Currys plc (CURY) Earnings Call Transcript & Summary

Good morning, and welcome to Currys Peak Trading Update Webcast. I will now hand over to CEO, Alex Baldock. Please go ahead.

Thank you, Sergey. Good morning, everybody. A few words from me before Bruce and I take your questions. In short, a pretty successful peak. We did what we said we'd do, which is getting the Nordics back on track, and it's now in recovery, keeping up some encouraging momentum in the UK&I business. And looking ahead, we now expect profit to be ahead of consensus and on the back of strong balance sheet and liquidity. We think that we're well set to build on this strengthening performance as and when consumers -- the consumer sentiment rebound. In December, we updated you on a solid first half performance, and the sales during peak were mostly consistent with our first half trend. With the exception of the Nordics, which saw a significant improvement from minus 6% to minus 2%, nudging up the group like-for-like trend slightly from minus 4% to minus 3%. What's sold well? Well, first of all, mobile was a really well-performing category, especially in the premium end, over GBP 900 mobiles were up 4% year-on-year, and our share of that premium segment was up 260 basis points. New form factors like Flip and Fold, Samsung Galaxy Z Flip 5, for example, sold especially well. And all of this was helpful in driving our mobile ARP up 15%, all helped by some strong trade-in offers. Headphones went well, not just AirPods, but the over-ears. In TV, which had some weakness overall, but not at the uber supersize 98-inch plus segment, which went well, and we're expecting that trends to accelerate in the busy sporting calendar year this year with the Olympics and the Euros. Gaming was good. PS5 sales and -- with Xbox Series X not far behind, helped by some AAA games releases and the Meta VR headset is showing some very promising growth. Appliances, the energy-efficient trend is still going very strong with air fryers powering ahead, up 60% year-on-year, A-rated appliances. Both washing machines and dishwashers are sharply up. But also there's good signs of a trend for refurb products as well. Good for the planet, yes. Good for the customers' pockets in a cost of living crisis that can get hold of premium-end appliances for much less when they're pretty low, but also good for us because they tap into some capabilities that we've got that others haven't got on repair and have them at scale. So we can do that and do it profitably. So a successful peak then, an upgrade on the profit expectations and allowing us to stand by our expectations of an improved year-on-year cash position at the near end -- the year-end. So let's get into the peak starting with the Nordics, which is now recovering. And that's despite a still tough market with consumer confidence, it's bottomed out, but it's not showing much signs of improving yet, and that's feeding into still soft demand, especially in Norway and Sweden. Inflationary pressures might be easing, but competition is still intense. So a challenging market, but our response is much improved. I mean, the leadership team is dealing with this challenging situation very well and producing more engaged colleagues, back up to record highs after a dip last year and more satisfied customers with customer satisfaction up 40 basis points year-on-year and 2 full percentage points year on two. And we're showing a really good balance, I think, in our trading between sales and margin rates in the Nordics. I mean we remained the clear #1 market share in every market with stabilized market share, while we've substantially grown gross margins. You'll recall, we flagged 190 basis points growth in margins in the Nordics in the first half, back up to levels of 2 years ago. And peak has seen the continuation of this positive trend as adoption of margin-accretive services and accessories has improved and just as we're not chasing less profitable sales with better pricing discipline and lower promotional intensity in the Nordics. And on the cost side, we're making more of group synergies. We've moved to a single group IT function. We're offshoring more with Infosys and making the most of group synergies on goods not for resale procurement. And that added to efficiencies in stores, contractors, marketing, is solidifying this GBP 25 million a year of permanent cost out in the Nordics flagged