Marston's PLC ($MARS)

Good morning, everybody. Welcome to the Marston's Interim Results for Financial Year '26. My name is Justin Platt. I'm the CEO. And with me, I have Stephen Hobson, Chief Financial Officer. We'll take you through the results today, we'll do so with the following running order. I'll give some quick headlines. Stephen will then talk to the financials. I'll then come back to give an update on some of the strategic progress we've made in the first half and then we'll take some time for questions. So it's been a really good first half for us. It's been a first half when we've made really excellent strategic progress [Audio Gap] and that progress sets us up for a very strong year overall. Profit wise, we've done pretty well. So we grow profit before tax at almost 8%. Alongside that, yet another period of margin expansion. And we've done that despite some of the well cost headwinds, but also with some of the closure periods that we've taken as we've refurbished our estate in line with the format. The formats have been a key success for the first half [Audio Gap] done 60 of them against a plan of 50. And as we've come to, they all performed very, very well. So all of that feels leaves us feeling very encouraged and positive about the second half and Hence, we maintain our view on expectations for the year. So that's the headlines. I'll let Stephen take you through the financials, and then I'll come back shortly.

Thanks, Justin, and good morning, everyone. So I'm going to give you an update on what we feel is a strong financial performance in the first half which sets us very well to deliver a good result for the year, in line with full year expectations. If I start with the group's key financial highlights for the period. which show EBITDA margins continuing to expand and pretax profits increasing year-on-year. As is the case every year, the group is second half weighted in terms of revenues, profits and cash flows this year is in particular, due to the impact of our new pub formats, the World Cup and the phasing of some cash flows, which I'll bring out as we go through the slides. Total revenue was GBP 422.7 million, down 1.1% year-on-year. EBITDA was GBP 85.9 million, flat year-on-year with EBITDA margin expansion ending 20 basis points to 20.3%. This builds on the strong margin expansion delivered last year. The net impact of the additional closure period was GBP 2.2 million of lost revenue and GBP 2 million of EBITDA in the first half, which is included in the underlying numbers presented on this slide. So overall, revenue was down 1.1% year-on-year, including the GBP 2.2 million closure impact I just mentioned, and I'll give you some more color on sales in the next slide. EBITDA was flat year-on-year despite the GBP 2 million impact from closure periods. And again, I'll come on to how we achieve that in more detail shortly. Net finance costs were slightly lower year-on-year, benefiting from continued deleveraging and depreciation also fell slightly as a result of lower capital expenditure in recent years and a high mix of spend being in the land Buildings category, which is revalued each year rather than depreciated. As a result, profit before tax increased 7.9% to GBP 20.5 million, and earnings per share increased 9.1% to 2.4p per share. Before moving on, it's important to note that the revenue and profit headwind from closure periods in H1 won't repeat in H2 as the new pub format program for the year is now complete with 60 pubs open all of which will contribute to sales and profit growth in H2, alongside, of course, the 31 pubs that we converted last year. Moving on to focus [Audio Gap] on revenue in a bit more detail. I've mentioned that total revenue was GBP 422.7 million. Within that, like-for-like sales were 0.5% lower, which was ahead of the hospitality market which GBP 2 million decline. In addition, I just covered the GBP 2.2 million impact of having the closure period which relates to our new proformas. Very encouragingly, those new formats give like-for-like sales growth of around 20% in the post opening periods, although clearly the impact of that in the first half was limited given in a relatively short period of time post opening. Turning to H2. I'd like to make 2 points in relation to revenue. First, on the bottom left of the slide. Like-for-like sales in the -- up to the end of week 31, were 1.5% lower year-to-date. However, you'll remember last year, that 5-week period post the half year showed like-for-like sales growth of 10% due to the timing of a much later Easter, Mother's Day moving into H2 and some great weather. I thought it would be therefore helpful to note that the 2-year like-for-likes in that 5-week period have actually been quite strong. And overall, we'd say that the underlying trend from H1 is unchanged. Second, as I've mentioned a couple of times, we do have the benefit in the second half of all of our [Audio Gap] Q1 new pub formats being up and trading with no closure periods. The chart on the bottom middle of the slide shows our expectation as to the year-on-year sales Bingo, which continues to deliver meaningful efficiency gains. As Justin will cover, this has been achieved just as our customer reputation score continues to improve. Second, the negative movement from utilities shown on the chart has nothing to do with current market movements in energy prices. It's actually due to a gas contract, which came into effect from print company had enjoyed a very long-term contract, which fixed its gas prices for the previous 5 years. Looking forward, we are well hedged on energy with electricity prices fixed for the business in total for this financial year and our gas pricing locked in until the end of [Audio Gap] which negates the impact of any short-term volatility. Revenue and COGS management shown on the left-hand side of the chart [Audio Gap] between them, they've delivered just over a percentage point of EBITDA expansion