Angling Direct PLC (ANG) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Angling Direct PLC Investor Presentation. [Operator Instructions] And I would now like to hand you over to the executive management team from Angling Direct plc. Steve, good morning, sir.

Good morning, everyone. Welcome to the Angling Direct 2025 Financial Results. It's been another record year for Angling Direct, record sales underpinned by MyAD, the development of our customer loyalty and repeat purchase platform. And we've also deployed a significant amount of capital in line with our medium-term objectives and the capital allocation policy we published back in December. I'll just take us on to the RNS slides where we give an overview of the RNS we put out last week. We'll cover a lot of detail later on in the presentation, but some key standouts from the RNS. U.K. record sales of GBP 86.4 million as we take an increasing step towards that GBP 100 million ambition. Gross margin progression of 130 basis points, particularly proud of that in an ever competitive marketplace. And indeed, we still remain -- have an incredibly strong balance sheet, just over GBP 12 million of cash on our balance sheet with clear plans how we deploy that surplus liquidity. Some real operational highlights at the foot of the RNS there. Again, I'll cover a number of those as we step through the presentation, but those link very much with the deployment of capital and how we see sort of driving our medium-term objectives. Here, we set out for those not familiar with the story, our purpose, our vision and those 6 medium-term objectives we published last year. Our vision is to become the largest Angling club in Europe, and we've been making increasing strides towards that, again, particularly using our MyAD proposition to be the cornerstone of that. Those 6 medium-term objectives on the right-hand side, we've got a clear ambition to get to GBP 100 million revenue within the U.K. I'll give an overview on the next slide of how we're progressing towards that. The second objective set against that GBP 100 million target is we've got a clear platform now to deliver greater than GBP 6 million, 6% EBITDA ratio -- adjusted EBITDA ratio, excluding IFRS 16 and IFRS 2, alongside that GBP 100 million ambition. Underpinning both of those is the creation of our MyAD repeat purchase and loyalty platform. Again, I've got a slide later on in the presentation. I can give you some more color around that. We've made incredibly strong progress in the year on that. And we've got over half the U.K. licensed Anglers now who are a member of that scheme. Development of a sustainable European business. We see Europe as a target market with scale that is very similar to the U.K. When we talk about Europe, we're primarily talking about the Netherlands and Germany as the closest 2 key target markets that we can access with our current operational platform. Fifth, our deployment of our surplus liquidity. This time last year, we had over GBP 15 million in the bank. We've used that in line with our capital allocation policy, driving that down to GBP 12 million and clear plans to get to a liquidity position more commensurate with the need of the business on an ongoing basis. And sixth, we are Angling's Retail's largest employer now. In the peak, we touched around 500 colleagues in terms of numbers as we went through that summer season. And as we continue to scale what we do for our colleagues and how we present to our customer, particularly around some of our ESG credentials are becoming increasingly important. The 6 objectives are how we're tracking against those. We try to sort of set out in a digestible fashion how we're performing against those. So the U.K. GBP 100 million target, 11.7% growth up to GBP 86.4 million. We've set out that GBP 100 million target. We have a clear path now to deliver that by 2028. We had a very successful year this year in terms of rolling out both our U.K. store footprint and continuing to move that digital business on. If we continue to sort of operate at the levels we are right now, there's an increasing capability for us to get there by financial year '27. In terms of the EBITDA performance, our EBITDA performance growth tracked in line with the sales, particularly pleased with that given the cost headwinds retail continues to face both from a cost of colleagues with the living wage alongside increasing energy and property costs that continue to persist and not abate. A particular strength within that was our gross margin journey, and I'll let Sam cover that in terms of the building blocks that underpinned within the U.K. 140 basis points progression in the year. Europe's largest fishing club, MyAD, as I said, we're at 409,000 members. That's over half the licensed anglers in the U.K. That's an 86% growth on the prior quarter. And what's increasingly important is not just the number of folks who are engaging in that proposition, but we've got an increasing suite of data that we can use for personalizing offers to customers and thinking how we use our marketing money more in a more efficient fashion to target those customers. I'll give some more color on the specifics around how we look at our customer cohorts from MyAD in a moment. Development of a sustainable European business, like-for-like EBITDA, so that's excluding our store in Utrecht, which we opened in May last year. So our like-for-like EBITDA performance improved 26% against a 7% growth of revenue. Europe remains a challenging market in terms of retail price point, but we continue to believe that there is a segment of the revenue within Europe that we can access and turn that into a sort of capital accretive business. The Utrecht store, as I said, opened in May. We continue to scale that. We've got over 500 unique customers per month in Utrecht now. That is starting to follow a maturity curve that we would see traditionally in the U.K., which is particularly pleasing given it's a new catchment and indeed a new territory for us. Deployment of the surplus liquidity, as I said, we've taken the cash balance down to just over smidge over GBP 12 million now. We did 6 new stores in the U.K. last year. That was a blend of 3 greenfield sites and 3 acquisitions. And importantly, 2 of those acquisitions were smaller format stores where we're increasingly confident there's another layer of catchments beyond that GBP 100 million U.K. revenue that we can access with that proposition. New brand -- new own brand storage and distribution capability. We opened an own brand logistics facility in the Midlands, specifically just to source and to -- fulfill own brand. We've made a standout job in terms of operationalizing that quickly. And indeed, in April '25, our own brand sales this year are already 70% up year-on-year, showing the value of the investment of that last year. Further automation of U.K. online fulfillment, we made a 7-figure investment last year in terms of an automated packing machine for the third-party distribution center in the U.K. We were looking at less than a 4-year payback on that investment. That investment is operationalized, and we're starting to see those savings come through the P&L account, and we're increasingly confident that the business case that underpin that investment is robust. We commenced a GBP 4 million buyback last year, and that indeed, we're looking to renew those permissions for the buyback in our June AGM this year, and that buyback is scheduled to run until December '25. Our ambition was to buy back up to GBP 4 million worth of shares, subject to a cap in terms of valuation. That buyback continues to operate effectively, and we've spent around GBP 1.5 million of the GBP 4 million, and it's pacing just a shade below GBP 4 million as we sit today. M&A opportunities in the U.K., we continue to evaluate those on a case-by-case basis, and we do see those as a realistic