last time. So Nordics, getting back on track. U.K., meanwhile, some encouraging momentum continues on the foundation of more engaged colleagues now up to the top 5% of companies worldwide and driving some robust profits as well. So we're keeping our gains on gross margins, which were stable over peak, while continuing the cost out that sees us on track for GBP 300 million out by the year-end. And on UK&I gross margins, this stability stems from 5x. We're not chasing less profitable sales because -- with a better understanding of end-to-end profitability, we don't have to as well as getting some good efficiencies on PPC and some better pricing disciplines. We're doing a much better job of selling -- sold with solutions more than that moment as well as services. And as the customer experience improves, so we can charge more for it. And finally, supply chain service operations costs, which land in the gross margin line here, are down too. I said more in a moment on sold with solutions. What we mean by that is if there are fewer customers in the market, we want to make the most of everyone and sell them everything they need. And adoption -- customer adoption of solutions is up fully 11 percentage points year-on-year. Nearly 1/3 of products are now sold with a solution, and that's true online as in stores, and it's true in every category. In computing, for example, instead of just selling you a laptop, we're doing a better job of selling the software, whether it's Infosec Security or Microsoft Office 365 and doing a better job of selling peripherals, mice, keyboards, bags with the laptop. That's good for the customer. They get everything they need. They have a good deal on the bundle. It's good for us, significantly higher margins. Not just computing those TVs, we are doing better job of selling the installation services and peripherals like brackets and cables with the tele on mobile. We're doing a better job of selling the connectivity in the cases and the screen protector with the phone. On appliances, we are doing a better job of selling the dust bags and the fabric softening balls. So right the way through, thanks to better availability of all of these peripherals and better bundles that meet customer needs. We're doing a better job of selling these high-margin software services and peripherals with the hardware. Not stopping there, and we're certainly not happy with where we've got to, it's better, but it's still not good, especially online, which might be up 220 basis points through things like the bundle builder that we look mandatory in peak. But it's nowhere near the big improvement of a higher base that we've seen in stores fully, 1,880 basis points up year-on-year. So on solutions online, a big area of focus as is the growth of the impulse range that you'll see getting bigger in both channels in 2024. We've also focused on customer satisfaction boosting and profit boosting improvements across the customer journey. So take delivery and installation as an example. We do 3 million big-box deliveries a year, just under 1 million of them installations. And we've been focusing on getting it right first time for the customer. So making sure the customers there when turn up, making sure it's not damaged -- the product is not damaged when it arrives, fewer technical failures, all driving fewer repeat visits and higher customer satisfaction and higher profits. So delivery and installation alone, GBP 9 million of annual cost savings, which worth -- remember that's worth more than 1% like-for-like sales. Lowest customer acquisition costs, as customers recommend us and it improves installation adoption, up fully 600 basis points year on 2 as well as, as the customer experience improves, we can charge for it as we did with deliveries. And those 2 things together, delivery and installation mean that D&I revenue per order is up for more than threefold year on 2, high-margin revenue as well. But delivery and installation, clearly that these improvements translate into customer satisfaction, up 200 basis points year-on-year and -- but not the only area where we've improved. Order and collect satisfaction is improved by 12 percentage points, as wait time comes down. Both the store and the online purchase experience satisfactions sharply improved, as is the total store and online experience satisfaction. So -- and on stores, for example, improved time to sell and online