Currys plc (CURY) Earnings Call Transcript & Summary

Good afternoon and welcome to this Yellowstone Advisory Webinar with Currys plc. We're delighted to have with us today Bruce Marsh, CFO; Dan Homan, Director of Investor Relations; and Joe Saunders, Investor Relations Manager. While we're waiting for everyone to arrive, please could you respond to the poll on your screen and I'll just go through a few of the admin points. The format today is a presentation from Bruce and Dan, which will last approximately 25 to 30 minutes before we go over to Q&A.[Operator Instructions] Looking at the poll results, we have a sort of 60 -- 65/35 split between shareholders and non-shareholders, and I think that's all of the admin points covered. So I'd now like to hand over to Dan, Director of Investor Relations, who's going to start today's presentation. Dan, would you now like to share your screen?

Yes. Thanks, Alex, and good afternoon all. Thank you for joining us this afternoon and glad to hear that almost 2/3s of you are already shareholders in Currys. I plan to give a very brief update on our strategy and the progress over the last 12 months before I hand it over to Bruce, who's going to give a bit more detail on the financial performance and our financial ambitions for the upcoming few years. So first of all, just a summary of the year. International, after a challenging year in FY '23, FY '24, saw the Nordics getting back on track. We also, as I'm sure a lot of you are aware, completed the disposal of our Greece business at a very attractive price. In the U.K., we saw continuing momentum across the business. And as far as the outlook goes, we're planning prudently, but confidently. We're focused on profit and cash generation. We have a very strong balance sheet, which we think means sets us up for this year, the medium-term and the longer-term. So turning to our strategy, I'm sure many of you are familiar that we have a very clear strategy based around 4 strategic pillars, which is capable and committed colleagues, being easy to shop, driving customers for life, and all of that will lead to a growth in profits. I'll step through these briefly in turn. So first of all on colleagues. Colleagues are our most important assets. In a business such as ours, it's very difficult for the customer experience to exceed the colleague experience. And over the last few years, we have been unashamedly investing in colleagues, both in tools, training, wellbeing, management and reward. And we've seen that rewarded with ever rising levels of colleague engagement. And our colleague engagement scores across the group now put us amongst the top 10% of companies globally, and in the U.K. that would be amongst the top 5% of companies. The next part of the strategy is being easy to shop. And easy to shop starts with the retail fundamentals. All retailers must have the right range at the right price and be available to buy. And this is something that we keep a constant focus on. In the year just gone, we are pleased with the progress we've made on all of these areas, but notably, availability has stepped up significantly, and is now at the heights that it reached before the pandemic. Easy to shop is also about being available where customers want. And you can see on the chart on the left here that in our category, very few customers, or around -- only around 1/3 of customers want to shop online only. Over 2/3s of customers want to use stores as part of their shopping journey, and therefore having stores is a really important part of being easy to shop for customers. And I think the data on the right hand side of this chart really shows that both the market and for our own sales, the channel mix between stores and online has stabilized to a surprising degree post COVID. So the debate about whether stores are an important part of the customer shopping journey for now and into the future, I think, is now settled. The final part of our strategy is customers for life, and customers for life, really, for us, centers on services, and I think a lot of people misunderstand our business and think we just shift boxes and are just a straightforward retailer. But in fact, we do a lot more for customers than help them choose the product. We help them afford the product through credit and we help them enjoy the product through