in the half. So setting aside the impact of the closure period, our EBITDA margins moved forward 60 basis points year-on-year, which gives us confidence in the second half. And then including the impact of those closure periods, EBITDA margin was 20.3%, and in the period. We have good cost visibility going into H2. I've talked about energy already, but also on other key cost areas. And as such, we continue to expect to make further progress over the full year as we move towards our medium-term margin target. Turning now to the pub estate. Since the introduction of our strategy in 2024, Marston's has successfully delivered growth through the core state with EBITDA per pub after central costs, increasing 29% to GBP 155, 000 and over that period. Growth has come from strong operational execution as well as many cost and revenue initiatives. But 1 of the most powerful believers in recent times has been through our investment strategy. And as the chart on the right shows the EBITDA per pub -- after central costs in our invested pubs has increased materially from GBP 265,000 preinvestment to GBP 354,000 post investment. This GBP 90,000 increase per pub, which represents a 35% EBITDA return on our 260,000 average investment per site illustrates quite well the speed of progress, both in terms of driving profitability and estate quality that can be made through our investment program. And looking ahead, we expect to build on this further through the acceleration of [Audio Gap] H2, then the GBP 7.1 million on the screen. Net interest increased slightly year-on-year, although we expect this to be slightly lower year-on-year by the year-end. And as I mentioned, CapEx was the largest driver of the year-on-year movement increasing by GBP 8 million year-on-year, reflecting the decision to await the format investment program into to maximize value generation, including all the trading benefits that we're going to see in the second half. We do expect full year CapEx to remain within the 7% to 8% turnover range, which we communicated back at the CMD. As a result of all these factors, recurring free cash flow was an outflow of GBP 15.6 million. However, we expect a strong reversal in H2 of that. And as I said at the top of the slide, we remain confident in delivering a GBP 50 million of recurring free cash flow in the year as a whole. I'll now turn to the group's debt structure, so our long-term financing structures remain in place. And those long-term structures are supported by our revolving credit facility, which in the year we extended for 1 further year until July 2028. Our securitization continues to provide long-term predictable financing. Scheduled amortization saw a reduction of GBP 44.7 million compared to this time last year and continues to be the main driver of deleveraging for the group as a whole. It's worth noting that while there remain operational restrictions in place as a result of the securitization, our team continued to make significant progress internally to manage and reduce those restrictions as we continue to delever. Other lease-related borrowings or OLRBs, remain relatively stable in the period, reflecting the long-term nature out financing and the balance on our GBP 200 million banking facility at half year was GBP 56 million or GBP 53 million net of unamortized issue costs as per the slide, reflecting the cash outflow that I've just discussed. Comparing to the same point last year, leverage, excluding IFRS 16 leases, is down by 0.2 of a turn, and we remain on track to reduce net debt to around 4x by the end of the year. Moving to the balance sheet. Our balance sheet remains really robust and is underpinned by GBP 2.2 billion of property assets with 82% of the estates held as effective freeholds. The net book value of our PPE increased by GBP 136 million compared to a year ago, reflecting the property revaluation, which we discussed at the full year. As I've just shown, net debt, excluding lease liabilities reduced to GBP 857.7 million, a year-on-year reduction of GBP 23.4 million, with lease liabilities relatively flat year-on-year. Other liabilities increased GBP 18.9 million primarily due to the deferred tax impact from the property reval gain in FY '25. And together, these movements have driven a GBP 134.5 million increase in net assets, which now stand at GBP 112.9 million, which is up 21% year-on-year. As a result, NAV per share has increased to 128p, underpinning the value of the business, and we expect this value to continue to grow through the coming periods. And then moving finally to the outlook before I hand it to Justin. There are 5 key points I'd like to make here. First, we remain confident in the trading outlook for FY '26. We do expect like-for-like sales to increase over the balance of the year, supported by the rollout of the new pub formats and the opportunity that the World Cup brings in the summer. Secondly, our format program itself is clearly now establishing itself as a key growth engine for the business with 91 sites now operating under our new formats in total, we expect to see an increasingly meaningful contribution as we move through the second half and into future years. Third, we expect further margin expansion in H2 supported by good cost visibility and continued productivity improvements, keeping us on track to deliver our medium-term target of 200 to 300 basis point improvement against 2024 levels. In terms of cash, the outflows seen in H1 are expected to unwind in H2 with the group on track to deliver another year of over GBP 50 million of recurring free cash flow. And then finally, we'll continue to reduce our leverage with further progress towards 4 times by the end of the year. So to summarize, we've delivered a strong first half with clear financial progress, and we remain confident in meeting our FY '26 expectations and delivering another strong set of results at our prelims in the one. Thanks very much. I'll hand back to Justin.