better customer experience in areas like search, filtering, bundles and the like, all of this driving quite pleasing improvements in satisfaction across the board and translating into record overall customer satisfaction stores. Still, we're not happy with where we are. There's a lot more we can do on store wait times and the order and collect process much improved, though it is, it's got further to go, but we do like the trajectory. So we're making ourselves easier to shop. And then -- and we're also this peak built more customers for life, customers who keep coming back through the services that Currys is fortunate to have at a range and a scale denied to any competitor. And we've made -- and services that makes a significant in-year as well as longer-term economic contribution. It's worth remembering GBP 700 million of product sales are on our growing credit book and a further 13% of our revenues from all of our other services. And credit -- to say one example, the credit that produces customers who are happier, who spend more and come back more reliably, that continues to grow well. Customer numbers up 25%, adoption now over 20% of our total sales, those up 240 basis points. We've done this through better user interface, better promotions and partnership with suppliers, stimulation of the existing book. Now 63% of our credit sales are from existing customers, but we're not happy. I mean -- and we're on with further improvements, for example, more personalized offers and campaigns and credit a better user interface in every channel, more to come from credit. And repair is the other big service that's had a strong peak, up 170 basis points overall. And it's through the best customer proposition that we've got in our repair proposition. It's based off the best capability. We're the only retailer with our own repairs facility. As those of you who attended the event in Newark in September would have seen for yourselves, Europe's largest tech repair center, 1,000 expert colleagues repairing everything from TVs to laptops to mobiles to appliances. Those of you, by the way, who didn't see -- didn't make it, can see all of this online. And this gives us capability that nobody else can come close to. And repair is great, obviously, for the customer's pocket in a cost of living crisis, it's good for the planet, and it's good for our profits, which is why we intend to do more of it and do a better job, by the way, of shouting about it. And much more to do here as well, notably replicating our success in credit online, in repairs, where we lag significantly. And we also want to do a better job of selling mobile insurance. The mobile overall is back into healthy profitable growth, a bit of a highlight for us with all of the historical issues that we've had in this category and especially strong in premium, as I mentioned, the Apple iPhone 15, we were selling every 3 minutes during peak and foldable phones of adding some excitement and innovation to the category, ARP nicely up. And iD, our own mobile virtual network operator, our own mobile subscription business, that's also going well, 29% up. Customer numbers over 1.6 million now on climbing through excellent value through good agreements with 3 and Vodafone on the connectivity and also good execution in the channels. We're building something valuable here. And there's more to come here too, with a new app, with better billing, with e-com improvements, more to come on mobile subscriptions. So we're doing what we said we'd do in the Nordics as well as in the U.K. And finally, we're ensuring we stay financially healthy as well with the debt and pension total liability down by GBP 0.5 billion a year on 5 and we expect net debt at year-end to be better than last year-end, which was GBP 97 million. And with the expected Greek disposal that should take us or will take us into a net cash position. So to conclude, in an environment that's doing us no favors at all, these are solid results, good progress. Nordics getting back on track. UK&I are continuing to strengthen with services that boost gross margins and long-term value in particular highlight with balance sheet and liquidity in good shape and a Greek disposal will further strengthen that. So I think we're proving our resilience today as well as our fitness to prosper as and when the macro picture normalizes. So with that, I'll pause, and we'll go to your questions.

