Ultimate Products Plc ($ULTP)

Good morning, and hello to those of you who are joining us today to hear from Ultimate Products who announced their interim results earlier this week. You haven't seen it already. You can find our research on our website with full commentary on the numbers. But the purpose of today is to hear from the management team, who will take you through the presentation and then take Q&A at. So I will go into Andy Gossage.

Thanks, Hannah. I hope -- you're breaking up a bit there, I hope it's you rather than me. Good morning, everybody. Thank you for your time today. I'm going to start on Page 3 , if we may, with the financials. What's -- yes, there we are. So obviously, the number is disappointing relative to H1 last year, but entirely in line with the guidance, the revised guidance we gave back in June '25, maybe just a slight beat on the revenue. So I'm going to leave it, Chris, to go through those numbers in more detail later on. But as we expected when we issued our guidance before the start of the financial year. What I wanted to do today is spend a little bit of time. I suppose letting our investors behind the curve a little bit. There is a lot going on in the background. And I thought it would be useful to give you some insights as to what it is we're doing. And I want to go over on Slide 4. This is a very simple which sort of put in front of our senior management team last month. This is the kind -- we call it the squeeze. This is the kind of challenge that many consumer businesses are facing in the current environment. It's a tough environment. Therefore, it's difficult to move the revenue line. And certainly, the market as a whole will move that revenue line for you. But costs are escalating. We've seen quite an extended period of high inflation on the cost side, particularly through the payroll line. So it is a period where really only self-help will do. There's no some macro forces which are going to float all the boats and that's why our focus is very much upon. I was at a dinner many years ago where Justin King spoke and these are better times for consumer businesses. And he talked about an escalator. He said, when markets are good, you can be on an escalator and you can stand still and still go upwards. Sometimes, you can even walk backwards and still go upwards. At the moment, the escalators kind of going down. So you have to run hard in order to deliver growth and investment returns. Let's move on to Page 5. So our self-help has always got to start, of course, with the commercial teams. This is what we call our commercial triangle. This is the sort of interface between our brand departments led by Tracy Carroll. Our product and buying departments led by Katie Maxwell and our sales departments led by our Chief Commercial Officer, Duncan Singleton. And for also, a big part of our focus in terms of that self-help is making these parts of our business individually and collectively as effective as possible. And since we appointed Tracy, Katie and Duncan into their roles at the beginning of September, we have seen a marked improvement in the way these key commercial functions are operating. This is critically important because it does deliver a competitive advantage. The ability to deliver a coordinated offer across these 3 fronts is often something our competitors cannot deliver, either because they don't have, for example, the marketing departments or [indiscernible], if it's a part of a large international group, it may be that the local team is just a sales team. Our ability to provide a coordinated offer across marketing, product and sales efforts is going to be critical in terms of that self-help going forward. Let's start with brand on Page 6. So Tracy, who's our Chief Commercial Officer, started as our Brand Director back in November '22. And she started by rebranding [indiscernible]. And then finally, those supporting brands Petro Progress and Clean Easy. That is all now complete which is a hell of a lot of progress over only a few years and really provides a stable and effective platform for our brands going forward. If we go on to Page 7. What we have, we have 7 guiding values. One of those is that everyone must love our brands. Tracy is loved by the way, [indiscernible], a feeling of deep perfection. So this is something which, for example, I as CEO cannot mandate [indiscernible] brands. This is something which must come from within the teams. And so it's important that all of our personnel believe and indeed love our brands, particularly [indiscernible] from Belgium. Tracy has been very effective in driving this throughout both their teams and the wider teams in the business. And you can see the our brand goals, which is taking up that brand value and widened it out. And we now have clear brand strategies for all of our brands. A particular focus on [indiscernible], they are 60% of our revenue. Salters, are scales and kitchen brands, kitchen covering kitchen electrical and cookware. It's the U.K.'s oldest housewares brand. So it's over 250 years old. It's data back to it's older in the United States of America. It's a fabulous brand with an amazing heritage. [indiscernible] at 150 years old. And this is our laundry and floor care brands [indiscernible] because that's where its