Vertu Motors plc (VTU) Earnings Call Transcript & Summary

Welcome to our interim results for the 6 months to the 31st of August 2022. My name is Robert Forrester, Chief Executive Officer; and I'm joined by Karen Anderson, our CFO. We turn to the first slide, the [indiscernible] slide. You can see that the group is benefiting from being a scaled, well-invested, technologically powerful business and one that is enabled to consolidate and continue to consolidate. The group continues to develop on a number of fronts as we execute our long-term strategy. And I just wish to highlight a couple of points from this slide. We've had GBP 2 billion of revenue in the first half for the first time. We delivered a solid profit performance. And indeed, the analysts this morning upgraded our full year numbers for the financial year. We've got 160 outlets. We actually represent more manufactured franchise partners than any other U.K. franchise dealer group, and we've got more to come, and we can see significant scope for expansion beyond the 160 outlets through acquisitions and continued multi-franchising of our estate. The tangible net assets level of the group is substantial at 71.3p per share, and it's grown substantially over the last few years, reflecting the strength of cash generation and profitability. On the bottom right, you can see our robust customer experience scores and colleague satisfaction levels. And that reflects the work that we do on a daily basis to make sure that our culture is robust and protected with, our culture is a unique part of this business that makes it very different to other retailers. If we turn to the next slide and highlights of financial year '23 to date. Clearly, portfolio management is critical in terms of growth. We are building out now our Toyota market area in the West of Scotland, which is a major opportunity. We continue to invest in our brands, particularly Bristol Street Motors, which is one of the leading automotive brands in United Kingdom. And we delivered market share growth across all the new vehicle channels as organic performance, but also as acquisitions and new dealerships [indiscernible]. On digitalization, which is clearly pivotal, both in sales and upsell, we further enhanced our sales process to make it flexible for customers and to make -- put customers right at the heart of it and enable to just interact with us in a number of ways. And our Click2Drive technology platform continues to be developed and get better and better. We've now got a head of data appointed and our data usage, particularly in the [ arrows ] of used cars is significantly helping the business. And we've got a clear road map on after-sale digitalization, which is now starting to be delivered, including the full rollout of self-service check-ins at the former state of franchise dealerships, which I think will enhance the customer experience and also give us efficiency. On financials, the increased revenues, it means we believe we're the fourth largest group now by revenues, and it's taken us less than 16 years to build the scale group. We've increased the dividend. We've executed the buyback and announced this morning an additional tranche of buyback and spent quite a lot of time, as you would expect us to do developing an energy strategy for the next 10 to 15 years, which Karen will go through in some detail. Our business is reliant on the colleagues within it to deliver the customer experiences which drive the revenues. And I'm pleased to report reduced vacancies, higher levels of engagement through forums, which help us identify issues which need to be tackled. We've recruited a record number of apprentices and expanded our training and development, and I'll touch on that more later. If you look at 4 critical financial KPIs. The first one is revenue. You can see the impact of the pandemic here quite mark. But we're not study growth as we've grown the business. We've got GBP 2 billion of revenues in the first half for the first time. Our adjusted PBT is back on the extraordinary levels of last year, but it is the second highest first half that we've ever delivered and a good performance. We continue to generate cash. We've got strong conversion of cash from profits to cash. Our free cash flow remains high. And in this period with minimal contribution from working capital, which really was conversion of profits into cash. Finally, tangible net assets, GBP 244 million, up from GBP 173 million in FY '19, which reflects the profit and cash generation that this business is capable of. I'd now like to pass to Karen to discuss the financials.