opportunity of building our own brand capability above those brands that we already operate today. Finally, our Angling's retail largest responsible employer, a lot of good stuff that we've detailed in the presentation around how we're looking at waste, how we're looking at energy. One of the things I'm particularly proud of is the work we're doing with the Angling Trust around their water quality testing, how we can support their ambitions there, how we can generate a data bank that we can conflate with the environment agencies work and drive more engagement and knowledge around some of the issues that British Waterways are facing. A bit more color about MyAD. So here, we've set out what is it you can access through being a MyAD member. Monthly money can't buy prizes, 1,000 everyday deals, special AD exclusive deals and bundles and member-only benefits that folks can get discount on sort of complementary products that Angling Direct doesn't sell, but Anglers would increasingly use as part of their Angling experience. Again, the data this sort of proposition is providing is increasingly important. For instance, we can see now that around 60% of our customers are store-only customers, however, those customers only generate around 40% of our sales. Our omnichannel customers, our most engaged customers are running around 20% of our customer base, and they're driving just a smidge over 40% of our sales. The opportunity to convert store-only customers into an omnichannel customer is a clear opportunity for the business. And increasingly, we're leaning into that by procuring a further data platform. We can use all of the MyAD data to plumb into and access some of that personalization and create those personas of customers so we can target them more effectively. We see that as a real strength to how we're going to use our data in FY '26. And indeed, some folks may have seen our first quarter sales, 17% up year-on-year is where we're starting to see some of the benefits of this targeting we're able to do [indiscernible]. The business review set out here by some of the strands, a number of the elements of the year. I'm not going to read out every single one, folks can digest those. I'll just point to a few on each of the pages. In the U.K. customer, particularly the last bullet, we've trialed something called Shop the range is that's our internal name for, where we've built a technology platform where in store, we're now able to offer customers complete access to our 19,000 core SKUs that we range digitally. That enables the customer with a PDQ machine attached to the tablet in store to make that purchase and have that delivered to the store or their home next day. We see that as a two-to-two pronged approach to how we use our footfall in store, one to maximize our conversion where increasingly, we may not be able to offer a customer what they precisely would like in store, but still be able to fulfill their demand in a timely fashion. And secondly, we can start to get folks into the digital journey if they've only ever been a customer in-store shopper with us before. On U.K. retail, the living wage was a standout in terms of the cost pressure last year, around 9.8% increase in that. We remodeled our opening hours, used our sort of increasing bank of footfall data to look at when our customers are engaging with us in store, and we're able to shape colleague hours and contracts to meet that -- those peak demand hours. Our ratio of how we look at our sales versus our colleague costs in our stores actually only went forward about 3% in terms of ratio. So we were able to comfortably get ahead of the cost pressure itself in terms of the living wage. And we've got more that we can go on that using our sort of increasing levels of data to drive decision-making against that. Linked to that, the bottom bullet, we trialed 3 digital shelf-edge labeling solutions. That gives us the capability to be able to change the shelf-edge label without deploying colleague time to make that change. We've trialed those 3 solutions. We've picked a preferred supplier for that solution. That is in excess of a 7-figure investment for us, but the strength of the colleague time that we'd be able to remove/redeploy in the operation gives us comfortably within a 4-year payback on the investment. We're quite excited about that, and that is one of the ways we've looked to mitigate this year the cost of the NIC increases and further living wage improvement. On the right-hand side, U.K. digital, at the back of the pack, there is all our digital stats. One of the standout as we took forward our conversion by 150 basis points. We continue to deploy increasing levels of technology in the website and our desktop experience, in particular, continues to strengthen. We've seen that as a clear differentiator in terms of our sales performance, getting that 8% growth in the digital business. And alongside that, the deployment of the automated packing solution enables us to keep ahead of living wage pressures within the distribution center and look at how we optimize that fulfillment to customers. Europe, increasingly, as I said, we're confident there is a market we can access with a sustainable business model. We continue to be sort of meticulous around how much more cash we're putting into that start-up business. The second bullet really plays to that. We have, in the year, done a drop-ship model with 2 of our suppliers such that we can increase our range by about 2,000 SKUs without increasing the working capital demands of the business, and we're able to fulfill that customer demand within sort of 2 to 3 days even based on that drop-ship model. We see that as a further opportunity for this year to increase customer choice without investing further cash into that fledging European business. As I said, we opened our first European store in the Netherlands. We see the Netherlands as our first sort of test case in terms of omnichannel, and we're going to look to prove out the unit economics of the Utrecht store this year with a view to then assessing further bricks-and-mortar deployment into the Netherlands at the back end of this year, early next year. We asked -- this will be its first full season. We only opened Utrecht in the middle of May last year. And the early signs, as I said earlier, of the maturity curve it's beginning to progress towards as well as the unique customers we're serving in that store gives us some confidence that it's going to be a successful trial. Commercially, own brand remains a key focus for us. Our SKU count in own brand is now going to be over 800 this year. We're increasingly engaging in categories where the customer is agnostic about the branding of the product or indeed our brand strength becomes sort of increasingly known to the customer. As I said, that own brand logistics capability in terms of driving up our year-on-year sales and our year-on-year availability is increasingly important. And indeed, the own brands that we have in our stable right now are delivering over about 11% of the gross margin pound notes that the U.K. business is generating. Final bullet on the commercial side, evaluate opportunities for scale brand partnerships. We see it increasingly important that we will need to sort of proliferate our brand -- our own brand stack beyond those we have in the stable today, and we continue to talk to the most appropriate parties about how we might mutually do that together. And finally, on the right-hand side, the communities and sustainability. As I said, the water quality testing is something close to my heart. We've got over 400 water quality testing kits that we're going to be disseminating for the Angling Trust, and we're looking to push that on further as we look at how we could introduce that for S Series as well as other areas of the waterways. On that point, I'll hand over to Sam for the financials.