heritage is. It was the originator of the [indiscernible] board back in the early 20th century. And again, a really sort of beautiful brands with a long heritage. Let's go to Page 8. and talk about product. So I mentioned before, Katie Maxwell, originally from our gradual development scheme, joined the business in 2013. She was appointed a Chief Product Officer back in September again. And again, one of our other guarding values is that everyone needs to be passionate about our product. Again, this is an emotion. It can't be mandated people either have it or they don't. And again, Katie, like Tracy has widened this out, and this is an exit from one of her slides that she uses in various strategy days across the business. I won't go through all of it, but I'm going to just pick out certain elements finding passion points under intense user empathy, finding passion points, work in the product spark to light, moments of surprise and depromotion connection. Our products are proudly mass markets. They're great value. But if you think value is just a symmetry between spec and price, it kind of misses why people buy -- there has to be an emotional connection, and we have to find what those emotional connections are. Those of you who are familiar with us will know that we -- tried and tested analogy is the countertop test. You buy our products, you bring your home, you put on the countertop and your friends come around for dinner. If it doesn't stay on the countertop because your consumer isn't proud of it, then we failed. So there has to be, of course, our product a fabulous value, but it also has to establish a meal connection with our consumer, who has to be proud on it. If they're not, we failed. On the strategic vision and purpose, long-term focus. We need our teams thinking about approach, not just in terms of where -- what's going to happen in the first 6 or 12 months. We want longevity answer our product. It's very similar to investing product developments. There's an upfront expenditure and then you get a return over time. Obviously, the longer that period of time, the greater that return on investment, and we need our product teams thinking in that way. On the rigorous quality and craftsmanship, active curiosity keeping up to date with new trends, technologies and market changes to ensure the product remains cutting edge. We are very fast. We used to be a trading and sourcing business. We've evolved over time into a brand business, but we've retained our speeds. And that's about understanding the market and then being able to bring products to market quickly to match those needs. Infectious enthusiasm. This is another emotion, of course, transmits energy and excitement across the team. So Katie has challenged the team, not just to be enthusiastic themselves about the product to make that enthusiasm [indiscernible] across the business and, of course, beyond that into our retail partners and our consumers. Everyone and she's quite -- evangelical about this. everyone, whether you're working in an account or whether you're working in buying has to be enthusiastic about has to be passionate about our products. And then finally, on the resilience and productivity, and this is going to be a recurring theme, prepared to get a bit bored. Everything has to be data driven. There's a lot more access to data now and the tools to interpret and access the data are, including, for example, AI, are more readily available now. We have to make best use of that to inform our product development decisions and increase our product success rates, which we have been doing with recently. That's not to say that we can develop product by numbers. So we need to retain intuition and we need to retain at times the confidence and the ability to step away from the data and take the odd risk. But making that decision, it means the background of understanding the data. Let's go to Page 9. So what you see on Page 9 is what happens when brands love our brands and passion about product comes together. This is a live brand campaign, and I would encourage you all after -- maybe after the call, if you mind the 2, to get online and see what we're doing here. So this is probably the first time we would be able to bring all the strands together of brands, products and then all of the various sort of marketing tools that we've been developing over recent years. This is the all-in-one floor cleaner. It's which is Best Buy. And that means it's beaten brands like Dyson, brands like VAX, [indiscernible] vessel, et cetera, to win this award. It's a fabulous product. It's a product which despite beating all those names is less expensive than any of them. And we've used this product and we've used the which accreditation to launch this brand campaign across multiple touch points, be it obvious ones like all websites and the platform but also things like trade shows, good old-fashioned PR, [indiscernible] social media and influencers. If you're a fan of the tracers we've leveraged some of that as part of this campaign. This is a current campaign. So do take a look if you get a moment. For us, everything we do is about providing beautiful products for every home. That's our mission, beautiful products for every home. So we are very, very proud to be in a market. That's the every