Thank you, Robert. If we turn to Slide 7, the income statement. You can see that the group delivered an adjusted profit before tax of GBP 28.2 million. And as Robert pointed out that whilst this result is well down on last year, which saw unprecedented market dynamics in used cars, it still represents the second best first half performance in the group's history. Revenues grew by 3.9% in the period despite vehicle volume decline. So this was driven by an increase in the average selling price of cars. These price increases had a dampening impact on gross margin percentage, as our gross profits per unit on vehicle sales in all channels remained above historic norms. Now albeit these were reduced in the case of used vehicles from the record level delivered last year. Operating expenses, as anticipated, increased with the impact of pay rises, investment in head count, including apprentice programs, investment in IT and system development and in addition, the removal of government business rate support. If we turn over to Slide 8, this shows the profit bridge of adjusted profit before tax compared to last year. The group delivered increased gross profit from its new retail and future commercial sales departments. And it was also pleasing to deliver improved gross margin generation from all of the group's core after sales operations. Clearly, the standout on this bridge in terms of gross profit is the decline in used vehicle gross profit generation. And Robert will shortly go through the key drivers of departmental performance, which give rise to these movements. However, it is worth noting actually that the total gross profit generated from the sale of used vehicles in the period was actually a record for the group, excluding the extraordinary result last year. The next slide will explain more fully the increase in operating expenses shown on the bridge. But in terms of acquisitions, and startup businesses, we saw a lot of that expected as these businesses start to build a database of customers. We turn over to Slide 9, as promised, this summarizes the cost base of the group. The group certainly faced inflationary headwinds in the period, and core group operating expenses increased by GBP 15.3 million compared to the first half of last year. To improve colleague retention and [ aid ] recruitment at a time when the group was experiencing high vacancy levels, the group while paying benefit review was undertaken towards the end of 2021. This tribute with an expected annual cost impact of GBP 12 million was slightly in the last year interim results announcement. But it's fair to say that in certain of the group's geographies and in tech roles, further enhancements to packages have been necessary. Overall, pay awards represent GBP 4.8 million of the increase in salary costs, but it's worth remembering that this increase does not include salaries paid to technicians as these are reported within cost of sales. Selling increases also include the impact of the group changes to sales volumes, where the introduction of sales advisers has increased basic salaries for these but reduced commission. And this has contributed to the savings that you can see in the commission and bonus line on this slide. The group also invested in additional headcount, including its apprentice program, where the group has made a record number of apprentice appointments in the period. Additional headcount was also seen in the group's dealership as vacancy levels were successfully reduced. We also invested in central functions such as digital development, customer attention and our concierge team here in the center. The group saw increased costs in a number of relative areas such as vehicle costs, training and travel. And this arose as activity normalized post lockdown. The increase in other costs, you can see on this slide also includes the investment in the group's IT infrastructure, including cybersecurity investments. If we turn over to Slide 10, one cost area where you might have been surprised to see no cost increase on the previous cycles in energy. The group has fixed its gas prices out to the end of October 2024, but by far the biggest element of the group's energy customers electricity. The group's fixed price electricity contract actually expired at the end of September 2022. And the group has always been focused on the minimization of costs and have monitored energy use of half hourly in the past and now to analyze areas where savings and usage can be made. Clearly, as the price of energy [assorts], this focus has intensified with the relaunch of the group's [indiscernible] initiative. As a result of this, we've successfully delivered a 5.3% reduction in energy usage in the period compared to the same period last year. And that will simply be control application of improved discipline by our colleagues in energy use and by some investments in energy saving technology such as [indiscernible]. This reduction is not the current in the reduced cost overall as some of the grid dealerships did not benefit from the fixed price agreement. And consequently, the increase in energy rate in these sites offset the benefit of reduced [indiscernible] in the group. The group now uses approximately 23 million-kilowatt hours of electricity per annum. And in light of the ongoing market conditions in energy, the group's developed an energy purchasing strategy. This target and move to off-grid energy solutions to meet 50% of the group's electricity requirement by the second half of next financial year. The group is seeking to enter into a purchase -- power-purchase agreement, sorry, which contracts directly with an energy generator, such as a wind or solar farm to provide 40% of the group's energy needs. And in addition, we approved GBP 3 million of capital investment in solar panel and installation, will be done on 46 of the group's [indiscernible], which should generate a further 10% of the group's required energy. If we turn over to Slide 11, this shows the group's cash flow. 77% of operating profit was converted into free cash flow in the period. Working capital was controlled with increased sales activity and timing differences contributing to increased inventory and debt balances, offset