Card Factory plc

Good morning, everyone, and welcome to the Interims Results Update for FY24. I'm Darcy Wilson-Reimer, I think most of you know that, CEO of Card Factory, and I'd like to begin today's presentation by introducing Matthias Seeger, our new CFO who joined Card Factory in May. Now, Matthias will introduce himself shortly when he provides the financial performance update for the first half of FY24, and then I'll provide an update on the delivery of our opening, our new future growth strategy. which will include an overview of our new ESG strategy, and then I'll conclude with an update with an outlook for the remainder of the year. So we're now two years on from the launch of our opening, our new future strategy. And if you attended the capital markets update in May, you'll be aware of the significant progress that we've made across the initiatives that are vital for our business. This focus on delivery has continued and we're seeing the positive contribution it is making for Card Factory and we're encouraged by the response from our customers. This has led to a strong performance in the first half of the financial year, and we saw good momentum across the card factory business, and it is clear that our value and quality proposition, combined with the strength of our store estate, continues to resonate with customers. Our store revenue, which represents 94% of total group revenue, grew strongly at 10.5% like for like in the first six months. This reflects developments around key initiatives, including our store evolution program and our new refreshed ranges, as well as the annualization of our targeted price increases. The growing importance of gift and celebration essentials has also been a key driver of growth in the first half of the year. With like-for-like revenue growth of 13.1%, building on greeting cards revenue growth of 7.7% like-for-like in the first half of the year. This has been the result of focus range development and the broadening of categories with the introduction of new ranges in stationery and toys and the expansion of branded confectionery ranges. We've continued to strengthen the balance sheet with a further reduction in net debt. So for more details on this and our financial performance for the six month period, let me hand over to Matthias who will lead you through that. So Matthias.