Good morning, everybody. So just starting on financial review. I'm not going to dwell on this first slide for too long because we'll get into more of the sort of segmental detail over the next couple of slides. So just to start with a few headlines. So from both revenue and adjusted EBITDA perspective, we've continued the momentum that we started building in FY '24 and have strengthened that into FY '25 in line with the delivery of the medium-term objectives with revenues up 11.9% and adjusted EBITDA up 20% with that delivered firstly, in the U.K. through the store portfolio in terms of both new space and growth in the existing portfolio and through a strengthening online presence as we deliver our consolidation strategy, both in-store and online. And in the U.K., building profitability through both significant gross margin progression and also whilst leveraging the cost base whilst facing into some pretty significant cost headwinds in the year around national living wage and premises expenses, but also whilst continuing to invest in the business to enable the delivery of the medium-term objectives, and we'll come on to explain some more on that shortly. And then secondly, in Europe, where we focused -- really focused our efforts on delivering earnings accretive growth to deliver year-on-year lower losses alongside some further reductions in the fixed cost base. And to deliver that continued growth and to enable the delivery of the medium-term objectives and also in line with our new capital allocation policy we published in December, we stepped up our investment program that started in the second half of FY '24 in terms of the automated packaging machine and the new space pipeline. And as a result, in the year, we've invested GBP 2.5 million into working capital and GBP 4.4 million in capital expenditure, more of which I'll come on to when we get to the cash slide shortly. So moving on to a bit more segmental detail and breaking. Firstly, the group revenue growth of 11.9% down into a bit more detail. U.K. sales were up 11.7% to GBP 86.4 million. So we remain on the flight path to the GBP 100 million target by FY '28. We are also now, as you would have seen on some of the statements that came out last week using a total U.K. like-for-like measure as the business becomes increasingly joined up in its omnichannel proposition, both from a customer engagement perspective, for example, in terms of MyAD that Steve was just talking about, also in terms of how we leverage the cost base and stockpile to drive increasingly profitable and working capital efficient growth. So this U.K. total like-for-like measure is a combination of both the store like-for-like performance and the U.K. online business in aggregate. And that was 7.1% up in the year, which was really sort of a tale of 2 halves with H1 being 2.2% and then strengthening to 12.6% in the second half. And you'll see from our Q1 sales we released last week, that momentum has continued into the new financial year. Then just looking at the 2 U.K. trading segments in a little bit more detail. U.K. Stores were up 14.2% to GBP 50.7 million, and that was driven by increased footfall across the existing estate, reflecting the strong customer offer and the success of our consolidation strategy with U.K. store like-for-likes at 6%, again, strengthened over the second half from 1.8% in the first half to 11.3% in the second half and new space over FY '24 and '25 contributed GBP 4 million of revenue in the year as we delivered our accelerated new space program, and we're really able to get ahead of the opportunities as they presented themselves in the year. Moving to U.K. online. Sales were up 8.4% to GBP 35.7 million with our focus being on driving cash contribution growth with conversion again driving this, reflecting the strong customer offer and success of the consolidation strategy, but also alongside some additional technology deployment around product recommend. In Europe, sales were up 14.1% with the online business up 7.1%, again, strengthening in H2 versus H1. H1 was backwards at 3.2%, but then H2 strengthened to 20.4% growth. Again, as we focus on that sales that delivers a unit economics that reduced the EBITDA losses. And the key target markets of the Germany and the Netherlands performed well and both strengthened in H2 with Germany up 15%, being 3.1% in the first half and 30.1% in the second half and the Netherlands up 6.3%, which was backwards 7.6% in the first half, but rebounding to 24.7% growth in the second half. And just as a reminder, we deprioritized France because of the adverse contribution ratio versus Germany and the Netherlands as our primary focus remains to be on reducing the losses. So France went backwards year-on-year by 7.8%. The trial store in Utrecht delivered revenues of GBP 300,000 in the year, which aligns to some of our U.K. stores that have a slower burn before hitting their sales flight paths. And we've used these slower burners as a benchmark given Utrecht is launching from a much lower brand recognition based in the locality versus a typical U.K. site. So moving on then to the profitability of the group and starting in the U.K., where the gross margin progressed 140 basis points year-on-year to 36.7%. And that's a significant gain year-on-year because this time last year, we would have been talking about 10 basis points improvement year-on-year. So this year's improvement is a significant step-up and really one of the key levers in dealing with the significant cost headwinds we faced in the year. So just to take you through the components of that 140 basis point progression year-on-year. Firstly, own brands contributed 60 basis points with the gross profit pound notes generated from our own brand growing 49% year-on-year. Third-party suppliers contributed 40 basis points to both terms and supplier mix and the latter of those delivered really through optimization of the range architecture. Lower levels of promotional activity contributed 20 basis points, in particular here as we continue to refine how we approach Black November. Service-based income of commercial marketing and in-store service revenue around real schooling, polar [indiscernible] and the newly launched real servicing have added 10 basis