Norcros plc (NXR) Earnings Call Transcript & Summary

Welcome, everybody. Thanks for coming today. It's great to see so many people making the time to join us. A short time ago, Thomas asked me to say a few words of introduction. And I kind of wondered what to say, actually, so I reflected back to a time last summer when I was delighted to be asked to join and chair the Norcros Board; and there were a number of reasons for that. I thought it's an opportune moment to share those reasons and why we're here today. I think I remember 3 principal ones. This is a great business. It's got great market position. It's got great brands. It does design and service really outstandingly well. And the more people I spoke to, the greater assurance I had about the ability of the business to drive value and scale through a balanced growth agenda. And I think you'll see that as Thomas and the team take you through the presentation today. And last but certainly -- least is great people with ambition, with motivation, with enthusiasm and with talent, who were focused on getting after these opportunities. So that's why I'm here. The 9 months since I developed those reasons, I've been engaging with the business, and they've been reinforced. And I kind of hope that one of the outputs from today is that you'll feel similarly positive about Norcros and its opportunities; and in which case, we'll have done a good job. So no pressure, Thomas.

[indiscernible].

So the kind of agenda for the day is we're going to introduce you to the team. We're going to update our strategy. And you'll have seen in the RNS this morning we're going to share some new financial and operating targets with you. The presentation will take about 90 minutes. We'll have Q&A afterwards. And after we're done with the Q&A, we'll go to the room beside us and have a drink and a chat and more informal questions as you wish. So that's the introduction, Thomas. Over to you to kick off the presentation. Thank you.

Thanks very much, Steve. And welcome to everybody, including our excellent team, mainly sitting to my right. And you will get to hear from them both formally through the presentations today and also meet them afterwards for drinks. We've got 3 really good stands outside that talked to some of the key themes that we will cover today. And we've got some subject matter experts on sustainability, on our new Grant Westfield product that is now starting to grow out of the bathroom as well. And I would really recommend -- I think a lot of you hear from myself and James quite a lot, well, we've got an exceptional team. And then please stay and talk to them. A special welcome to Kevin, our South African MD, who's traveled all the way across to be here today. He's not hard to find in the room -- if you just raise your hand, Kevin. He's not the smallest guy out there. And that's why we win the World Cup every 3 or 4 years, because -- he's mid-sized South African and I'm smaller. And also special: Nick, thank you so much for coming all the way down. I'll talk to us having a great platform to grow from. And Nick played no small part in taking Norcros from what it was 10 or 12 years ago to where we are now and the platform we have today. So thank you very much for coming down to support us, Nick. Today, James and I, together with our team, will set out our medium-term growth strategy and focus on why Norcros is a differentiated and compelling investment case. We are truly different. In June '23, we communicated our 4 strategic initiatives, namely portfolio development, organic growth, operational excellence and ESG. And today, 4 of our senior executives sitting at the front of the right there, Helene, Charlie, John and Dave, will take you through key aspects of these initiatives. And the key point is they are all already in play. We're not standing up here and talking about stuff that we're not already doing, and I think that's really important to note. I think it's also really important to note, as I said, thanking Nick, is that we're operating off a strong base. We are a very, very strong business in a very strong financial position; and we've developed great scale. This base has been carefully and deliberately developed over the last 10 or 12 years through a combination of organic share growth and targeted acquisitions. Giving some context at the start of what is a tight and focused session. Over the last 10 years, Norcros has pursued a focused market consolidation strategy. That's not often spoken about, but those of us that have been in the business a long time -- I'm 18 years. I think James is 10, more than 10 now. This was always the ambition that was followed by the group. And that market consolidation strategy has resulted in Norcros becoming the U.K. and Ireland's #1 bathroom products group. Our South African business is the #2. This is a significant achievement and sets us apart from many of our peers. This leading market position, together with the result and critical mass that we now have, adds a number of new arrows to our quiver. The most important of these is our ability to collectively leverage our scale and access new growth accelerators to accelerate organic growth ahead of the market and at higher margins. We will spend time today focusing on what sets Norcros apart, because we are different, and also why we continue to outperform the market going forward. As you will have seen this morning, we updated our medium-term targets that reflect our confidence in our revenue and margin growth prospects. Our updated targets recognize the benefits of our scale and increased collaboration. We plan, firstly, to grow organically 2% to 3% ahead of the market, driven primarily by our exceptional NPD program and also our increased cross-selling across our brands. Secondly, we will develop our organic operating margins from 11% to 15%. And James will talk to that in more detail, how we bridge that over the medium term, but it is interesting that our U.K. business, after the exit of Norcros Adhesives and more recently Johnson Tiles UK, is already close to that 15% hurdle. Thirdly, we will remain focused on maintaining our excellent record of cash generation with cash conversion greater than 90%. Fourth, the ongoing development of our portfolio, which is something we set out and we are actioning; and the development of our operating margins will see Norcros move our ROCE target from 15% to 20%. Finally and very, very importantly, this is a thread that runs through what we're going to be doing going forward: We will accelerate our plans to reduce our carbon footprint, with our first important step being the delivery of our 2028 SBTi-validated targets. Delivering this target is not just about doing the right thing. It is already and will continue to give us an increasing competitive advantage as we help our customers reduce their own carbon emissions and look to meet their end consumers' requirements. In doing this, we aim to give our customers a powerful choice for better living. And Dave Tutton, our MD from Triton, has an excellent presentation on growing profitably by doing the right thing, later in the session. In addition to this, we are going to continue to accelerate the growth of the group through M&A. Our M&A will not only accelerate our scale but will also, based on our acquisition criteria, further develop our operating margins, as seen through the Grant Westfield and MERLYN acquisitions. The rest of the afternoon will be focused on how we're going to deliver these targets. We will cover 3 key areas today. Firstly, we're going to look at the strong and successful and differentiated business that we have today. We will look at the opportunity ahead around the addressable market opportunities and how we address these through product diversification and careful geographic expansion. And then with the rest of our team, we will share examples of the drivers that will drive our core economic -- our core organic growth over the medium term with those clear and already-in-play growth accelerators. So starting with Norcros today, James and I will briefly cover where we are as a business today; very importantly, where our brands are positioned. And we've been talking about this for the last 1.5 years. It's really important to understand the positioning of the brands as we go through today, and specifically our positioning in the sort of mid-premium product space and price space. It's more resilient. We've got market-leading brands that are price leaders, and we are not as cyclical as a lot of building products out there. And then very importantly, because this will give you the confidence that you need in terms of the acceleration of our financial performance, we've got a great track record. And that gives myself, James and, I think, the Board the confidence to know that we know how to generate growth and strong investment returns. Norcros today is a decentralized but collaborative business that designs, sources and then provides exceptional levels of customer service and support. And you'll hear from the horse's mouth a bit later. We've got a great video from John Adams at Barratt, who talks about what makes Norcros different. Our decentralized model means that we have industry experts managing our brands where it matters most, and that's at the rock face. I always tell everybody we've got a tiny little office at Wilmslow, with a few of us in there. And I think there's 14 of us there now. Our real talent sits at the rock face. They are industry experts. They understand their customers. They understand their suppliers. And we delight in competing with big multinational corporates with wonderful and really complex structures. These industry experts are what makes Norcros different from everybody else in our business. And our scale and group-wide cooperation allows us to deliver more than the sum of the parts, and we will talk to that more today. I believe that the strength of our teams and our model is at the heart of our success to date and will underpin our future plans. And as I've said before, these expert teams is what it's really all about. And please engage with them, and you'll see what I'm talking about. So looking at what we are. As we said, we've grown to become the U.K.'s #1 bathroom products group and there's still so much more to go at. Underpinning this growth has been market-leading bathroom and kitchen product brands, not commodities, nothing other than in-house excellence that is driven by great customer insights. We are strongly positioned in the more resilient mid-premium market and especially in the RMI space, which James will talk to. There are still lots and lots of skips outside houses that are being renovated. And the biggest part of the bathroom market is actually RMI. Around 80% of the bathroom market is RMI-driven. We are differentiated, as I said, by exceptional in-house design. And this covers technical; quality; and fashion; and very, very importantly, speed to market, which we do time and time again. We will be talking about our ENVi shower today, which is the first new-generation behind-the-wall electric shower. We've done it again, and well done to Dave and his team. The individual brands are also increasingly capital light and cash generative. And this has been further strengthened by our exit from Norcros Adhesives and more recently Johnson Tiles UK. As a team, we are also very clear as to what we are not and what we will not get involved in. We are often viewed alongside other building products businesses, but we are simply so different. I think it's important to be clear on what we are and what we are not. Firstly, we are not a distributor. We design and curate our own products through our exceptional and specialist in-house design teams. Our product designs are all centered around delivering the very best experience to our end customers and always surprising them on the upside. We are increasingly not a capital-intense manufacturer. We do some light assembly, but in general terms, we design products; and then source them from third-party partners, not suppliers. And this keeps our returns high, reduces our operational gearing and enables us to focus on our core strengths which are product design and customer service. We are definitely not a supplier of heavy-side, price-sensitive building commodities like cement or roof trusses that are really heavily indexed towards new build. And by implication, we actively avoid low-margin and low-return categories and channels. James will now take you through our business portfolio and importantly our brand positioning. Thanks, James.

