Headlam Group plc (HEAD) Earnings Call Transcript & Summary

Good morning, and welcome to the Headlam Group plc Final Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Chris Payne. Good morning to you, sir.

Good morning, and thanks for joining our presentation today. I'm joined in the room here, well, over on 2 different screens. Adam Phillips, our Group CFO, is with me as well. So we'll both be presenting today. Just by way of introduction, there's just a slide here, which -- just outlining what we're going to cover. So I'll be covering an update on our transformation plan, which is progressing well. I'll be talking a little bit about the contribution that we're already seeing from our strategic initiatives that we started a little while ago. And Adam, I'll be handing over to Adam shortly to talk about performance in 2024 and how various parts of the business have fared. So let me turn to Adam to start with, who will talk you through an update on last year's performance.

Thanks, Chris, and good morning, everyone. So I've got a handful of slides on the P&L, balance sheet and cash flow, but I'll start with a brief update on the market and how the market performed in 2024. So on this slide, you'll see a few of the indicators that are relevant for the flooring market. We've shown these before, the top left-hand side, consumer confidence. And you can see that's remained negative. It has been on a bit of an improving trend over the last 18 months, but has remained negative and fragile. And in particular, you can see that drop down in the late summer, autumn last year around the time of the government's budget announcement. And what that means -- that lack of confidence has been that despite discretionary income improving, despite interest rates and inflation coming down, consumer spending on home improvements has been weak. And home improvements has been one of the weakest categories of retail spend for the last couple of years. And that chart in the middle there shows that data on consumer spending on home improvements. On the right-hand side, on a more positive note, housing transactions, and this is a good lead indicator for future demand in the flooring market, that has been in growth now for almost a year, which indicates there should be some good demand building as and when confidence can be unlocked. So what does all of that mean for the flooring market in 2024? And on the bottom of the slide there, you can see we've now had 3 consecutive years of decline in volume in the flooring market, and in 2024, in particular, about 9% decline, both in Headlam's U.K. revenue and also in the market, and Headlam maintained share overall in the U.K. in 2024. So just turning to Headlam's revenue then, and I'll start at the top of the table, regional distribution, that's the part of our business that's been most impacted by the market conditions, particularly with the residential market being weaker than the commercial market. And in that part of the business, revenue declined 16%. We continue to deliver growth in the strategic initiatives of Larger Customers and Trade Counters despite weak end consumer demand and larger customers' revenue up 4%. And actually, this is despite actually quite a bit of change in that channel this year with 3 retailers dropping out. So we've had Carpet Right and Homebase entering administration. And then ScS made a strategic decision to exit the flooring category. And now Carpet Right was only a tiny customer of ours, but Homebase was more meaningful, and we delivered revenue of GBP 7 million with Homebase in 2024. But despite that, good growth, and that's reflecting the relationship we've got with Tapi, who've taken a large proportion of the carpet business, as well as 2 new customer wins in that segment in 2024. Trade Counters, good growth, 7%. We've seen continued good growth in Trade Counters, and those investments are performing in line with the business case despite the market headwinds. We ended the year with 76 sites, and we expect to end the investment phase of the Trade Counter business this summer with around about 83 sites. So just moving down the table, overall U.K. then down 8.9%. And as I mentioned, that's in line with the market overall. In Continental Europe, the market conditions were even more challenging than in the U.K., and we saw revenues there decline 14.9%. So just taking a look at the income statement, we've covered revenue on the previous slide. Gross margin then of 29.9%, that was 180 basis points lower than the previous year, and this was due to 4 factors. Firstly, stock clearance, and we undertook significantly heightened levels of clearance activity during the year linked to the transformation plan to simplify the network ranges. Secondly, rebates, it's a combination of the volume decline in the market combined with our drive to improve stock turn in the year, which reduced purchases from suppliers in the year, which impacts on rebates and rebate tiers, et cetera. Thirdly, mix and the revenue from larger customers whilst contributing positively at operating margin is at a lower gross margin than revenue from retail distribution, for example. And then fourthly and finally, price and promotional activity, and in response to market activity on price, we did respond with some price and promotional activity in the period, but this was overall a relatively modest driver of the overall movement in gross margin in the year. So moving down the P&L, operating costs, these increased by 6.9% in the year, mainly due to cost inflation. So cost inflation added GBP 7.5 million of additional costs in the year now. In the year before, in 2023, it added GBP 10 million of costs. So it's come down, but it's still elevated compared to historic levels where we perhaps would see about GBP 4 million or so of cost inflation a year. And in 2024, that was driven by still elevated pay inflation across both the U.K. and Continental Europe. So in the U.K., average pay inflation was about 6%, and that was particularly driven by the national minimum wage increase of 10% at the start of last year. And then in terms of costs, we also invested in new Trade Counter sites, which added about GBP 5.5 million of operating costs into the business in 2024. Now, mitigating actions offset some of that, and that includes the benefit of the introduction of the dynamic route planning in our transport network, which we introduced towards the end of 2023. But it's important to note the transformation plan, which we'll talk about in more detail later, didn't have an impact on 2024 operating costs. These benefits have started to be recognized in 2025. So moving down the rest of the P&L, interest costs were higher year-on-year, reflecting the average borrowings prior to the property disposals at the end of the year. And all of this resulted in an underlying loss before tax of GBP 34.3 million, which was before non-underlying items of GBP 7.2 million expense, which I'll go through now on this slide, so a net P&L expense of GBP 7.2 million, but actually a net cash inflow of GBP 48.5 million. And if I just focus on the middle rows, which are the larger ones, so if you see the third row down, business restructuring change-related costs, that was a charge to the P&L of GBP 19.7 million, although only around about half of that was cash. So the GBP 10.2 million cash cost principally comprised severance payments, restructuring costs, relocation and dual running costs associated with moving operations from Ipswich to Rayleigh, and the noncash element of GBP 9.5 million in that row related to stock write-downs. Next row down, profit on sale of property, so I'll talk a bit more detail about property sales in a moment. I've got a separate slide on that, but profit of GBP 21 million and cash inflow of GBP 61 million generated from those in the year. And then lastly, ERP system development, we guided at the start of the year to a spend of around GBP 3 million, and we came in slightly below that, so GBP 2.6 million cash spend on the ERP replacement project in the year. So moving on to cash flow, good operating cash generation with underlying operating cash flow of GBP 27.6 million in the year. Now that does include GBP 11 million of VAT that we collected on the property disposals in December, which we then paid over to HMRC in January, but nonetheless, still a good, positive underlying operating cash flow even if you strip that out. And this reflects working capital movements. So if we move down those one by one, you can see inventory there. So we reduced stock levels in the year. And if you exclude the movement on provisions, the cash benefit of this was GBP 17.6 million, as set out in this table. Receivables was an inflow reflecting the movement in revenue and payables was an inflow of GBP 10.7 million in the year, but this does include that GBP 11 million of VAT. So if you normalize that out, payables were basically flat year-on-year, so no change in payables year-on-year. And we also saw no significant changes in suppliers or terms of supply such as payment terms, et cetera, during the year. Moving further down the table, CapEx, so CapEx was GBP 10.6 million in the year, and that compares to GBP 18 million the year before, GBP 14 million the year before that. And we expect that CapEx number to drop further. We'd expect about GBP 6 million or GBP 7 million this year in 2025, and that will taper down, particularly as the Trade Counter investment phase comes to an end and as we cycle through the replenishment requirements on existing equipment, which was a driver of the CapEx spend in 2023. Lease payments were a GBP 12.9 million cash outflow in the year. There was a GBP 4.8 million cash outflow for dividends in June last year, which reflected the final dividend payment in respect of 2023. And then finally, towards the bottom of the table there, property disposals were GBP 61 million cash inflow, more on those in a moment. And the other non-underlying items represented a net GBP 12.8 million cash outflow as set out on the previous slide. So putting all of this together, all of this resulted in a net cash position at the end of the year of GBP 10.9 million, and that compares to a net debt of just under GBP 30 million at the start of the year. And on this next slide here, I won't go through this in detail, but this just lays out a bridge of that GBP 30 million net debt at the start of the year to the GBP 11 million net cash at the end of the year. And you can see the working capital and property disposal green bars in there. That's cash inflows offsetting lease payments, CapEx, and dividend from 2023, et cetera. So just a little bit more detail on property disposals then, so we sold 5 properties in the year, as set out in this table. Three of those, the first 3, were vacant sales, and these were properties that became surplus requirements as a result of the network optimization initiatives in the transformation plan. Two of the properties, Gildersome and Leeds, were sale and leasebacks, and the implied yield on those leasebacks for those 2 properties is broadly equivalent to the group's cost of borrowing. So in total, the disposal proceeds were GBP 61 million, and all of those properties were sold for a significant premium to book value, averaging 68%. And at the end of the year, the group continued to own property with a book value of GBP 67 million and a market valuation as of January 2023 of GBP 94 million. So the final slide for me before I hand over to Chris, one of the characteristics of Headlam that we've talked about before is the strong balance sheet. And on this slide, I've put the full balance sheet on the left-hand side, but drawn out on the right-hand side just a few of those -- a few of the highlights, firstly being the good liquidity headroom, so GBP 10.9 million of net cash at the end of the year and GBP 72 million of borrowing facilities. And the progress we made in the year on the cash upside from the transformation plan has enabled us to reduce the size of facilities that we need from GBP 100 million to GBP 72 million, which reduces the fees that we pay on unutilized facilities. The majority of the GBP 72 million facilities that we have is comprised of a GBP 61 million revolving credit facility with 3 lenders, and we have a revised covenant package in place whilst we implement the transformation plan. Second point on the balance sheet, the orange box, strong asset backing, and that includes GBP 94 million of property assets and over GBP 200 million of stock and receivables that aren't leveraged in any way. And then finally, during the year, we also further strengthened the balance sheet by completing a pension buy-in. What this does is it significantly derisks the group's exposure to movement in pension assumptions, and it removes future contributions into the scheme. I'll now hand you back to Chris.