points. And then finally, shrinkage has improved year-on-year, adding another further 10 basis points, where we really started to see the result of the significant actions taken over the last 24 months in this area. In Europe, the gross margin was backwards 10 basis points year-on-year with the key driver of this continue to be the competitive pricing environment, where we still see heavy discounting on new and sought after products in particular. But the primary focus for us in Europe remains on reducing the losses. So the key measure here for us is the contribution ratio and not just the gross profit margin in isolation. And this is also in terms of, again, us making sure we get the right unit economics after the variable cost of [picking], shipping and paid search. Crucially, that contribution margin improved by 230 basis points year-on-year to minus 3.3%. So whilst we're still not quite at the breakeven point in contribution to the fixed overheads, we do continue to make significant progress through both our new third-party logistics arrangement and as I said before, deprioritizing France in the sales mix. So just moving on down through to the adjusted EBITDA. So group adjusted EBITDA growth was 20% year-on-year. The U.K. adjusted EBITDA margin was maintained at 4.9% in the year with both stores and online delivering EBITDA growth in line with the sales growth, consequently both maintaining their EBITDA margins and U.K. group overheads remained flat as a percentage of U.K. sales. So it's just important just to highlight as well in there, there are 2 key fundamentals to explain why on a headline basis the adjusted EBITDA margin hasn't progressed year-on-year, especially in the context of our GBP 6 million adjusted EBITDA target. So firstly, in the year, as I said before, the U.K. business faced another significant year of cost headwinds, particularly in FY '25 around National Living Wage and also significant premises cost increases. But secondly, we've also made some significant investments in the year that have impacted the year-on-year adjusted EBITDA margin percentage. But these are really essential to then underpin the growth towards the medium-term objective of GBP 6 million. So just to help understand or explain the underlying impact of this, if we take the new space we did in FY '25 and mature that out to where we think we can get that and also remove the one-off legal fees of executing that new space, annualize the investment we've made in the new own brand distribution center in Wednesbury, annualize the automated packaging the savings and then just add back the one-off cost of relaying the warehouse in [indiscernible] to install the Autopack machine and to move things over to Wednesbury, then our adjusted EBITDA margin would be sort of 30 basis points shy of the 6% target we're trying to get to by FY '28. So that gives us increasing confidence that we remain on target to deliver the GBP 6 million by FY '28, and that's even despite the continuing cost headwinds we face, particularly around the most recent employees national insurance increases. And then finally there, just moving on to Europe. The adjusted EBITDA losses improved 26% year-on-year on a like-for-like basis, which excludes the Utrecht store through the improved contribution ratio, as I've already mentioned and really then alongside the fixed cost savings we made in the year, which were about GBP 160,000, which equates to about 20% of the fixed cost base. And then finally, just moving on to the cash bridge. So we had a net cash outflow of GBP 3.7 million in the year with the standout being the GBP 6.9 million, you can see that we invested in working capital and CapEx in line with the capital allocation policy, but also to enable the year-on-year growth and the delivery towards the medium-term objectives. So just putting out those 2 key movements in the year. So firstly, the GBP 2.5 million we invested into working capital was predominantly around new space, which was about GBP 1.5 million of the GBP 2.5 million, and that's obviously in terms of getting stock on the shelves in the 6 new stores we did in the U.K. and the one we did in Utrecht. And then own brand investment of GBP 1 million with us planning into FY '26, another year of considerable growth in our own brand offering really to kind of get us on that pathway to delivering the 6%, but also just conscious of the continuing cost headwinds we're facing. And then secondly, you see that we invested GBP 4.4 million into CapEx, real standouts in there being GBP 0.5 million of that GBP 4.4 million is kind of a timing flux where we'll import our store racking from Taiwan in batches just to optimize the unit economics and to also make sure we've got it here when we need it for fit-out purposes. So some of that GBP 0.5 million will get offset against future CapEx commitments as we get through '26. GBP 1.8 million of the GBP 4.4 million was then the fit out of the new space, as I say, in terms of the 6 new stores in the U.K. and the one in Utrecht. We also spent GBP 0.5 million on the [indiscernible] stores in Chownsford and Walden Cross, 2 of our larger stores. We delivered the balance of the automated packaging of GBP 600,000, which we then operationalized in Q4 at our main distribution center in [indiscernible] near Norwich. We had a GBP 300,000 investment into the Wednesbury distribution center, which is the new own brand logistics hub and the other standout being around about GBP 150,000 investment into the shop the range technology rollout, which Steve mentioned earlier. And then thirdly, just on that bridge there, the buyback program. So as Steve already said, we've kind of done GBP 600,000 at year-end and GBP 1.5 million as of a week ago when we released the annual results, and that continues to travel well. So just to briefly summarize before I then hand back to Steve. So we've invested cash in line with the capital allocation policy and to also enable the delivery of those medium-term objectives. The sales and adjusted EBITDA momentum we started to build in FY '24 has continued and strengthened in FY '25, and it gives us a firm foundation from which to deliver the medium-term objectives, both in the U.K. and Europe. And with that, I'll hand back to Steve.