Thank you, Darcy. As a German living in Yorkshire for many years, I'm delighted to have joined Card Factory's Wakefield-based team to partner again with Darcy and be part of this exciting next chapter in Card Factory's evolution. I'm looking forward to putting to work my more than 30 years of international and UK experience in FMCG manufacturing and retail to support the growth plans of the business and to achieve the targets as set out in our strategy update in May. It's also great to see some familiar faces in the room here today. Thank you for joining us in person and online. And I'm looking forward to having the chance to catch up. And also meet those of you I haven't been able to speak to. So to the results. I'm pleased to share with you our financial results for the first six months of our fiscal year 2024 with you today. Card Factory has delivered a strong financial performance. Results are ahead of management and market expectations set at the start of the year and in line with our trading update published at the beginning of August. We have delivered a strong sales performance with a double-digit growth in a challenging economic environment. We have more than doubled our profit before tax, driven by sales growth and enhanced margins. Our cash generation was strong, enabling us to invest into future growth to deliver our strategic plans. And at the same time, we strengthened our balance sheet by reducing net debt. Allow me please to comment on all the financial key metrics in more detail. All metrics improved significantly compared to the same period last year on the back of the strong business performance. This was achieved against an economic backdrop that continues to be challenging for businesses and consumers. Total revenue increased by 11.5% to 220.8 million, including the benefit from the acquisition of SA Greetings, which contributed 1.1 percentage points to the growth. This reflects continued good momentum across the business, particularly in our stores. Against the target of 190 million of incremental sales, as discussed at a strategy update in May, we have delivered already close to 23 million additional sales in the first six months of our four-year plan. EBITDA increased by 16.7% to 51.1 million and adjusted PBT by 105% from 10.8 million last year to 22.1 million this year. Adjusted PBT margin expanded by 4.6 percentage points from 5.4% to 10% while we invested in resources and capabilities to enable our future growth. Cash conversion and cash generation were strong as operating cash increased by 84% to $36.3 million. This enabled us to increase investments in infrastructure and growth projects while reducing net debt by $25 million to $71.9 million. Indicative of our good results, adjusted EPS increased by 100% to 5p versus the same period last year. Our business has a track record of delivering year-on-year growth. We were confronted with major challenges during the pandemic in fiscal year 21 and fiscal year 22. I am happy to report that the business has now fully recovered and has accelerated its growth journey. Actually, in the five years since half one 2019, card factory sales have grown on average by 3.6% every year, every year. The plans we set out at our capital market strategy update in May will add further growth and deliver additional value for our shareholders going forward. Let me now turn to our sales performance in the first six months of this fiscal year. As mentioned, overall group revenue increased by 11.5% from 198 million to 220.8 million. Our core business, the stores in the UK and the Republic of Ireland that account for 94% of sales, delivered total store-based growth of plus 11.7%, with strong like-for-like of plus 10.5%, and positive like-for-like performance in each of the first six months. One third of this improved like-for-like performance can be attributed to the targeted price increases, which were successfully implemented in the second half of last year. Two thirds of the like-for-like growth was delivered from successful range development, plus an increase in the number of transactions. The strength of our range, our relentless focus on value for money, and on in-store experience were at the core of our like-for-like growth. This resulted in improved sales of plus 13.1% in strategic growth categories across gift and celebration essentials. It also delivered robust greeting card sales growth of plus 7.7%. Continuing to increase our footprint and our market penetration, we grew our store network by 11 stores to 1,043. Over the period, new store openings contributed 1.2 percentage points to our total store-based growth. Online sales have fallen year on year due to the continued rebalancing of retail sales between online and in-store across the sector, as consumers have continued to return to the high street. We also recognize that our online business is in an investment phase as we develop the platform and our online offer. Therefore, we expect online performance to continue this trend for the remainder of the current fiscal year as we invest in improving our online proposition. This is in line with the expectation stated at a strategy update in May. Turning to partnerships, our existing partnerships performed strongly, delivering plus 23.5% sales growth compared to the same period last year. The new partnerships with Levi in the Middle East and with Matalan in the UK are in the process of scaling up and will contribute to future growth. SA Greetings has contributed sales of 2.2 million since the acquisition and is performing in line with expectations. We expect a small positive contribution to the earnings in the full year. Together with our new colleagues in South Africa, we are excited about the opportunities to grow the business, to unlock potential supply chain energies and drive improved margins. Turning now to margins. We have been able to enhance our margin rates despite headwinds on wage inflation and currency, as well as funding the focused investments into future growth. Adjusted PBT of 22.1 million delivered a 10% margin rate, which was 4.6 percentage points ahead of last year. This excludes the 2.6 million acquisition gain for SA Greetings. product margins on a constant currency base improved by 2.8 points. The impact