Okay. Thanks, Adam. So I'm going to now focus on an update on our strategy, what we have been doing over the last year and how we see that moving forward and also the transformation factor, and a bit more detail on about what we're doing to deliver the transformation plan, and then how we see the benefits in terms of P&L and cash working out over the next couple of years. So the first slide really for me is just a reminder. So this is standing back and looking at the market opportunity. So this is a slide we shared before, and it talks about the amount of flooring spend in the U.K., so GBP 2.5 billion to GBP 3 billion worth of flooring demand in the U.K. at distributor prices. And this is a slide that I've shared and is real and underpinned to the strategy and how we see things. So this slide shows different customer types. So we've articulated 7 different types of customer spending that GBP 2.5 billion to GBP 3 billion a year. On the left-hand side of the slide are our retailers, and this is the area of which Headlam has had a degree of stronger part of the market and where most of our customers and most of our heritage has been in servicing that customer group. And as you move further to the right, we see Headlam's weighting or share of that customer segment declining. So on the right-hand side, large contractors and online buys of flooring is where Headlam has had a lower market share. And on the left-hand side is where Headlam's traditional kind of heartland has been around serving the independent retailer and local trade people. So that's really the shape of the market as we see it and is the key to why a part of our strategy has been to offer service to more of the market. So we've been looking at flexing our business model, flexing our operating model to offer service to as many parts of the market as possible in order for us to broaden our base, broaden the business base out to offer service elsewhere as well. So that's just a reminder of the market as we see it. If I move on to the next slide, which has got 2 sides to it, so this is a bit of a reminder slide and a bit of an update at the same time. So on the left-hand side is our strategy. So that's the strategy, which has got 5 pillars. So there are 5 pillars on this slide. And if I just kind of run through where we've got to with those and then we overlay the transformation plan on the right-hand side, and this is effectively an acceleration of the strategy that we've already articulated. So the strategy of 5 pillars. The first one on the left-hand side is really an articulation of being great at service. So that traditional heartland, or the independent retailer, which is still the most important part of our market, still the most critical customer segment for us, it's imperative that we remain great at service, great at offering our existing customers the best service that we can. And we regularly interview and survey our customers. And we've always remained the best service, the deepest, broadest range of products available in the marketplace. And it's important that we keep that in place. The second element of our strategy is to look at growth. So how do we offer different types of service and broaden our customer base out? And that's a key from the previous slide, is that we recognize that there are certain customer types that we've traditionally had a low share of their spend, and there's an opportunity for us to broaden our strategy out by offering service into new types of customers. And that's why we've moved into investing in the Trade Counter network, for example, and expanding our footprint in large customers to recognize that that's where Headlam traditionally has had low share. The third element of the strategy, the third pillar on that left-hand side is our operating model. So this is around being operationally efficient and effective, and this is around the use of technology and being cost efficient and consolidating some of our network. And it's why we've been doing things over the last couple of years such as transport consolidation, moving to a U.K. network rather than a collection of regional businesses, which Headlam has been for many years and have been grown up through that sort of acquisition strategy of the past. And we've been able to move to a much more integrated model, certainly from an operational perspective. And the transport consolidation that we undertook a little while ago is one of those examples, and that's why that's a key part of our strategy. And on the right-hand side of those final 2 of the 5 pillars is around how we operate as a business, so our ESG credentials, how we present ourselves to our employees at making ourselves a great place to work. And these slides that we're going to talk about today focus mostly on the first 3 elements of this strategy. And the final 2 that I've just described, there's a bit more detail in our RNS and our report and accounts that we'll publish in due course. So it's not that we've overlooked those, but we focused a lot more on the transformation of the business plan rather than those 2 elements of strategy, which are detailed elsewhere. So that's a sort of summary of our strategy. And the acceleration that I described is this overlay of the transformation plan. And I talked about this at the half year, and these slides just give us an update on what we've been doing since that market update and how we see it playing out in the future as well. So we think that we provide a bit more clarity over the details of the transformation plan, but importantly, the value. So how much are we going to create by P&L benefit? How much cash are we going to generate? And we'll come on to talk about that in a little bit more detail. So 3 elements, I like to think of this a little bit as sort of front office, which is the customer offer, sort of middle office, if you like, which is our network and operations, and then back office on how we actually operate. So those are the 3 ways to think about it. So if I start with the front office, the sort of sales piece, that's really where we've started. And when I say started, Adam was talking about the benefits of the transformation, not really in our '24 numbers. So we announced this sort of big change in Q4, so in September last year. So it really started to take effect in Q4. We've migrated 17,000 customers. All of our customers now have been moved on to this sort of single account Mercado account. So all of our wholesale businesses, all those businesses that we're serving, independent retail in particular, have now been merged into the Mercado business, so 32 trading businesses all into one, 17,000 customers migrated. As you might imagine, that took some time, and we completed that at the end of January. So it took a few months to get through that process. I'm pleased to say we started there. Customers responded positively to it. Some of the feedback was can't believe it's taken you so long to do it. I think it's the right thing to do, simplicity, it makes it much easier for us to do business with you, some really good feedback from customers. In doing that, we were able to, I suppose, invest in some of our sales team as well. So as part of that restructure, we've been able to organize ourselves so that our sales teams now can operate kind of hard line between post codes. That means that in a territory or town or whatever, a single salesperson will have the relationships with our customers in that territory rather than customers having 2 or 3 salespeople to talk to or some of our sales team, in some cases, even worrying about losing their sales to a fellow Headlam salesperson. So we've cleaned all of that up, which has made it much easier for our customers to trade with us. And we've been able to invest in our sales team, so given them better kind of incentives, rewards, given them that kind of confidence to go and sell in their marketplaces. So that activity completed, it's meant that we can now go forward into the market with confidence acting with one voice. I think just to look ahead, so the orange bars at the bottom are things that we are now sort of focusing on. I think one of the important elements of the transformation so far from this front office piece is that we've been able to simplify our digital assets. So we've had, as you might imagine -- each of those 32 businesses have their own websites. And that means it's, one, confusing for the customer, but second, it makes it quite a big burden for us to maintain those websites, keep them cutting-edge, keep them modern. So we're now able to move those on to a single ordering portal for customers for simplicity. But it also means we can now start to invest in that single portal and make it much more customer-focused and enhancing that customer experience when they go online. So I've long talked about the experience of trying to create an Amazon type experience for B2B customers, which is a bit of a holy grail. But for us, it's around customers should expect -- they should expect to see it when they log on to place an order for products that we can make some suggestions for complementary products or if we're out of stock of a particular one, we can suggest some alternatives for products that are very similar. And customers can also see what they bought before, so it simplifies their ability to order again. So all those kind of investments now become possible while operating on a single platform. I also talked about investing in the independent retail space. This is an important feature for us. As you might imagine, up until now, because we've been contemplating this transformation, we haven't launched an awful lot of new product. We haven't put many new stands out into the marketplace. And this is really the lifeblood of the independent retail space. So now that we have this sort of single Mercado model, it means that we can go and refresh the POS, the point of sale, that's in the customer base. And we've now started to engage our customers about putting new equipment out there, new launches of new products that all of our salespeople can get behind. And it's quite an exciting change for the group that we can really get behind these new launches, and we expect those products to start going into the market at the end of Q1 and Q2. So there's a big POS refresh that we're planning for our customers to benefit from in the midyear. So I just talked about this sort of middle office, and I've got a couple of slides here just to bring this to life a little bit. This probably started a bit earlier. I talked about the transformation of the transport model, for example. We really needed to put the building blocks in place for this transformation to be a success. And that's why I think I've described it as an acceleration of our existing strategy. This isn't a new sort of strategy. This is something that just accelerates what we've already started doing. So this move to sort of more of a U.K.-wide network rather than a regional one is important for efficiency and effectiveness and consistency of service across the country. And this is something we started a while ago. And Adam commented on the sort of things like the fleet monitoring, so our customers can get like a parcel tracking type service for their delivery so they know when trucks are turning up for delivery. And it means that our routes can be changed daily. So depending on where the customers are getting drops, we can flex and move our delivery routes accordingly using technology and the customers can see where their deliveries are. So that's been in place, and that meant that we can now start to manage our network as a U.K.-wide operation, which is great. It has also meant that, as a consequence of this sort of focus on efficiency and effectiveness, it's meant that we've been able to free up some of these assets. So things that were previously a bit locked because they were needed for regional distribution, moving to this national network has meant that we've been able to liberate these assets and as a consequence of the changes, been able to dispose of some of the buildings and create a sort of capital event. So there's more of this. We're going to continue to review the opportunities. The other thing that that throws up is that you're able to go deeper on stock for sales of that product in the post code. So in the past, we would have been holding stock based on the sales of that particular territory. But now we've moved to this national network. We've unlocked all of the sales of the 32 businesses in the post code so we can actually stock hold close to the customer. So those types of changes now are possible, which means we should see a level -- a second level of efficiency coming through. And that's the focus for this year, is now starting to leverage that single view of the customer, a view of how many sales and what stock we need locally to be housed in each of the distribution centers. So that's the next phase of the kind of middle office. We actually just put a slide in here. So I had a couple of questions come up from shareholders about why do we do things? So Ipswich, in particular, was one that was -- we had some really good conversations with shareholders on. So a relatively new site, and therefore, why would we sell a new site and what's, of course, it all about? So I did an extra slide here just to dive into the detail, just as really as an example of why we're doing what we're doing and what the secret is to this sort of part of the strategy. So you might imagine, if you look at the sort of U.K. network and the map of the U.K., once we were a regional business, clearly, we have the distribution centers in the center of the region in which they were servicing. But if you move to a national network, you need those distribution centers to be much more aligned with a national network and the shape of a sort of at least a Southeast, for example, in this case. So a site in Ipswich didn't really make sense when you're looking at servicing London and the Southeast. So by changing the viewpoint of the network, by putting the underpinning of all of that transport network that I talked about, the investment in systems where you can move routes around seamlessly, it's meant that we've been able to move to a new site and create a much better location for customers. So the sales that are being made in London and the Southeast can now be serviced from a site that's much closer to the territory. The site that we've now moved to in Rayleigh, Essex, is a lower cost to serve and a much smaller footprint than the old site. And therefore, there's an improvement in the operational cost. And in doing so, we have been able to free up the capital by disposing of the old site. So not only have we moved service to a better location for customers, we've reduced our cost to serve. We've also created a capital event for the benefit of the business, so lots to like about that type of thing. And in a way, it sort of shows the sort of middle office benefit that we're able to create through consolidation of the network. And then thirdly, the third element, the sort of back-office piece, if you like, it's not just about, I suppose, consolidating the back-office processes. This is moreover about giving us the ability to act as a single business. So I talked earlier about now presenting a single face to our customers. We can also now act as a single face to our suppliers. And up until now, we've only partly been able to do that. So we've been buying through these different entities around the country. And now we can consolidate our buying efforts and our energy into talking to our supply chain as a single voice. It means that we can stock in depth of the bestselling ranges. We can order with confidence. Our suppliers know that we're going to order in depth and deploy our stock around the country as we see fit. So it does mean that we can really leverage that scale in a way that we've not been able to do before. And I think that's really a focus for this year. So a lot of the processes, a lot of the tidying up, has been done, but now we're able to get after some of the benefits of scale and go after that in a more meaningful way and work with our suppliers to really understand what's selling and, frankly, not stock the stuff that isn't selling and remove that duplication from the network that we had in the past. So just to talk about the sort of scale of the benefits and the timing under which they might fall, I'm just going to hand back to Adam, who can talk you through this in a little bit more detail.