[Operator Instructions] I will now take our first question from Richard Chamberlain from RBC.

A couple from me, please. I wondered if you could just give a sort of update on the sort of topic du jour, one of the moment in the market, which is shipping disruption and how is Currys thinking about sort of managing through that? And then second, I think you called out in the statement Norway as improving in the Nordic area, sort of helping to offset Finland. But what about the Swedish market? What's going on there? And how do you see the outlook for that market?

Okay. I'll let Bruce lead off on the impact of Red Sea, and I'll build on it.

Yes. So I think the first thing to say is clearly very early days in terms of the situation. We have got a robust level of stock within our business, good availability. So from a supply chain and a stock perspective, no impact. From a cost perspective, clearly, we're coming off the back of a couple of years of very high levels of cost across shipping. And therefore, when you look at the cost at the moment, they are favorable for us. Now clearly, we remain vigilant and make sure we've got good contracts in place going forward, but clearly, it's an area we're staying very close to.

And just to build on that, Richard, I mean zooming out of it, I mean, of course, if the conflict in the Red Sea were to escalate or to endure, it's going to affect everybody. But as it stands, we don't expect and we're not experiencing significant disruption. I mean there are a few products that having up to 14 days delays, but it is a few products. And it's worth remembering, of course, that supply chain disruption is not a novelty for us. We've been dealing with waves of it for years now, and it does help being #1 in our market that we're first in the queue with suppliers when stock is scarce, which is one reason, by the way, we were able to post availability 21 percentage points higher over peak than 2 years previously. We've learned a few things. I mean, we've got up to 6 to 8 weeks cover on key lines to give ourselves some buffer. And all of this is one of the things that's enabled a successful peak trading. So we're watching it very closely. No significant immediate disruption to report. The Swedish market remains -- we're looking prudently when it comes to our planning across the whole of the group, and that's true for Sweden as well. I mean consumer confidence has stopped getting worse, you can say that. But it's fairly rebounded as yet. There's a very high concentration of home ownership in Sweden, and they're all variable mortgages, which have hurt disposable income. So it's tough. It's a challenging market, but that's true across the Nordics. I mean we said that demand is still soft. And even though inflationary pressure might now be easing, competition is still intense. And so it's our self-help that we're relying on. And it's that good progress, excellent progress on gross margins, allied to some strong cost discipline, which leaves us confident of a significantly improved year-on-year profit performance from the Nordics.

Matthew Abraham from Berenberg.

To start with on the market share expansion that you've called out, could you just talk about which names do you think you're taking share from? And the team names in which you think you're winning share? And then the second question is just a query in reference to the mix. It seems as though a higher uptake of some of your premium products have contributed to the strength of this trends, just wondering how sustainable you think this mix is and the key factors that you think are driving a higher take-up of some of those premium products in your range?

Right. So on the first point, Matt, I mean just to clarify, what we talked about was stabilizing market share in the Nordics and while we're not giving numbers to anything, but we flagged some market share erosion in the U.K. in the first half. And we're not flagging a change to that over peak. Now two important things. In the U.K., the point to make is that we're not solving for market share, what we're solving for is sustainable profits and cash flow. And that's the thing that's most important to us. We're not chasing less profitable sales. And so we consciously forgone some sales when it comes to, for example, spending less money on PPC, digital marketing, when it comes to being more disciplined on pricing to name but 2, of course, though, we want -- there's a balance here because we enjoy the benefits of being #1 in our market. So we intend to hang on to that market leadership. At the same time, as we're looking to continue the march forward on margins and so there is a balance here. But I think a successful peak in the U.K. as in the Nordics shows that we're probably getting more right than wrong when it comes to market share and the balance with margin growth at the moment. When it comes to -- by the way, one last thing to mention on market share is some of these improvements that we've made, whether it's better PPC efficiency or better understanding of end-to-end profitability by supplier, by product, by category, and we'll be coming up to anniversary on that. So we're not flagging the likelihood of continuing -- indefinitely continuing erosion of market share. That's not our intention. We like being #1, but at the same time, we're solving for sustainable cash flows here. Your point about premium but -- the specific point was about mobile, within the mobile category, the premium segment did grow. And we did grow about 160 basis points, I think, our market share of that premium segment. And that's driven by good product innovation. And I mentioned the Samsung Galaxy Z Flip 5, a foldable phone as an example of that. It's not necessarily true right the way across the piece. We didn't see significant ARP growth, for example, in TVs, but what we -- or in the bulk of computing. We have seen it in appliances. And there's a different trend going on there, which is energy efficiency. The consumers have become much savvier about looking at the total cost of ownership of the washing machine, for example, helped by us helping them to see those -- that picture. And that means that they're willing to pay more for a more premium product upfront and return for lower lifetime costs through lower energy bills. So there are different dynamics going on in different segments, Matt. I mean, mobile and appliance has been the 2 examples.

We will now move to our next question from Warwick Okines from BNP Paribas Exane.

A couple of questions, please. First question on costs, have you got any further thoughts on how to deal with the minimum wage increase in April? I appreciate that's the next financial year, but just any comments you might have on that. Secondly, on costs, you said you're working towards the GBP 300 million of cost savings by year-end in total. Does that mean you're on track to deliver sort of GBP 60 million in the second half? Just share that I've got that right, please. And just third, if you don't mind, the CapEx has been -- your guidance has been cut from GBP 80 million down to GBP 70 million, which was already a number that you had said was being managed very tightly. Can you just give us a look on how you're thinking about CapEx into the new financial year?