Thanks, Thomas. And good afternoon, everyone. So to Slide 12. We have accelerated the development of our group through acquiring and growing great brands. You've seen this previously, but it's an important part of our differentiation. We operate a balanced group of autonomous businesses, and the split of these is shown in the chart on the left. The divisions manage complementary product-based brands. And each division is driven by product and sector specialists, and this specialism is crucial and helps us to differentiate. And we collaborate across all our divisions to drive growth and efficiency. We have a good track record in cross-selling and we're excited with this significant opportunity to do more together. The key takeaway here is our diversified portfolio is a great platform for growth. And importantly, we have a very strong position in the large and more resilient mid- to premium RMI segment or, as we call it, our sweet spot. So on Slide 13, looking at the U.K. sweet spot. We have strategically positioned the group in the areas of the market that we believe are most resilient. Firstly, we're not over-indexed to new build. Looking at the chart on the left, we note that about 80% of the bathroom products market is driven by RMI; and RMI is more resilient than the new build housing market which is more cyclical. And our Norcros revenue mirrors this RMI-new build split, approximately 80-20. Secondly, we have consciously focused our businesses on the mid-premium segments of the market. And looking at the chart on the right, you can see this is approximately 70% of the total market. This mid-premium sweet spot is more resilient to cost-of-living pressures, as consumers in these segments are prepared to pay more for quality products and great customer service. So turning to Slide 14. And you have seen this previously, but it's helpful to highlight the key points again. We have broad routes to market across trade, retail and online channels and a significant export business. We have a strong customer list with over 1,000 blue chip customers. And we have a great track record of building long-term relationships with our customers across all of our group, such as Barratt, Wickes and Howdens. We are increasingly chosen because of the strong product design, stock availability and outstanding customer service. And the significant breadth and depth of our customer relationships provides great stability and opportunities for further growth. Thomas?

Thanks, James. So in summary, Norcros today has the critical mass and a successful and scalable platform. We have a very strong record of growing market share in a balanced way and balance between organic share growth and M&A. And I think, importantly, from an M&A side, we've developed a real skill in terms of integrating and growing the acquisitions we've made. And Charlie Soden from MERLYN will talk to this later in the presentation. We've also developed a portfolio of market-leading brands, as James has shown you, and significant scale. Our diversified platform provides growth opportunities and has enabled us to remain resilient in the face of multiple global and regional economic cycles and shocks. Our service levels to our customers have remained at the absolute top end right through COVID and the [indiscernible] shocks that we faced. And this is a key differentiator and why we are the trusted partner to all of the market-winning brands that you see, you saw earlier with James. Our brands are differentiated by strong design, and you can see some of them outside; and the best customer service capabilities in the market. Given our scale and proven model, we are really well positioned to accelerate the growth of our business and the quality of our returns. We will now move on to the opportunity. The markets that we currently trade in and those in our neighboring geographies remain fragmented and attractive. Our strategy over the medium term will continue to grow through -- will be to continue to grow through consolidation of these attractive markets both organically and through acquisition. There are 3 clear areas of opportunity to accelerate this growth. Firstly, as we've said, we operate in large and fragmented markets. Given our strong M&A and organic track record, we have a great opportunity to further consolidate these. Then secondly, and this is important, we are all working in a rapidly changing world. Key trends like product sustainability and aging populations are driving changes in demand, including in the bathroom and kitchen sectors. We recognize these. There are clear and growing opportunities here and we are already developing our offer and our positions in these markets, and you can expect to see those accelerated as we go forward. Thirdly and something that we'll just keep hammering on all day today is the benefits that come from our scale. Probably post the MERLYN acquisition, we got to the right kind of size that we could start operating and leveraging the strength of the Norcros Group, not just the individual brands. And this -- and through the scale, we have the opportunities to drive the benefits that come with that scale but also from collaborating. While we have always realized synergies across our group, we are accelerating the group benefits inherent in our model. We will talk, we'll be talking more about these points in the growth plan that will follow shortly. Overall, there is a significant opportunity to drive accelerated organic growth, M&A activity and margin enhancement in these large and attractive markets. James will now focus specifically on our addressable market. Thanks, James.

Thanks, Thomas. So on to the opportunity. We operate in large and fragmented bathroom and kitchen product markets. Taking only the product categories and geographies where we currently operate, the total core addressable market is approximately GBP 3.5 billion. In the U.K., we are the market leader and we have a share of approximately 15% in our core categories. In SA, we are #2 in the market and we have a share of approximately 7%. They are both attractive markets to be in, with fundamental shortages of housing and infrastructure to meet growing populations. And as we've spoken about previously, there are lots of smaller and weaker players in these markets from whom we can and are taking market share. So to Slide 19. Norcros covers most bathroom product categories. However, there are gaps and great opportunities. There are several categories that we currently do not have significant exposure to, and these are shown in the diagram. Given our presence and broad routes to market in the U.K., SA and beyond, we clearly have a fantastic opportunity and ability to enter and win in these product categories. In total, they cover over GBP 2 billion of revenue, and that's in the U.K. alone. Of particular notes are the U.K. sanitary ware and bathroom furniture markets. Together, they account for approximately GBP 1 billion in value. And we have nominal presence in these categories at present, with VADO's Cameo furniture range only recently launched. However, we already have routes to market and core capabilities to add value in these product segments. Each category has a fragmented market. And there are a number of opportunities for us to grow organically and potential via M&A, and with these wider categories, our addressable market increases to approximately GBP 6 billion. So on to Slide 20 and looking beyond the U.K. There are also attractive opportunities for international expansion. Based on our current export footprint, we have revenues across Europe, the gulf and sub-Saharan Africa. These geographies and others like the Nordics represent significant opportunities for further future organic growth, M&A expansion and the extension of our addressable market. Overall, the market is large, over GBP 10 billion. And it has strong underlying long-term growth drivers and is largely fragmented, a significant opportunity for us [ and serving us ] organic and M&A growth. Back to you, Thomas.