Thanks, Chris. So in September, we set out some targets for profit and cash from the transformation plan, which we put in that first column. And then we've now upgraded those targets. So in the middle of this slide, you can see our latest targets on those, and I'll just step through those one by one. So from an annual profit improvement point of view, we're targeting GBP 25 million once fully implemented, and that's up from -- at least GBP 15 million was our target in September. And that is net of reinvestment. So that's an important note to make. So where we are, for example, investing -- we've reinvested in market-leading remuneration packages for the sales teams. We've reinvested perhaps in lease costs where we moved to Ipswich, which was owned, into Rayleigh, which is leased. That GBP 25 million is net of any of those reinvestment costs. Gross one-off cash benefit, so we had a target of at least GBP 70 million in September. We've now upgraded that to at least GBP 90 million, and that reflects some of the initial strong progress we've made. And that is through a combination of disposal of property and working capital optimization. And then one-off cash costs, we estimate those to be around GBP 30 million. That's slightly higher than the GBP 25 million we said in September, and that reflects the fact that we've now identified further projects for P&L and cash benefit. And those one-off cash costs include things like restructuring, relocation costs, fit-out of new sites, advisory costs and also significant investment in point-of-sale materials such as displays. So just to give you a sense of how those benefits phase in over the next few years, on this slide, you can see we've set out the profile of those through to the end of 2027. And taking the annual profit benefit to start with, ultimately getting to an annual profit benefit of GBP 25 million recurring profit stream from this program. None of that was in 2024. We are targeting around GBP 10 million in the current year that we're in and then getting to the GBP 25 million annual run rate in around 2 years' time or so to get that GBP 25 million benefit in 2027. The cash benefit then, so GBP 90 million -- at least GBP 90 million once fully complete, GBP 57 million in 2024. So I've taken the cash benefits we've achieved in the second half of 2024 on the basis that we launched the transformation plan around about halfway through the year, so GBP 57 million of one-off cash benefit in the second half of last year. We're targeting to cumulatively achieve at least GBP 80 million by the end of this year and then get to the target of at least GBP 90 million by the end of next year. And then finally, cumulative one-off cash costs, so we incurred GBP 9 million in the second half of last year, and we expect around about GBP 10 million additional this year and then the rest phased over 2026 and 2027. I'll hand back to Chris now on summary and outlook.