of pricing and normalized freight costs more than offset the margin rate mix impact driven by the high growth in the gifting and celebration essentials categories. Direct costs reduced as a percentage of revenue by 2.3 points. Improved labor productivity, efficiencies, and the continued benefit of our energy hedge exceeded the impact of national living wage increases. Higher sales per store drove efficiencies below the line with a 1.8% percentage point improvement. This came from right-to-use rent lease depreciation and finance costs, as we have continued to see average store rents reduce on renewals. Increases in interest rates were offset by reductions in the gross level of debt drawn. During the period, our effective currency rate was lower than for the equivalent period last year. But our established currency hedging approach protected us against the full extent of market fluctuations in the period. We retained a hedge portfolio with an average rate ahead of current spot rates. At our strategy update in May, we set our plans to invest for future growth. In the period, we reinvested the equivalent of 2.1 margin points in operating costs. This came namely in our colleague offer and resources and infrastructure to ensure we have the capacity and capability to deliver our future growth plans. Further, the operating costs for SA Greetings added the equivalent of 0.5 margin points in costs. To summarize the P&L, strong sales growth of 11.5% added 22.8 million of revenue. This was underpinned by 10.5% like-for-like growth in stores from pricing, successful development of our range, and a small increase in transactions. Product margins of 70.3% improved 1.4 points, reflecting the annualized impact of price increases and normalized freight costs. This was partially offset by currency and sales mix impact as we sold a higher percentage of non-carb products. Gross margins of 36.8% increased by 3.6 percentage points due to efficiencies and normalized energy costs as we're able to more than offset the impact of wage increases. We reinvested 2.1 percentage points into developing capacity and capability to enable future growth. Our adjusted PBT increased by 11.3 million to 22.1 million year-on-year, as our adjusted PBT margin of 10% improved by 4.6 percentage points, despite headwind and reinvestments. Margin enhancement was driven by a combination of increased sales, improved productivity, and cost efficiencies across our unique end-to-end supply chain, as well as normalization of costs. Adjusted EP doubled to 5P for the period. Cash performance was strong in the period. Cash from operations increased by over 16 million to 36.3 million. Cash conversion increased from 45% to 71% year on year. Working capital trends continued to normalize following volatility during the years affected by the pandemic. Networking capital outflow was 6 million lower than it was for the same period last year. Rent lease payments reduced by 11 million, as payments last year included the deferred payments from the pandemic. In addition, we continue to see reduced rents due to our dynamic and flexible approach to our store portfolio. Corporation tax payments resumed in the second half of last year. We pay in quarterly installments under the very large companies regime. Total tax payments were 6.1 million. Total capital expenditure of 15.3 million in the period increased by 9.7 million. Key investments included in that were behind ongoing ERP upgrade and network infrastructure upgrade, as well as new store openings, store refitting, and upgrading of store layouts, as well as investments in improving the online experience. In addition, we paid 2.5 million in respect of the SA Greetings acquisition. Finance costs at 6.2 million were slightly higher than in prior year. It is important to remember that our business is seasonal. with lower sales and higher cash outflows in the first half of the year and the reverse being true in the second half. In that context, the free cash outflow for the period was in line with expectations. And we are pleased to deliver a significant $9 million improvement on last year. Moving on to debt. Net debt at the end of July reduced by $25 million as we have continued to strengthen the balance sheet. The chart shows the components of this improvement over the last 12 months, with the key themes being very similar to those I have just set out. Strong operating cash flow and lower lease rentals have created capacity for us to increase investment and reduce debt, whilst absorbing corporation tax payments. Debt service costs at 10 million remain broadly consistent with prior periods. Increase in interest rates were largely offset by a combination of our hedging program and a reduction in the level of cross-debt. working capital over the last 12 months has been broadly neutral in line with our expectations for normalized post pandemic position. At the end of the period, the group had headroom of 33 million in its debt facilities. During half 24, we made repayments in respect of our term debts and CL builds facilities totaling 12.3 million. I'm pleased to say that yesterday we made the final repayments in respect of our CL build facilities, which are now completely repaid. The final repayment in respect of term loan A is due at the end of January next year. The latter will remove the current dividend prohibition. In summary, Card Factory has delivered a strong financial performance in the first half of our financial year, ahead of expectations set at the start of the year. We increased our total sales by 11.5% and our store-based like-for-like growth by 10.5% behind our strategic growth plans. We doubled our profit before tax and made operational investments to support the plans for the future. Our strong cash performance enabled us to reduce debt, strengthening our balance sheet and invest in infrastructure and growth opportunities. This provides a firm foundation for the second half and for us to deliver against the targets we set out in May this year. Finally, a reminder that it's the Board's intention to consider dividend payments after the account restrictions are lifted at the end of January next year. And with that, I will hand back to Darcy for the strategy update. Thank you very much.