Thanks, Sam. I'll just set out briefly some of our focus areas for FY '26 as we travel through this year, having got the first quarter under our belt. There's a lot of detail here in the presentation for folks to digest. I'll pick out sort of 2 or 3 points across each of the pages that sort of stand out for myself. Firstly, on U.K. customer, how we continue to leverage that MyAD data bank that we're increasingly building. In the last quarter of last year, we contracted with a business called [Ametrial], who are an established sort of data platform in terms of how you build those customer personas and use that data. We've seen those in terms of being very successful with both Whittard and [indiscernible] consumer brands. So we've got some really strong sort of industry testimonials against those guys, and we see that as a differentiator of how we can drive the value from that data set and the proposition we've built with MyAD. And then increasingly, just the last bullet there, the Evaluate data-led retail pricing optimization, the use of digital shelf edge labeling and our capability to be able to change prices more frequently and dynamically rather than rigor and routine of a fixed number of days as we do currently in the stores will give us the capability to use a lot of the information we've already got around competitor stock deck, competitor offers in the moment where we'll be able to pass or play or choose to nuance our pricing in response to those. We haven't built any of that upside into our business case in terms of our investment into the digital shelf-edge labeling. So we see that as a sort of tailwind to our numbers in the latter part of this year and particularly FY '27. U.K. retail in the middle there, the second bullet, we are now actively seeking out more of those smaller catchments in terms of a space footprint. Traditionally, a U.K. store would be around 4,000 square feet. We increasingly see that sort of just shy of 2,000 square feet as a real opportunity for us to get into catchments, which are of the size that we believe we can take value from. But indeed, you need a sort of commensurate stock and colleague deployment and rent deal that sits against that. We're going to start to sort of turn up the heat on that in the second half of this year with a view to giving us a decent launch point and pipeline into FY '27. On the right-hand side, U.K. digital, the deployment of more contemporary technologies on our website remains a priority. Indeed, we've already done so in the first half of this year with some sort of modest tens of thousand investment in further technology, looking at persistently regression testing your front-end code in terms of any bugs in the customer experience, and we're seeing that being successful in those first quarter numbers. And lastly, just on that, I think we have launched a competition offering called AD Win. That complements MyAD in terms of it being the capability for a customer to buy tickets to win prices in terms of Angling equipment. We see that as an effective way of sort of keeping secondhand product out the market, working with suppliers where there has been a bit of a -- sort of a number of folks who've done that and it's pushed too much secondhand product into the market. We think we can win that with a more compelling offer and then start to sort of tailor what stock ourselves and the supplier wish to go into the market through that competition offering. In Europe, our focus remains Germany and the Netherlands, as Sam said, we've had a good first quarter in those with our digital trading up in double figures across those territories. And we're going to expand the drop ship capability further beyond the 2 suppliers we currently work with to further extend customer choice, but also sort of mitigate those cash headwinds against the business as we still establish its credentials over the next period. Commercially, growing our own brand offer remains a focus. We have got a new Commercial Director in the business. He brings the blend of retail experience having previously worked for Unilever with a number of their brands, and he's also a passionate Angler. We believe that sort of complement of understanding Angling, understanding Angling product, but the way that you optimize a retail operation is increasingly important. It is an enthusiast product. It isn't a sort of a generic product where anyone can buy and understand what customer needs are. Further on down the bottom, we're sort of taking a more AI-led approach to our ordering, our purchasing. We're looking at different technologies we can bring in there. We've already got some well-established code based on that. We think there's some overlays we can make using AI to develop that further, which gives us the opportunity both to optimize our stockpile, but also look at where we're offering choice or actually can remove choice and still deliver the cash this business needs to generate. And then on the right-hand side, one of the other pieces, we've made some real strides in the year around fishing line recycling. We did a 35% increase to 1.9 million meters. We see that as a really sort of an engaging area for both our customers and our suppliers. We're going to continue to push that on in FY '26 as a component of our ESG credentials that we've set out in our annual report. Finally, our outlook slide. As you'd expect, we remain focused on delivering those medium-term objectives. We've been pretty clear in the pack when we think we can get to those objectives that we've set out. We continue to work to accelerate those ambitions. And our Q1 '26 sales at 17%, we think sort of underlines our credentials in terms of how we're bringing these building blocks that underpin the medium-term objectives together. In Europe, we remain focused on that controlled growth, prudence, discipline, rigor, how we can increase the digital business and decrease those start-up losses as well as making sure we optimize the opportunity in Utrecht such that we can then with confidence, go at the Dutch market in terms of a further sole rollout. And then that underpins our confidence to move further afield should that be successful. Lastly, to mitigate those further costs that are coming at us in terms of NI and the living wage and increased property costs, as I said, digital shelf edge technology is our key lever to do that. And increasingly, we're going to look at other technologies we can deploy to get ahead of those costs. Overall, we are increasingly confident we can get to those medium-term objectives, and we think they give -- should give folks confidence that we remain on the right path to deliver those in line, if not accelerate ahead of those objectives. That completes our formal presentation. Thanks very much. Well, a couple of seconds to see if any more questions come in, and then we'll take the questions that we've got in front of us.