Thank you, Stephen. So yes, I'll take you through some of the progress we've made strategically in the first half -- just as a reminder, the approach we take to driving value at Marston's to be a high margin, highly cash generative local pub company. We do that with a focus on differentiated formats that appeal across a range of consumer segments. That was what we laid out at the Capital Markets Day and continues to underpin our approach. The 5 value drivers, you can see on the screen, the 2 I will talk to today are the first 2, i.e. execute in a market-leading operating model and using CapEx to create these differentiated formats. So first of all, on the operating model. I mean, really, this is about the essence of running a good pub business. It's effectively balancing revenue delivery, cost efficiency and guest satisfaction to drive returns. As Stephen has said, we've done that successfully in the first half to reliably deliver profit growth. And we've done that with both sides of the slide here. So from a revenue point of view, tough market, but steady and we've done that really through our peak performance. So peak trading, up north of 5% and within that best ever Christmas. So from the revenue side, steady and resilient alongside, though, we've complemented that with our approach to margin as Stephen said, continuing to look at every single line of the P&L where we can drive productivity, combination of offering a great guest offer whilst also managing our costs. I think a final point though, on the slide is also very important. Taken a very disciplined and judicious approach to discounting in the first half. As the markets got a bit softer, there's been an avalanche of discounts across the pubs and the restaurant space, particularly on food, I'm talking here. And whilst we have offered discounts in certain places where we believe it can enhance the experience in our returns, we've been quite careful with that because what we didn't want to do is trade the top line for the bottom line. So overall, the combination of the 2 has allowed us to deliver that reliable profit. But alongside that, of course, the business only wins if you keep doing this right. If you keep giving guests a great time. So the great news is that whilst we've driven the profit growth, we've continued to make good strides on guest experience. So reputation scores up again at continuing to make progress. And we do that on 3 things. There are probably 3 big drivers behind this. The first one, events. For those of you in the room, you can see the posters around the room. This is about giving guests a reason to come to our pumps. So in the first half, we've had a lot conference darts tournament. [Audio Gap] We've got a trivial pursuit, national pub quite and the IP Matilda, we've been bringing to our pubs. So appeal across a range of demographics to really drive engagement across our pulp. Alongside that, we've continued with order and pay. Order and Pay is really important to us, giving guests the opportunity to not have to get up from the table to order their food or drink. That continues to grow and do well for us and support great appeal great returns. So the real standout performer amongst these, certainly in the first half for this year has been grandstand, so what I thought I would do is just give you a bit more depth into what's behind the grandstand model to help you understand the way some of our formats operate. And I thought 1 of the best ways to do that was be to hear from some of our local pub managers about what this grandstand pub is all about. [Presentation]