home base, but the product has to be peaceful where marketing comes in is to get that message across because the consumer's first assumption may well be that if it's the lowest price, it's the lowest quality. So as we move forward, we need to use our marketing capabilities to educate the consumer the [indiscernible] is in your corner and even though it's great value for money, it's also great quality. If we go on to the next slide, the next stage in our development, and this is very early stage and sort of this is so early stage. I don't have a need for it, this range you see here. But this is about the next evolution, which is about having what we call in the game of product design language. So this is about, well, the way with Dyson, you can see a basin product and now it's a Dyson product because -- without seeing the word Dyson. This is what we're aspiring to initially at least with [indiscernible], and this is a range that we're working on. I hope you agree with me that it looks stunning and beautiful. And I think any person be proud to [indiscernible] to make kitchen but it will still remain peaceful product for every home. It will still be a mass market and great value for me. Watch out for this, this will be in the market during calendar year '27. Let's go on to Page 11. So we've talked in the past about sales function transformation as part of that commercial triangle. Duncan Singleton took on this rather brave challenge back in September, stepped across from our buying function to become CCO and run our sales team. And there's been a lot of change in a very short period of time, but in terms of personnel, investments in training and development, better use of technology, improved management process and better alignment of incentives with shareholder invest. Again, this is a slide that he's used in some of his internal sales sort of trading days. I won't go through all of it. I'll leave it to you to read. But I would again pick up data. We get a lot of data from our retailers from multiple different directions. If we're going to maximize on self-help, then we have to maximize on that use of data, and we have to improve the sell-through of our products with our retailers. And in doing so, gain growth where perhaps others won't. I'm really proud of the team. It's a very new team. It's an intelligence enthusiastic, highly motivated team. It is a young [indiscernible]. So they're going through the gate in terms of experience. But I think that the team is already performing as well as previously bought with significant scope for further developments and improvements. Let's go on to Page 12. So you will be familiar with this graphic. We started off as an internal graphic, and you've used that a lot eternally. This is our, what we call, our productivity wheel. So we talked -- I talked before about escalating cost of all consumer businesses and perhaps all businesses generally are facing and have phased over these last few years. We have a really well embedded process of continuous improvements. It's cornerstones by our human capital, particularly via our graduate development scheme. What that means is we've been able to maintain OpEx -- our OpEx is leveled this year for the fourth consecutive year which I don't think many of our consumer businesses will be able to say. And that's because since FY '23, we've reduced our head count by 20% and which is equivalent to about GBP 3.5 million a year of payroll cost. The backbone of that to date has been our RPA program. We have nearly 1,300 RPA bots crawling around our service every day. That saved $100,000 annually, which is equivalent to 50 heads. So the reduction in head has been productivity driven not by compromise and maybe cutting into muscle. But for me, the real benefits of all of this is, of course, management of [indiscernible] super important. Well, for me, the bigger benefits are the other things around the outside of that range, the commercial benefits, the ability to maintain lower price leasing up resources to invest in brand and marketing, where perhaps elsewhere other people are cutting back on that in response to these cost pressures. But also for me, maintaining product quality because what we're hearing a lot is our competition being forced into compromise in terms of product quality. And I think that potentially solves a problem today is sort of brand and death really. So this underpins this work our commercial efforts right across the business. To date, it's been large about RPA in the last 12 months, AI increasingly. And the great thing about AI is we've got a process that this new tool can kind of plug into -- what I'm seeing elsewhere on AI is there's a huge appetite to deploy II, but people don't seem to know how to do it. This -- and there seems to be a lot of CEOs and exec teams passing the message on almost must use -- it doesn't work like that. I like RPA works best at its bottom up. And what we have in our organization is a bottom-up process of continuous improvements. Just to mention of our PIM, which we launched last year, that is delivering also delivering significant commercial and operational benefits and will continue to do so for quite a while. Okay. At this point, I'm going to hand over to Chris Dent, who's going to talk about the financials.