Perfect. Steve, Sam, if I may just jump back in there. Thank you very much indeed for your presentation this morning. [Operator Instructions] I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions throughout your presentation this morning, and thank you to all of those on the call for taking the time to submit their questions. But Steve, Sam, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you.

Okay. So question one, could you explain the advantage of the omnichannel model, how you're maximizing the MyAD Club? From a U.K. market perspective, only around sort of mid-20% is actually a digital market. This does remain a heavily store-based market. It is sort of an experiential category. There is a community aspect to it. As I sort of quoted earlier, 60% of our customers are store-only customers. Clearly, there's an opportunity to move that, but it isn't a growing digital market. There is very much a sort of static mix in terms between that physical and digital customer base. We see that as absolutely key. Indeed, there are very few other omnichannel offers within the market. It's a consolidating market. We've seen over 20% of independent retailers close the doors over the last 24 months. Omnichannel is the way to engage with the customer base, provide choice, consistency of service, and we believe that is increasingly the way the market will operate. How are we maximizing the MyAD Club? I think I've sort of given quite a bit of color on that. We've got clarity over who spends what, where. And increasingly, we can think about why is that? Where are we not getting the rest of the customers' Angling wallet, what do we need to do differently to access that? We think we've got good data points on that and good technology that will help us understand that further to maximize that as we grow through this year. Second question, how do you intend to deploy the cash pile? Can shareholders expect further buybacks or dividends? So -- as I said, we're on GBP 12 million. We have got clear ambitions in terms of new space this year. Again in the U.K., our belief is we need to do at least 6 new locations in the U.K. this year. We've opened one in Chester so far this year, and we've got a fairly rich pipeline in terms of greenfield opportunities with a smattering of small M&A opportunities for stores alongside that. That will be a key component of our cash deployment. I'd encourage folks to go and have a look at the capital allocation policy that we published back in December. That sort of gives some guardrails in terms of where we're looking at deploying the cash. Digital shelf edge is clearly a 7-figure investment that fits within that sort of technology element and investment element of that capital allocation policy. We see that as crucial to delivering the medium-term objectives and continuing to get ahead of labor cost headwinds. And then in addition to that, there will be very low single million M&A opportunities that the group can engage in terms of thinking about that partnership or brand stack. And then alongside that, we've got the GBP 4 million buyback program running where we'll continue to evaluate that. And based on all of those components, the cash balance at the end of FY '26 could be as low as GBP 6 million. We think that's more commensurate with the level that the organization can operate with comfort against its medium-term objectives. As the policy sets -- the capital allocation policy sets out, we'll continue to review the sort of the appropriateness of that capital allocation policy as we rebuild the cash balance as we go through delivering those medium-term objectives. Our buyback program of GBP 4 million, we think is sort of adequate and commensurate with where the cash is forecast to be at the end of the year. We'll again review that within the next 24 months as to how that forms part of either another buyback or a dividend strategy in light of where we go on that medium-term cash forecast. Question three, how do you think the business is -- sorry, do you think the business is likely to receive the takeover bids given the valuation? I'm not going to speculate on whether we will or won't get any. What I will say is the business is trading on about 4.5x forward on an EBITDA basis, excluding Europe. We are increasingly of the view that isn't reflecting the value this business is generating nor is it reflecting where we believe the increasing confidence is around the medium-term objectives. Clearly, the share price is always a focus for the Board. We have seen a little bit of a tick up to around 42p. The buyback continues to support some buying where we think it's appropriate to do so. And we continue to be optimistic around some flows in terms of continuing to push that share price north of where it is currently. Next one, [indiscernible] this is -- I'll read this up. Imagine a significant unforeseen disruption to your industry in the next 5 years, something beyond the typical cyclical changes or technology advancements you're already anticipating. What is the single most critical capability or cultural trait within this organization you believe will allow you to not just survive but potentially thrive in that new landscape? And how are you actively fostering that capability or trade today? Do you want to take this one? I think what is important to sort of express is we are a multi-brand retailer. Customers do not buy single brand baskets. Customers buy what they need for their Angling and there is an increasing need to understand how Anglers think what is the most recent trend in Angling, how does that sort of portray itself in terms of buying patterns and how can we see what a typical customer is and isn't buying. One of the things we are passionate about and what we've increasingly done is particularly with the change of the commercial director is, you have to have anglers who are commercial individuals that understand the business. We think that blend of the 2 is increasingly important. We've seen our most contemporary competitor close its doors in terms of a business that attempted an omnichannel strategy, both a digital offer and built up to around 3 stores. They weren't able to sort of harness those 2 elements together. And increasingly, this isn't a margin-rich business. Rigor, discipline, understanding is absolutely crucial, and we believe we've got that now in terms of the strength of our management team and the other colleagues that are within the business. And we'll continue to foster that because we think that is a key differentiator for us. Please -- next one. Please, can you discuss seasonality in your business you may -- you made 6% EBITDA margins in half 1 and 1% in half 2 with comparably stable gross margin. What drives the volatility? Do you want to?