Thanks, Adam. So I've just got a few slides here just to finish off the presentation before we move to questions. I think the -- just in terms of current trading, it's still been a relatively slow start to the year. I think, if you look at the macro, as Adam described earlier, there's a lot of feeling like the market is going to improve and at some point that there will be a market recovery or there will be an uplift in demand. But we still -- like, we've been saying that for a little while. We're certainly not seeing it yet. So I think it's a bit of a slow start to the year, albeit the expectation is that the market will turn and there will be a bit of a positive contribution. So we're not really getting a helping hand from the market at the moment. So it is really important that we focus on our self-help measures. And I'll come to that in a minute. But in terms of delivering the in-year benefits from the transformation plan, and as Adam just said, there's GBP 10 million a year, that will start to impact '25. The maturity of the initiatives also, we will complete the trade count to roll out the initial investment phase this year. And that will start to, therefore, generate year-on-year benefits going forward. So yes, we're not getting a helping hand from the market at the moment. However, we do expect that the indicators, the macro indicators, suggest that that will turn around at some point this year is the expectation. So on the longer term then, it's important that we focus on these self-help measures, getting us back towards profitability, breakeven and then beyond. Much of the existing initiatives, the maturity of the trade counters, the transformation plan, we said we just heard from Adam will generate GBP 25 million over the next couple of years. We don't need to see a significant recovery in the market for us to return to profitability, but just sort of a flattening and a modest recovery of market recovery will give us that following will really help us get there more quickly. But we're focusing on the bits that we can control, deliver the strategic initiatives, deliver the transformation plan. All of the benefits that Adam just articulated are there for us to control and deliver with our own self-help measures. So it's important that we can focus on those things and the market will recover at some point. So that's really the summary that I wanted to sort of finish the presentation with, that we are progressing well on the transformation. It's given that confidence to us to upgrade the level of contribution, both in terms of P&L and cash benefits from it, which is important that we've seen the continued growth from the strategic initiatives coming through, and we've been able to report on that. And those will start to mature and start to give some drop-through profitability to help that recovery shape. And yes, of course, there is some short-term performance weakness there, particularly from the market, so controlling the things that we can control and delivering those self-help measures is really the key for us to turning the business around and getting back into profitable territory. So thank you very much for listening into the presentation today. I think we're about to turn to some questions.

