Zigup Plc (ZIG.L) Earnings Call Transcript & Summary

Okay. Thank you. So welcome, all, and thank you for coming this morning to the Redde Northgate half year results. I am Martin Ward, Chief Executive of Redde Northgate. And with me today is Philip Vincent, our CFO. Our agenda covers an overview of the half year results, a more detailed financial review by Philip and a business update followed by questions and answers at the end. So turning to performance overview on Slide 5. This has been a really excellent first half with a strong period of growth. If we look at this on a comparable basis to the same period last year, our underlying revenues, which exclude vehicle sales, has grown 20%, with a strong recovery contribution from claims and services. Our EBIT is up 7% at GBP 93.4 million, with stepped up contributions from Redde and Spain, and our PBT grew 6.1% to GBP 83.7 million. We have also improved our return on capital employed, which is one of our key operating measures by 1 percentage point to 13.5%. So including the share buyback purchases of GBP 50 million to the end of October, and the recent Blakedale acquisition, we have kept leverage well within our target range at 1.6x. So with this excellent progress, I am pleased to announce that the Board will be making an interim dividend payment of 7.5p, which is a 25% increase. And coupled with our previously announced GBP 60 million share buyback, this provides good capital returns to our investors. If we turn to Slide 6, so what has been supporting our growth and strong operational performance is an increased fleet size, which, despite the constraints we highlighted, grew 8% to over 130,000 vehicles. The main use for this fleet was delivered in the claims and service business following 2 large insurance contracts, which went live in the year, and also in Spain, where we have seen continued growth of rental services. We have broadly maintained margins across the business, with management taking careful pricing actions to mitigate inflationary cost pressures. The cost and pricing measures implemented have been effective and managing inflation continues to be an active agenda item. It's also been encouraging to see that we have had further take up and cross-sell of our value-added services, supporting our position as a leading integrated mobility provider. And building on the merger plans from 2020, we have not stood still and continue to broaden our market proposition to deliver on our strategic goals. The acquisitions we have made post the merger have integrated well and will deliver long-term incremental value. FMGRS, which we acquired in September 2020 out of administration, which undertakes Body Shop accident repairs, has very significant demand from the market. The drivers to grow this lies in recruiting more technicians to support volumes and maximize capacity, and we are very excited about building this further. And our more recent acquisition of Blakedale this year, which was a well-run family business, add specialist traffic management vehicles as a further capability into the U.K. business. Since acquiring this business, we have grown both the fleet and customer base through cross-sell opportunities. We've also seen progress being made in developing new propositions. For example, building on our clean energy transitional plans, where we are combining our capabilities by offering fully funded electric vehicles and charging point subscription services for customers, supported by our in-house ChargedEV business, which we acquired last year. And whilst the majority of the merger integration acquisitions have been U.K. focused, we were delighted to see a cross referral from within the existing U.K. customer base to secure an insurance contract win in Spain for repair services as well as an outright win for repairs from another customer. This adds yet another new revenue line for the business and builds on our capabilities. So overall, the Board is pleased with these results, which has delivered good value to investors, and shows that more opportunities exist to grow and develop the proposition. And on that note, I'll hand you over to Philip.