[ Thanks, James ]. So when we look at our growth plan and when we look at it, we are clearly focused on our current core markets. The opportunities that come from moving that addressable market from GBP 6 billion to GBP 10 billion and more should not be ignored. We generally enter new markets very carefully. And we usually piggyback off existing customers, like following Howdens into France for Screwfix on their international expansion plans. We do not commit significant investments in infrastructure; and look to ship directly from our suppliers, which is more profitable and reduces the need for investment in inventory. Our growth plan, which is Part 3 of today's program, is exciting and deliverable. We won't forget what's got us to where we are and why we are successful. And we will remain focused on bathrooms and kitchens and the opportunities to take organic share in the more profitable and resilient mid-premium price points. Our M&A engine will continue to be critical to accelerating that growth. Our business will continue to be differentiated by design, sourcing and exceptional customer service. And we will manage a capital-light portfolio that generates strong cash. Very importantly, we'll remain an agile and insight-driven entrepreneurial, decentralized business where the talent, expertise and passion of our teams sets us apart from many big corporates. What will evolve is that we will drive and take advantage of our scale-based growth accelerators that we will talk to you specifically. We will continue to drive the model to become increasingly capital light and high growth. We will move from focusing on design and sourcing to leading in terms of design, specifically around sustainability, and driving ahead of market service levels. This will be supported by performance-enhancing ops platforms. And this is not about rolling out ERP programs that are standard across the group. Most software today has strong API capabilities. And our focus here would be, for instance, not putting together 7 or 8 different digital platforms for our customers to engage on; and we already started on that journey. And through our scale, we will drive improved operating margins and shareholder returns, so there's an absolute clear focus on the areas that we would look to evolve on. We drive a rigorous strategy program every year, and this is reported on to James and myself monthly and in detail quarterly. We use a structured and consistent model across our brands, and today, we'll focus on a couple of key areas here. What we do is fairly simple. We craft design-led, sustainable bathroom and kitchen products. We're already famous for our design and increasingly so for our sustainability. We're going to be working really hard on developing leading digitally enabled service platforms. We will grow our inclusive and growth-focused culture, and we are ambitious. We will continue to scale, but we will not just grow for growth's sake. Any growth that we will be targeting will be to ensure that we keep developing on our already strong returns. Our focus today is really on our 3 strategic initiatives, M&A or portfolio development, organic growth, operational excellence; and then the common thread that drives through that, which is ESG. The ESG angle is really important for us and we'll keep talking to it. And I think it's becoming a conscious decision right through when we get to our end customers. They're asking for it. We've got regularly -- regulatory tailwinds driving it, which David will talk to. And if we do these things really, really well, we're going to be offering our customers a powerful choice for better living. When a lot of people are sort of skirting around this, we will embrace it and have embraced it; and we know that it's going to drive long-term value. James will now take us through M&A, the first of those blocks.

Thanks, Thomas. So looking at M&A on Slide 27. Going forward, we will continue to take an active approach to managing and developing our portfolio. In terms of acquisitions, we will focus on consolidating the large and fragmented markets that we operate in. In addition, we'll be backing quality, cash-generative businesses with low capital intensity and strong management teams. We have a full and well-developed acquisition pipeline and we are seen as the go-to home for many sellers across our industry. And importantly, in our ownership, we will grow these acquisitions faster than if they remained independent. In terms of divestments. Where divisions no longer fit our strategy, we will make divestments. This will allow us to put our full attention into those businesses with the largest opportunities, highest growth prospects and stronger operating margins. This started with the closure of UK Adhesives in 2023. And you will have seen that we announced -- reached an agreement to sell Johnson Tiles UK a week ago. So on Slide 28. We are proud of our successful track record in M&A, albeit we are not complacent about the due diligence and focus required to bring the right businesses into the group. The chart shows the acquisitions we have completed over the last decade and how they have supported our growth. We believe we succeed at M&A because of 4 key success factors. Firstly, we have a dedicated in-house corporate development team that are focused on strategy, developing our pipeline, leading transactions and integrating new businesses. Secondly, we only target businesses that are aligned with our strategy and culture so that we know integration and synergy delivery will be successful. Thirdly, we target successful businesses. We do not typically look at turnaround deals. We are focused on investing in strong management teams with credible growth plans. And finally, we only invest where we are able as Norcros to add value to that growth plan, usually through demand and operational synergies. And you'll hear more about some of these shortly from Charlie at MERLYN and John at Grant Westfield. Thomas, back to you.

Thanks, James. We're going to now have our first business presentation. And we're going to illustrate the kind of businesses that we target and how we accelerate the growth of these acquisitions through a presentation from Charlie. We acquired MERLYN in 2017 and we have together invested in their growth since. Importantly, we have maintained our exceptional operating margins as we have scaled the business, so we have not stepped back or bought growth and profit that -- for the sake of it. Charlie, it's really good to have you here across from MERLYN. And you have a great journey to share. Thanks.

Thanks, Thomas. Afternoon, ladies and gentlemen. I'm Charlie Soden, team member at MERLYN. I'm delighted. I'm proud and I'm privileged to be here today. I'd like to introduce you to my 2 other team members here, Sean Collins and Kathy Egan; and hopefully, you'll get a chance to team up with them later. There are 2 families in my life: first, my wife and my daughter. The second is the extended Norcros family. We've embraced each other for 7 fantastic years, and more importantly, they've been so enjoyable. MERLYN, #1, U.K. and Ireland. We design, we engineer and we craft the finest shower environments in the world. We're B2B. We're mid- to high end. We've a flexible, scalable model; and we focus on what we're really good at. I'm going to talk to you about a component for a second, the hinge. And this is in-house design. And we call about design led, right? The sort of these things, they excite us. We get really excited -- when you're ready, catch. Whoa...

[indiscernible] hands...

[indiscernible] hands, good catch. [indiscernible]. You better mind that. It means a lot to us. We'll get it off your later. Very good. MERLYN. They were acquired in 2017 by Norcros. Norcros, head-and-shoulders above everyone else at the time, the perfect fit. They asked the right questions. They understood the business. They were clear on what they wanted, as were we: like minded, passion and ambition to grow the business together, focused on customer-centric innovation, product development. There was clear synergies in IT, marketing and HR. And most importantly, there was significant growth opportunities. Both organizations had a track record of leadership that delivered. Let's get to some numbers. You are numbers people, right? This is what our team are most proud of. Norcros, they listened. They questioned. And they partnered us in our decisions; and look at where we got to together, GBP 30 million to GBP 57 million. When we looked at new channels and the housebuilders, we got from GBP 7 million to GBP 21 million. That's by taking market share. The growth drivers, investment in people, NPD and brand, cross-selling. We're going to give you an example about Wickes in a moment and we'll hear a little bit from Barratt. We entered into Screwfix using the Triton brand. Dave and the team, thank you so much. And the group, the strength of the group, was a big enabler, for sure. Wickes. This slide is not in your presentation, but guess what. We snuck it in here today. [indiscernible] to bring it to life and to show an example, right? We got the introduction here from Johnson Tiles, right? And again [indiscernible] an example of group collaboration, GBP 5 million in 2 years. Category management was key, made their life easy. The other areas that were really important for them, extensive ranges, quality products, market-leading availability, customer care and after sales and home delivery. These were all vital to them and we delivered and excelled on these. Andy, VADO, how excited are you about the future and the opportunities?

We are super excited...