Cool. Thanks very much, Andy. So if we bring up Slide 14. So Yes, a disappointing set of results. However, they are marginally ahead, especially in relation to the revenue line compared to the guidance that we set out last June, which was for revenues to be down 8% but the achieved result was minus 6%. Now the big driver behind that has been the closure of our clearance division. As Andy said, we are a business who is passionate about Tobox and a business that loves our brands. It's our brands and in particular, solon Beldray that has driven growth over the past 10 years. And ultimately, it's our brands that are going to drive long-term shareholder value. However, that clearance division has hampered the growth of our brands. We always saw it as a nice little extra, a little so like bit of icing on the cake, which was the original core of the business. However, over the last couple of years, we've sort of seen how that has confused our customer in terms of what UP stands for and what our product and brand offering is and has also proved to be a distraction to our commercial teams, especially in relation to our sales team. Therefore, we took that very difficult decision to close down the clearance division, which saw GBP 6.5 million coming off that revenue line obviously, that flowed down to gross profit. And then in terms of admin expenses, those up by $500,000 in total 400,000 of that relates to the reorganization that we've done in the period of our commercial function, particularly our sales teams. So that's the top line. Moving on to Slide 15. I think some of you know that we've probably got one of the longest revenue notes in the business that we do try to explain everything fully and in detail for everybody. And I know that an awful lot of you love to kind of like get down into this and sort of like try and work out what's occurring. So how I would summarize it is in sort of light 3 ways. So first of all, you can see that 69% fall in that third-party clearance business, that's GBP 6.5 million. And then our branded sales are up by 2%. A However, that growth has really all been generated by 1 segment, which is the EU discount segment. Now 2 or 3 years ago, we set out a vision about how we were going to grow this business over the medium term. And that had 3 plants to it. The first with growth in relation to Europe. And you can see that we've achieved that in that EU discount sector, that growth of branded sales of which shows what we can do where we align our strategy with our customers' strategy. Second part of that was to continue to use RPA and other operational efficiencies to contain OpEx. I believe that we've been very successful doing that with flat OpEx for around 4 years. The third part was keeping our core stable -- our core business almost being everything else excluding the EU discounters. However, disappointingly, you can see that we've gone backwards in the period. So overall, the U.K. down by 6%, 4% with supermarkets, 8% with discounters, 7% online. And it's these numbers that made us go back and reflect that perhaps I go to market in the U.K. wasn't quite correct that we were not aligning ourselves with what our consumers wanted and what our retail customers wanted. And that's why Andy went about sort of like changing the way that commercial functions work. Part of that was the promotion of Duncan to be the -- and also part of that has been that refresh of that sales team so we can align more closely with our retail customers. So that summary of the sales movement can then be seen on the bridge chart on Slide 16. So GBP 6.5 million down in relation to clearance International branded sales up by 4.4%, U.K. down by GBP 2.9 million. In terms of how that has translated through to profitability, we can see that on the slide on Page 17. So obviously, no turnover down. However, I actually expect us to see an improvement in gross margin in the period because we have seen a benefit in relation to freight. So freight costs were very high following the close of the Red Sea, but did kind of like come down following from that. And we actually saw a benefit of GBP 1.2 million. However, that's been eaten up by a change in sales mix. That sales mix is partially due to clearance being at the higher end of our gross margin range but it's also down to the EU discounters being at the lower end of that range. And this is why for us, we would like that increase in EU discount revenue to be incremental because we need to sort of like maintain that core, and that comes back again to why we have needed to refresh our commercial function. That can be seen flowing through that -- the change in the commercial function with the GBP 0.4 million in relation to reorganization. Apart from that, we've seen a relatively stable OpEx line but you can see that we do need to have pay increases. We're in an inflationary environment. We do need to pay people more, but that has been offset by the efficiencies that we have gained through using AI through the use of the PIM and through using RPA. So looking down to the bottom end of the P&L. So on Slide 18 there's probably just a couple of exceptionals that I want to pull out. The first in relation to the move to AIM. So on the 12th of January, we moved from main market to the A market. That's mainly because we see aim as being the most suitable market for a company of our size. It's almost the natural home for a smaller midsized company rather than being on the main market. The other big cost is in relation to our ERP system. So this is our main IT system that we use as a business, which is being end of life Therefore, at the moment, we've got a GBP 2 million project going on, which will see us introducing a new ERP system, which will be launched in spring of 2027. So you will see over the next 18 months those exceptionals continue to run through our income statement. Moving on to Slide 19. So just to kind of reiterate what our capital allocation policy is. as a wholesaler, we have a working capital requirement, so we need to bring stock in. And we think the most suitable way to finance that is through a bank debt. Therefore, we try and keep that net bank debt is around 1x EBITDA. So that's the most important part of it. We then pay out 60% of our profits as dividends to shareholders. And then to the extent that net debt falls below that net, we would then top that up with share buybacks. Now at the end of the period, we were below that 1x. But over an average over the year, we were slightly above that. So we have not started to do share buybacks based on the year-end or sorry, the interim end position. So that fall in net debt and working capital can be seen on Slide 20 with net debt falling from GBP 17.7 million to GBP 9.7 million with working capital falling from GBP 32.5 million down to 24.9%. And this is quite a big point for us that our capital allocation policy is designed in many respects to be countercyclical because what happens with our business is when it shrinks, we end up throwing off cash and having excess cash which can be seen on Slide 21. So there, you can see as the business has shrunk slightly, we have thrown off excess cash, which has caused net debt to go down and dip below that sort of like 1x EBITDA. Sitting here as a CFO, that's lovely that my net debt has decreased. But to be honest, I would much prefer the business to be growing and for the business to have a need for more working capital within our business. And therefore, over the long time term, I would be expecting the business to be consuming working capital slightly rather than what we have seen within the period. So Andy, over to you for the summary and outlook.