the range of services that we offer, whether that's helping them get started with delivery and installation, giving tech a longer life with our repair plans and our repair capabilities or recycling, or getting the most out of tech, importantly through connectivity. I'm going to touch on a couple of these and the progress we've made in the year. First of all, on repair, we have a really unique capability in repair. We have our own repair facilities. No other retailer operates its own tech repair facilities. And those companies that do offer technology repair outside retail don't do it on the same scale we do. So for a retailer, we are unique and we have scale that no one else does. This allows our repair plans to be tailored to what customers really want. And for example, on white goods, we don't offer accidental damage, because it's expensive to offer that and it's very difficult to accidentally damage a white goods, despite my kids trying their hardest. But we do offer a 7 day repair guarantee, which customers really want. If a washing machine breaks or a dishwasher breaks, 7 days is long enough to wait for it. We don't want customers to wait any longer. And so, we guarantee that within 7 days, we'll repair or replace that product. These unique repair capabilities and the plans we offer means that we've seen our repair plans grow quite significantly in the year. But we're still not happy with the awareness of our repair capabilities. We've shown through the year that more and more of the press are aware of what we do in repair and in recycling, and even some of the Prime Ministers and former Prime Ministers are aware, but we're not happy with our customer awareness and we still want to do more on growing the awareness of our repair product. The second area of services I wanted to touch on was mobile. Some of you will remember that 4 or 5 years ago, mobile was a big problem for this business. It was declining. It was very unprofitable and burning a lot of cash. We are pleased to say that for the second year in a row, mobile is a growing business that is profitable and cash generative. And this is predominantly being driven by iD Mobile, which is our own MVNO. iD Mobile had a very strong year in '24. It grew subscriber numbers by over 30%, up to 1.8 million subscribers. And we are seeing decreasing levels of churn, while our revenue per user continues to increase. We really like iD Mobile. It provides a complete customer solution. It's a source of recurring revenue and profit and cash flow, but it's also a [ very ] valuable asset that we're building. Some of the analyst notes out there put a value of iD at GBP 240 per subscriber. We are aiming to get to 2 million subscribers by the end of this year, which will point to iD being a value of almost GBP 0.5 billion, which is in excess of half of our current market cap. It's important to say, with all of these services, whether it's credit that I haven't gone into detail on today, or repair, or iD, that these are sources of recurring high margin revenue and our ambition is to keep growing these in the mix of the business. The final part of this strategy update that I'll share with you before handing over to Bruce, is just customer satisfaction. If you take all of the improvements that we've made across the colleague experience, the easy to shop experience and customers for life, and this leads to improved customer satisfaction, which is one of our most important lead indicators. And we're very pleased to say that we're now known as great on TripAdvisor. So our rating's up to 4.1 and we've overtaken John Lewis both on our internal metrics and the external metrics, such as TripAdvisor, as being the most trusted retailer in our category. The last bit on progress before I hand over to Bruce is just on cost savings. The final part of our strategy is to grow profits, and we reported that for the 3 years ending last year, the U.K., we saved almost GBP 300 million of gross costs, more than offsetting the inflationary headwinds that we've seen over that time. And in the Nordics, over a period of a year, we saved GBP 30 million of costs, largely offsetting the very high inflation that we've seen in the Nordics during the year. I'll now hand over to Bruce, but happy to answer questions on any of those subjects at the end of the presentation.