Thank you, Martin. Good morning, everyone. As Martin has said, this has been a really strong first half, and we're very pleased with how our teams performed to deliver what's a really good set of results. So if we turn to Page 8, first of all, for an overview. We had strong revenue growth of 20%, with revenue excluding vehicle sales of GBP 627.6 million, and rental revenues grew 9%, with growth in vehicles on hire and rental rates. And claims and service revenue grew 32%, with new contracts going live at normalized traffic volumes. Vehicle sales revenue of GBP 68.7 million was 24% lower than the prior year as the continued restrictions in new vehicle supply and strong rental demand have reduced vehicles available for sale. And whilst residual values have started to decrease this year, they are still very high. We sold 7,700 vehicles in the first half, which is 24% lower than last year's as vehicles were retained to meet demand. And as a result, disposal profits of GBP 24.7 million were 9% lower than last year. Underlying profit before tax of GBP 83.7 million increased 6%, excluding disposal profit, and increased -- sorry, increased to GBP 83.7 million, increasing 6%, but excluding disposal profits, increased 13.7%, demonstrating the underlying growth of the business. And statutory EPS of 34.4p includes a benefit of GBP 28 million being the reduction in depreciation rates, which does not impact underlying results or cash as I explained at the year-end. Steady state cash generation before growth CapEx continues to be strong, growing at 29.6%, and free cash flow of GBP 2.1 million includes GBP 69 million of investment growth in CapEx and GBP 10 million of acquisitions. And net debt of GBP 661.3 million increased 12.6%, and I will talk you through that increase in a moment. Now we'll have a look at each of the segments. So if we turn to Page 9, let's start with U.K. and Ireland. So higher revenue of GBP 184.1 million grew 7.8% year-on-year. Average vehicles on hire reduced 1.8% due to the restriction of vehicle supply, which held back growth. And revenue per vehicle increased 8%, helped in part by price increases, which were managed across our products. And the rental margin for the half year was 15.6%. This is above our sustainable margin of 15% and 30 basis points higher than the full year last year. Although it's 2 percentage points lower than H1 last year, this is mainly due to the investment in expanding our ChargedEV business, readying it for growth as EV supply improves. Restriction in vehicle supply, combined with the investment in ChargedEV, resulted in a 4.2% reduction in rental profit to GBP 28.8 million. Vehicle sales volume of 4,900 was 13.8% lower than the prior year due to restricted vehicle supply. And whilst the average profit per unit on disposal reduced 5.5%, residual values for vehicles have continued to be high, with an average profit per unit of GBP 3,800. In H2, we expect access to vehicles in U.K. and Ireland to continue to be limited. We would expect H2 rental margins to stay around 15% and residual values are likely to remain high for some time. So now let's move to Spain on Page 10. So in Spain, vehicle hire revenue of GBP 122.7 million grew 13.9% year-on-year and rental profit grew 35.7% to GBP 25.1 million. Whilst there has been continued restriction on the supply of LCVs in Europe, Spain has been successful in securing supply to grow their fleet, with average vehicles on hire increasing 7.7%. And rental margins increased 3.3 percentage points to 20.4% for the full period of price increases that were carefully implemented in January and good cost control. 20% margin is likely to be a peak as margins are expected to move towards the sustainable level of around 15% in the medium to longer term as the fleet is replaced and price inflation fully impacts the cost base. And whilst the volume of vehicles sold was 36.2% lower than prior year, residual values in Spain have continued to be high with a profit per unit increasing to GBP 2,100, and as a result, disposal profits increased to GBP 5.9 million. In the second half, while we expect access to new vehicles to improve, we believe that residual values will remain strong. Now let's look at Redde on Page 11. Claims and services revenue was GBP 331.4 million, that's 31.5% higher than the prior half, reflecting the increase in traffic volumes seen in H2 last year. And the business is now also providing fault and nonfault claims solutions and repair management to previously mentioned new insurance contracts. Hire length also remains extended due to the continuing impact of macro challenges in the supply chain for parts. An EBIT margin of 6.2% was 20 basis points lower than prior year due to a higher mix of direct hires and direct repairs alongside the costs incurred bringing on the new contracts. And as we extend services to insurance partners and grow the business, we may take on direct services that are lower margin, but grow absolute profitability and help secure multiyear, multiservice contracts. And you can see EBIT for the half year was GBP 20.4 million, a 27.1% increase on the prior half. In the second half, we expect volumes to continue to grow as we enter the winter months and hire length is not expected to reduce significantly. And whilst margin should improve as volumes grow in the second half, this will be gradual to the impact of product mix. Now if we turn to Page 12. This chart shows the growth of underlying PBT from GBP 78.1 million in H1 last year to GBP 83.7 million this year. Total disposal profits reduced from GBP 27 million to GBP 24.7 million representing 30% of profit in H1. And as expected, you can see that the underlying performance is driven by volumes and margins across the business and continues to outgrow the GBP 2.3 million gap created by the year-on-year reduction in disposal profits. Now if we turn to Page 13, we'll take a look at cash flow. So steady state cash generation of GBP 121.2 million was GBP 27.7 million higher than the prior half year, driven by growth in the underlying performance of the business and lower replacement CapEx in Spain. Working capital was a GBP 19.6 million outflow, including supporting the commencement of new insurance contracts. And growth CapEx of GBP 68.7 million reflects the growth in the Redde fleet to meet the increasing volumes and in Spain to meet rental demand. GBP 9.9 million was spent on acquisitions in H1 and free cash flow was GBP 2.1 million. Now turn to Slide 14, we'll have a look at our borrowing facilities and financial position. So the business remains well financed with a strong balance sheet to fund growth. And you'll recall that we completed a successful refinancing in November last year. We placed EUR 375 million in private placements with terms up to 10 years at an average fixed rate of 1.3%. And we have now executed an option to extend our GBP 475 million revolving credit facility by a further year to November 26. And it's worth noting that in the current interest rate environment, 66% of our drawn debt is fixed, and this provides the business with significant protection against rising interest rates. And our average borrowing cost at the end of October was 2.7%. At the end of October, we had GBP 308 million of headroom available against our total facilities, and this financing places us in a strong position to invest in the business for growth. And we continue to operate very comfortably within our headroom on all our covenants and year-end leverage is 1.6x, well in our policy of 1% to 2%. Now the chart at the bottom of this slide bridges our net debt as of April at the year-end to net debt at the end of October of GBP 661 million. In the first half, we generated steady state cash of GBP 145.8 million, excluding the lease payments. Working capital increased GBP 19.6 million as Redde took on new business and GBP 68.6 million was invested to grow the fleet in Spain and Redde to meet demand, and GBP 9.9 million was spent on acquisitions, and we returned GBP 74.2 million to shareholders in the form of dividends and share buybacks. Now our objective remains to employ a disciplined approach to investment to deliver sustainable compounding growth. And you can see in the chart on the top right of this slide, that since the merger, we've invested GBP 41.5 million in acquisitions, extending the products and services of our mobility solutions platform. We've returned GBP 104 million in dividends and returned a further GBP 56 million to shareholders through the buyback. Now with the buyback nearing completion, we are focusing our efforts on supporting business growth and want to ensure that we have flexibility to grasp opportunities as they do arise. We do continue to view buybacks as a useful element within our capital allocation model and the Board will keep them under careful review. So thank you. I'll now hand you back over to Martin for the business update.

