all that data, understand how we can use that to refine our planning, so that's one example. We can do that for people working outdoors, also the people that are working in our mail centers. We don't have clocking in and clocking out. It's like putting in things like that, bringing in digital visibility to the operation. Moya also mentioned the bar-coding. Learning and understanding how we can see the traffic come through the pipeline. So we know how much work is going to land the delivery office. That gives scheduling opportunities, particularly on the variable hours. So once we get better customer visibility, we can barcode them, they get scan through the network again, you got an opportunity to refine your costs, down at a delivery office level. So those are a couple of examples that are being trialed over the course of this year. We'll let you know how we go.

Moya Greene: They also protect your revenue. When we started putting, we invested 70 million. And I remember when my colleague, Stephen Agar, came to me with that investment, it was about five years ago, and I had to swallow really hard, really, I remember saying to him 70 million for a business that is in structural decline, that is a big investment. And he said to men, "No, Moya, this honestly is going to pay for itself in two years. So after much thought and consideration sure enough it did. The way it paid for itself, is he told us where people were just systematically underreporting how much volume they were giving us. They were -- there were some very big names in the U.K. if I use some very un-British language that was systematically ripping us off. And so now that we have put barcode -- we put mail mark now on 90% of the mail that can have a mail mark on it has got a mail mark. Well, bar-coding our parcels has given us opportunities to protect our revenue exactly the same way but on the parcel side. It's probably less of a surprise to you than it was to me that we got some pretty big companies that did that will give us a bag of parcels, and they're not entirely truthful about actually how many are in them or what they weight. So now we're able to go back and really starting enforcing the surcharging provisions that have always been in our contract. So these investments, you're putting in place in year one, they land you in many times efficiency operations -- efficiency opportunities in year two or three, but they also lend you revenue protection opportunities.

Samuel Bland: Two please. First one is where we might expect a little bit of our higher volume decline rate in letters going forwards, sort of very generally, would you tend to expect a slightly higher rate of price increases to broadly offset that such that the revenue trends are not much different from what we might have seen in the past? Or do you, for fear of not wanting to cause a price elasticity effect, tend to keep the pricing broadly unchanged. And then on the 230 million of cost avoidance target, also similar to last year, but there's not another sort of multiyear target that you've laid out. Just get a sense if there's any reason to think that beyond FY '19, the level of cost avoidance that might be achievable doesn't sort of suddenly tail off or decline.

Moya Greene: Well, my colleagues are going to come forward, as Stuart said, on the cost avoidance program. But just take solace from the fact that nobody is going to do anything with that office of cost reduction. They are going to be just as busy as they always were. So let us give our colleagues a chance. In terms of the revenue transport for letters, and we are very careful about pricing. We don't -- we got a business in structural decline, and we need to try to offset the impact of that on our business to some extent with pricing. We are very-very careful, though, and we look at the dynamics that play out for every stream of letter mail, whether we're talking access letters, letters that are coming to us by our customers who are [indiscernible] operators, whether we're talking about the retail addressed letter and that is coming from business, whether we're talking consumer mail, whether we're talking consumer mail domestically, consumer mail internationally. Marketing mail, whether we're talking addressed marketing mail, with a national drop to earth plan to it or we're talking regional. So there are many-many streams of letter mail and the price that you can sensibly apply has to be looked at in terms of the dynamics that are in operations at a particular point in time. So generally speaking, we try to keep our business intact by pricing sensibly. I don't want ever my regulator to look at me and say, you're gouging your public, thankfully they don't think that. They think that we are delivering value for money. In fact, we are the only consumer-facing company of all of them that have been looked at where people say Royal Mail delivers value for money. So I don't want ever to change that. I want to be us, as a company, to always be found to be fair. But at the same time, we do have a very big challenge. We have a very big stream of traffic that is in structural decline, has been in structural decline for over a decade. And so we look -- I would say, we spent more hours on this single topic than any other one, including the CapEx project to try to figure out exactly where we should put the pin in. So that we do not accelerate e-substitution, we don't cause people to feel that we are gouging or unfair. But we realistically try to deal with the unavoidable fact that a big part of our revenue is in structural decline. So it's a balancing act that is refined on a per stream of traffic basis. Does that give you a bit of a picture?