Andy, you're very welcome. All of us in our group are going to help them grow. And you know what, they want to grow with us. I'm going to talk to you a -- about a video that's coming up now. It's from John Adams, Barratt Homes; and as they say, you're better off hearing it from the horse's mouth. It's about 2 to 3 minutes and I hope you enjoy it.

I am John Adams. I am the Group Procurement Director for Barratt Developments. I have been in this position for 17 years now. And broadly, I have responsibility for sourcing and managing the supply chains that support Barratt with all of its materials and indirect requirements. Norcros provide a number of products for us across our bathroom and kitchen requirements. We work directly with some of their brands and have used their products for many years now within our housebuilding projects. We feel that generally their products raise the profile of our brand portfolio, making our homes more desirable to our end purchaser. We have a long-standing and very successful relationship with Norcros, particularly working with brands such as MERLYN. We've worked for them for many years, and the fact that they are part of a larger plc gives them distinct advantage over other businesses. In terms of that relationship, it gives us assurance of financial security and governance. Being part of a group also helps with growth. As we grow our requirements, they are able to grow with us. They have the ability to invest in inventory, meaning they have good response times and good product availability, which is extremely important to us, as we seek to maintain stability in our build programs. Norcros also have a great knowledge and specialism in the areas of bathroom and kitchen product generally, and this helps us understand what our customers might prefer to see in their end product. At Barratt's, we're all about delivering aspirational homes for our customers. The Norcros Group provide us with product insight that allows us to tailor our product to our customers. This helps strengthen Barratt's brand in our marketplace. We really like their partnership approach. This is particularly evident with MERLYN. They have got great product design that's well engineered. MERLYN spent a lot of time listening to what we require; and have delivered solutions to us that, by and large, meet exactly our needs. They're great at customer service and focus on that intently and then provide support on the technical installation of all products. Their products are safe and reliable and they have an increasing focus on sustainability, which is a key driver for the Barratt group. There will be a continued need for multiple bathrooms in new housing. And there'll be an increased focus on sustainable products using less water, less energy, less packaging, more recyclable product. And as we see future legislation kick in around future home standard, we will see products have to evolve and change to meet those needs. Norcros stand out because they simply design, engineer and produce great products. They have expertise in each of the particular product segments they work in, but I think what makes them stand out particularly is their desire to achieve excellent customer satisfaction. I have many examples where they've gone above and beyond to achieve what we need, and that is not something we can say about every organization we come across.

That video clearly demonstrates that we partner. We partner our customers. We partner with our suppliers, and we partner with our staff. We, MERLYN, are the leading supplier in the sector and the most trusted. I am so excited about the opportunity and being part of this wonderful group [ for us all ]. Watch out. Trust me. This group is going places. Thank you. Our team will be available afterwards. And thanks again. Enjoy the presentations. Cheers. Thanks.

Thanks very much, Charlie. I met Charlie, I think, in 2017. We had a taxi ride back to the airport. I've never forgotten that conversation, but it certainly changed my thinking about business. And that happens with most people that interact with Charlie. That hinge that he's so precious about gets tested 20,000 times in terms of how many times it open and closes. And we hang -- I'm not going to tell you how much Charlie-wise, but the equivalent of 3 Charlies on that, I think, for 2 months -- is it, Charlie?

[indiscernible].

Yes. So that's the kind of attention to detail. Our design isn't only about fashion. It's about quality and really technical -- leading technical thinking. It's also important to note that, while we provide strong growth accelerators to the businesses we buy, we receive similar inbound benefits from businesses like Charlie's, with his team playing a key role driving cross-selling and operational efficiencies across the group. This example of MERLYN perfectly illustrates the impact of acquiring and growing the right businesses and what positive impact that has on our growth and our operating margins. Looking at M&A or portfolio development as we refer to it. Our experienced in-house team is focused on 3 key areas at present: filling the gaps in the U.K. that James spoke to, particularly in furniture, sanitary ware and, increasingly, assisted living; secondly, adding new capabilities, particularly in and around sustainable products and digital capabilities. The way people live and the kind of bathroom and kitchen spaces are changing and evolving very rapidly. And thirdly, after we've made progress in the first 2 areas, we will very carefully enter new markets, particularly in our neighboring geographies, where we often already have a presence through our [ pathfinding ] export program. We expect M&A will make up over half of our revenue growth over the medium term and play a key role in terms of both our scale but very importantly the overall quality of our earnings. We are now going to move on to organic growth, which is the core business driver in our group. From this slide, you will see that we have 4 main organic market share growth drivers. The first, which we've touched on today, is new product development, where we have a strong focus on on-trend quality and sustainable products that are developed on the back of our own and independently researched consumer insights. All of our products work with water and energy or a combination of both. This is an area of strength for us, positioning Norcros strongly to drive growth from increasing sustainability-led demand. Secondly, our strong key account management, where we develop long-term relationships with people like John at Barratt. And these are not just relationships. They are active and proactive partnerships, helps us grow wallet share with these customers. We back the winners and pride ourselves in helping these customers grow their share. Thirdly is cross-selling, and we will talk separately about this. And fourth, why we do all of this is really about exceptional customer service, as covered by Charlie and Helene later. We are engaged with our customers. We proactively invest in inventory and our customer service teams so that we are able to provide the kind of service levels that many others cannot. Profitable organic market share growth is the key driver in our business and the key driver towards a 15% operating margin that we published today. We will now focus on 2 specific organic growth drivers: NPD and cross-selling. Norcros has market-leading NPD capabilities and a track record to match, with our product vitality, and that's essentially products that have been launched in the last 6 -- 36 months, accounting for 25% of our revenue. The fact that our brands are managed by sector expert teams means that our understanding of current and future demand is a key strength. These end customer insights, supported by our in-house design and development teams, ensures that we have a strong pipeline of high-margin products coming into the market in a planned and regular way just like a steady drumbeat and -- very, very important in terms of the development of the business. It takes something -- it takes years to develop the kind of capabilities we have. It's just part of what we do. Recent launches include tile effect and Naturepanel at Grant Westfield, taking the Grant Westfield product range more premium; ENVi at Triton, which is outside, the first new-generation behind-the-wall electric shower with great sustainability credentials; and then very excitingly, Cameo at VADO. The launch of the first phase of our Cameo bathroom range, including bathroom furniture for the first time in the U.K., once again demonstrates that we are not reliant entirely on M&A to enter new categories. The VADO team was able to lean on our South African business, who already offer a full bathroom solution. This is a key development that's been managed by [ Angela Niv, Angela ], who you will see at the MERLYN stand because they work really closely with MERLYN; and our VADO MD, Andy Baines, who has strong experience managing brands with a full bathroom offer. This is really important in the bathroom and kitchen space going forward, having matched offers and stuff that is integrated. I'm really excited by this development. And although only recently launched, this range is already award winning and is in the process of being rolled out to a very receptive customer base. You can have a look at this excellent range on the VADO website. And as such, it's -- really recommend -- you do a cracking job, [ Angela ], and the rest of the team there, Andy. Going forward, we are increasingly focused on investing in sustainable products that reduce water and energy consumption and believe that we have a sector-leading position in this area. For those of you who are interested: We have 2 expert members of our Triton team, Dan Lintell and Phil Viner. There they are, and they'll be available at the Triton stand. And there's a lot of talk about sustainability, but if you really want to understand it, spend a couple of minutes with those 2 gentlemen, and you'll walk away with a much clearer understanding. We are working across our group on the design of our ranges, and this is especially important in terms of finishes. The photo on this slide is of our Pronteau hot water tap developed by Abode. We are a leading challenger in this fast-growing product segment with a range of on-trend products that will fit any kitchen, but importantly, and this is something many people want, this is WRAS approved. Our revenue has grown to just under 5 million, with the market leader, and I'm not going to mention them, having revenue well north of 50 million. We have a [ clear run at them ], with no further significant CapEx investments required. It's just a great example of where we have great product. We've developed it in house. And we are going to take market share from those guys. With an exceptional product vitality rate, new product development is increasingly driving accelerated growth and improved margins across the group. Here's one for all the analysts. So what cross-selling is, is really our brands introducing their fellow brands to customers they already have. It often takes a long time to get into a customer like Wickes or Barratt, but because of the strength of our relationships, we are able to accelerate that. We have met our U.K. businesses and we've met that across our top 20 customers in the U.K. And the key takeaway here is the number of opportunities that remain not only in the top 20, where you see all the white space, but in our other customers as well. Recent examples of cross-selling activity include collaboration with Grant Westfield have introduced Triton to a number of social housing contracts where we sell our high margin -- Dave, help me...