So Grand stone, very popular with our pub managers, very popular with our guests. And as I said, the commercial returns actually have really astonished us how strong they've been, market share, and this is measuring the market share of a local grand stump up in its locality. We've gained 1% on average across all the areas that we've launched. And 1 of the biggest things behind that is the visit frequency. What Grand Sand is only a venue for the big match or the big occasion it's accessible enough that people will come on different nights of the week as well as on those big match occasions. And that's reflected in the visit frequency. So our visit frequency has gone up from an average of 5.5 visits a year to almost 6.5 visits a year. That's then translating into revenue. So revenue growth of around 30% on a like-for-like basis. And that's partly because of that visit frequency, but also we're improving spend. So spend is up 7%. So quite a unique food offer that we've put into GrandStand alongside the drinks. So that's really helping alongside the visitation, push up the revenue. And of course, that then translate into the returns. So the revenue -- the top line is good, but remember, to Stephen's point earlier, on average, like these are GBP 280,000 a pub. It's not a very, very expensive conversion and then to the returns we can get are really strong. So good commercial returns, and that then plays into the operating model. So if you think about the things we talk about on the operating model overall, what's happening with Grandstand and indeed with the other formats is it's just turbocharge Dinnington is a multiplier. So I'll talk in a while about the power of the World Cup and what it can do for us this summer. That's across all of our estate. Imagine what it can do in a grand stamp pub. On a reputation point of view, I've just shown you 806, Grammer in 848, Order and Pay. We're a bit north actually of 11% now as a total business. Grand stands 14.5%. And of course, that helps us in our spend. And then finally, EBITDA margin Grand stands ahead of the total company and its EBITDA margin. So it's where you start to see the value drivers working together and these formats complementing what we're doing on the operating model. And I think the big thing now really with the formats is, we've talked to you over the last couple of years about these formats, and we've very much been in test in learn mode. We're not in test and lone mode anymore, certainly from this half onwards. We've got enough in the business at 91 in the business. We've got enough that these will contribute to the top line and to the bottom line across the total business. So we've had a really good look at the whole estate in terms of the rollout opportunity. And we've mapped all of our pubs. So we've mapped the demographics and the populations around all of our pubs worked out which ones can be grandstands, which 1 can be Woodies, which ones can be 2 doors. We think there's about a 600 pub opportunity, a conversion opportunity. And of those 250 or so on Grandstand, so really clear now, significant rollout opportunity. We've got 91 to capitalize on this year, but beyond that more, which is why we're saying today, we're going to accelerate this rollout program, and that will be over a number of years. We'll confirm exact numbers to you in the prelims in member, but we'll be doing in the region of 100 next year to really get behind this. So a big, big driver of top line for us in the second half, but then for many years to come. And really, that's what leaves us feeling positive about the outlook. Of course, we've got a World Cup summer ahead with a Unity based estate, high proportion of drink sales, big football tournaments are always very big for us across the summer. But alongside that, it's just the general momentum, outdoor spaces, beer gardens are very important. So the general momentum of a World Cup Summer outside of the tournament as well as in the tournament, can be very positive. But alongside that, as we've said, 91 of these pubs, a lot of these pubs that we've done in the first half can actually open until March, so we're not actually getting the benefit until the second half. And this is the first time that we'll have been through a peak season with a meaningful number of pubs, so it's the combination of, if you like, the World Cup Summer and those new formats firing for us that leave us feel very confident about our outlook. So in summary, strong H1 in terms of profit delivery, excellent strategic progress where the new formats are delivering. We feel good about the H2. And as a result, we're very much continuing our guidance we're on track for expectations for the year. So with that, we can take any questions that people may have.

Do Janet Peru. Two or 3 questions, if it's okay. In terms of the pipeline for conversions into 2027, will that be half 1 focus as well, do you think that's the first one. Because to door going to be sort of #2 after grandstand in terms of the pipeline. And in terms of the estate, obviously, you've got a big NAV at 128p and growing. Are you tempted to make any disposals anywhere in the estate? And last question was in terms of trading, how franchisees or tenants anyone in any way, cut back in any opening hours because of any costs?