Stuart Simpson: So just briefly, I think I've already said this right at the top of the list. Moya and myself sort of to look into the next three or four years. One of the things Moya and I have said many times when we were out meeting investors is our challenge is actually deciding which operational change activities, cost avoidance activities to undertake. The list is longer than our capacity to execute. So yes, I'm confident we will keep going. This is not something I see stopping. If you can just pass the microphone. I think it was -- you got it. Good.

Moya Greene: He got it.

William Howard: William Fitzalan Howard, Berenberg. Just on your 50 million export market, do you have any sense of what the B2B versus B2C splits in that? And if you do, what the growth rate differentials are? And then secondly, you spoke about the weather effects in Q4 on the service levels, do you have any sense of whether that impacted volumes as well, or was that some other reason why it looks like versus your nine month number, the parcels volume in the UK were slightly lower in growth?

Moya Greene: I don't think that the weather may have affected the timing of the receipt of stuff because if the highways are closed, nobody can get it there. But I don't think it affected our volumes. I think volumes are not as precisely forecastable, it depends on people's propensity to spend, it depends on where the consumer is thinking and sitting at the moment, it depends upon the forecasting of the big online retailers, which is good, but it's not perfect by any stretch of the imagination. I think one of the things that my colleague, Nick Landon, has to deal with and is probably one of the bigger bugbears on a daily and weekly basis is that forecasting is not a precise science when it comes to parcels. In terms of the international traffic coming from Asia that we sort at our Heathrow facility, and then back it out into Europe as a destination, that is a very important growth area for us, that has grown from like zero to 50 million in a very short space of time. I think most of it is B2C, the stuff that's coming from Asia. If I look, it's mostly B2C. If I look at who those shippers are, they're mostly B2C.

Stuart Simpson: Questions at the back.

Unidentified Analyst: Okay, from Liberum. Moya, you've talked a lot in the past about Royal Mail having a maximum absorbable rate of change. Firstly, do you still think that is the case? And secondly, when you think about things like the trials or anything else, do you think that there's anything that might increase that sort of maximum rate of change?

Moya Greene: I do think at any given point in time when you are working through 140,000 people, there is only so much change in a particular area that human beings can absorb. The tools you give them can help them go faster on an individual basis. So I'm not saying that it's static, and it doesn't ever accelerate. I think for example, the PDAs and the software that is on the PDAs is going to help us accelerate the rate of change in particular areas. But at the end of the day, there's a human being, that human being used to do the job this way, and now they're doing the job that way. And it may not be just one change that is going on, it may be three or four at the same time. And you always have to gauge it, is this too much, is it too much in a particular area. I have given speeches on this because we can dream of technology advancement and we can explain how the advancement will occur. But one thing that I think managers always overestimate, and maybe this comes from being 64 years old and having seen various technology revolution in the course of my lifetime, the one thing that managers always overestimate is how fast they can get people to accept it as the way, the only way that they do their job. So what we've learned and we've learned it the hard way, we have overestimated just like everybody else, we're certainly not perfect. We've overestimated how long it would take us to get something done. And actually in certain cases, it's taken us more than twice as long to get that something done. And I think that this is a normal managerial frailty. We see a benefit, we see how it could really improve what we're doing, and then we overestimate our ability to bring it on board or to bring it on board nationally. And that is just going to be a forever drag on it as far as I'm concerned. But from an individual's point of view, the more tools that you give that individual, the more that individual becomes relaxed with that tool, that individual can see their own ability to absorb change accelerate. But you still have managers. And then the other thing we found is that we can resource and monitor and make sure delivery is occurring for only about 100 projects a year. If we try to do more than that, and again this is something that we've learned the hard way. We actually can even supervise them very well, they get too unwillingly. And we're in literally 3,000 different places, and I'm only talking the core network. It's -- you can envision it and speak about it, but practically speaking your ability to manage it, in my experience, is generally overestimated.

Stuart Simpson: Any more questions?

Moya Greene: Okay, then...

Stuart Simpson: Okay. Thank you very much.