Omnicare...

Omnicare products. And as we grow, the overall mix and margin mix for Triton develops and drives our wider operating margins; and equally, where Grant Westfield have been introduced to 3 major retail customers since joining us. And John will talk to that. Looking at our VADO business, which has traditionally been focused on housebuilders and independent retail only. They are working very closely with MERLYN and the MERLYN team to fill the clear spaces that you see on that map with strong organic growth opportunities that require little or no additional investment other than product displays and targeted marketing. Our brands are actively targeting these gaps in a collaborative manner, with good success already achieved and a sizable opportunity to address. I'm now going to ask John to come forward. In our second presentation, by John, who's our Managing Director of Grant Westfield, he will share with you how NPD and cross-selling is driving profitable market share growth in his business. John is using these accelerators, working closely with our other brands in the group, to drive improvements in the quality of the earnings at Grant Westfield from an already high base.

Great. Thanks, Thomas. And before I start, I'd just like to introduce my 2 colleagues, [ Laura and Jamie ], who would be delighted to meet you afterwards on our stand. Now while we are the newest acquisition, we are in fact the oldest business in the group. We were founded in 1881. And we've been proudly manufacturing high-quality interior products in Edinburgh for over 140 years, but over the last 20 years, we've established ourselves as the U.K.'s #1 for waterproof wall panels -- and hold over 40% market share. So why do we focus our business on the waterproof wall panel sector? It's attractive, high growth, with demand driven by a long-term shortage of tilers. This shortage created the need for an easy-to-install alternative for bathroom fitters, plumbers, heating engineers and other trades. Grant Westfield were able to apply over 60 years worth of laminate fabrication and design experience to come up with the answer. And that solution was Multipanel, which not only provided tradespeople with a product that was easy to install. It provided consumers with an easy-to-maintain solution; no more growth to clean, which is perfect for an aging population. And as we developed the range, we moved beyond the practical. We focused on design and sustainability, curating on-trend fashion-led products such as the Linda Barker and Tile Collections; and also focused on reducing our impact on the environment. We recently completed a life cycle assessment on all of our products and, through our environmental product declaration, can proudly demonstrate the carbon footprint reduction that our panels provide over traditional tiles. In the last year, Multipanel customers have saved over 3,600 tonnes of CO2 by selecting our panels instead of tiles. That's enough CO2 to drive around the world 628 times. Now Grant Westfield has a long history of collaborating with industry partners; and has developed an incredibly effective supply chain, providing access to the latest surface and design innovations at market-leading costs. These partnerships, combined with our manufacturing and commercial expertise, have built a high-margin capital-light business with a strong cash flow. New product development has been incredibly important to establishing our position as market leaders. Now I'm going to introduce you to something small, yet maybe my colleagues are going to hand out a few of our hydrolock samples, an in-house design that has cemented Multipanel's reputation as the easiest product to install on the market. And why is that? It is suitable for uneven walls, as let's face it, who has a house with square flat walls? This combination of compatibility with an almost seamless finish meant installers could trust Multipanel to deliver a high-quality job every time. Now over 70% of our products feature hydrolock, including 100% of our tile effect collection. This collection was launched in June 2022. As its entry to the -- and its entry to the market was greatly assisted by group collaboration, with key introductions made to new customers and specifiers. And as you can see from the chart, we've achieved sales over GBP 6 million in less than 2 years and have exciting plans to further develop the category. Norcros are investing in new machinery to double our capacity from Q2 this year to meet the growing demand for The Tile Collection; and for our new brand, Naturepanel, which you can see outside after the presentation. Norcros has helped us gain traction in the market and rapidly grow our sales through access to capital investment and cross-selling. Being part of a newly acquired business, I was incredibly impressed by the openness and collaboration that was fostered between the business units. Within the first 18 months, we have made breakthroughs in 3 key new customers, serving 3 different channels and with introductions from 3 different business units. A big thank you to Johnson's Tiles for introducing us to Topps; David, Triton, for Screwfix; and Charlie and Sean, for the introduction to Wickes. And beyond introductions, we have worked closely in specification, sharing our knowledge of the social housing sector and gaining valuable insights into hospitality and new build. We are also collaborating beyond sales and have plans to leverage the excellent MERLYN customer service model to help deliver a step change in our own. It's an incredibly exciting time for Grant Westfield. We have a phenomenal NPD pipeline both in the bathroom and beyond with our new Naturepanel product, our first product design for use both in and out of the bathroom, which you can see on the slide, looking great in the gym. We are delighted to announce that today we were awarded the best bathroom surface award by Ideal Home's, which was a first both for us and for the wall panel sector. Our cross-selling initiatives with sister companies promise to deliver results both here and in Europe. And in Europe, we have secured a listing with hagebau, who are the largest DIY and timber merchant in Germany, which promises to significantly accelerate our growth in the DACH region. Now as we approach 2 years in Norcros ownership, it's clear to me that the capital and collaboration has allowed us to grow faster than we would have as a private business. Myself, [ Laura and Jamie ] would be delighted to talk to you about our business and products in more detail after the presentation. So thank you for listening, and I'll hand you back to Thomas.

Thanks very much, John. Grant Westfield is a great business with excellent upside growth potential in a fast-growing market segment. The business, like MERLYN, fits neatly into our capital-light, high-growth and high-margin profile. Demonstrating our ability to grow while remaining capital light, the doubling of capacity at Grant Westfield will cost less than GBP 1 million and is really aimed at driving higher capacity in our more technical product segments and our more premium product ranges, so really good work and really good opportunities. Wrapping up on organic growth. As we move forward, we'll continue to focus on our organic growth drivers discussed and these drivers that are already in play, but we'll be investing in 2 new group initiatives. And those are both at the bottom. The first one is being closed -- is really about closer brand marketing collaboration; and this includes sharing consumer insights, marketing assets and digital platforms. And secondly, we're going to use these insights and our group muscle to put in a small and dedicated team that would be working only on medium-term technology and design, especially around sustainability. And this is the kind of investment that will drive and secure our future growth in the group. In summary, I'm confident that, through our scale, NPD and increasing collaboration, we will, as shown by John, drive ahead of market organic growth by at least 2% to 3%. We're now going to talk to operational excellence. Operational excellence is a broad term, but for our purpose, it's about using the benefits of our scale to drive improved service and efficiency and to drive improved operating margins. Our scale enables us to access service and cost synergies not easily available to our smaller competitors. The compounding effect of these higher service levels and lower costs is an important driver in our program to increase our operating margins. Helene? Helene joined us in January this year and replaced my good self at the time and has spent her first couple of months immersing itself in our industry and our brands. Helene has deep and excellent experience in operations, managing large and complex teams locally and internationally in both retail and manufacturing. One of Helene's key focus here is ensuring that we collectively drive the best possible benefits from our scale in our collective operations. Helene will now take you through where we are, where we'll be going in the medium term; and include her early impressions. Thanks, Helene.