Thank you, Doug. So let me start with the last one. No, we've -- opening times, we've very much protected that both from a partner or a managed state, while there's the demand there, we will continue to map it up. So we have -- we've very much protected our opening hours and wouldn't touch that. In terms of the format, we'll very much aim to do the conversions in H1. As Stephen said, it's approximately 3 weeks closure. And so of course, what you try and do is you try and do those closure periods in the lower months. So really, this time, it's been this half, it's been October, November, we obviously don't then do that in December because December is a good trading period and then January to March. So we're still laying down exactly what it will be. But yes, we'll tend to do the H1 because that then allows us to have a full period through what we know is our biggest period, which is basically between May and August of firing on all cylinders. In terms of the mix of to door and grandson. I mean in essence, to door was the first off the ramp. This time last year, I was talking to you all about 2 door in a bit more depth because we did 25 or so 2 doors last year alongside the 30 or so we've done this year. So it was kind of to do as a big focus last year. Grandstand starting to grow. I mean we're in the fortunate position now that they're all working. You kind of feel like a footwall manager with 15 good players, and it's who makes it to the first 11, so we can have a look across the estate and work out what our priorities will be because they're all working. And honestly, I didn't anticipate that I expected some winners and some losers, but they're all working, and that will enable us to pick the right plan for the year. And your last question was disposals. Look, we always look at the state. There's always elements of the estate that you'd like to pull them in and you'd like to move them out. It's not a major focus part of our assessment on looking at the formats, part of the assessment is looking, first of all, are they good pubs in good locations, but then secondly, the extent to which they're suitable for these formats. And that's why looking at the estate, as I say, 600 or so are absolutely bang on. It's data led. It's not like, oh, we're quite fancy this 1 being a Woodies. This is completely driven by population and demographics. And the remainder by the way, outside of this 600 are our low-cost pubs, which is our fifth format that doesn't require as much format conversion. So yes, we do look at disposals, Doug, but it's more on what you would expect of a bit of churn.

Caroline Gulliver from Equity Development. Two questions, if I may. The first is on labor scheduling. You've obviously done a really good job already on improving labor productivity. -- how much more opportunity is there to go as you roll out order and play with that labor scheduling system?

Yes, you're right. We have done a lot of work on it. And the interesting thing is often your mentality is not how do we save cost -- but how do we get more staff on at the right time. It's as much about having more people on a busy Friday night than it is about less having less people on an acquired Tuesday afternoon. The biggest factor in it is how good you can get with your sales forecasting. That is the single biggest driver of it. So there's a bit on rosters in the way you. We have a staff app and a routing app and there's various things that are very helpful. But the most important thing is how you can get better at your sales forecasting. And frankly, we get incrementally better on that every month. And I think we will continue to get incrementally better as you forecast trading patterns up and down.

Very neatly brings me on to my second question, which is what does the successful World Cup look like for you? And really, I'm just trying to understand what's the sensitivity to how England do perhaps for Grandstand, but then perhaps because you've got some diversified formats for the whole group. Is it particularly sensitive? Or are you not there? And just as a sort of a color to that, weather. You mentioned Bearden there's a lovely summer weather at 1%, 2% like-for-like or vice versa?