by increased related payable balances. The group paid taxes of GBP 4.8 million in the period, and interest of GBP 3 million. Demonstrating the group's capital allocation discipline, free cash flow was invested in both acquisitions, including the purchase of the freehold property in Derby and in the [indiscernible] acquisition, and in returns to shareholders in the form of repurchases of shares and dividends. If we turn over to Slide 12, further detail on the group's capital allocation discipline [affirms]. Investment in growth is prioritized with both acquisitive growth and reinvestment in operations considered carefully in terms of return. The group has invested GBP 15.3 million to date on capital expenditure, including the GBP 7 million property [brokes] previously highlighted. Total capital expenditure for the financial year of GBP 27 million is now anticipated. And this includes the investment in the Toyota expansion in Scotland, together with the group's investment in LED lighting and solar. Returns to shareholders are also a reported part of capital allocation. The interim dividend has been increased to 0.7p per share, an increase of over 7%. And whilst the group has recently completed its existing program of share buyback, spending GBP 5.9 million since the first of March on the purchase of approximately 3% of the opening shares in issue and a further GBP 3 million share buyback program has been in market today. Share buybacks have actually long been an important element of the group's capital allocation strategy. And since the last equity raised by the company back in April 2016, over 48 million shares have been repurchased, representing approximately 12% of the shares in issue on the first of March 2017. My final slide on Slide 13 summarizes the group's balance sheet. The group continues to have a very strong balance sheet underpinned by significant freehold and long sold property portfolio. The group has a net cash position of GBP 17.6 million, including GBP 12.4 million used vehicle stocking loans, but excluding these liabilities. This balance sheet strength gives us all confidence that significant firepower is available to achieve the strategic growth objective of the group. Movement in working capital are apparent on the balance sheet with significant increases in inventory and debtors and corresponding increase in creditors, all of which are related. Improved availability of new cars in certain of the group's franchises saw an increase in the level of new vehicle inventory at the end of August compared with the [ end ] of February, demonstrating requirements for last year lockdown have been reestablished. And with better supply, that has led to an increase in demonstrate stock as well. As anticipated, new vehicle prices have moderated, contributing to an overall reduction in [the current] inventory levels. Although the number of used vehicles held in stock by the group actually increased as the repurchasing strategies ensure the good supply of vehicles for sale. The group defined benefit pension scheme remained fully funded for last actuarial valuation back in April '21 and remain in surplus on the accounting basis, both at the half year more recently, despite the turmoil in the financial markets over the last week or so. The scheme is fully hedged being invested in [ ADI ], which is previously and continues to protect the scheme for interested inflation movements. It will be no surprise that active management of the team's assets have been required in recent date to ensure that this team has sufficient control to maintain this hedge position. I'll now hand back to Robert to complete an update on strategy.

Thank you very much, Karen. You can see here a nice picture of our new used car [indiscernible] Bristol Street motivation stocked on [teas], our first dealership on the Bristol Street Motors in the [indiscernible] area. So the group strategy is outlined on Slide 15, and it has not been changed since the last time we presented. The Board actually reviewed the strategy of the group in September, and we believe that no fundamental changes were required. In fact, we think we've made progress in all areas of our strategy, including the 3 sustainability goals at the bottom of the slide, which are really at the heart of our business strategy, and we ensure that they are executed as well as other operational matters. They are part of our operations. ESG is actually how we do business and always has been rather than something we had to think about separately. So if we turn to market trends in vehicle sales, quite a busy slide here, but I think it summarizes the situation in the 6 months. Vehicle supply issues have probably never been as well publicized as they have been in the past 12 months, a variety of reasons, which I think are known, i.e., selling look to Ukrainian wars, et cetera. Our new car vehicle supply remained weak. It is probably a little bit better than it was certain periods in the past 12 to 18 months, but it remains volatile and not certain. And certainly, in September, we can know where the cars were coming or not coming. The GBP 1.6 million forecast market, which the SMMT has now made is a long cry from a GBP 3 million market, which was predicted, say, 10 years ago by some industry pundits. We are seeing the direct impact of reduced vehicle supply over the pandemic period over the supply shortage period on the zero- to 3-year park, which is impacting used cars but not necessarily in too much of a negative way because we think it is underpinning robustness in used car values to clearly is also contributing to used market declines to some degree. You can see in the bottom right-hand side of the graph; this is the trend we plan the new car values over the past few years. And you can see the acrobats were at it last year in terms of wild increases in used vehicle pricing. This year has been a lot more stable, better in terms of robustness than a normal pre-pandemic year where we tend to see bigger falls in used values that are incredibly stable. And used vehicle values are still 11% higher than they were last year. So they are at a high level, though the gap is closing. The electrification of the vehicle park and