Thank you, Thomas. And afternoon, everybody. On joining the business in January, I was very fortunate, as Thomas mentioned, to be given 3 months to really understand the market and the Norcros business itself; and this time, really only reinforced my belief that Norcros is a great business with real talent and bags of potential to do so much more. It's only reaffirmed that I made the right choice to join the team. And if there was one thing that I was surprised by when joining the business is this level of collaborative thinking which only reflects that alignment across the portfolio of businesses. There's a real desire to drive the sum-of-parts benefit across the group, so I joined Norcros to lead the U.K. and Ireland businesses, identifying where we can make a step change in growth opportunities as well as how to reduce complexity and simplify our operational base. So building on my experience from different sectors in retail and manufacturing, I wanted to highlight some of those areas of opportunity for internal improvement and also a couple of examples where we've already made good progress and indicate that direction of travel. In terms of operational excellence, we're at the start of a journey but have a solid foundation from which to work and have identified so much more that we can invest in given our critical mass and scale when compared to our competition. It's this ability to invest in capital expenditure that allows the individual businesses to differentiate themselves from their competitors and take market share by providing what our customers need in terms of product and service, as John Adams from Barratt succinctly put in his interview. Secondly, despite our successful decentralized and autonomous business model, we have a highly collaborative culture where the businesses are learning from each other and also bringing what good looks like from external experts. This is where the sum of the parts is real and where we do better together. In turn, we use these strengths to drive that exceptional customer service in a cost-effective way without diluting that decentralized model. We are focusing on simplifying our operations, logistics and warehouse whilst bringing in digital systems where they really add value to us. We're trialing and we're taking those learnings in one business to apply in others. And I just wanted to cover a couple of examples to illustrate our approach. I really love this picture. Our brassware business at VADO has grown organically from a small enterprise. And the 4 units that we inherited are coming together in this modern facility that will be fully operational by October. Not only will this lead to greater efficiencies but also improved team communication and improved service levels to our customers. The learnings were taken from the MERLYN business -- and you can see Charlie in the photo. You can also spot Andy on the left of the photo, who is our manager at VADO and also in the audience today. Applied at VADO but, going forward, we will apply elsewhere within the group, with Grant Westfield, our most recent acquisition, already being considered. Building on this work in our operations, though, we've also looked at how we can streamline our supply chain of products and components from overseas by working directly with global shipping companies. It's our scale that allows us to talk directly to these global players, and that differentiates us from our smaller competitors and help us drive our market share by providing that crucial availability -- that crucial reliability of stock availability to our customers. All through COVID and more recently through [ the serious ] crisis, we have delivered superb levels of product availability to our customers. And we are seen as that trusted partner, as already mentioned by Charlie, so working together will allow us to improve the predictability and the flexibility of our incoming products, helping us to mitigate the risk to our businesses in times of tight supply of containers and avoid those significant associated upcharges. The next step will be to manage our carbon emissions associated with freight, to reduce our footprint by utilizing methanol-fueled ships; and consolidation to drive a higher percentage of 40-foot containers, improving our shipping utilization. ESG is closely linked and a fundamental element of operational excellence in our business, as Dave will detail more in the next section. Both examples, hopefully, show how we are already reducing complexity in our business through collaborating and leveraging that scale, building on the sum of parts and differentiating ourselves from the competition to bring added value to our customers. We have a good track record and will accelerate our work in this area through collaboration, so this time next year, we will see margin improvement flowing through, as highlighted by James later in the presentation. So thank you very much. And with that, I'll hand you back to Thomas.

Thanks very much, Helene. It's good to have you onboard and also to note the momentum already in play from both a service and a cost perspective. The 2 examples that you have shared are both significant. In the case of VADO, not only will we see more efficient operations, but we will see a significant improvement in our on-time and in-full performance. This will drive higher revenue and improved operating margins once again. And we're now going to move to the bottom block, which is ESG. And ESG has become a somewhat contentious subject, but at the heart of this subject are core issues that tell you a lot about the future of almost any business and, I think, tells you a lot about their future prospects. ESG covers the environment we and our customers live and work in; our impact on these communities; and finally, how we run our businesses. We have an excellent reputation with regards to governance. And Nick is sitting here -- and no small part again to the way we were trained and managed and developed. We also know the future is about ensuring that we are well positioned and moving in the right directions in terms of our talent management and development and our products. And we will ensure that, by giving our customers a powerful choice for better living, we will drive ahead of market profitable growth. Our key drivers in ESG focus on our people, our products and the world we live in. While we will focus on sustainability today in blocks two and three, as mentioned earlier, our talented teams are a key enabler and differentiator in the market. And we have invested in our capabilities at the center through the appointment of Helen Gopsill [indiscernible], who will amongst other responsibilities be responsible for coordinating the development and retention of our talented team. Historically, we have sometimes lost some really talented individuals in some of our smaller businesses because there was just somebody really good ahead of them. Our scale and collaboration now allows us to career path across our brands and through our broader group project teams, making us a business that talent seeks out. We are starting to have people approach us, wanting to work for the group. And when you deal with some of the people outside, you'll understand why. Our final presentation from one of our businesses today will cover ESG as a profitable growth driver. You will see a demonstration from Dave Tutton, our Triton MD, of how doing the right things drive profitable growth and improved operating margins. Our journey at Triton, where we hold a leading position in electric showers, is a perfect example of where water and energy come into play together through a sustainability-led growth strategy. Thanks, Dave.

Good afternoon. And I hope you don't mind because I'm going to ask you a bit of a personal question, to start with. Hands up, all of those who have had a shower this morning. [Voting]

Good. I'm glad to see it's majority. Don't worry. I'm not going to embarrass anybody by asking how many of those showers were from a Triton shower, because I know we've got 38% market share, but I just want to ask another question. Leave your hands up if you considered how much water, how much energy or how much you added to your carbon footprint when you took that shower this morning -- not you or Dan or Phil. Thank you, Nick. [Voting]