Yes. And you're right, actually, the 2 link in the sense that the first thing to say about the World Cup is -- there's 2 real strengths of it this time versus previous years. First of all, there's an extra round of games. So it previously would go second around quarter finals. It now goes second round final. So there's an extra round of games, which is helpful. But secondly, the kickoff times in the sense that the biggest dynamic change in pubs in the last 20 years is the busiest time is 6: 00 To 7:00 in the evening. The quieter time is 10:00 to 11:00 in the evening. And therefore, we know we can get people in early evening. But because the world -- many of the kickoff times are 9 p.m. or 1:00 p.m. certainly for the England games, -- we know we can get people in early, and then they'll stay through the evening. So that's an opportunity. I think to your point about what success looks like is it's not just about the games. It's about the momentum and the feel-good factor it creates in the country for people visiting the pubs generally. So what we don't see is like, of course, you get a big spike on a big inland game. -- in the English pubs, you do get that. But it's more about the momentum where the pub becomes in community pubs, you remind everybody that it is the center of your community where you're all going to go and meet -- so you end up going midweek as well as well as going at the weekend to watch the game. And that's a bit analogous to the way I described GrandStand as a product before, is people have come and watch the big game, but it will remind that they quite like that venue. So they'll buy in on a Tuesday as well. So really, it's about the overall feel good factor for the year. And it can work across all of our pubs, frankly, our signature and our Woodies, which are our more food-based pubs. Again, you create that momentum, and that's where our outdoor spaces come into their own. So we think it can work across a major portion of our estate and really, it's about a fair good factor across the country.

Karen Puri from JPMorgan. I've got 2 questions, if I may. The first 1 is on the like-for-like. So just -- I mean you sort of shared that you're outperforming the market in terms of like-for-like growth. But if you look at some of your closer pairs, it's sort of to point lag? Just trying to understand what's sort of driving that? Is it geographical exposure, different segment exposure? And are you seeing any sort of weakness consumer weakness across any part of your business? That's the first one. Yes, maybe we can start with that.

Do you want to start with that, Stephen?

Yes. I mean, the lifelike promise in the first half it's sort of where we expected it to be, to some extent, Karen. I mean, obviously, the market is pretty tough at the moment. We always need a big opportunity for us is in H2 because the world couples the format as Justin sort of said, -- and we have -- we've said that we're outperforming the market, which is to do with some market data proprietary data that we have, which includes the whole market. And that's kind of where we sit. So I think the opportunity definitely remains in H2, we're sort of as we expect it to be. And I think compared to some of the peer group, quite a lot of the companies have quite different dynamics. We sort of look at youngs and fillers and they're very London-based. M&B has got a much larger portfolio in food than we have, et cetera. So it's quite hard to read across the different sectors if you go to bid on that. And you know the way we think about it when we laid out the strategy at the Capital Markets Day, we view ourselves as a hospitality business. So our peer group is public and private, pub and restaurant and across the piece. And so there's different segments within that.

The second 1 is on the balance sheet and capital returns. I guess, seem to be pretty much on track to hit the 4x net debt EBITDA. Have you sort of any -- do you have any sort of thoughts in terms of how you plan to return capital to shareholders? Could that be dividend share buybacks? I know it's a bit early, but sort of any thoughts are welcome here?

Yes. I mean, look, it's something we'll consider over the second half year. You're right. The trend is that we should be close to 4x, but probably not quite 4x by the end of the year, but close to 4x by the end of the year. I think you guys have a set about sort of 4.1% or 4.2% something like that. So it's clearly something the Board will consider going forward. I mean, as what I would say is that the Board will need to consider all different uses of capital, including investing in these excellent returning formats shareholder returns as well and resilience of the business. So we'll have a good think about that as a Board over H2, and we'll give you an update at the prelim.

Anna Barnfather from Pam Liberum. Just on Slide 7, you set out the sort of uplift in the second half from the reformats at 1.7%. Just wondered if you could expand on what sort revenue uplift that is on those 91 sites and whether that's exclusive of World Cup or World Cup is on top of that? And then the second question, I guess, is a bit more a follow-on to the capital question at the end of the year, if you get towards 4x. You mentioned that you're so negotiating to reduce the restrictions. Is that the cash in the securitization vehicle or anything else on that?

Yes. So in terms of Slide 7, I mean, the GBP 11 million in the bullets is what we think the impact on revenue will be from those formats. So the 3 bars on the chart, the biggest bulk of them is the FY '26 uplift. So that 1.7% is the impact on the group's total revenue year-on-year in H2 as a result of performance that we did in the first half. And so it's actually quite a meaningful number. And if you back solve it, you work out, it's quite -- it's an average weekly take that's quite a bit higher than the estate average, but it will have quite a positive impact on us.