So I'll let Bruce take the points on costs and on CapEx. But let me start with your question on the minimum wage. I mean, again, this is a question of getting the balance right. We like the fact that we're able to upgrade profits -- profit expectations, and we intend to keep growing profits over the medium term. And one of the ways that we do that is by having the most capable and committed colleagues in the market with our colleague engagement in the U.K. now at 82, for example, putting us in the top 5% of companies worldwide and reward -- and the reward opportunity is a big part of that. And we've invested unapologetically in those colleagues, 14%, an increase in base pay for frontline colleagues in the past year alone, and we intend to stay competitive. And that means we need to find a way to absorb and deal with the inflationary cost pressures that the government is mandating. So there's no real change there. By the way, since you mentioned the minimum wage, I mean, it's not the only cost burden that the government is putting our way, whether it's rates or the recycling proposals. We're arguing hard for a change of sentiment from government on a few proposals that are going to be counterproductive as well as expensive. But that's one side. The main point here is that we've got the benefits of having engaged colleagues. The engaged colleagues themselves are behind the gross margin improvements and the profitability improvements that we're driving in the U.K., and we don't intend to let that go.

Hi, Warwick. Yes, so maybe covering off your 3 points. So how do we think about the minimum wage impact. Clearly, we've got a focus on maintaining and continuing to drive down the cost within the organization, and that will continue going forward and will allow us to offset some of the inflationary pressures that Alex described. In terms of the GBP 300 million, as you know, that was a U.K. number. And as we talked about in December, we're on track to deliver that. So the GBP 60 million that you described, in H2, is pretty much where we expect it to be. But I'd also remind you that we've got a cost program within our Nordic business as well, as we focus on getting the profit back on track within our Nordic business, and that will be incremental to that number. The final point on CapEx, the reduction from GBP 80 million to 70 million. I think perhaps the most important thing to say, and this is true on most areas where we've changed our guidance in terms of some of those cash flow items. There's a big element that relates to FX. So the NOK has devalued by rough between 12% to 15% over the course of the last year and that is having an impact. But of course, that's also having an impact on our profit number as well. So when we're talking about this step forward in guidance, that's despite some significant headwinds. The other half of the CapEx reduction is really our ongoing focus on making sure that we're maximizing the returns that we get from all the money that we're investing. And we are maintaining that focus. Now as we come into next year, we are likely to perhaps relax some of those constraints that we've got in place, but we'll talk more about that at the year-end.

Just one other thing, Warwick, while you're asking about mitigating the minimum wage, it's worth -- one example that might be useful to you. I mean our stores' customer satisfaction increased by 500 basis points year-on-year. And that's despite us making some savings in the total number of hours that -- of colleagues that we have in store. And we achieved that while increasing the number of customer-facing hours that we have [ for store ] colleagues. And the trick there is process improvement. And we're not done with that. There's a great deal more that we can and intend to do on process improvements in the stores that will reduce the total number of hours while continuing to improve the number of customer-facing hours. So that's just one example of a mitigant that we intend to build on.

Adam Tomlinson from Liberum.

Three questions for me, please. The first one is just on the U.K. and coming back to that gross margin stability that you highlighted in the statement. Now obviously, we've had some of your direct peers in the space worn on profits really around gross margin coming in below expectations. So keeping hold of those gains you've made over the past few years, really interested to understand how you've done that over peak. And particularly in an environment that your competitors are noting is very -- the consumer remains very price conscious. So it's great to sort of run through those details. The second question on the Nordics. I think you spoke about your competitors behaving more rationally in these markets. So good to just get some more color on that. And I think there's been a little bit of M&A as well in that space. So just whether that changes anything in terms of the competitive landscape for you? And finally, sort of overarching question, both territories there, just around subscription numbers and loyalty schemes and the ability of those, the opportunity there to continue driving repeat purchase and customer lifetime value, just -- some thoughts on that would be great as well, please.