Thanks, Chris. Well, the summary is pretty straightforward. We're trading in line as the guidance says group sales are expected to be marginally ahead of market expectations with profitability in line with consensus. So I guess at this point, it's probably a good moment to talk about Iran. And any -- I guess -- and I guess the question around this war is it going to be a long war or a short wall your guess is as good as mine if it does prove to be a long war, what we worried about. Well, let's start with what I'll be less worried about. I'm not as worried about shipping up. I'm getting a lot of incoming questions on shipping, the impact on shipping of this will -- our shipping routes of being going around Africa for quite some time, a long way away from the conflict zone. The increase in the oil price may have an increase on shipping costs, but only if it leads to capacity coming out of the market -- the -- we have seen a sort of $400 fuel surcharge added on to a 40-foot container, but in terms of the overall rate, it's only if it leads to, say, for example, older ships, which are now not economic being retired that you'd see a significant movement in the shipping rates. And that is against the background of quite an excess of shipping capacity with quilt new space that's come on stream in the last 18 months or so. So might see some modest inflation in shipping, but it's within a normalized range. Factory gate, I'm more concerned about oil prices feed through very directly into plastic prices and plastic is a key input into many of our products. So we need to watch that very carefully. Some inflation in aluminum costs, which is a key important to our cookware Again, I didn't realize, but there's quite a lot of aluminum smelting that takes place in the Gulf. So you learn something every day. So factory gate price actually gate prices will be of a greater concern to me than say, for example, shipping. But probably the greatest concern revolves around demand and the reaction of the consumer who's already quite traumatized about cost living crisis and is very sensitive to any talk around further inflation. We've seen a consumer quite uncharacteristically saving over the last couple of years in response to those concerns, which is very unusual for a U.K. consumer. So we've seen the savings rate -- household savings rate being sort of north of 10% for the best part of a couple of years. So my bigger concern would be what happens with demand as consumers batten down the hatches again, perhaps. But even there, I am optimistic because I do see quite a lot of distress in my sector. We are a well-performing business with a strong balance sheet that continues to be profitable month in, month out. That's not the case for a lot of people around us. So if a tough market got tougher again, yes, it would make -- give me more gray hairs, no question, and I've got quite a few of those but it would -- I suspect in the medium term that it would also produce opportunity. Okay, Hannah. That's everything from us. Are there any questions?