Thank you, Dan, and good afternoon, everybody. You will see that I'm going to walk through a subset of the slides that we shared in our year-end results. The full deck, along with the video of Alex Baldock, our Chief Executive, and myself presenting these results are on our website and I would encourage, if you want more information, to dig into those. But of course, as Dan said, very happy to answer your questions today also. So if we could go on to the first slide, which is our financial highlights for last financial year. Obviously, we come off the back of 2 very challenging years from a cost of living perspective, selling high-price discretionary products meant that the overall market in both of our key core markets, U.K. and Nordics, stepped backwards. And off the back of that, we saw our sales decrease by 2% year-on-year. But despite the drop in our sales, we saw our profitability increase by 10% to GBP 118 million. We gave a lot of focus. Our key metric is the generation of free cash flow, and we saw a big step forward in our free cash flow to GBP 82 million. And through this increase in free cash flow, our focus on our balance sheet and the sale of our Greek business, we moved from a year-end net debt position 12 months previously of GBP 97 million to a net cash position of GBP 96 million. So we're in a really, really strong balance sheet place. Earnings per share stepped forward by 7% to 7.9p, and we didn't pay a dividend last year, again, with the context of managing our balance sheet. So I'm not going to share the year results. Instead, we thought it would be helpful for you to see year-on-2 years, because this encapsulates that period of tough economic environment. So starting off with the U.K., over that 2 year period, our profitability has moved forward from GBP 117 million up to GBP 142 million. So, as a percentage of sales from 2.1% to 2.9%. Now, that step forward has happened despite the fact that we have seen a significant impact on our sales as a result of the shrinking market. So that would be over GBP 0.5 billion worth of sales have been lost over that 2 year period, which would have been based on a marginal contribution of around 20%, circa GBP 100 million negative impact on our profitability. Now, the great news is that we've been able to offset that and we'll come into more detail on the steps we've taken to improve our gross margin. We've increased our gross margin percentage for 3 years in a row and over the last 2 years by 120 basis points. And we've also enjoyed significant cost savings. So across the U.K. business over the last 3 years, circa GBP 470 million worth of cost savings, that has significantly more than offset inflationary headwinds. So as I say, despite the big drop in revenue during this cost of living position, we've been able to improve our profitability. And that is critical, because as we look forward, our ambition, indeed our strategy, is to hold on to those gross margin upsides and continue to drive them further. We will continue to manage our cost base. But as the market comes back, both the overall market, the macroeconomic environment, and some of the self-help activities I'll talk about later, we believe that we can significantly move our EBIT margins forward. Looking at the same slide for the Nordics, our financial year '22 in the Nordics was definitely the peak profit that we've had ever. Coming off the back of the pandemic, we've achieved an EBIT margin of GBP 142 million, 3.5% of sales. Last year, we generated GBP 61 million. So why the big step back? Well, there are 2 key factors. First of all, like the U.K., is revenue, a drop in our Nordic revenue of around GBP 350 million. So that would equate to a GBP 70 million drop back in EBIT. There was also a GBP 10 million headwind caused by movements in FX. You may be aware that there's been circa 12% devaluation of the NOK. So as we translate our Nordic business profitability into Sterling, that impacted us by around GBP 10 million, and that equates to the whole of the step back. Now, again, like the U.K., we're very optimistic about moving that EBIT margin and profitability forward back towards where it has been in the past. Now, some of that will come through plans that we have to grow gross margin and reduce cost similar to the U.K., but again, step forward in the market, self-help in terms of growing sales will move that profitability back to where it has been historically. Looking at cash, so this is the cash performance last financial year, and as I said in the headlines, we achieved free cash flow of GBP 82 million, up from an outflow the year before of GBP 92 million. So a major step forward. As you can see, our operating cash generation was broadly flat, but we did take a decision to dramatically reduce the level of capital expenditure in the year. We more than halved it, as we focused on the balance sheet and getting our liquidity in a really strong place. We have very strict criteria for spending CapEx within the business in terms of payback period and tight cost control when a project's been approved. We did increase the value of adjusting items in the year to GBP 48 million. That was an increase in our Nordic business, offset by a reduction within our U.K. business. And within the Nordic business, a large component of those exceptionals, indeed, all of it was relating to restructuring as we reduced the size of our head office, our regional offices, and also made some changes to our store to save cost going forward. Our cash tax paid reduced partly as a result of lower Nordic profits, but the number there for FY '23, included almost a double