indeed a sales continues, recently seen articles that were at 0.5 million battery electric vehicles in the U.K. Supply is being more of a push towards electric vehicle production because of the need to target. And indeed, [indiscernible] have a 14% market share. The key questions I think we will look at over the next 10 years or so, is what impact does this have on after sales on used cars and on vehicle park, and I think we really spent some time looking at the vehicle park, the number of vehicles in the market, in the U.K. And clearly, the pandemic, lack of new vehicle sales due to closures due to supply issues has led to a decline in the vehicle up, particularly in the zero- to 3-year old cars. Now that clearly has an impact in terms of our sales. It clearly has impact interfuse car sales, positive and negative. We're now expecting to see the vehicle park grow from 2022 to 2032, which is good news, the more vehicles in the U.K., the more robust our business for sure. And the pace of change and electrification in terms of the impact from our vehicle is positively [glacial]. In 2032, we expect special electric vehicles to have around 35% of the vehicle park. So the change is exceedingly slow. If we look at how our business has performed in the period, we are very, very pleased. You can see that like-for-like sales were down in every channel, new and used at all elements in between. However, we grew market share in all new vehicle segments. You can see 4.1% of the retail market, 4.6% fleet, 6% rebalance. One of the key points here. The fleet growth is particularly impressive, from 3.3% to 4.6%. And we have expanded our fleet operations with a new focus of attack in terms of penetrating the public sector market, particularly around electric vehicles, and we've been successful in that, we'll continue, I think, to help our fleet share. The second point is clearly to have a 6% balance share of the new van market in the U.K. is for the first time, is a great achievement. We believe we are the market leader in the van segments and that puts us in a strong position. So we are absolutely delighted. The volume shortfalls on a like-for-like basis are clearly evident. And we beat the SMMT statistics year-on-year in all areas where they've got to accept new retail volumes, where we were back slightly, and that was really due to the forward franchise seeing a lack of volume coming through, particularly forward focus. And [indiscernible], however, we are actually seeing that to some extent, reverse in more recent months. So it'd be interesting to see how that plays out. Margin per unit dropped in each channel, as you can see from the top right but remains at very high levels, not at the peak of H2 2022, but at very high levels historically. And clearly, that is important in terms of generating the excellent profit levels that we're at. We have seen used car gross margin percentages fall, and I think it's worth us looking at that. So we're now at 7.9% gross margin percentage and the reasons are very straightforward. A slight decline in gross profit per unit or a massive hike in sales prices. If you actually look back at the history, FY 2020 H1, our average selling price for used was GBP 14,500. And if you look today, it's close to GBP 20,000. That is, to some extent, franchise mix, but actually more this incredible increase in used car pricing over the past 12 months. And bear in mind, the average of GBP 20,000 is against a backdrop where we've got less sales in zero to 3 park, which is actually more expensive and a lot more cheaper, older cars. So it really shows you just how much pricing has moved. And that has clearly had an effect on gross margin percentages. If we turn to aftersales, aftersales is a create profit driver for the business. You made the Eagle Eye amongst you will notice that we split 4 quarters, the first time I think about 6 years. We have one petrol per station in witness, but it was making the segments analysis looks strange because we saw a 93% increase in revenue to GBP 6.7 million from Forecourt. We took the decision to go for market share in terms of [competitor] supermarkets, and we did that with great success increase the number leverages by 80%, an increase in gross profit as well. So we've stripped that out. If you actually look at service, you can see growth in revenues and profits on a like-for-like basis, which we're delighted with. It's true to say that the increase in higher internal rates of the service departments charge, sales department has clearly helped us. But given the increase in technician costs, that was definitely the right thing to do. Margins fell as anticipated on flight due to the higher rates of payables, but we have been successful in getting more technician resource on board, and that is helping us drive the business forward. You can see in the bottom left, the revenue mix. Clearly, warranty work is down 8.1% on a like-for-like basis, and that's absolutely directly related to this decline of the zero- to 3-year car, which is on the most part period are just less cars in that category, but I'm absolutely delighted to see that retail was up 3.4%. You could hypothesize that franchise dealers only really service cars in the zero- to 3-year part that's under the warranty period. And after that, we leave it to the independent studies, absolutely not true of our business and the proof is in the [indiscernible], here. There are a number of reasons why despite the decline in that zero- to 3-year car, we have powered into a 3.4% increase in like-for-like retail sales. We have a robust process for vehicle health check to make sure our customers' cars are safe when they leave our workshops. We have generated an average invoice value of GBP 24,294 versus last year [indiscernible]. And with the number of services we do, that is a substantial number. And indeed, our average invoice value is now at record high. We've always been successful in penetrating service funds for our sales customers, particularly on used cars and is putting us in a great position to retain older cars into our service departments, which tend to have higher bills due to high wear and tap. We've got over 169,000 customers now on service plans. In