Thank you, Philip. Okay. If we can turn to Slide 16, please and we'll cover the business update. So we thought it would be useful to give some high-level context to the markets in their present state. So in the U.K. and I, there is a continued strong demand for rental typically from well-established large users as well as high areas of growth like communications and telecoms. More recently, there has been some slackening in parts of the market such as retail and logistics as they adjust for a downturn. Overall, what we can see is that if product is available, the demand is there, either for rollover replacement contracts or to support growth. Rental and subscription is still trending well over ownership and a van is generally used as a workhorse to be operated and not owned and the structure of trends continue to favor rental with flexible terms. Supporting this trend for Redde Northgate is the ease of rental and the value-added services such as the dropping convenience of our extensive workshop network, more vans repaired in our own accident body shop network and the use of standby replacement vehicles for emergency purposes. New supply of LCVs will be an enabler for growth as well as the future development of fit-for-purpose electric LCVs, which are yet to materialize for mainstream usage. If we look at Spain, the economy is holding up well compared to most European countries, with GDP performing above the European average and public investment support and build projects supporting activity. Core sectors such as infrastructure, IT and telecoms are doing well. The country has also benefited from a COVID rebound as a go-to tourism hotspot, which feeds into business activity. Though economic headwinds prevail, employment rates are good and trade remains buoyant post the half 1 period. Van availability, as Philip said, has been less constrained in Spain over the last few months, supported by the fact that left-hand vehicles are a mainstream product for European manufacturers unlike the U.K.'s bespoke right-hand vehicles. So this good supply of LCVs has helped the business grow. And even with this supply of new vehicles, residual values continue to outperform. Spain has also been extending its product and service offering with B2C digital-only car rental and open workshops, which services, maintains and repairs noncustomer vehicles, and more recently, we have extended into insurance accident repairs. Okay. Looking at Redde so there's been a strong rebound of traffic volumes post COVID, which has supported accident and incident frequency. The rush hour appears to be making a comeback as more U.K. workers return to their desks. Market demand for high-volume repair capacity is very hot and having the ability to self-source this from our own body shops is a clear market advantage. Technicians are in demand, which is a growth driver to undertaking more repair work. In addition, we can see an increase in outsourced opportunities being offered up, specifically in insurance services, fleet management and leasing support services, which has underpinned our strong pipeline over the next 24 months. This outsourced demand feels structural with the primary aim being to reduce the in-house cost. We have also seen demand from existing customers looking to do more with us, and this is all encouraging for our future prospects. In addition to winning new contracts, our growth will be linked to growing our skilled workforce and building capacity into the repair body shops, which is also an enabler to growing at the mobility services. We turn over to Slide 17. So we signaled the constraints in vehicle supply in the previous reporting period. So the feeling is if we could have grown further, we could have grown further with more vehicle supply despite the economic challenges. However, we were delighted to have secured an 8% or a 10,000 vehicle growth in our fleet to over 130,000 vehicles. Our depth of relationships with OEMs plays a pivotal role in securing new stock. To grow the fleet at a time when supply has been constrained is a credit to our fleet team, and we have a very strong balance sheet and access to contract higher funding to support new fleet opportunities as they arise, either to secure growth or to feed replacement stock. We're also on a journey of broadening into more OEM relationships than in the past, particularly with growing quality brands. This is opening up opportunity to work more closely with all aspects of the vehicle life cycle for OEMs as they seek to establish a bigger foothold with us in our markets. Residual values have been well signed posted from public data points and values have been softening slowly. We can see that with continued limited new supply, values remain relatively strong compared to historic data. Our current position is that we are managing stock as in we are deliberately selling less so we can support rental demand, and we will monitor this to maximize potential returns. If you look at the chart on the right from the Society of Motor Manufacturers and Traders, it shows LCV registrations in the U.K. and forecast registrations through to 2024. A gradual return to near normal levels is expected so there is unlikely to be any sudden changes in the market. The 4-year shortfall of circa 200,000 LCV registrations in the U.K. alone supports our view that normalization will be gradual. And if we can turn to the next slide, please. So what these tables and charts do is provide a breakdown of the customer profile by sectors and the penetration in each by country. So the takeaway here is that with a very broad spread of sectors, with blue chip, government and midsized businesses making up more than half of the volume of the hires, what we see is the overall diversity of sectors and customers with no one sector or no one customer dominating the mix, which forms a resilient position for the rental business. And as I mentioned earlier, retail and logistics are the sectors where we have seeing