count because there was some timing of previous tax payments. And our cash interest paid was broadly flat, as a result of higher average interest rates offset by reduction in our average net debt. And from a working capital perspective, you can see last year, we had a cash outflow from working capital of GBP 34 million. That's really good news, because all of that relates to the growth of our iD Mobile proposition. As you saw from Dan's slides, we've significantly grown the size of our iD proposition. And as we increase the size of that base, it actually causes a cash outflow in the month that we make the sale of a mobile phone, because we've got all the cost of goods sold, but only receive the revenue over the course of the life of the contract. Outside of that, our working capital has been extremely tightly managed. With our falling sales, you would have expected a cash outflow because we've got negative payday stock, but indeed we managed to offset that through a focus on stock and payables. So on -- Dan mentioned the disposal of our Greek business, Kotsovolos. We achieved a very good price for that business, GBP 156 million. That's great news. It's allowed us to strengthen our balance sheet, as I've described. It simplifies the group, allowing us to focus on our U.K. and Nordic core business. But as I reflected, we achieved a wonderful valuation for the business. Roughly, we sold 7% of our turnover for 25% of our market capitalization. Now, that obviously was the capitalization at the point that we did the transaction. I think it also shone a light on the undervaluation of the business in our opinion. So a very, very good transaction. And the next slide shows how that has helped us really improve our balance sheet. So as I've already described, we enjoyed significantly higher free cash flow at GBP 82 million. As part of our balance sheet management, we declared 0 dividend last year, so no shareholder returns. And we also had support from our pension scheme. Cash out was only GBP 36 million, compared to GBP 78 million in the previous year. And together with the GBP 159 million that we got from the disposal of our Greek business, it meant that we had a movement in cash in the year of GBP 193 million, and hence moving ourselves to a net cash position. And as I say, that's super important, super important from a liquidity perspective, but in particular, making sure that we're taking off the table any risk of business failure, which obviously, unfortunately, in many retail businesses, has been a challenge. We want to make sure that during any downturn, we are protected from that by removing the level of debt within the business. And moving on to the next slide. You can see this hasn't just been a 1-year thing. We've been focusing on improving the balance sheet over the course of the last 4 years. And if you look at the number there for FY '20, if you look at the combination of net debt and pension deficits, we had a negative position of over GBP 800 million just 4 years ago. Through the focus we've given to the balance sheet, that number, for last year, was less than GBP 100 million across the pension deficit and the net debt. And that pension deficit reduction is particularly important, reducing it from around GBP 550 million down to GBP 171 million, mainly as a result of the contributions we've made. Our focus is to get that deficit clearly as low as possible and that will mean a reduction in contributions to the scheme. So moving on. In terms of outlook for the year, starting with our medium-term ambition. So our medium-term ambition is to achieve at least 3% EBIT margins. Now as you can see on this graph, and you've heard me say already, the U.K. business has been at or around 3% EBIT margins for the last 2 years. And that isn't the extent of our ambition as I've described. As the market comes back, as we have our self-help growth opportunities and continue to focus on margin and cost, we expect that to step forward further. And similarly, the Nordics, if you were to look back at the last decade, majority of those years, probably 8 out of the last 10 have achieved an EBIT margin of over 3%. It's only the last 2 years as we've seen sales fall away and some one-off impacts caused, in the Nordic market, by, for example, the war in Ukraine and some excess stock that was sloshing around in FY '23. Getting back to 3% should be eminently achievable. And with that step forward in EBIT margin, we'll be able to do our #1 objective, which is improving our free cash flow. So in terms of where that will come from, we've got a number of initiatives that we've been working on for the last 3 years and had success over the last 3 years in driving our gross margin forward. If I was just to cover these really quickly. So solution selling, selling accessories with the hardware, so selling a case with a laptop or selling a sound bar with a TV. We've got really effective at driving that adoption rate and that improves our margin. As you heard from Dan, driving the sales of services, increasing the adoption of credit also helps our margin. We've started to charge for delivery and installation after many years in the market of that being free, and that has substantially improved our gross margin percentage, as has a set of conscious decisions to stop chasing less profitable sales. We have put in place, over the last 3 years, a forensic view on end-to-end profitability, and that's allowed us to choose the products that we want to sell, to choose the brands we want to sell, to stop loss making promotions, to stop giving so much money to Google for pay-per-click advertising, and to