addition to overcome the declining part, we've really focused on getting older cars back here, and we've developed a digital conquest strategy. I'm pleased to report we got over 13,000 bookings in the 6 months, up 32% year-on-year, and these tend to be older cars, which we've never sold and never seen in [the service depart]. Finally, it's probably worth pointing out that the retail number actually includes B2B sales, where we are bringing [indiscernible] and leased vehicles being from the major lease costs into our workshops for serious and repair. We've got a very strong relationship, both on the fleet supply and the aftersales side with the East Coast, and we're seeing some really quite strong growth in gaining market share to do likely have to have great customer experience levels, the customer monitoring our experience by East Coast, and we are taking share in that area. That has helped us to drive income. So let's talk about digitalization. There's a lot going on in the digitalization space. There are 4 key areas I've highlighted. The first and a number of our shareholders saw a webinar about 12 months [ago] of this system, which is our usual analytics to what we call Vertu Analytics. This helps us to drive detailed pricing strategies to maximize profit per day, we maximize the profit [indiscernible]. One of our -- one of the ideas we've had is, it's not that we've got almost a bigger problem in selling our good, well-demanded cast too cheaply as we have in keeping an overpricing car that probably should actually be moved on. So if this system allows us to do it, I ask you personally use the system and -- this is one of our dealerships. And you can see there's a dot in the middle [indiscernible] and that's red. I will go and click on the red. It will tell me the car, tell me the pricing, how it compares to the market, how it's performing on sale order credit, and that would allow us then to get our pricing structures right. We're developing this data now to [ ADAR ] buying. We've got -- it has a central buying function, and the systems can tell us what to buy and at what price. So it is very much core to our use car strategy going forward. Secondly, online reservation, most people will notice you've heard me speak before. I'm not a great fan of the economics of online retailing, pure online retailing. It is still a minority sport. It is the equivalent of [indiscernible] Wings. And the key to used car retailing digitally now, I believe, is a GBP 99 or similar reservation fee, allowing the customer to digitally go on and find a car, pay the reservation fee, take our sale of 48 hours and then we can conclude a deal. And we like people to do that either online or through concierge services or in a dealership. And indeed, this is far more important pure online retail. In August, we took 1,500 reservation fees and converted at 60%. And it's an area where we think we can do a lot better, and that is the [great Buffalo brand] in used cars. Concierge services, our personal shoppers, who engage with customers in the buying process through online, either through video or live chat or on the phone to guide them through if it gets [indiscernible] or if they have queries. It's far more than like chat, we can -- they can rate dealership to get videos. They can actually help them through the online buying channel or actually just send them an offer directly. And we found that it has doubled our online conversion, and there's certainly a good record to increase [conversion]. Finally, [indiscernible] completed different business, but one with synergies to the group, it's an acquisition with an excellent organic website, believe it or not selling white [indiscernible], and also, we have purchasing benefits because it's massive increased our white [indiscernible] business, which helps us in other ranges of the business. It's integrated into our [indiscernible] online business, and we've got [hybrid]. So let's look at colleagues. Everything we do is really underpinned by our colleagues, be it software development or interaction with customers. And we've got to make sure we have the right people and the right numbers with the right talent who are energetic and driven. That's the only way we feel we can have business success. There are some good highlights in terms of engagement and retention. And clearly, the labor shortage in the U.K. has been well documented. We've actually reduced vacancies now from 500 to 400, about 6% of our overall planned headcount. So that certainly helped us. We're doing a lot more engagement focused sessions, actually including with our nonexecutive directors to identify issues be it world like balance or the strains and stresses. And then we can take it back and act on it, and we certainly are. We are looking at different levels, different ways of actually structuring work. So maybe you do 5 days hours, 4 days, a day off, and there's a number of different things in pilot at the moment. Karen mentioned pay restructuring review. That is an ongoing process. We clearly are cognizant is likely to be a large national minimum wage increase in April, which we need to consider as well, specifically on national minimum wage, but also what's the impact on full of job roles and what we're going to do with regard to differential. But clearly, as a cost living crisis and that potentially is problematic, both for colleagues and in terms of prospects. This is one to be discussed over the next 6 months. We have done a lot of work for a number of reasons around our sales teams. We now have more sales advice in place versus sales executives, sales advisers have higher basics, fixed hours, less commission versus traditional sales effect, and it's certainly given us far better gender balance and remains more attractive as an employer. Overall, we are very happy that 86.6% consider the group to be a great place to work, and that remains a key metric for management. If we actually look at what's happening to the sector. We have a massive amount of change, both in terms of electrification, digitalization, the structure of dealership network, and we need new skills, new roles. We need some of our existing roles to change. And that puts training and