[Operator Instructions]. I'd like to remind you that a recording of this presentation, along with the complete slides and the published Q&A, can be accessed via your investor dashboards. As you can see, we have received a number of questions, both pre-submitted and throughout today's live presentation. And Chris, I'll hand over to you now to start running through the questions, and I'll pick up from you at the end.

Yes. Okay. Thank you. I have a question here, if I just read it out. Consolidation of Headlam trading businesses seemed like an obvious strategy for a long time. Why did it take so long to finally do it? I think the way I described it earlier, we needed to put a lot of building blocks in, a lot of foundations. So it's not really until we were able to unlock this U.K. network that we've been able to move away from the regional wholesale businesses into one of a sort of national brand really. So I think it's important that we put all of those building blocks in place first. And we lined everything up, had the investment in the transport network. We had some of the, I suppose, digital enablement there to go. And hence, we've been able to do it. And we spent quite a bit of time making sure that we communicated that cleanly and clearly with our -- not only our colleagues, but with the customers as well. So yes, it took quite a while to get there in terms of just putting those building blocks in place. And so that's why it now has been the right time. And frankly, we need to do it anyway. This is the time where the luxury of a buoyant market isn't there to preserve. So we've got to be as efficient and effective as we can. And this is the time to really simplify our offer to the customer, I think. Okay. That's the first one. So there's a question around mortgage approvals and secondary housing transactions improved significantly towards the end of '24. And why are carpet volumes still depressed? So this is a question around sort of macro data. And in the past, when we tracked the housing transactions, they have been a really good lead indicator. So in the past, when you look at -- we track data all the way back to 2000 and the various influences, if you like, or indicators on subsequent flooring demand. And mortgage applications, then leading into housing transactions, leading into flooring demand, there is a pretty good relationship between those. So mortgage applications sort of 3 or 4 months then lead to housing transactions, which then sort of 6, 7 months later then lead to flooring transactions increasing. I haven't really seen that so much this time around, the first time we haven't really seen it. And the one element that's been held back seems to be consumer confidence. So people's ability and desire to spend money on big ticket seems to be the thing that's holding us back. So all the macro indicators point to an increase in demand, whether it's real income, for example, so wage inflation outstripping inflation, interest rates, perhaps tendency just to start to drop. But even if it is dropping, the feeling is it might not go back up. And then the sort of housing transaction is the final piece. So I think we're just waiting for that consumer confidence to come back. And then I think the expectation is there will be an increase in flooring demand as a result. Adam, I'll hand over to you for the January and February sales performance.

Yes. So the question we've had here for January and February sales in 2025, please advise the performance -- the difference in January and [ February ] 2024 and the difference between your 2025 budget for sales. So year-on-year, January and February this year, as Chris mentioned, down 6% year-on-year. So compared to 2024, January and February down 6%, February a little bit better than January. We don't kind of comment on specific months in terms of budget. But as we've set out in the outlook, the expectation for the year based on the external data points is that the flooring market and related markets like RMI, et cetera, will show some modest growth this year, likely to be back-half weighted, but for the year overall, some modest growth.

Next one.

Yes. I'll take the next one. So it's quite technical one. This one [indiscernible] I read it out. So can you provide an update on how total equity per share changed over the past year? Additionally, how much was spent on dividends and share buybacks ideally on a per-share basis? Lastly, what are the company's projections for these figures in the coming year? Okay. So we don't give forward guidance on these kind of things, on these numbers, and don't put projections out. But what I can tell you is what these numbers are and have been over the last year or so. So if I take equity per share to net assets per share, we ended 2024 with net assets per share of about GBP 2.40. And the year before that, so the end of 2023, it was about GBP 2.75. And that reflects the financial results in the year that we've gone through. The question on dividends and share buybacks in the year, in 2024, the only cash outflow on those was the GBP 4.8 million dividend relating to 2023, and that equated to about 6p per share. But if you look back over the last 3 years, so 2024, 2023, 2022, there's been GBP 59 million of buybacks or special dividends or ordinary dividends, so a total of GBP 59 million, and that equates to just about -- just under 75p per share of dividends and share buybacks over the last 3 years.

Thanks, Adam. Next question, so there's a couple like this. I'll use this as an example. So market share, so we made a statement in our results and in the presentation that we've held market share broadly flat, and we think the market was down around about 9% last year in the U.K. So the question is, you plan to have maintained market share, but you've got a 16% decline in regional distribution, but the market is not 16% down. Others have done better, for example, likewise. So yes, that -- so those things are true. However, if you look at the other elements of our U.K. market, and we talked about Trade Counters being quite significant growth, over 7% despite the weak market, and our larger customers also showing some growth. We subscribe to some market data analysis, and we actually have some market share commissions as well. So we're able to track our market share and the market data on a regular basis. So in total, our market share has maintained, but it's true to say that we would have lost a little bit share in the regional distribution market and gained a little bit of share where we're deploying Trade Counters, for example, and gained a little bit of share in large customers as well as we expand into those areas where we previously had low share. So we look at it, as a whole, our market share is maintained. And that's why it's really quite important that we do address the independent retail part of our marketplace. So it's still the largest customer segment for us. And as I said in the presentation just now, it didn't make sense for us to invest in new POS and new range launches last year whilst we were going through that transformation and consolidated the 32 brands into one. But now we can. And I think it's important that our sales teams have got that confidence to go and talk to customers and -- whether it's to regain share, but we're certainly going to be investing in that part of the market and putting new POS into the market in order to go after that customer segment and just show the level of investment that we're putting into that space. So it is important. And I think we lost a little bit of ground last year. It's important that we do get back into that and recover some share. But I think it's around the timing of when we can make the investment in new POS, the new range launches, and all of that is coming in this year. Okay, next one, Adam, for you.