make better pricing decisions. And then finally, within our gross margin, we've reduced our supply chain and our service costs. Moving on. As I said already, we've had great success at taking cost out of our business and we have line of sight to further cost savings. We've worked hard with outsourced partners for many years. GXO and Concentrix have run our supply chain, service operations and our contact center. And we've also outsourced our back office to Infosys. Over the last 18 months, we've moved circa 900 heads from our U.K. and Nordic business to Infosys and the majority of those are sitting in India. So we are getting significant wage arbitrage savings. We're also working on a group synergy basis. So for example, we only have one CIO now looking after technology for both the U.K. and Nordic business. And we've done the same thing for procurement. We focus on getting things right first time, which significantly reduce our cost base, particularly within our delivery network and our service network. And then finally AI. This is AI within our business and we're working with Microsoft and Accenture to dramatically reduce our after sales cost base by supporting our contact center and our service infrastructure with generative AI technology. And then finally, from a development perspective, as I say, growth will come from the market returning, but we're not relying on the market returning. There's a whole series of benefits. Some of them are new technology and there's been a dearth of new technology in the electricals market for a number of years. But actually, it's starting to really get momentum. And certainly we're very excited by a set of new AI driven technologies, both mobile phones, laptops and tablets. And you will have seen the new range of Microsoft products that have recently been launched with new chips that dramatically increase battery life and are super-fast and that give access to a lot of new use cases. I've talked about solution selling with add-on accessories. We see opportunities to continue to grow sales through there. It's also the customers we sell to. So we've got a very good B2C business in the U.K. and Nordic. We have a smaller B2B business with a much smaller market share. We're really getting behind B2B in both U.K. and Nordics. There are some categories where we were underweight. If you set our average market share across our 2 markets, it's 25%. There are some categories like gaming, health and beauty, where we have single-digit market share. So there's the opportunity to grow significantly and that's a key focus. Again, you heard Dan talk about services and we're going to drive those forward. And over the course of the next few years, we're starting to invest in our stores. We're refurbishing 115 of our stores this financial year and we continue to invest in our website to drive conversion rate and sales. So with all of that activity, we believe that we will significantly improve our free cash flow generation. And using last year as a benchmark, last year we generated GBP 82 million of free cash flow. I've added back the GBP 34 million of outflow of working capital because we are committed to flat working capital going forward and we will continue to manage stock and payables to achieve that. Our interest cash costs will reduce because of the improved net debt position. Our exceptionals will reduce dramatically over the coming years. And with 3% EBIT margin, our cash coming from -- cash profit will also increase. The one offset is capital expenditure. As you saw on the cash slide, we did dramatically reduce our CapEx level. We're expecting that to return to more normal levels over the coming years. In terms of our capital allocation priorities, this has been consistent for 3 years and will continue to be consistent. Our #1 objective is to maintain a prudent balance sheet. You've seen the hard yards that we've achieved over the last 3 years to get our total net debt position down towards 0. We're not going to be giving that up. We, of course, must continue to support our pension scheme and that -- we have made great success in reducing the deficit. But as that deficit goes down to 0, so the contributions will disappear. We will continue to invest in the business, but, of course, at the point that we've achieved all of that, we will then reinstate and grow the dividend and any surplus cash will be available to return to shareholders. In terms of our short-term outlook and guidance, we've had a reasonable start to the year. Good start to the year. It's been in line with our expectations and certainly in line with our year 1 ambition. We expect to grow profit and to grow free cash flow, irrespective of what happens to the market in the year ahead. We're providing some guidance. Capital expenditure, we expect to be around GBP 90 million in this new financial year. Cash exceptionals will drop from GBP 48 million down to GBP 30 million. And our annual pension contributions will increase based on contracted amounts to GBP 50 million this financial year. Final slide, I guess just to re-emphasize some of the things Dan said. We are the market leader in all the markets we operate in. We have our 4 clear strategic priorities in terms of capable and committed colleagues, easy to shop, customers for life. And all of those are working, which meant that we continue to grow profit and free cash flow. And with a robust balance sheet, we believe that leaves us in a really strong position for the future. So that's the end of, I guess, our formal presentation session. Let me hand back to Alex, so that he can serve up your questions. Thank you.