Right, three big topics there, Adam. So I mean, first of all, to answer your question on how we're able to keep gross margin stable, while others perhaps are having less success at that. I think it speaks to some of the things that we've got that competitors simply don't have. I mean the solutions selling, for example, I mean, that depends on really well-invested channels. It depends on capable and committed colleagues, who've got good tools and are well motivated in the stores. It depends on a top-class commercial team negotiating good terms with suppliers for bundles that encourage the customers to take them. It depends on the investment -- the heavy investment that we've made in our online channel that allows us to put in innovations like the bundle builder, for example. And the results of all of this have seen this big jump forward in customer adoption of complete solutions rather than buying a product on its own. Now up to nearly at 30% of all products are sold as part of a solution, 1,100 basis points up year-on-year. So -- and this is hard work that depends on some real capabilities that we've got at scale that others perhaps don't have. So that's certainly true of services, the other big driver of gross margin improvements that we've seen. And we have -- we've built over years this credit business that's now over 20% of our total sales. It's hard work doing this, but I'm glad we've done it because that's good for customers, but it's also very good for in-year margins and for longer-term value. And then the repair facility that we -- the repair capability that we talked about before. You can't just magic up an 11 million customer repair capability overnight. I mean no one else could realistically replicate what we've built in Newark of 1,000 colleagues in Europe's largest technology repair center. I mean these things take years to improve. And we've worked hard to do so. We're not happy with where we are on all of this. And there's a lot more to come, but we are happy with the trajectory with our repair up 170 basis points year-on-year. So -- and then there's mobile subscriptions as well. So we've got assets that I hope we're making better use of that others simply haven't got. And that can explain our gross margins. It's for others to explain theirs. I mean your second point was on the competitive environment in the Nordics, there has been some M&A, yes. I mean NetOnNet and Komplett have dropped together and Power brought out MediaMarkt's Swedish business, for example. There are rumors about 1 or 2 others. And everything else being equal, that's helpful as the market consolidates. We don't see competitors having to desperately discount to get rid of excess stock. That's walked through, by and large. And -- I mean the competition is still intense. We're not planning otherwise. I mean we -- for example, the grocers in Denmark are still using some electrical goods as loss leaders that makes life complicated, Power themselves are investing heavily in marketing, as they rebrand the MediaMarkt's Swedish business. NetOnNet, Komplett are opening new stores. So it's not that the competition has become any less intense, but it is perhaps a shade more rational. And -- but ultimately, we're not depending on consumer sentiment recovering. We're not waiting for it. We're not waiting for the competition to change what we're getting on with our self-help actions. And that's the 190 basis point improvement in gross margins in the first half that we flagged as well as the cost disciplines that Bruce spoke to. So -- and with no help from the market, that's leaving us confident to doing much better on profits year-on-year in the Nordics. And then finally -- I mean, I've touched on this already. You asked about the various drivers of loyalty. I mean, we are fortunate in this business to have a number of them. I mean credit customers are much likelier to come back and make their next purchase from Currys. So as we increase the proportion of our sales on our own credit product, and it's just overtaking credit card, by the way, as the #1 means payment in Currys as we increased that proportion of sales on credit, so we're increasing the recurring nature of those relationships, likewise on repair. When customers sign up to a care and repair plan, they're likelier to come back and give us their business. So we keep going with that and likewise on mobile. When a mobile customer signs up with iD, as 29% more customers did year-on-year over peak, they're likelier to come back and give us their next handset deal. And that's before we start talking about our millions of perks customers and Nordics customer club members, which obviously also the more conventional drivers of loyalty, if you like, which also served to drive repeat business. So I mean, I don't know, I'd give us about 6 out of 10 in terms of our maturity on all of this, but we're improving. And there's more to come.

[Operator Instructions] The next question is from Ben Hunt from Investec.

Just to continue on that theme of adoption rates in care and repair and delivery and installation. What is exactly do you think that is driving the adoption rate? Is it the market itself? Or is it a function of you shouting a bit more louder about what you do? Is there anything specific you can do that's pushing that acceleration there...