We have a number. Let's start with online. Obviously, is slippage of worry. And are you concerned that you are losing ground to the competition. And now you've got views on a strategy refresh.

So the decline in online can be sort of really -- I do have to be quite careful about talking about individual retailers can for commercial reasons. But we have seen what seems to be sort of an extended destocking period with Amazon off the back of, I think, sort of fairly boomish buying in that kind of cover in the post cover period. So it's gone on a lot longer than I anticipated, but at some point, it will come to an end. We have seen some in sort of in the calendar year '26, we have seen some better performance in each month than we did during calendar year '25. So there are some decent signs that, that kind of destocking process is coming to an end, and we can return to positive like-for-like growth in online.

And also, we're very pleased with its [indiscernible]. So yes, there are other platforms that we are on, and we will continue to use them. But those we own, and we own the relationship with the consumer at that point. So we see those as a really important place for us to growing, and we will continue to be putting quite a bit of our resource online into growing our own platforms.

Sounds good. Can you provide a bit more detail around the reorganization of your sales team and how it might impact the future growth of your proprietary brands?

Well, I think it has been a period of change, and change can be disruptive. I think that -- but I do feel that the much larger part of that is now well behind us. We've done a lot in a very short period. Going forward, I think it's going to be sort of clearer calmer waters and we'll be able to sort of double down on the investments in the team. So I do think repeating a little bit what I said before, that we're in a good position, I feel relative to where we were, but we've got the opportunity to develop and grow from here.

[indiscernible] perhaps then nicely leading on from that. If the team is in the good place, what needs to happen in what's the minimum viable external environment to have a high-growth future.

What does that mean?

If I was to project, I think they were asking if you feel like you've done what you can do internally. I know it's iterative. But what are we looking for externally [indiscernible]

I mean obviously, the phrase high growth is in the eye of the beholder what does high growth look like. I would say that we should be through winning of market share in our U.K. market should be growing at mid-single digits. And in our European markets, which are obviously much newer to us, we should be growing at sort of mid sort of double digits to mid-teen double-digit growth. That should be eminently doable from where we are.

And it does come down to that market share point of going -- excluding salterscales, we are challenger brands. And we've got a long way to go in relation to both of them, well, both of our major brands.

Okay. Let's move on. Of the GBP 21 million sales to European discounters, how much was to the largest customer in that segment?

Can't really answer that for sort of like commercial reasons, to be honest with you. But what I would say is that as a Board, we are concerned about customer concentration. And therefore, we have a limit that any single customer would not be greater than 20% of our total gross margin, and that's how we manage that. And if you do have a customer which is growing very fast and I know which customer you're referring to, and we are growing very rapidly with them. What we need to ensure is that the rest of the business is back to growth as well to make sure we don't breach that 20% limit.

Well, a nice -- maybe not a nice problem to have, but glad to see that they're growing aggressively with that one. I've noticed several new salted products that appear to be due, EG, a [indiscernible]. Is this an evolving strategy?

Well, I guess, again, that's a little one that's in the eyes of the beholder, isn't it? We certainly don't set out to sort of other brands. And if we did, we'd be in an awful lot of trouble with them, and we don't have issues of that type in our business anymore. We did many years ago, but not anymore. I think sometimes when you've got products, we just have a particular function then inevitably some similarity, some of that can happen. But no, we want [indiscernible] of products, not a [indiscernible] brands.

Probably a couple of questions here, which is sort of getting at the same thing. One thing when we have completely exited the 3P clearance and white label business and the other one sort of what proportion is from long-term strategic plans rather than opportunistic listings. So an opportunity to talk there about the focus on brands, I think.