Thank you very much, Bruce and Dan. It sounds like you're well set for further progress. And the focus on cash generation and profits are definitely what investors want to hear.

[Operator Instructions] So just starting off with a question that came in ahead of time. "Can you talk about progress in the Nordics region? Is the new management team having an impact?"

Yes. Let me take that one first, and then Dan can add. We're pleased with the progress we've made over the last 12 months. I didn't share that particular slide, but as I've described, the slides are on our website. We more than doubled our profitability in our Nordic business last year from a low base. And certainly during the second half of the year, we saw ourselves taking market share. We successfully grew our gross margins substantially. We continue to take cost out of the business. So we are pleased with the progress that we're making within the Nordic operation. It remains a tough market. I think that's an important point to say. A number of our competitors continue to lose money in that market, but we're not. We're growing our profitability. We're the market leader. And as I said, the new management team, we put a new Chief Executive in, a new Chief Operating Officer, and a new Chief Commercial Officer. Those individuals have got a lot of experience of electrical retailing, a lot of experience of our outshop business, and a better place, I think, in a tougher economic environment to run that business. And certainly, we're delighted with the progress they're making. Anything to add, Dan?

No, I think you covered it, Bruce.

Okay, thank you for that. I've got a question here on the pension. "Please, could you give an update on the pension situation? When will cash payments into the scheme finish? And what will you do with this extra cash when payments do finish?"

Want to take that, Dan?

Yes, of course. So the pension, as Bruce mentioned, the IAS 19 deficit at the end of the year was GBP 170 million. Now the actuarial deficit, which is measured on slightly different assumptions, will be a little bit higher than that, but not materially higher. We have, for those of you that have looked at the results, seen -- will have seen that we've got GBP 320 million of scheduled contributions over the next 3 years, which is a lot higher than that deficit. There are 2 points to consider here. First of all, once that deficit reaches 0, those contributions will cease. And second, we have a triennial review date coming up in March 2025. We're working proactively ahead of that date to come to an arrangement that's suitable for all stakeholders, the pension scheme and shareholders. And we will do as much as we can there to potentially lower those contributions. And as Bruce said earlier, with that extra cash generation and the lower contributions, when they come, then it's available to return to shareholders.

Thank you, Dan, for that. I've got 2 questions here which have come in on AI, so I'm going to sort of ask them together, but you'll probably just like to answer them together. The first one is, what could be the impact of AI on your business? Will it lead to a requirement for more powerful PCs and/or more frequent PC upgrades? And the second question, same subject is, there is much talk in the U.S. about a significant PC refresh cycle being imminent linked to the AI products, and that in the U.S., Best Buy will be a big beneficiary. Do you foresee a similar scenario in the U.K.?

Let me start and then I'll let Dan maybe build with some color. So we are very excited about the AI opportunity, as I described in the presentation, both in terms of the computing market, but also the mobile market. And I'm sure AI will start to touch many of the other products. In fact, I was lucky enough to be with one of our suppliers last week who was showing me an AI powered fridge. But you can only imagine what that does. The -- we are excited by the opportunity that will come, partly because we think it will drive the repurchase cycle. Certainly since the pandemic, when a lot of people bought TVs and computers, that's now becoming 3, 4 years ago. It is coming to a point where that repurchase cycle will start to kick in again. And we think this AI technology will be a great excuse for people to do that. In terms of why should they do that? Well, there's lots of key use cases, but also the technology that this brings, so the speed of the PC, the fact that far more can be done on the computer as opposed to having to bounce backwards and forwards to the web. The ability, for example, auto translation from a foreign language into English; better quality photos being taken; Microsoft Copilot, which is quite clunky if you're trying to run it on existing technology, but with the latest technology, it will run seamlessly on your computer, so lots of reasons to believe. You may have seen that along with Best Buy, we were the first business in the -- first retailer in the world that got access to this technology. We have exclusivity on a number of the devices that we sell. In terms of when will this be big, I would say that there will be some upside in the current financial year, but we think it will be even bigger in FY '25. Many of the products today, as always with early adopters, are going to be high priced, which is great news, because there will be better margins on them. It'll also be relatively, I guess, niche. As we look ahead and the price points start to drop, as they inevitably will, it will become more mass market and as I say, that will kick in with a refresh cycle. Dan, could you add to that?