Thank you, Matthias. So turning now to our opening our new future growth strategy, we are pleased with the continued progress that we make across all of our growth areas. Delivery continues at pace in line with our expectations that set out in the CMD update in May. So in summary, our strategy is to transition Card Factory from being a store-led retailer into a market-leading omnichannel retailer of cards, gifts, and celebration essentials. Through this strategy, Cardfactory is well positioned to become the UK's number one destination for all customers seeking unrivalled quality, value, choice, convenience and experience. And we're working to transform Card Factory into the leading omnichannel brand in our space to help customers celebrate each and every occasion. And it is our aim to become a global competitor, putting cards, gifts, and celebration essentials in the hands of more customers. So looking first at our store estate, we'll continue to develop our store portfolio with 11 net new stores in the period, bringing the total number of stores to 1,043 in the UK and Ireland. And as outlined at the capital market strategy update, we're making significant improvements to our store layout and design. Excellent progress has been made on the Capital Light space reallocation program, which has now been applied to 700 of the 750 allocated stores. And we've also completed the display reorganization in 24 stores with a further five stores due to complete before Christmas. And as we've updated the store design for new stores and a select number of existing stores, and all of those are in line with our refit costs. So early results from the store evolution program show increased customer satisfaction and positive revenue impact with the reduction in card space allocation not adversely impacting sales at all. Whilst we've seen revenue growth from increased space allocation to gifts and celebration essentials. Importantly, and in time for the Christmas trading period, we've introduced a new customer service excellent program for all store colleagues, which forms part of our commitment to improving the customer experience in store. Turning to cards, our data and insight investment is driving our range development, helping us deliver sales growth of 7.7% in the period across both our everyday and our seasonal card ranges. We're also ensuring our longstanding value for money credentials are maintained through a combination of low entry price points and rotating promotional offers. And whilst at the same time, we're using data and insight to balance the targeted price increases that we've made within the card category. As already mentioned, we continue to see strong sales growth within gift and the celebration essentials categories. We are maintaining this growth through the introduction of new and refreshed ranges. And in the first six months, this included stationary, where a range refresh drove 68.5% like-for-like growth, and soft toys, where we saw growth of 34.5% like-for-like with new ranges and the introduction of some limited branded products. We also saw strong performance in confectionery, which delivered 9% like-for-like growth from the expansion of our branded offer. Our transition into an omnichannel retailer of cards, gift, and celebration essentials is now underway. In April, we completed the first phase of our journey with the UK rollout of our click and collect service. By the end of July, almost one in 10 of our online customers have chosen to collect their order in store. There have also been early indications that our omnichannel proposition is contributing to store revenue growth, with 9% of click and collect customers making additional purchase when collecting their orders in store, and the basket spend of these customers typically 25% higher than our average in-store basket. We continue to invest in our online platforms and the customer experience as part of our omnichannel ambition. And we've also recently commenced a piece of work to clarify the Card Factory online proposition. This will then also help inform the development of our future online marketing strategy to support our online growth ambitions. Progress within our partnership offering has been good through the six-month period. We signed a new long-term franchise agreement in the Middle East with Lewa Trading Enterprises in April, and the first four franchise stores opened in Abu Dhabi and Dubai over the summer, with plans to open around 36 in total over the next five years. We'll continue to progress conversations with prospective partners across our seven markets of interest, as outlined at the CMD conference. We've also agreed a new long-term partnership with Matalan, which will see Card Factory cards and Celebration Essentials available across their entire UK estate of 223 stores. The first phase of the rollout to 22 stores has been completed and the second phase is underway and all stores are due to be complete by the end of this year. Finally, we completed the acquisition of South African-based SA Greetings in April, supporting our partnership strategy in the region by providing us access to key wholesale accounts through the company's printing, merchandising and warehousing capacity. Now, as stated at the prelims, we're pleased to update on our ESG progress, including our new ESG strategy. So notable updates since the prelims include, firstly, the completion of scope one, two and three emissions assessment with net zero goals to be finalised and published in FY25. Second, we've also completed a materiality assessment refresh, providing an updated picture of where our most significant ESG impacts and risks lie. The world has changed and our business is growing. And as we continue the successful delivery of our future growth strategy, it's time to evolve our approach to sustainability and expand our scope and embed this throughout our business. This year marks a significant step in this process with the launch of our ambitious new five-year ESG strategy, Delivering a Sustainable Future. This strategy is our most comprehensive yet and using insights from the materiality assessment refresh, we've been able to ensure our ESG plan addresses all key areas of risk from both current and emerging regulation and allows us to capitalise on new areas of opportunity and build our differentiation in the marketplace. Our new strategy is built around the five areas where we want to deliver positive impact. Climate, waste and circularity, protecting nature, people and equity and governance. Each of these focus areas is underpinned by a set of commitments and we are now developing a detailed roadmap and action plan to deliver on those over the next five years. We've included targets where we can with more to be added as the plan develops. This is a rapidly developing area and so our strategy is designed to evolve over time in line with emerging information and evolving ESG context and pressures. Sustainability must sit at the core of how we work and the decisions that we make every day and delivering a sustainable future is aligned to our business strategy and will be embedded into our operation and decision making over the coming months. Our strategy meets all regulatory and reporting requirements and covers areas such as nature where we expect to see greater regulation in the future. We look forward to updating you further on progress and specific detailed plans at the year end. So looking ahead, I'd like to start by summarizing our preparations for the Christmas season. And we are well prepared for Christmas with our seasonal rollout as well underway. For the first time, this will include a fully integrated marketing campaign, positioning Card Factory as the perfect value destination for cards, gifts, celebration essentials for anyone wishing to celebrate Christmas with friends and family. New products this year include an expanded gift offer with new ranges in many areas. So for example, in toys, we have key licenses such as Barbie, Jurassic Park, Disney, and Harry Potter. We have new ranges of food and confectionery, and we've made further improvements to our own label ranges, including expanded captions, such as gifts for sister and gifts for mom, as well introducing a pet gifting range in over 300 stores to understand customer demand. So you might get a gift from your pet this year. And as part of our space realignment project, we've continued to optimize space to ensure that we got the correct balance between Christmas card, Christmas gifts, Christmas celebration essentials, and of course our everyday range. And from a supply perspective, all stock has been manufactured in line with the required delivery dates, and there'd be no issues with inbound logistics for any stock that we have manufactured overseas. And finally, recruitment of our seasonal colleagues for the Christmas season has commenced, and we are confident in our ability to not only meet staffing requirements for this seasonal peak, but also provide customers with an enhanced customer experience. in summary we've had a strong performance through the first six months we've continued to make progress on our key foundations for growth through the delivery of our opening our new future strategy it is clear that our value and quality proposition and the strength of our store estate is helping card factory to drive growth whilst we remain mindful of the challenging economic backdrop The celebration occasions market remains resilient with growth opportunities for our business. And finally, cash generations remain strong through the financial year. And as we look ahead, based on the strength of the first half and the outlook for the second half, The board is confident in delivering a good outturn for the year. Trading since the August update has been in line with our expectations. And the board remains confident in the compelling growth opportunity for the business, in our ability to use our expertise and the flexibility in our business model to drive value for shareholders over the long term by delivering on the targets outlined at the capital market strategy update in May. So thank you for your time today. Matthias and I will now be happy to answer any questions. So for those joining online, please submit your questions via the Q&A button at the bottom of your Zoom screen. We'll start by taking questions in the room and then the technical gods should put the questions onto the iPad. Kate's always first.