Yes. So I guess there's 2 sides. The first one is in terms of our gross profit percentage during the year. And in the summer seasonal months sort of May building into June, July, August and then building down into September is where we get most of our sort of bait and terminal tackle sales, and that tends to be the highest sort of margin in the sort of category stack. So we see particularly sort of peak levels of gross profit on a percentage basis in those summer months. And probably the larger element of that kind of sits in H1 versus H2. And alongside that in H2, we sort of see our promotional months, particularly around Black November and sort of December time, where, again, you'll see a slightly lower gross margin percentage. And then in terms of then the flow-through to EBITDA, that's then the relatively gearing impact between the fixed element of the fixed cost base versus that gross profitability. So in the months where we've got both lower MyAD sales and also more promotional activity, the fixed element overgear in those months, which reduces the EBITDA percentage. And as I say, that just tends to be because the summer peak is slightly more biased to H1 than it is H2.

Next question, let me just read -- we are pleased to see the new LTIP being announced given the strong operational performance in the last 12, 24 months, but also the substantial focus on shareholder returns, which remain lackluster. Please can you help us understand the accounting of this and the P&L costs we should be -- sorry...

Should be modeling.

Please can you help us understand which where you will only deliver 4% EPS growth given the substantial top line, a loss-making operation can exit and a significant share buyback. I think that's one we're not going to take in the moment. I think that's too detailed for us to do. We'll have a look at how we put something back to Investor Meet company that we can share back on the site for that one. Next one, you referenced 2026 consensus in the press release, but you do not confirm you can meet or beat it despite the current trading. Please, can you confirm a clearer view on the current outlook given the NI increases? Do you want to take that?