Yes. Next question. So can you clarify and confirm the phasing of the benefits and cost of the transformation plan, please? The table shows a cumulative profit benefit by 2027 of GBP 25 million. That's cumulative one-off costs of GBP 30 million. So does this mean a negative net contribution of GBP 5 million from the plan over these 3 years? So the way to look at this is that GBP 25 million of profit benefit is a recurring -- that is the -- what we're targeting is the recurring annual profit improvement stream from this program. The one-offs and the one-off cash inflow and one-off cash outflows, they are just one-off in 1 year. They don't recur every single year. So it's not GBP 25 million less. GBP 30 million is minus GBP 5 million recurring going forward. The way to look at it -- the best way to look at it is the output of this transformation plan gives a GBP 25 million recurring profit improvement. It also generates GBP 90 million plus of one-off cash inflow at a one-off cash outflow cost of GBP 30 million. So you can net those 2 off, if you want. You could go net GBP 60 million of cash and then you get GBP 25 million a year profit improvement from 2027.

I think you've covered the next question, which is effectively capital allocation policy around return to shareholders. And then there's a clarification question around underlying operating cash flow by change in payables. Do you want to cover that one?

Yes, sure. So the question is underlying operating cash flow was helped by a large swing in change in payables of GBP 34.7 million. How did this come about? So payables in-year, if you compare payables at the end of 2024 compared to the end of 2023, they increased by GBP 11 million, which was -- actually that was all to do with the VAT on the property disposals, which we then paid over in January this year. So if you strip that out, payables are flat year-on-year. So there's been no sort of big swing in payables. It's pretty steady. Payment terms stay the same. Supply arrangements stay the same. So underlying, if you strip out and normalize the VAT, debt payable is pretty flat. Over the next few years, you'd expect -- as revenues and cost of sales increase, you'd expect payables to increase. So you'd expect, over the medium term, there to be an inflow from payables coming over the next few years.

Thank you. So we'll perhaps share this one. The next question is that we've got 76 trade counters as of today, and they're generating sales of, annualized, around GBP 100 million. So they must be making a loss. How much are they losing currently? So they're not making a loss. The way that we allocate cost is we've been trying to track the level of profitability with the investment we're making in expanding the footprint and reinvesting in the sites and then the maturity. So what we've been talking about is a reduction in profitability. So they are contributing at the moment. But what we've seen is a reduction in our profitability as a result of the investment drag in new sites. And we now expect to see that moving into the maturity part of its life cycle from the second half of this year, when we finish the investment phase. And that will start to generate profit accretion year-on-year from the second half. So it's not that the cohort are loss-making, but we've seen a reduction in the profitability for the cohort as we've invested in new sites. And we should see that come out the other side from the second half onwards. The next question is how sales to large customers have increased with the loss of ScS and Homebase? And maybe I'll ask Adam to cover that because you did sort of talk to that in your presentation, I think.

Yes. So we had 3 retailers drop out in 2024. One, obviously, Carpet Right was not really a customer of ours, but ScS and Homebase were, and they were fairly meaningful customers. However, despite that, we grew revenue through a combination of growth in other customers, one example being Tapi, where Tapi picked up quite a large proportion of the carpet business. So they bought about half of the business effectively. And then they just organically then grow -- mopped up some sales that had been displaced from Carpet Right. And we've grown with Tapi. And then we also won a couple of new customers. One was a retailer, a multiple chain retailer. And we also won a piece of business as distribution as a service, so doing a distribution service for a manufacturer. So we won those 2 things. So net, that all offset it, and we generated a 4% revenue increase net of all those movements.

Thank you. The next question, I think market share we've sort of talked about. The next question is around are we happy with Trade Counter growth given we're sort of in rollout? Now perhaps let me answer that one. Yes, there's a degree of first-year benefit and arguably second-year benefit, but that's sort of the reason we're doing it. So yes, we would expect there to be Trade Counter growth. Now, in theory, the growth that we see should be even higher because we're seeing obviously a market shrinkage issue. So that's offsetting the growth that we are reporting. So it's pleasing to see that we've seen some good growth in trade counters despite those market headwinds. But we should see growth because we're putting down some more space. So that point is well made. I think what we have done is go back to our investment case. So at the outset of this, we said, okay, we're going to be deploying GBP 25 million of capital to invest and refresh our Trade Counter estate to grow the number of sites, but also to move to a common blueprint, a common footprint and to access parts of the market we're not currently accessing. So that sort of investment case, in its broader sense, we are still on track to deliver the benefits that we articulated at the start of that despite the market headwinds. So good news is that we're seeing that coming through. It's still got a couple of years to move to maturity. And I've always said that we'll track this and report on it as we go because it's still got to hit that main part of the maturity curve. Now, good news is we will have finished the investment phase or the first part of that investment phase this year. So we should now start to see that year-on-year recovery in profitability. As the revenue grows, it will create that drop-through impact because we've got our footprint established and the marginal benefit, therefore, will be a higher profit gearing. Next question, I'm going to ask Adam to handle the leases question.

Yes. The question is capital leases seem to have average GBP 35 million to GBP 40 million for many years, but now jumped GBP 20 million to GBP 61 million. This means a considerable increase in expense. Revenue has to climb in order to reach profitability. Please correct me if I'm wrong or missing something. So this comes back to that GBP 25 million of annual profit benefit, which is net. So that is net of any changes or reinvestments we're doing as part of this transformation plan. So for example, we sold Ipswich, which we owned the freehold on and we've moved into Rayleigh. It's a more efficient footprint for us. It's a better location, as Chris described. We have to lease Rayleigh, whereas we didn't with Ipswich, but the operating cost savings by having a more efficient footprint, having almost half the size, because we didn't need the size that we had in Ipswich, offsets the lease costs. So that GBP 25 million annual profit improvement we talked about as part of the transformation plan includes any reinvestments such as these lease costs. The next one is probably for me as well, actually. So a question on cash flow, the question reads, obviously, it was great to be able to dispose of some properties and have a one-off release of cash from working capital. Going forward, as revenues stabilize, what's your expectations for cash flow? So if you take the guidance and target that we've given on cash, which is the GBP 90 million, at least GBP 90 million of one-off cash benefit less the GBP 30 million of one-off cash costs, there's an opportunity for us, over the coming years, over the medium term, to be in a minimal to 0 net debt to net cash kind of position. And we set out a capital allocation framework a couple of years ago. It has been in place for many years. We just reconfirmed it a couple of years ago. And within that, we set out a debt framework, a leverage framework, where we said we think the right amount of leverage for this business is 0.5x to 1x net debt to EBITDA. Now we'll obviously revisit that once we're through the transformation plan, but that would suggest, if we're at a 0 net debt or a net cash position over the medium term and we've got a leverage target in place, then we may have a quality problem in the years ahead where there's a bit of surplus capital, which we can consider what to do. But the focus for us right now is executing the -- is sticking to be focused on executing the transformation plan over the next couple of years.