some slackening, but we got ahead of the game on this by proactively rotating fleet to higher growth areas. Okay. And I'm going to turn to Slide 19. So the diagram here amply depicts the services and products on our platform and how these combinations support the requirement for joined up integrated services. As an example, we have leveraged the relationships with the businesses and seen a 75% increase this period from Northgate customers alone, taking up our full suite of accident management products as well as building a strong pipeline of customers looking to take up fleet management services. These crossover opportunities from a standing start are already supporting several thousand additional customer vehicles under our management. And our data and telematics and auxiliary sales have also increased the numbers supported by the fleet and accident management services, which is another example of how one service feeds another. We have also seen more services on the platform being taken up by existing customers. For example, the provision of fault accident repair work and direct vehicle replacement together with roadside accident recovery. It's the combination of these services, which is unique in the market and puts us into more new conversations than any stand-alone proposition. And whilst we have a broad product and service offering across the mobility life cycle with no major gaps, we believe there is also opportunity to explore markets where these services could add value. Those are adjacent markets. Turning to the next slide, please, on 20. At our last presentation in July, we highlighted why Redde Northgate was a resilient business, with many factors and drivers supporting our position in the market. We are very pleased to see that, as we anticipated, these have stood up well in these results. This resilience continues to be relevant with more outsourced opportunities across the platform of services coming to the table and supporting a strong pipeline over the next 24 months. We are delivering more services to existing customers and gaining market share. We don't win all the time, but conversion levels are high. We have broadly maintained margin and effectively managed cost inflation through the period. We know there will be more to come on that front, but we are well placed to manage this. And another good example is as the energy levy, which we have been able to share with our customers through the repair body shops. We cover the customer profile for the rental business and the broad base of sectors, which are well diversified. And to add to that, the Redde business base is primarily large insurance companies, blue-chip corporates, dealerships and leasing and automotive companies of scale, which adds to the diverse nature of Redde Northgate. Add to this, we are seeing a high number of potential bolt-on acquisitions being offered up, and we will be carefully evaluating these against our model for those that present attractive, long-term quality returns. And as Philip mentioned earlier, we continue to have a strong balance sheet, with 66% of our funding secured during the period at a very attractive rate of 1.3% over 6, 8 and 10 years tenures. In addition to that, we rely extended our RCF facility out to 2026. So with over GBP 300 million of headroom at the end of the period, we are very excited about developing opportunities and strengthening our position. And if we turn to Page 21, before we get to the outlook, I wanted to just touch on what we have described as our investment proposition, setting out what we see as our key attributes, which make Redde Northgate an attractive equity story. And these attributes have been shown throughout this morning's presentation. Much of the success of the past 6 months has been through leveraging our market-leading platform and the competitive advantage we have from our operational scale. And the structural shift from ownership to rental is supported by an increasing desire by our customers for a trusted supplier who can deliver a broad set of products and services. We know that EVs will play an increasingly important part in many customers' net 0 journey, and we are positioning ourselves to be a key enabler of this energy transition. We are helping our customers navigate their early steps in this through advice and innovative products such as the bundled charging product I talked about earlier. And we are also helping our colleagues navigate what is a difficult cost of living crisis. This week, we took the decision to make a special payment reflected in this crisis, which will benefit over 60% of our colleagues across the U.K., Ireland and Spain. We recognize how valuable an asset our colleagues are, the experience and efforts they put into the customer service and into managing fleet acquisition and cost management in these most challenging times. And finally, we are very mindful of the support we get from our stakeholders and investors, and ensure we make disciplined capital allocation decisions. We have a strong track record of delivering both organic and inorganic growth and using both dividends and buybacks to enhance shareholder returns. And finally, if we turn to Page 22, look at the outlook. You've seen this in our release this morning. So demand for our products and services continues to be robust, strong -- supported by strong levels of residual values. Many of our services are contracted over multiple years, which gives good visibility on revenues and income. Given the excellent performance to date, we now expect the balance of the year to be modestly above market expectations. And the Board is mindful of the ongoing macroeconomic environment and the LCV supply constraints in the U.K., but we remain confident that our integrated mobility platform will continue to create sustainable shareholder value. Okay. So thank you for listening. And I hope the progress you can see that we have made and the resilience in the business is very evident.