Sure. Yes. So the consensus for 2026 is GBP 3.8 million -- sorry, GBP 3.8 million, that's the group EBITDA. And that's been consistent for the last sort of year or so. Even despite kind of, I guess, the October autumn statement where the employers National Insurance was announced, we've kind of held firm on that. And even then as we kind of travel through our sort of annual internal planning process, we've held firm on that again. And as we've entered the year, we continue to remain confident about that. So I think from a sort of our perspective, we're pleased that we haven't had to kind of come off that GBP 3.8 million despite another year of challenge from a cost perspective. But that's really a testament to all the sort of innovative work that's gone on in the background to make sure we stay in that strong position.

Next one, go down. You spent GBP 740,000 on acquisitions. Please, can you remind us the payback you expect on this investment compared to organic growth? Yes, do you want to?

Yes. So we did 3 acquisitions in the year. And of that GBP 740 million, just to remind people, so just to kind of, I guess, pick out in there that the vast, vast majority of that is on stockpile. So typically, when we look at an acquisition opportunity, stock obviously forms the key component because all of those deals are structured as trade and asset deals rather than sort of buying a legal entity, if you like. So they're underpinned by a stockpile, which typically has a sort of 80%-ish crossover with what we would have as our stockpile. So we're confident in what we're buying because we'll do a full stock before we enter into any agreement. Now just in terms of then how that fits with our planning. So an acquisition and a greenfield kind of stack up in the same way. So we're making sure that when we go in on a sort of prudent basis in terms of our assumptions within the model that we're trying to get to a 4-year payback on those investments. And when we look at all of the stores that have been done historically that have reached the payback, there are a few that haven't yet reached the payback, which tends to be sort of an older cohort of stores from sort of pre-2020. But of all the more recent ones that have reached their maturity, sort of average 3.5 years. So our model that we use is on the prudent side, and we would expect to come in ahead of that. But as I say, whether that be greenfield or an acquisition, that's the sort of economics that we're trying to get it back up on.

As you have opened a number of new stores during Q1, it makes it difficult to judge the underlying progress. So could you say what like-for-like sales were in the U.K. and Europe in Q1, Do you want to take that one?

Yes, sure. Yes. So U.K. like-for-likes in Q1. So February was -- if you remember, it was a bit of a soggy start to the year, so a bit of a challenge in February. But then March and April have come back strong. So overall, on a sort of U.K. total like-for-like basis, we're sort of getting close to sort of mid-teens in terms of our like-for-like growth. But as I say, that's the amalgamated stores and online performance. And in Europe, the online business has had a more challenging start to the year as we saw kind of in the previous year. The winter period tends to be where we get a lot of competition in the market on the pricing front, which hits the margins. So they only went forward just a smidge -- only went a smidge forward year-on-year. But since the end of Q1 have kind of come back to strengthen as we then enter the peak season in Europe. So a strengthening picture in Europe.

Let me -- sorry, -- why no stores in Cumbria, -- any plans to change that? I think what I'd say on that is we've got a fairly sophisticated model in terms of looking at where we believe there are catchments that can be served. From an effective sort of return on capital perspective, we look for north of a 20% return on capital from a single stand-alone store where we don't believe we can access that catchment with that model, we don't put a store in that. As I said, our increasing sort of appetite for those smaller format stores, we think opens up that opportunity. We're always of the belief you need around GBP 600,000 in a store to make that effective. We think there's around GBP 250 million of the market that can be accessed through that GBP 600,000 catchment. We'll continue to sort of drive our property guys to look for those catchments where we can meet those economics. Next one, just -- Europe remains a drag on performance. Can you say in which year you expect Europe to break even, outline the steps to get there? So in the interest of time, we've set out we believe we can get to breakeven by 2028 in our medium-term objectives. We believe we can do that with one store and our digital offer. As I said, the digital offer is around ensuring customer choice, strengthening those contribution margins as we look at all of the components. One of the things we didn't highlight perhaps strongly enough in the first half of the presentation is we did do a third-party logistics agreement in the back end of last year, which enables us to outsource our operation in terms of pick, pack and carriage in Europe, and that's going to help underpin the progression year-on-year in terms of our European ambitions. We think there's more to go in leveraging that, use the drop ship operation and continue with our sort of product authority and our increasing brand strength in Europe. As I said, the store goes into its maiden [term] fishing season in terms of being open for a full year, and we're seeing increasing green shoots that, that store can start to perform in line with what we'd expect from a similar U.K. store outlet. I think that concludes all of the questions we've got there in terms of the time. So I'll hand back at that point. Thank you very much.

Perfect. Steve, Sam, that's great. And thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But Steve, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Yes. Thanks very much, everyone, for attending. Appreciate the time. There's a lot of other information in the deck. I'd encourage you to go and have a look at it. We think our sort of level of disclosure is sort of punches far beyond the scale of the company. We think there's enough there for folks to really get under the skin of the business. We think we've given enough sort of credence to how we're traveling against our medium-term objectives. We're increasingly confident on those, and we think those underpin a valuation that's far beyond what's on the screen today. Thanks very much.

That's great. Steve, Sam, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Angling Direct plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.