I don't have to be. Kate Calvert from Investec. Two for me. First, on your stores, could you talk about how much your space allocation has changed between categories with the relay of the 750 stores and also how that compares to doing a relay of the actual fixturing? to give an idea there. And the second question is on the Matterland partnership. Could you give some more detail on how the scale of the partnership has changed versus the old wholesale agreement you had? Thank you.

So thank you very much. So on space, effectively we've moved about 7% of space from basically cards to gift and celebration essentials. And in doing so, and the intent was always to do that without impacting card sales, by making sure that we had... Basically, a full range in each of the captions and categories we needed. And as we did the work in every card that we took out of the range to do that, there was a really credible alternative to that. So that's about that kind of range optimization. And then... Replacing that space with gifts and celebration essentials where we either had permission to do it or through the customer research, customers have told us they would like us to kind of do that. In terms of the kind of fixturing, so that is – so the space allocation was – It was roughly £1,000 a store. The space, the fixturing pieces, that's more expensive and the payback is longer. And we continue to evolve that as we go. So in the plan was to do 50 stores this year. We've done 25 so far. Um, we'll do a few more before Christmas and the rest, you know, kind of after Christmas as we, as we just keep evolving that, that test. And then finally on Matalan. So Matalan, you'll know we did extensive trials for, for a period of time, uh, off the back of that, we're doing the full rollout. It is a branded store in store offer. We continue to have, uh, in our arsenal, um, a store-in-store, a white label, and a full franchise offer, you know, basically across partnerships. Pretty good. Thanks, Ranjay.