I think the next one has been answered. So if I can just turn to -- there's another one here, which is sort of a multipart question, which I'll try and summarize. So there's -- what should we think about a normalized level of inventory days or stock turn or however we describe it? Has there been any impact in the sort of price of purchases or goods or stock as a result of some of the people leaving the marketplace? And how do we think about volumes? Can we facilitate volumes if they do recover? Can we reach the profitability we had in the past? There's a few questions there in one. So I'll try and summarize and answer on that. Adam and I have been talking about how do we drive working capital. As a result of the consolidation of our business model into a simple product and [indiscernible] product list, we should be able to now consolidate our stock holdings. And we removed the duplication and we kind of harmonize and improve the stock turn accordingly. So we've been down in the [ GBP 300s million ]. We're targeting the [ 400s million ]. So stock turn improvement is quite significant, and we think that's achievable. So that's that kind of an improvement in working capital that we're targeting, and that's what's behind some of the cash flow assumptions that we've made in the guidance we've given. I don't think there's been a huge impact on some of the people dropping out of the marketplace from sort of discounting stock and things like that. People like Tapi obviously have acquired some of the stock that Carpet Right had as part of the administration process, but that's a relatively short-term impact in the marketplace and may or may not have been passed on to customers and consumers in any event. So I don't think that has a huge impact. I think what does have a bigger impact is when you do have a bit of a tough demand period, people are very focused on price and trying to maximize the benefit they get, so customers driving prices down and suppliers trying to fight hard for the business that is there. So we do get a little bit of a constraint happening with discounting during these types of periods. But I think that's more effective than people dropping out of the marketplace. And then the capacity question is a good one, actually. If we're seeing -- we're effectively taking capacity out of our offer because we're consolidating our network and we're releasing some profitability back to our run rate. Can we still -- could we still deliver the capacity if the market returns? The modeling that we've done, we are taking a fair bit of capacity out, but we felt that this was surplus capacity. We still have capacity as a result of the changes that we're proposing. We still have capacity for growth. So there is a bit of the quality problem that Adam described earlier that, should the market go up 40%, 50%, then we might need to put some more capacity back, but that's a nice problem to have. But with a good degree of the recovery of the market that's lost, we think we can still facilitate that with the capacity that we've retained. So we're reducing our footprint. We're becoming more efficient, making our stock work harder, but we still think we've got capacity in the network to meet an increased demand, should it happen, which means that we would see a strong drop-through to profitability. I think the next one, Adam, might be sort of year-on-year impact on costs.

Yes. So the question is we have seen a significant increase in distribution costs and administrative expenses. What's your outlook for 2025? Do you plan to take any actions to reduce them? So if you look at the last couple of years, the key drivers of costs have been 2 things. So it's been cost inflation and investment, the investment phase in trade counters. So prior to the past couple of years, a typical average cost inflation for Headlam might be something like GBP 3 million, GBP 4 million a year, so GBP 3 million, GBP 4 million of additional cost a year from cost inflation. And that would typically just be offset by price inflation in the market. So price rises from manufacturers through the distributors on to the end customers, that would just offset -- the 2 would offset each other. Cost inflation in the last couple of years has been elevated. So it was GBP 10 million in 2023, in 1 year alone ,and it was GBP 7.5 million in 2024. So elevated cost inflation, we're seeing that ease. So we expect that to come down in 2025, and we expect that to come down again in 2026 and start getting back towards the long-term average kind of annual cost inflation. We will, this year, have another leg of Trade Counter investment. So that's been adding GBP 5 million to GBP 6 million a year on the operating cost base. As we've been in that investment phase. We'll have another leg of that in 2025. And then, as we end that investment phase, that will cease. So that will no longer be a driver of cost increase when we get into 2026 onwards. To answer the question, do you plan to take any actions to reduce them, so that's all obviously wrapped up within the transformation plan. So within that transformation plan, with the GBP 25 million of benefit, once fully implemented, that is predominantly through cost savings.

There's a number of questions coming up. So I'll try and summarize some of these. So when do we plan to return to profit? So we're not clearly giving guidance. The analyst guidance suggests that we might be getting back towards profit in '26. '26 is kind of -- it feels like a good time now. That's a bit dependent on market -- a small element of market recovery. But most of our -- as Adam has outlined, most of our recovery plan will be implemented during '25, '26 and the full runway of '27. So in that sort of '26, '27, you'd expect us to get back into profitability, and that's what's been picked up by the analysts. Next question, around market share, which we've answered, revenue and profit estimates, which we've answered. Policy on dividends, and again, we've covered capital allocation and covered that already. Next question on Trade Counters, so Trade Counters take a number of years to get to maturity and they make -- initially, they make losses. Can I provide some color on how quickly they take to move into profitability and what sort of profit margins the mature Trade Counters generate? So this comes back to the question we asked earlier around sort of, as a cohort, what do they make? So in each individual trade counter, we think, for a new start, for example, I'll just take an example there, the business case that we're working to and seems to be being borne out by practice is we expect a trade counter to generate around about GBP 2 million of sales at that level because they come with sort of an average fixed cost base, if you like, and an assumption around gross margin. We expect them to be around 10% operating margin, so GBP 2 million of sales generating around GBP 200,000 of operating profit at maturity. Now, they get to sort of a growth phase. They start 0 sales. And as you start to move through a maturity phase, somewhere sort of between 12 and 24 months, you expect them to flip over from loss-making to profit-enhancing. So there's a contribution phase in that sort of 12- to 24-month period as they ramp up. And then obviously, that sort of second half of the revenue stream from GBP 1 million to GBP 2 million is where you start to create that profitability. So yes, that's why we have this sort of bow wave of new sites coming on that are starting to flip over into profit contribution. And as Adam described, up until now, we've been investing much of that and more in opening new sites. So that bow wave of kind of new site opening will start to now flip into a net contribution from the end of this year onwards. So we'll start to see that contribute to the recovery and the profitability that we talked about. Okay. Our next question, which I'll ask, some of your competitors such as Likewise appear to be growing revenues and are profitable and they're taking share. And secondly, the strong balance sheet, unhindered related to receivables. [ is this due to reduced ] payables? So there's sort of 2 questions in one there. So I'll answer the first bit, and I'll hand over to Adam to talk about the balance sheet. So on the first one, as I said in the presentation, there's parts of our market where we are taking share and parts where we're perhaps losing a little share. Likewise have been an example where they've been deploying space. They've been growing their footprint from a relatively low base, and they've been able to take share from us and maybe others as well, but I suspect predominantly from us in the regional distribution, the independent space, where we've traditionally had a higher share, where we've been in the business for a long time. So we've been growing our share in new parts of the customer segment. And as I described, it's important that we -- now we're acting as a single business. I think we've got an opportunity now to harmonize and take some of that share back again. So that's the focus for 2025, is taking some of the share back in the independent retail and regional distribution business. I think, in the other parts of the market, we've actually done well, and we've taken some share in other spaces. So I think that's the secret to the different parts of our business and the relative maturity of it. And now, as I said, we can act as a single voice. I think we can be taking share back. I think I'll hand over to Adam for the balance sheet part of that question.