Yes. I mean -- I think we've got about GBP 0.5 million of closeout stocks to the business to move through [indiscernible] I suspect that will be largely through by the end of this calendar year. Yes. I mean I think it's probably not a bad moment to sort of say to share my thoughts on where we need to be in the longer term with regard to our brands. General merchandise has typically been sold season to season to retail buyers. I do think in the -- we need to evolve our business to be more about category management, we do need to, I think, start thinking like an FMCG because that's what they do. It would be unusual for our segments, but I think it's where we've got to be -- it's one of the reasons, for example, why we still have some recruitment to do into our sales function. I'm really keen to bring in some account managers from an FMCG background, because I do think it is a -- it's where -- it's the direction we need to head into. It's been super useful having JC and Andrew Mill on our boards, JC's ex [indiscernible] is ex-Coke and obviously runs the CEO of Nichols. And they have really helped get us thinking about this, about how we sell and how we partner with retailers. It's not our natural skill set. So we are going to have to either learn or bring in expertise. But we really do need to be in the future, be in a position where we're category managing and kind of managing space, I suppose, rather than what we perhaps come from, which is about pitching products and ranges on a season-to-season basis.

Thank you. Just a comment here on exceptional ERP costs. Will you be classifying the benefits of the new ERP system is exceptional and adjust them out from '27 onwards?

That's a sort of difficult one. Yes. Yes. I mean, all I mean, the answer is no. I'm going -- it's all about -- I'm going -- we will be able to sort of quantify because we will start sort like looking because what we've done with the PIM is that we've used that to kind of like produce benefits for the business. So what -- the question is right and going is that I absolutely think that, that will start producing benefits whereas lots of people may be sat there with their ERP system going, oh right, it's just a cost, it's a cost of the ongoing business. But we've seen with the PIM how our people have taken that and how they're using that. And -- so at the moment, we've got a couple of our guys going over to the U.S. because we're up from an award in relation to use of the PIM because what we do is we take these systems and we make them work for our business to help us operationally. And we're going to do that with ERP. So most will be going, well, there won't be any benefit. I absolutely believe that there will be.

Just to add to that answer to the somewhat mysterious question. The reality is that these costs should have been capitalized in my opinion, for accounting standards have changed since my day and hence, there happens to be revenue expense and therefore, [indiscernible] an exceptional.

I'm not sure if this question came in after your shipping comment, but they are saying the CEO of Maersk expects 15% to 20% increase in shipping costs. What impact do you think it will have on gross margin and working capital?

Well, I suppose in relation to that is going where we are at the moment. So base costs at the moment are 2,000 for a 40-foot. To put that in context, at the peak of the shipping crisis, that went up to 18,000. At the moment, that puts on a surcharge, which is about 400, which is a 20% surcharge. So within that sort of like 10%, 15%, but that's only putting you at 2,400. That compares to 2,800 that we were paying last year. And the year before that, we're paying about 6,000. So that 10% to 15% is absolutely in a source of like normalized range.

Okay. Let's have a look. With engineering and production outsourced, how long would it take competitors to follow such sales insight or clonal best product?

Well, I think it's very easy for people to copy products and to do it very quickly. It's one of the reasons why we evolved our business model away from a trading and sourcing model because all you have at speed, and this is why we focus on our brands it's back in -- we made that decision back in 2013. There's -- China over many years has come closer to the U.K. with -- in various forms, not least recently with the likes of team book before that with things like Alibaba. And also, the West has got close to China that many retailers have sort of Far East buying offices and whatever, which is why we moved to being more branded. And the reason for that is when it comes to general merchandise, the market research is very, very, very clear. Consumers want the brand. They don't want white label or own label of product. They want that confidence. That is -- I think that is escalating as awareness of issues around product that's being bought or platforms like T-Mo have become more common knowledge. I mean I was talking to an ITB journalist who is really interested in this kind of point. And they said, at the end of the conversation, the reason why we're talking to you is because you know the way on sort of if I know, say, good morning, Britain or wherever they have an e-mail address and decide everyone thinks if they e-mail, we won't read it, said well we do, we reread the e-mails, and we're getting a lot of e-mails about substandard and dangerous products that's been acquired through these kind of platforms. So I actually think this consumer prioritization of brands when it comes to general merchandise is not only going to continue, but it's going to escalate. That's going to be overlaid by the way, with regulatory change. The product safety and the metrology build that came in last year is going to lead to a rate of additional legislation which is basically going to be about online platforms, the likes of Amazon say, TM, et cetera, being as responsible for the product they sell, I'll say, Tesco is so sort of leveling of the field. So yes, I think it's going to be tougher for those platforms as we move forward. And I think the need to rely on brands is going to increase.