development investment, absolutely essential to what we're going to do to make sure we're relevant. On technicians, we are absolutely focused on making sure we're ready for electrification more and more. We are investing in battery centers. We've now got 2 with the Volkswagen Group, 1 in Leeds and 1 in Carlyle. And overall, everyone needs to actually be training electric vehicles and we are. We've taken a record number of light vehicle detection. And in addition, we've taken a 100-customer service that fancies on in the aftersales departments to make sure the customer experience is right and to bring fresh new talent in, which is certainly with an expanded scale group and one which is to grow, we've expanded our management development programs to give people the opportunity to learn management skills and everyone in the group has access to excellent online digital development programs. The more we invest in our colleagues, the more likely we are to retain them, the more likely they are to go and fulfill their careers with us in more senior [indiscernible]. So turning to current trading and outlook. Let's take September. September was an ultimate. I think everyone would agree. We've lost the Monarch. We had energy heights looming -- we had a budget that wasn't a budget, and we had dislocation in new car supply a year ago. I'm delighted, therefore, to say that we delivered the third highest profit in September in the history of the group. And that clearly underpins H2, and you can see the statement, full year results are expected to exceed current market expectations. Now, I would say a month where we were uncertain as to what was going to actually come in terms of new vehicles, there was volatility in deliveries, a lot of ended up coming in the last 3 days. And therefore, volumes were going. However, margins were very strong and new vehicles, and that underpinned our profitability and the continuation of the trends that we've seen in the previous 6 months with our strength in gross profit generation. Used demand was subdued in September. And clearly, that's one to watch in terms of future months. There was a lot going on in people's minds in September, and I think it did have an effect. Some of it is supply related, but I think actually demand-related. Margins remain strong. Pricing remains very resilient in used cars, which is very helpful. Service, albeit service actually lost the since we closed the business completely on the day of the Queens funeral, we are benefiting from higher resource, and we saw some very, very strong trends. For example, a 27% increase in the amount of turnover that we did with leasing profits in service and repairs, which was excellent. So where do we go from here? It is a very good question. If we take each time in turn, new supply, I think we'd like to see more of the same. We must get back to normality at some point. No one really knows when that is. Some people say 2024, I would expect to be right by financial year '24 at some point. But I've been wrong before on this when I thought would be the [indiscernible] on devices by 6 months ago than we actually are today. So I think we can probably assume there's still going to be constrained. We're still going to see margins at a pretty high level. And we're probably going to have an underpinning of used vehicles. And new vehicles are affected by the day-to-day new car supply because that generates product changes, but let's forget that there is a gap in used vehicle supply due to the pandemic and supply shortages where there is in excess of 1 million vehicles missing and they're never coming. So we will inherently have charge of suppliers that negative bubble feeds its way through over the next 5 years or so. Now clearly, on the demand side that may offset that supply constraints to some extent, and we all need to be cognizant to that. But I think we've got a very strong car business. We spent a lot of time analyzing it and making sure that they are in a good place in terms of stock turn and aging. If we take costs, we can't ignore costs presently. We've clearly got an energy strategy. We're clearly going to be aided in the second half by the government action with regards to energy cost, that was a big benefit to us. We've also got a benefit from the usual insurance change, which was recently announced. But we are cognizant that there are continuing [indiscernible] purchase, and the National Minimum wage next April, I suspect it's going to be a fairly significant percentage increase. And therefore, we're going to have to factor that into our business planning for next year. We think it's too early to call next year's numbers. At the moment, we're happy with what's in the market and we'll update you, of course. Finally, we've got a strong pipeline, we believe, of growth. We're actually excited by where we find ourselves. We've got more multi-franchising opportunities to come, which pursue sales for sales outlook, gives us extra after sales and enhances our profitability and resilience. We've got a strong pipeline of acquisitions ahead of us, which we hope to execute. And we've got the chance of potential new franchises as well, which we're in discussion with. Now we already have the highest number of franchises of any retailer in the United Kingdom. So in summary. This is this group of 16 years in the making, and we've followed a fairly rigid strategy. We are well capitalized and that's in fact, which actually gives us significant firepower to expand the scale. I will prefer a business at scale than a small business because then we can invest in brand, we can invest in technology and invest in training development. There are benefits of scale for sure. The digitalization is given us the greater better customer journey, and it's also given us productivity benefits, which you've seen before through the group, and we expect to continue that. The key thing for this group is what is the culture. It's got to be a culture of success and confidence. We've got to have talented people that we invest in, and I think we are doing that. And overall, we've got the Board and executives and senior management who are excited by what we're doing and see good future ahead of us. Thank you.