Yes. The balance sheet part of the question is to do with when I was talking about the strong balance sheet and GBP 200 million of stock and receivables that's not leveraged in any way. The question here is about does this figure deduct payables from that? And if not, is this a very useful figure? So it doesn't deduct payables. But if you deduct payables, there's just under GBP 100 million of net positive working capital. So it kind of doesn't really change the message. But the reason I wanted to put the GBP 200 million unleveraged stock and receivables on there is that, actually, in our industry, it's not uncommon to secure funding on stock and receivables in isolation as asset categories, which we don't do. The option is there for us to do it. Receivables factoring, for example, there are distributors that factor up to 50% of their receivables, which for us would be worth about GBP 40 million of additional financing if we were to do it, but we don't. The point here is just to say, look, the GBP 200 million asset base there, that can be leveraged if we wanted to, but we have a revolving credit facility and have no requirement to do so at the moment.

Thank you. So there's a question here about -- on the segmented customer types. Which one has the most opportunity and are there margin differences? So this is where I described our strategy as one of broadening the base. Now the market opportunity is spread fairly well across the different customer segments. As I said, it's imperative that we remain focused on our service and offer in the independent retail market. That is still a significant part of the market, perhaps 1/3 of the market operates in that space. And it's important, therefore, that we invest and continue to be market-leading in that space as well as developing growth opportunities in other areas. So if we've got a relatively high market share in the independent retail space, it follows that that will be harder to grow. But it's important that we preserve and we remain relevant for that part of the market because we can offer the best service, the broadest product range, and that is something that we are continuing to offer to that segment. So it's important. So that remains a strong opportunity for us. I think the growth areas may well come in other areas where we've got a low share and, therefore, can offer -- it's very much service led. It's very much tailoring our offer to what the customer needs are. If we can't add value to the customer, then we clearly won't have any sales to it. So we've got to be very mindful about the service and the value add we can offer to those segments. So I think, in their own ways, all the segments present a good opportunity. We've just got to tailor our service accordingly. There's a good question here, which is a sort of detailed question about how the regional distribution under the new Mercado model works. So the question is, in a town where there were 4 independent retailers, previously, they had multiple choices. and they could have a different offering. But now we've gone to a single Mercado and wouldn't they all have the same offer. How can they create some exclusivity. And this is a good example where the market operates in a way that each independent retailer tends to work with a number of distributors. Now, in the past, as your question sort of alludes to, several of them may well have been Headlam businesses, but they'll also be working with other people outside of the Headlam Group. They'll be working with other distributors. And they -- those independent retailers would have needed to have multiple accounts with Headlam to get different types of products and different ranges. Now, nothing really changes from the perspective of access to range and product availability by acting as a single Mercado business. They will have access to all of the products and ranges they had before, and they still have the opportunity to pick and choose which product they select from that portfolio. So nothing -- they don't lose anything as a result of us merging those multiple touch points into a single voice. And indeed, they still have the competitors that they would have bought from before. The key thing for us is that we make ourselves easy to do business with. So instead of them needing multiple touch points with potentially overlapping samples and multiple conversations with our salespeople trying to sell the same product, they don't need to do that anymore, they can have a single conversation about a much broader portfolio of products. And they still have, of course, the opportunity to go elsewhere, as they had before. So it's an important point to note that this isn't about reducing choice for customers. It's about increasing access to the product range that Headlam has to offer, but in a single offer, a single account, if you like, rather than having to shop around. Okay. Anything left?

There's a question just on do we have a breakdown of where the GBP 2.40 TNAV resides? So this is where I answer the question about equity per share. So that GBP 2.40 is net assets per share. It's not TNAV. So if you strip out intangible assets and do strictly a tangible, so TNAV, that TNAV works out to be about GBP 2.16. But the GBP 2.40 is just simply the GBP 191 million in net assets at the end of 2024 divided by the number of shares.

Perhaps this is the last question for us. So could I elaborate on the company's digital sales strategy? And what's our current online presence and strategy going forward? So if I can just sort of characterize this as 2 -- there's probably 2 sides to the coin. The first one is our offer to our customers. So we're a B2B business. We only sell to trades people and businesses. So we offer there a kind of service portal for our B2B businesses. You have to have an account. They come on and they can look at our product portfolio and our stock holding of a particular product and they can place their orders electronically. And that works across all of our customer segments, whether they are customers of a trade council, whether they're customers of independent retailers, whether they are large customers, and I described Tapi earlier. So they can place their orders electronically. They can search and scan availability of products and check prices. All of those things can be done electronically. So that's what we have today. On the consumer-facing side of things, although we don't sell to consumers, consumers can look up different websites of some of our branded products, for example lifestyle or something similar. And they can look at products and order samples as a consumer. And then we guide them to our customers, our retail customers, if you like, our partners, to actually then transact. So they will be guided to our customers to place orders. So we act in 2 ways. One is a driver of activity to our customers through our branded sales team and one is a fulfillment channel to our customers for placing orders. And I described earlier the consolidation of our digital platform, if you like. So we're trying to move away from this sort of spread of discrete websites into a single platform, which we can then invest in. So to take our business forward on the B2B side, it now means that we can offer much more of an e-commerce feel to our customers so that they can search and scan products. They can see our complementary products. They can see substitution products. They can look at what their previous transactions have been. They can pay for goods online. They can use credit cards. They can do what they like. So that's the area of investment we're making. So as I said, we've got consumer-facing brands, which drive activity to our retailers. Then we've got B2B activity, which is behind effectively a firewall and our customers transact with us there. And that's the area of investment going forward. So I think that's probably the end of the questions and pretty much all the time that we've got left. So thank you for all of your contributions to a good Q&A session, and thank you for listening.

Chris, Adam, thank you very much for updating investors today, being very generous of your time. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? It's going to take a few minutes to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Headlam Group plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.