Yes, perhaps just to give a few numbers to give people a bit of sense of the potential scale of this. If we take the Windows computing market, which is probably the market that's going to be most impacted by AI, albeit actually early signs. The early wins we've seen in AI have been in the mobile market with the Samsung S24. But if I take the Windows market, last year in the U.K., that market was about GBP 900 million, which was 20% lower than its prepandemic level. So that market's down significantly versus prepandemic. In volume terms it was actually down 30%. So that market is significantly lower than it was prepandemic, As we've seen sort of that pandemic boom followed by a bit of a demand vacuum, so there's reasons to believe that will recover. And within that market, we sell almost half of the Windows laptops in the U.K., so it's an area where we are going to be the major beneficiary. And the picture is very similar in the Nordics. The Nordics haven't rolled out the Copilot+ PCs yet because they tend to hit the English language countries first. But when they do, the market is of a similar scale to our business and we have a similar market share. So yes, it's an area we're clearly excited about and the fact is the suppliers want to work with us. Bruce said, we were the exclusive launch partner with Microsoft alongside Best Buy. We actually had the Microsoft plus PCs on sale within 30 seconds of Microsoft announcing them. And the reason we were able to do that is because we knew months and months ahead of launch what was coming and worked with Microsoft on the launch of them. Us and Best Buy were the only 2 retailers in the world in that position.

Thank you, Dan. I've got a question here on -- quite a specific question on some trade, so bear with me as I read this out to you. "So on Wednesday, the 10th of July a massive volume of Currys' shares were traded on the stock exchange. More than GBP 29.5 million were traded, amounting to more than 2% of the issued share capital. And at about 11:12 a.m. there were 2 trades, both involving 5 million shares, probably sales. And at 4:32 there were 3 very large sales involving a total of 12.9 million shares." "I'm aware that on the 12th of July, the Currys plc employee share scheme bought about 10.49 million shares in Currys, increasing their holding from 3.79% to about 4.7% of the company. But who were the big sellers and who were the big buyers on the 10th of July?" I'm not sure if you can answer that, but there's a question out there for you.

Okay. Yes, I probably can't answer it. I don't know the answer. What I can confirm is clearly 1 trade that -- and the RNS was published, was the employee share scheme bought shares during that period. That's part of our normal annual process of buying shares to satisfy upcoming colleague share awards. So that was completed. As far as who the sellers were and the other trades, I don't have visibility of that, and so can't answer. Generally, to sort of answer in a longer time period, we haven't seen a material change in our shareholder register year-to-date. It's been remarkably stable and most of the large shareholders actually increased positions early in the year when the shares were low and have held on to those positions as the shares have increased through the year.

Okay. Thank you, Dan. We've got a couple of questions in the queue currently. We certainly got time for more than that. [Operator Instructions] So coming here to a question on the dividend, "Can you say a little bit more about the potential dividend policy?"

Yes, let me pick that one up. So I think just by way of background, coming out of the pandemic, we reinstated our dividend. But as I've described, we obviously went into the cost of living challenge. We were seeing a drop off in sales and there was a degree of uncertainty in terms of the marketplace. So we took a series of decisions. We decided to stop the dividend. We decided to stop CapEx within the business. And we also got support from our pension scheme to reduce the level of contributions. And we sold our Greek business. And you've seen the benefits that we've achieved from that, both over the last 4 years, but in particular over the last 12 months. We have said that we don't intend to pay a dividend for the year that's just finished. But our expectation is that, we would restart dividend within the next 12 months. And what does that mean? Our expectation is that we would restart a dividend for the end of the financial year we're in. We're not promising that, but that's our expectations based on our current forecast coming to pass. What would that mean? Obviously, that's up to the Board to define exactly what the dividend would be. But we would expect to start a dividend and to grow a dividend at the point that we have excess cash, as I've already described. We would then deliver that back to shareholders by way of buyback. So that's all I can say predominantly, because that's all that's, at the moment, been discussed and approved by the Board.

That's very clear, Bruce. Thank you for that. I've got a question here on the margins and the targets. "Are you being overly cautious by only targeting a return to 3% margins?"

I don't know about overly cautious, but we are being cautious. I think as we've demonstrated, getting to 3% EBIT margin based on recent history looks very achievable. We've already got the U.K. business pretty much to that level, and we have plans through sales, margin and cost to move beyond that. Our Nordic business, it's a bigger build, clearly, from the lower base we've seen in the last 2 years. But again, we've made good progress in the last 12 months. And assuming our plans come through in the medium-term, we should be getting back to 3%. So our position is at least 3%. And I'd emphasize the words at least. If we got to 3%, we would not be satisfied or resting on our laurels. But our goal is to get beyond that.