Okay. Nice segue there. Strengthening brand presence, strong refresh, lovely endorsements from the likes of which, do you think any of this leads to distribution of ranges into higher-end retailers and independent cookware?

Well, we are -- we're very useful products for every home. So we're proud to be mass markets. I did use to say, if you see us in John Lewis, let me know because we've done it wrong, and then we bought [indiscernible] were in John Lewis, so I can't say that anymore. I think there are -- I think there is some scope for moving into some of that retail space. I mean we're doing, for example, increasingly well with queries. And I think that's a really credible place for an electrical brands to be in. But we haven't desired to be a high-end brands selling. I'm going to get [indiscernible] here, selling stuff to people who already have lots of stuff does not particularly interest us as a concept. We want in a very small way to make the lives ordinary people look a little bit better. And that's what we want to do.

According to [indiscernible], there's also 2 build-rate years in John Lewis. So [indiscernible]

I don't know how I feel about that.

You clearly got around the earlier question around concentration of customer in Europe. What about geography, Chris, perhaps, can you roll out successfully to other countries where are you concentrated at the moment? What's the opportunity there?

So I mean, we believe that we have an opportunity globally. There are kitchens all around the world. So ultimately, we have triple ambition, but you have to do that step by step. First of all is securing our U.K. core market, which for us is the most important, and we want to do first. And then we're going to be building on where we are already strong in Europe, which at the moment is in Germany, France and the Netherlands, and that's where we will start. And then as we can see incremental customers that we will work with, that's the way we're going to go. But until we've secured that U.K. we are going to start sort of flying off an opening office in the U.S. or anything like that. But we know that in the very long term, of course, we can sell to a 1.5 billion kitchens that there are across the world.

Okay. And considering new European actions, what percentage of our salespeople are native speakers of the foreign language?

At the moment, one -- so we -- yes, at the moment, yes. And I think that when we sort of pivot -- we do have -- it's a great question because we do have to work that one out. How do we serve Western Europe? Is it by recruiting needs of speakers locally? Is it by serving accounts because we're targeting very large accounts. Is it by targeting those very large accounts from the U.K.? Is it a mix of the 2? And that remains a bit of an open question because there are a lot of examples of both -- if -- I always look to the Dutch. They have that kind of wholesale trading tradition that actually predates the there's a British tradition. And they seem to serve your pretty effectively largely speaking in English. But then they do, at the same time, largely supplement that with some local presence often. So I suspect it will be a hybrid retires as to how we serve those regions.

And this one probably speaks to the value you might see in your shares at the moment. But obviously, management center plans have lapsed, et cetera, and the EBT currently holds over 0.5 million of shares surplus of requirements. Why do you continue to purchase significantly into this [indiscernible]

Of course, we sort take a long-term view in relation to it. So with the EBT, it's little and often, and you do always tend to have more plans being issued each year. But yes, if there were sort of like no new share options being issued ever, then we may have an issue. But almost what is looking over a sort of like a 4- or 5-year period and seeing the general inflows and outflows, but yes, technically, at this moment in time, there's a little bit too many, but I'm just going to continue to buy through because in some years, what's ended up happening is more share options have been issued and more have been exercised than I bought in the market. So it ends up over a long period of time, equaling itself out.

Thank you. Right. Well, I'm [indiscernible] the time. I hope we've got to the gist of today's people's questions even if we haven't asked them individually. Just leaves me to say thank you for your time. Everyone, when I switch off, there will be a survey, and we're going to do it straight after the event today. So please fill it in. Otherwise, thank you all for attending, and thank you both for your time and good luck for the next 6 months.

Our pleasure. Thanks, everyone.

Thank you.