No, there wasn't many in the room, but increasingly, I believe you will. And I won't -- I don't think you'd be alone when you do, as today, the government, housebuilders, the wider industry and more and more consumers are doing just that, as I'll explain. Now showers are an RMI product, so that means we mainly operate in a renovate and maintain and improve driven market, where over half of the 1.9 million showers bought every year in the U.K. are electric showers and of which Triton has got a 54% market share. Our market leadership and strength is built on the bedrock of our in-house design, innovation, engineering, quality and world-class customer experience. Increasingly, though, is our leadership and approach to ESG, which is a core capability and competitive advantage. Today, our customers, our tradesmen and our consumers are recognizing and will search out the Triton brand not just because it's a replacement product but of our world-class credentials and our drive and purpose to inspire everyone to shower sustainably. Now clearly, as a market leader, we have responsibility to show the way and address the sustainability challenge that faces us all and show how small differences do matter and how every drop does make a difference. Consumers are rightly recognizing this and are pushing manufacturers to give them less-impactful product choices at the same time as facing real cost-of-living pressures. Increasingly, consumers are recognizing that their habits, their usage and the product's efficiency does impact the planet as well as their own wallets and purses. Our customers and tradesmen are also responding, seeking out, recommending and driving sustainable product solutions into new homes and the RMI sector, ensuring that they drive their own businesses' carbon footprints lower. And increasingly, as John Adams pointed out, regulations and standards are playing a part, most notably in driving alternative heating and hot water systems and water solutions. We've already seen how the gas boiler ban in new homes has impacted, and there are plenty of further changes to water and heating regulations coming. And these will mandate reductions in usage and consumption, such as water reductions in new homes to less than 90 liters per person per day. And today, it's 125 liters per person per day. And they will mandate increases in efficiency and the lowering of emissions; and bring reductions in carbon footprints; and ultimately deliver that future home standard that John mentioned, a carbon net zero home. And with homes and domestic buildings accounting for around 30% of all U.K. greenhouse gas emissions through space heating and hot water and with showering accounting for 25% of all water consumed in the home, it's easy to see why every drop does make a difference and how increasingly electrification and showering will provide a significant part of the future. So for Triton, ESG isn't a bolt-on. It's at the heart of our strategy and our success. We focus on 3 pillars to deliver our vision and growth: our people; our product; and of course, the planet. Triton is a team of people with shared values and beliefs driving ahead with ambitious goals but, at the same time, giving back to our local community, supporting, learning, growing and developing ourselves and our colleagues so we're all able to contribute more to that success and share in that success. Our product and marketing messages are designed and articulated to demonstrate and deliver innovative shower and hot water solutions that encourage, nudge and illustrate how saving water, saving time and saving energy saves carbon and saves costs. We do that at the same time as ensuring our impact on the planet is minimized in everything we do, including in our factory and offices and wherever we operate; and by championing a low-carbon footprint and sustainable manufacturing practices throughout our supply chain, all to ensure that we go further than our carbon-neutral status, which I'm really pleased to say we've achieved now for the past 3 years. And we maintain our 2028 SBTi near time -- near-term glide path and achieve our carbon net zero goal of 2035. I'm pleased to say that our campaigns, our lobbying and initiatives are making a difference and not just to our record results. Our product innovations, our brand and our marketing on carbon reduction and our company sustainability drive is recognized across the industry and all market sectors, winning numerous nominations, accolades and awards, just 3 of which we highlight here, the Bathroom Manufacturers Association sustainability award for carbon reduction; the Planet Mark Eden Project sponsored award for the sustainability campaign of the year; and one we're especially proud of, recently announced for our ENVi product, the 2024 kitchen and bathroom product of the year from Housebuilder. It's perhaps no coincidence that Persimmon, Vistry, Barratt's, Taylor Wimpey have all visited and been into our design lab this year, since the start of this year, and all whom are really excited about our products and plans. Now these awards are brilliant awards and a recognition for the whole of our team at Triton, not only supporting our strategy but also helping increase awareness; and opening new market sectors, customers and opportunities for us. There's a recognition -- it's a recognition that our business plan and products and messages can and do play a part; and give environmental and cost benefits to consumers by reducing showering time, using less water and by using energy from renewable sources -- become a really sustainable solution, so we're working hard and helping everyone understand the environmental benefits that electric showers give: instant, reliable and safe showering with 30% less running costs than a mixer shower and up to 68% less water than a mixer shower. And that can give up to 70% CO2 emissions than a mixer shower using a gas-fired combination boiler. And of course, they still do give really pleasurable bathing experiences from increasingly stylish and design-led products, like this DuElec shown here, that will suit any bathroom, but electric showers are not just an environmental and cost benefit for families. They can make a massive impact on a national scale as well. For example, if 10% of all homes in the U.K. switched to electric showers from mixer showers on a gas boiler, U.K. as a whole will save something like 95 billion liters of water and 1 million tonnes of CO2 equivalent emissions. That's equivalent to nearly 600,000 internal combustion engine cars off the U.K. roads, so it can make a massive difference. These benefits are most visibly delivered in ENVi, our latest development and the next generation of electric showers. Launched in September last year, it's already been nominated and winning awards, that award from the Housebuilder. It's a stylish design-led solution with an intuitive digital touchscreen control that allows personalization for up to 6 shower experiences or users. And you can now set times to limit shower durations, very useful if you've got teenage kids in the house; or particular temperature or flow settings to suit moods or taste. And importantly, it gives every user feedback at the end of every shower on their water, energy cost [ and now ] usage, nudging behavior and changing habits. As well as being easy to use, available in a multiple of options, [ it is like every ] Triton shower design with the tradesman in mind, so it's high quality, reliable and very easy to install. ENVi is also our first ClimatePartner-certified product range, a first, a world first, in showers. Triton have taken responsibility and offset all of the carbon from its manufacture and for 5 years of its use, with 2 ClimatePartner-approved offset projects to fully compensate for all the emissions. I'm pleased to say that our award-winning electric shower with all these benefits of sustainable showering, lower water usage, lower energy costs and a lower carbon impact is already exceeding our sales forecasts and expectations. And it's helping Triton enter new market segments and take further market share. So in summary. Triton is the U.K. and Ireland's brand leader and first name in showers and water heating and the largest brand within Norcros. Our strengths, our knowledge and experience and existing routes to markets are helping develop, drive and deliver our own and the Norcros ESG opportunity. By supporting our sister companies, sharing our experiences along our journey and leveraging the many mutual opportunities for sustainable growth, we are driving ESG for greater and greater competitive advantage. I'm really confident that our Triton plans will continue to ensure we lead our existing markets and the wider bathroom industry but increasingly bring us further opportunities both at home and abroad, inspiring everyone everywhere to shower sustainably. I hope I've inspired you all to think in your next shower and acknowledge that every drop does make a difference. Both -- Phil and Dan and I will quite happily share with you our experiences and demonstrate the ENVi outside, but thank you very much.

Thanks, Dave, for a really comprehensive demonstration of how we are winning through sustainability. As a group, we are collectively driving forward our wider ESG agenda with important and specific projects in talent management and sustainability. Some of these key sustainability priorities across the group include meeting our milestones as part of our net zero transition plan and making rapid progress in delivering our 2028 near-term science-based emission targets. Ultimately it's about putting in more than we take out, and we are committed to and passionate about doing this. In terms of implementing a sustainable products framework, measuring sustainability is quite complicated, whether it be for reporting but more importantly for customers. It's really difficult for customers to understand what sustainability is and how it's ranked and how to make an informed choice. And our team are obviously working on simplifying this and making it really easy for everybody to make an informed choice or, as we say, a powerful choice for better living. We are committed to changing the way things are measured and the way they are communicated. And maybe just a recommendation of how this can and has been done successfully earlier, much earlier, there's a documentary called The Whole Story which covers the Whole Foods journey. And there's a section in it, it's available on the Internet anywhere, about how Whole Foods managed the grading of fish, rare species to easily available species. And they didn't stop selling anything. They just gave customers a choice and inform them properly about what they were doing. They did this by working with the Monterey aquarium, and it led to probably most of the grading systems that you see in supermarkets today. And that's what we're going to do in our industry. We are an industry leader and we're going to drive that change. We are investing more in sustainable products, including products to reduce water and energy consumption. The demand for these products is already increasing, driven in no small part by regulatory tailwinds but also by our customers and our end customers who are more aware of their personal impact on the environments and wanting to do the right thing. As part of this, as I've said, we are developing a framework that will make it easier to understand what is going on; and we will report on this framework as we -- as it is developed and completed. We will use this framework to systematically focus our NPD and M&A investments. Our ESG program is and will continue to drive both revenue and margin growth as we give our customers a powerful choice for better living. Thank you, Charlie, John, Helene and Dave, for the excellent presentations today. And I think they would -- they have demonstrated why we are and will continue to drive ahead of market organic growth at higher operating margins. I also hope it's demonstrated the quality of the teams we have at Norcros. It's now back to the numbers. James?