Thank you for that.

Just to add to that, Alex, 3%, as Bruce said, is not heroic, but it's a staging post where we believe if we hit that 3%, it's an attractive return for shareholders based on the amount of cash we'll be producing. But as Bruce said, it's not a heroic ambition. We want to go beyond it.

Thank you. I've got a last question here on the store portfolio and the balance sheet. You talked about the importance of an omnichannel strategy. Looking at the balance sheet, you can see that net lease liabilities have fallen from GBP 1.485 million to about GBP 999 million due to business exits and lease reduction. Do you have any plans to reduce your store portfolio to bring this down further?

So I think the first thing to say, why has that lease liability reduced? Well, obviously we've sold our Greek business so there were a chunk of leases associated with that organization. We've seen the underlying lease liability within both our Nordic and our U.K. business also fall. The majority of that reduction has been as a result of rent reductions and shorter lease periods. We focus on maintaining a shorter lease period as we possibly can to give us optionality and we've been negotiating hard with our landlords to reduce our lease costs. And over the last few years, we've sort of seen around a 30% reduction in lease costs each time we renew. So we've made good progress, and that's reduced our liability. Now in terms of linking that to a forward-looking view, as you heard from Dan, our strategy is omnichannel and stores are a critical component of that. So therefore, we're investing in our stores. As I've described, we're investing in 115 of our stores. And our ambition is to see the top line grow and for those stores to go from strength-to-strength. Any assumption that our position is that the future is online and the stores are yesterday is definitely wrong. We believe that stores are going to be a critical component of our proposition. Now if I was getting into the nuts and bolts of this, we do review the profitability of every one of our stores twice a year. Off the back of that, we make a decision as to whether maintain the lease or not at the end as we come to lease renewal, and as I say, that's a very short period. And the good news is that we've closed very few stores over that period, a handful every year. And we're very satisfied with the profitability of the stores we've got. And this is not just a black or white, is the store making a profit or not. We look at it in a far more comprehensive way than that. We appraise what sales we think would transfer to other stores. If we close the store, we also think about what might transfer online. And even taking that more prudent view, we're still satisfied that all of our stores, maybe with the exception of literally 1 or 2, are profitable. And when I say 1 or 2, those happen to be stores with quite long leases that are very old within our group. But other than that, of our 296 stores in the U.K., for example, literally apart from 1 or 2, all of them meet the hurdles that we require. So we're not intending to close at this stage. Anything to add, Dan?

No, I think that covers it.

Next question is on IT. "IT is critical to your business if there was a hack, is any of any potential liability placed back on to Infosys? And how are you mitigating cybersecurity risk for the business?"

Well, I mean, I can give you what I know. I'm clearly not an IT expert. I'm chief bean counter, so let me give it a go. I mean, we -- a key component of our capital expenditure is on infosec, with -- something that we take extremely seriously, both as a Board and an Executive Committee, both within the U.K. and the Nordic organization. We have teams that constantly appraise our level of security, are constantly upgrading and protecting our data and dealing with our legacy infrastructure. We have experts in this field and, we, touch wood, have not suffered issues, certainly in my time within Currys over the course of the last 3 years. In terms of the Infosys question, frankly, I don't know the answer to that, so I'm not going to even attempt to answer it. Dan, anything to add?

Probably just the one bit to add is some of you may remember that we had some historic data breaches before the start of Alex's tenure here, and that it catalyzed a whole series of investments to tighten up infosec. And when we talk about data and using customer data, we're very clear on the priorities. First is to secure it, and that will always be the case.

Brilliant. Thank you very much for asking and answering all those questions. We really appreciate your attendance at today's webinar. We're coming to the end of that now. And as you leave today's webinar, you will come to a series of questions, a short feedback survey, and we'd really appreciate it if you could complete those questions. And I'd just like to say thank you again for attending, and thank you for the presenting team for presenting so clearly and answering all those questions. Thank you now and goodbye.

Thank you. Have a good afternoon.

Thank you, all.

Bye-bye.