Just to sort of clarify. So they've done 20% like-for-like uplift that grand done 30. Is that...

That's equivalent to 1.7% of the total group turnover in H2. Yes. which is why we're feeling positive about H2 really because you can -- we can directly see on our own forecast GBP 11 million of year-on-year sales upside from those formats. Most of that will be in the life flight number. The closure period won't be because we strip out closure periods from like-for-like accounts. But in total, it's a good upside. And then your second question on restrictions. What I was alluding to there more was that the securitization does impose restrictions on the company, and there's lots of -- I mean, the rule book is sort of 10 inches thick kind of thing. But we, as a business, have been working with the securitization for 20 years now. And actually, the restrictions that it places on the business, for example, you have to spend a certain amount of maintenance CapEx, we're getting cash up this curisation is a bit tricky. We know how to deal with that. And so the point I was trying to make is that actually, as we run the business as we decide what to invest in, what to do with the strategic plan, we can do that despite the restrictions of the securitization being in place. We've also done quite a bit of work on distributable reserves as well. So we had negative distributor reserves a year or so ago. We're now in a positive position. So if we want to think about returns, we actually can do that whereas before we can.

Good morning. A couple of questions. Just on the margin and the outlook. Another way of sort of looking at it is cost inflation. So you did a fantastic job in the first half of costs being down. What is in the outlook for sort of year-on-year cost growth is for the full year? Secondly, with the increase in reformats to 100 next year. Does that change the view on the sort of GBP 50 million recurring cash and sort of CapEx of 7% or 8% of revenue? And then thirdly, just thinking about sort of the property valuation at the year-end. Given the uplift in profitability per pub you're seeing, is it straightforward to think we can put that uplift in EBITDA or a multiple of that lift on EBITDA straight through? Or will the value take longer to appreciate that.

You go to that as -- so margin and cost inflation, we're actually quite well set for the second half. And so the general situation, Greg, is that -- as I mentioned in the slides, that energy prices are locked and loaded. And then other stuff that we buy, food drink labor and stuff. We know the prices of those. We have long-term contracts, annual prices at least. So if inflation were to peak, that would more be a 2027 thing rather than a 2026 thing. So we do have good visibility across the whole of the cost base in the second half. Now I can't say that if there's not a real big spike in inflation that we won't have suppliers wanting to have a conversation with us and we'll, of course, engage with any supplier on a normal basis if they come and talk to us. But as of now, contractually, we're in quite a good position, and I think cost inflation should be okay in the second half. Next thing was the reformats. I mean, look, we -- I think the GBP 50 million recurring free cash flow is a really important number. It's sort of -- it talks to the business's ability to generate cash. And consistently generate cash. We put it up there as 1 of the 4 key targets of the CMD just a couple of years ago. So we're really committed to that being something that the group delivers. We think that we can extend our investment program to circa 10 next year and still deliver recurring cash flow of GBP 50 million, and that's what we intend.

One of the key things on that, Greg, is you remember when we designed the format is being clear how much you can invest per pub. It's 1 of the strengths of it is whilst they perform at a revenue level, as I say, you're only spending between GBP 250,000 and GBP 280,000 a pub. So that allows you to do a significant number without breaking your other commitments on cash flow and capital allocation and CapEx as a percent of revenues still remain at 7% to 8%. So that's why we're so confident in the model going forward is we've got a formula that works for sensible and judicious amounts of CapEx.

And then the property reval. I mean, it's not quite as straightforward as EBITDA goes up and therefore, valuation goes up because the 2 factors are the EBITDA that a so-called reasonably efficient operator would deliver rather than what milestones would deliver. And then there's a multiple of marking multiples applied to that. So -- if we see a big improvement in EBITDA as a result of doing investments in sites, that doesn't straight away feed through into a property revalue increase because we did the investment and another operator may not have done that. So I think in time, it supports the property revaluation and it does give a bit of an upside. But I don't think you should get go EBITDA is up, therefore, property revel goes up as well. It's a bit more than that.

Any more for any more? Well, thank you for joining us, everybody. Have a good day. Thank you.