We'll now move to questions and answers. So we're going to take questions from the floor first, followed by any questions that come in on the online platform that we've got set up. There's a roaming mic.

Andrew Nussey from Peel Hunt. A few questions, if I may. If we start off in Northgate, U.K., if we adjust for the investments in ChargedEV, would the margins have looked pretty similar to the first half of last year? And how long will that investment phase last? And secondly, in terms of new LCVs in Northgate, U.K., how much visibility do you have on those landing through the second half and maybe into the first half of next year? And you mentioned that you're looking at new or challenger OEM relationships. Does that have any impact on your buying power with existing OEMs and effectively the workshop efficiencies that you would then get as a knowledge has to be built up on the newer OEMs.

Thank you, Andrew, do you want to pick up the margin point?

Yes. So on the margin, I said it was mainly ChargedEV. So to be clear, that's investment that's gone into ChargedEV and a lot of that's in back office support to support new customers that come online. So we don't see more investment having to go in currently. What we're waiting for really now is EV supply to pick back up again and therefore, there'll be more demand for people to install charging points. People generally don't want to put a charging point on their driveway until they know the vehicles coming in the next week or something. So there has been a delay in that. As that supply eases up, we'd expect to see that coming back up. If you have excluded that, it would have been probably just fractionally below the prior year. So that is the majority of it, yes.

And on the sort of new LCVs, particularly in the U.K., I mean, I would just point out the chart from the Society of Motor Manufacturers and Traders which show how that sort of gradual return to 2024 normalization occurs. There isn't a lot of visibility from manufacturers in terms of what we'll be landing in the U.K. We get anecdotal information, but there isn't a huge amount of visibility. But the view is, is that product is being made, product will be shipped to the U.K., and we'll see more of that sort of probably coming through in the early part of next year. On the challenger sort of OEM and therefore, relationships with existing. I think particularly Northgate has had a very sort of narrow relationship with a number of OEMs in terms of the products and probably for good reason as well around quality and sort of durability. What we're seeing is that some of the newer -- I say, newer they've probably been around 20-plus years, build a quality product that is very durable. There's good knowledge in the workshops around sort of the components and the reliability. So we're building on that because I think there is appetite for manufacturers that want to sort of spread their product base to get into the rental sector. And we see that as a good opportunity. And probably what I said in my commentary as well is that does give us a good opportunity to do more work with our OEM around the life cycle of the vehicle in terms of supporting the accident management repair, the service maintenance and aspects of it and the sort of the daily touch points that may occur when customers are using the vehicles. And of course, we've got the capability and the network to support that. I don't think there's any issues there with sort of challenges with existing relationships. Some manufacturers chosen to say that they would prefer low-volume, high-margin products as in supporting sort of prestige car and all rest of it as opposed to high volume on van. But I think over the lifetime of experience in this market, you tend to find the most manufacturers favor market share over sort of -- if you're a manufacturer, you produce small goods and they tend to favor gaining market share over that sort of high margin position. Okay. And I think I covered the workshop piece. Okay, Andrew.