I don't think it's shouting louder, Ben, because I think I mentioned that -- that's one thing that we're being self-critical about. We need to do a better job of it. I mean you talk about care and repair. We have this fabulous capability up in Newark. We've got 11 million customers. It speaks to customers' enthusiasm for sustainability as well as their desire to save money in the cost of living crisis, and it's profitable for us. So it's take, take, take. And we want to make -- we are making more of it with 170 basis points improvement in adoption. But we're nowhere near our full potential, and we're challenging ourselves that we need to do a better job both about shouting about it, but in the case of repair, doing -- replicating the success we've had in credit online and replicating that in repair. We're doing better at selling care and repair online, but we're nowhere near good and that's a big focus for this year. When it comes to delivery and installation, again, it's not about us shouting about it. And actually, it's not about price competition because if we're charging more for -- more than threefold increase year on 2 in terms of revenue per delivery and installation. And the reason we're able to charge more for it and the reason that adoption is growing isn't because of our skill in shouting about it, which we need to do better, it's everything to do getting it more right first time for customers whether it's turning out...

And that's despite annualizing the GBP 10 increase, I think roughly, how much more you were charging in September last year, is that correct?

Yes, that is correct.

Okay. And then are you actually able to give us a number for your market share in the U.K. for Q3 for [ P3 ]?

Well, no, that we're not guiding to, and we'll come back and report on that at the year-end. I mean we did flag that we'd let go some market share in the U.K. in the first half, more than half of it, thanks to deliberate conscious choices. We're not flagging any numbers on that for peak. But I put it this way, I mean, the like-for-like sales we have talked about and that remains steady over peak with the first half performance in the absence of a much market improvement. But that's not where our performance improvement has been driven from. It hasn't been driven from a strong market or from share gains. It's been driven by us managing to keep stable profits and continue the cost discipline that we've talked to. I think long -- we've talked about -- I touched on market share earlier, didn't dive in. We're not flagging it intention to keep market share eroding indefinitely in the U.K. We'll be annualizing on some of the improvements that we made in not chasing less profitable sales and digital marketing efficiency and pricing discipline and the like. We'll be annualizing those decisions during the course of 2024. And at some point, we'll come back and talk to you about some profitable growth plans. But the -- so we're not flagging an intention to keep eroding this, but we like being #1 in the market. We like our market-leading position. We derive some concrete benefits from it. But we -- but that's not the primary thing we're solving for. The primary thing we're solving for is sustainable free cash flows and profits in this business and that will continue to do.

Okay. And then final question, if I can, iD Mobile seems to be getting great bones at the moment. How much of it is benefiting from those with the legacy Vodafone contract switching over to iD, i.e., be switching them yourselves? And how much of it is actually you gaining incremental new business?

Well, it's not legacy Vodafone contracts. We're certainly benefiting from the excellent deals and relationships we now got with our MNO partners, 3 for iD and Vodafone as well. And we've got good arrangements with them that benefit everybody, but allow iD to offer excellent value to the customer. I mean the customer is very value conscious at the moment. And so if over peak, more than 1 in 10 of U.K. new subs in the market were with iD, it's because we're offering excellent value, and we're executing better in the channels. So that's what's behind this. And there's, I mean, more to come. We're not happy with where we are in iD. There's the app to land, there's e-com broadly to improve, there's billing to improve so that -- we're going to keep this going. And we've seen no reason why we shouldn't be able to. And what we're building here, Ben, as you know, is a valuable asset.

Thank you. And as there are no further questions in the queue at this time, I'd like to hand the call back over to Alex for any additional or closing remarks. Over to you, sir.

Okay. Well, thanks, everybody. And in summary, this has been a pretty successful peak and a challenging market doing what we said we'd do, getting the Nordics back on track, keeping up momentum in the U.K. and positioning ourselves well for -- when consumer sentiment improves and staying resilient in the meantime and putting in a pretty solid performance. So many thanks, and we'll speak to you all soon.

Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.