Thanks, Thomas. So just a quick recap on Slide 67, and you can see our 10-year financial performance. And we have a very strong track record of delivering growth. And I think that's part of the reason it gives us confidence that our targets are achievable and we can create and add value. Over that 10-year period, as you can see in the top 2 charts, we have delivered organic revenue growth augmented by acquisitions, driving revenues and improving underlying operating profit. In the bottom left: We have consistently delivered a strong return on capital, and we will look to improve that further. And looking at the chart on the bottom right, we have always been highly focused on cash, consistently delivering high cash conversion; and this will continue. So on Slide 68, we set out our new strategic KPIs and targets. They are built on the 4 strategic pillars you've heard about today: number one, continuing with our strong M&A track record; number two, driving faster organic growth; and three, continuing to invest and improve our operational excellence; and finally, ongoing focus on ESG products and initiatives to drive competitive advantage. As a consequence of delivering on these, we believe our targets are deliverable over the medium term. That is driving organic growth 2% to 3% above the market, improving our operating margin to 15%, to be highly cash generative and continue to deliver 90% -- over 90% cash conversion, to achieve a ROCE in excess of 20% and to deliver on our 2028 SBTi emission targets. So just turning to Slide 69 and looking specifically at the organic margin enhancement opportunity. We believe we can increase our underlying operating profit margin from 11% in FY '24 to 15%. This will be achieved through 4 key drivers: firstly, managing our portfolio and exiting lower-margin businesses. The disposal of Norcros Adhesives in 2023 had a positive impact on the FY '24 operating margin, for instance. Similarly, the disposal of Johnson Tiles UK will increase operating margins going forward. And excluding Johnson's from our FY '24 numbers increases operating margin by approximately 1%. The second driver is operational excellence. This involves delivering efficiencies across the portfolio. Helene presented a number of example projects that are already underway in this area. The third driver is organic growth, as John spoke about earlier, in particular our investments in NPD, marketing and sales that are focused on growing the higher-margin areas of our business. And finally, as markets gradually recover, this will drive efficiencies and improve operational leverage. Taken together, we believe there's a clear pathway to improve our operating margin to 15%. And finally, in addition to this, we envisage targeted M&A to also aid operating margin progression as we've seen historically with the MERLYN and Grant Westfield acquisitions in particular. So finally turning to Slide 70. We believe, investing in our growth strategy built on our strategic pillars, we will deliver better shareholder returns. As our strategy delivers growth in free cash flow, we recognize it is important to carefully assess where that capital is deployed; and we'll allocate our capital across 3 core areas. Firstly, investments in innovative products, outstanding customer service and efficiency and sustainability projects will drive organic growth and margin progression. Secondly, M&A. Acquisitions will accelerate growth, delivering EPS accretion. And thirdly, for shareholder returns. As a result, we set out the outcome, shown on the right-hand side of the slide: ROCE to be in excess of 20%, leverage to be maintained at less than 2x EBITDA. And finally, we will maintain a progressive dividend policy. Thomas, back to you.

Thanks, James. These targets are ambitious but achievable and we are collectively committed to achieving them. So in closing. We have a really compelling investment case. We have clear alignments and goals and are not coming in today's presentation from a standing start. Our organic growth drivers are all already in play, and we'll continue to support this through targeted and well-developed M&A pipeline. And as James has said, we will only do acquisitions that enhance our operating margins. Looking at our investment case. We are already the #1 bathroom supplier in the U.K., and we've discussed the benefits of this scale in terms of our competitive positioning. We have clear strengths that we play to. We have market-leading brands with increasing sustainability credentials. We have clear scale benefits. Our model is resilient, and our positioning makes us less exposed to really the kind of cyclical challenges that we've seen driven by macro and economic drivers. And we have a proven track record of growing our business organically and through M&A. These, together with our decentralized approach, differentiate us from any major competitor in the market; and pave the way for Norcros to accelerate both our core organic growth, our M&A program and, by doing these 2 things, delivering the increasing returns that we set in our targets. So why invest in Norcros? As we've said, we are already the #1 market leader in design-led sustainable bathroom and kitchen products. We have a proven and successful and scalable platform and with multiple in-play growth accelerators. We have clearly identified and focused on the growth opportunities that we've spoken about today, with sustainability being at the core of it. Our strategy is consistent and clear with a healthy balance between organic and M&A growth, with strong opportunities to further differentiate our already strong service levels and use ESG to widen our competitive advantage. This will deliver a business growing organically ahead of our competitors in the market by 2% to 3% and even better operating margins of around 15% and offer an enhanced return on capital employed in excess of 20%. I trust that you have a deeper understanding of what sets Norcros apart from our peers, especially in terms of the quality and passion of our people, our market-leading brands and why our scale and collaboration makes us more than the sum of our parts; and also that you've got comfort that we have a proven ability to deliver on clear and implementable plans. Before we move out to the refreshments and our product showcase, I'd like to open the floor to questions. Please raise your hand if you have a question. We'll bring you a mic. And then if you could, please let us know your name and where you come from. Thank you. All right, they're coming from the back. And we'll leave it to you [ VC ] to manage.

Toby Thorrington from Equity Development. A few questions on the new targets.

Yes.

Please -- one at a time, or all at once?

Go -- no, let's go. If I'm missing an answer [indiscernible].

All right. So the presentation, towards the end, the operating margin target of 15% pretty clear. That's organically capable rather than via M&A. Scale is part of that outcome. Could you give us some sort of sense of what scale of business needs to be in revenue terms, say, to achieve that? I know that's not the only criteria, but that would be helpful. And also, cheekily, if you could give us some sort of sense as to how much comes from the U.K. and how much is South Africa.

Let's start with the last one, first, because that's quite often a question that we have. Up to about halfway through FY '23, our South African business was operating at just below 10% ROS. I think 9.2% or 9.3%. And that's with a large exposure to retail. Our biggest business in SA is a retail business, and when you're getting to operating margins around 8% to 10% in retail, nothing wrong with that. The return on capital employed in South Africa was also well above our target. We know what's happened with the power interruptions about a year and a bit ago now. Those have subsided to a large extent. They are still there, but what we are seeing is a lot of people going off grid and a lot of private capacity coming on, so we do believe that we'll see a gradual improvement in South Africa. And if you looked at that bridge, if we got anywhere near the numbers we were before, that would move the dial by more than 1%, right? So you're already at [ 12 ]. Well, after Johnson, you can add another [ 1 ] on for South Africa, broadly speaking. It's not going to be [ 1, 1, 1 ], but it just gives you an indication of the weighting required there. Back to your first question, in terms of scale. We're looking over sort of the medium term. And it's always -- it's been our sort of directional thing, to sort of double the size of the business every 5 years. And we see about half of that coming from organic and the other half coming from M&A. And we don't need the M&A piece to get to that number. So I hope that answers this. James, jump in.

Right, yes. I think the other part to that is -- it's a good observation and a good question, Toby. It's that, each of those components on that margin improvement, they're all material, but on -- overall, I think what we would like to see is -- what's a normal set of volumes? Back to 2019 maybe, but I think delivering that margin improvement will rely on each of those components to play some part.

Understood. Another one for James, I think, this one. Post the exit from Johnson Tiles, what does the group ROCE number look like ex that business?

Yes. Well, obviously we've not disclosed yet FY '24 ROCE. We'll obviously be doing that in June, at the prelims, but broadly speaking, 0.5% to 1% improvement in ROCE given the reduction in net assets from the sale of the Johnson's business.