It's David Brockton from Numis. Can I ask 2 questions, please. Firstly, I'm intrigued by the 2 new insurer repair contracts in Spain. Is this the beginning of a sort of a ready business in Spain? Just wondered if you could touch on if it is, how that could expand? And then the second question, sort of is a bit more sort of more medium term. You've clearly put a very strong case as to why normalization in residual values will be modest and you're making very strong progress in the, what I guess, what you could call the core business in terms of rental and accident management. Is it now -- I guess, your expectation, I appreciate you can't be definitive about this, but the business can continue to grow notwithstanding that moderation as it occurs?

Okay, David. Yes, so I mean -- so in Spain, the cross referral from an existing U.K. for repair, we've got that resource. Those are our assets and resources in Spain. We've got that capability. So it was a natural fit to do the repair element. I wouldn't say all aspects of Redde translate to Spain. Many, many, many moons ago, when the business was called Helphire, we went to Spain and undertook several thousand vehicle replacements and the sort of credit hire. The law doesn't quite stack up the same as in the U.K. So we've got no ambitions to develop a full Redde suite of products. However, the fleet management piece and the repair side with insurers definitely works really, really well and there's an opportunity to develop that. The start of the 2 contracts is a start. It's another revenue line, which diversifies our potential there in Spain. On the second piece, sort of medium-term normalization residual values, and will it hamper our sort of ability to grow with supply? I stood back from the fleet and sort of said, we made the comments about constraint last period, and then we grew 10,000. So I look at it as a sort of a portfolio of a business. I don't -- we don't get siloed just on the sort of the U.K. aspect in the business. If there's opportunity to grow with good margins in the business, and put new fleet to use, getting hold of cars is easier than getting hold of vans. So you've seen that in the numbers that we've reported and sort of the Redde fleet is predominantly cars. And remember as well, in Spain, it's a different mix. You've got more sort of passenger car type vehicles in Spain as well. So there's different mix to the U.K. So I don't think it completely restrain -- contains our ability to grow. I think we'll have that opportunity to grow as fleet more generally becomes available to us.

David Farrell from Jefferies. One of the benefits of the last few years of high residual values have been that net replacement CapEx has been pretty low relative to history. Can you just maybe kind of talk about your outlook for that over the next kind of few years? Are we expecting a step up? And if so, is that kind of playing into your view around kind of not extending the buyback? And then on Redde, I was just kind of wondering if we could get a split of the revenue growth by how much of that was in new contracts, how much of that was underlying, and how much of that was perhaps price increases?

Okay. Net replacement.

Go ahead.

Thanks, David. Yes, net replacement, it's very hard to forecast at the moment, obviously, because it's quite hard to have visibility over vehicles I think what we'd say, David, is we wouldn't see it as a step up. We see it was a gradual move back up to a more normalized level as the fleet becomes available. We don't suddenly believe that fleet is going to come gushing through our doors. Be nice if it could, but it's not going to -- it's going to be increasing slowly. As it increases slowly, we'll take those vehicles on. Some of them will replace the fleet where necessary. Other will be used to grow the fleet as we've been able to do in Spain this year. So it will be a mix of net replacement growth and CapEx, but we will expect it to start to move back up over the next 2 to 3 years, yes, but not a big step up. And I think is that impacting our view on share buyback? No, not that by itself. It's the overall wish of how we're spending our money and how we are allocating our capital through our capital allocation model. And it's the fact we do want to grow the business. And we've got lots of opportunities that are passing across our desk, which we're viewing on a regular basis, and we want to have the firepower to be able to execute on some of those.

And then your second question, David. I mean, we haven't split out the revenues and I haven't got numbers to talk to you today. I'd have to ask themselves the question, is it commercially sensitive to provide that type of level of detail. So we'll take that one away, and we'll will follow up in the round.

James Zaremba, please. Three questions, please. So the U.K. margin's above your target margin but hasn't benefited from a growing fleet for a few periods. Is there some buffer here for when supply constraints ease, you can grow the fleet again? Or are there certain cost wins you might want to flag such as higher depreciation in newer vehicles? And then I think last year, you mentioned you were putting Redde and Northgate into the same IT systems. So I was wondering if you would -- if there's any comments there about operational synergies you might be seeing this year? And then lastly, just around the EV transition. The Spanish fleet seems better positioned than the U.K. due to that weighting to smaller vehicles. So do you have any kind of plans in that market?

Okay, James. Philip, do you want to?