So a question on price mix and volume. How are you seeing that evolve this year, both in-store and online? Is there a difference between the two? Do you have greater power in taking price online? And then secondly, on mix, how should we be thinking about that between card and gifting, maybe in gifting, potentially seeing a slight downgrade or differences in what people are going for? Thank you.

Thanks. Thank you for the question. So looking back at the first six months of this year, we saw the annualization benefit of pricing, which contribute one-third to our 10.5% like-for-like growth, whereas two-thirds of our like-for-like growth, as we discussed, was driven by range, particularly the new offering in the categories, as Darcy discussed. So with that, we would expect that we continue to see the benefit of the new range going forward, as well as the benefit from the space alignments, as Darcy just commented a minute ago. Your second question?

So it's also like a monument mix. How should we think about that?

Yes, on Mix, thank you. What we've seen is a strong growth, disproportionate growth of 13.1% in the non-card categories. We are now selling 50. Our sales are 51% non-card. And as you might recall from the Capital Market State Strategy update, our target for 27 is 53%. we see a strong cash margin contribution coming through from this mix, which is in line with our plans.

Morning. Adam Tomlinson from Liberum. Three questions, please. The first on store performance. So can you just give us a reminder of the balance of your store estate across shopping centres, high street and retail parks and whether you see any differing performance depending on location? The second question is around cash. Customer demographics. So previously, you've talked about how the younger generations are one of the stronger growing demographics. So just whether that's a theme you're seeing continuing and any updates on that. And the third question, the investment into the ERP system and the new system coming in there, just a bit of color on the benefits of that, particularly as you move into peak trading. Thank you. Very good.

Do you want to do store portfolio and I'll do demographics and ERP?

Well, I mean, we don't comment on detail. Whilst we don't comment on details of the different formats, I can tell you that we have broad-based growth across all locations, whether they're in high street or shopping centres.

And it follows, we're basically mirroring the kind of general football trends that you basically see. And again, we're also starting to see it much more normalized depending on what's happening, just generally, you know, weather impacts and, you know, it's a much more normalized space. In terms of the demographics, that was a particular piece of research that we do for the annual report that demonstrated that. What we are in the process of doing is doing a much more detailed bespoke piece of research around that demographic to understand exactly what's driving it and what the implications of that and how we might want to if there's anything we need to do for the offer to do that. So there'll be, you know, kind of more of that in the future. But that is a, it was an interesting thing and it's something that we're looking at and kind of focused on. In terms of ERP, so you'll recall the first round of ERP was the finance system. This time it was largely the warehouse management system. And uh some capability that we need uh to deliver on the partnerships so that went in and went live about four weeks ago or you know we're still in hyper care that that rollout went exceptionally well this is my third um erp third company with an erp implementation and it was at the the better end of any of the others that that i've that i've um seen um I mean, effectively, the technology we had in before was something that was a Microsoft product from AX 2009, it was called. There was huge vulnerability in our warehouse for Christmas, for example. If that had fallen over, it would have been disastrous in terms of us being able to deliver what we need to deliver to the store. So that's gone in. It's gone smoothly. We're seeing the benefits, so you know, the systems run faster. We get the data much earlier and much better. It means our replenishment will be much more accurate. And if there are challenges in the system, we get much, much clearer kind of early, you know, early warning systems. So, yeah. And then, yeah, that's it. So I'm going to turn to, go on.

obviously you're having very very good growth in gifting and con and celebration essentials you mentioned that sorry thank you um obviously part of that is due to range expansion and space expansion but i wondered if perhaps you're also gaining from weaker players like the exit of paper chase because you mentioned stationary was strong and if you could just talk about sort of how you see the competitive dynamics in the gifting area

Yeah, so at the Capital Markets Day, we basically outlined how we redefined the market for us and effectively the market that we wanted to play in. And we split out gifting and celebrations into two separate things. It helps us focus, but also measurement in the market basically is much easier. I think the... So the range development that we've done is based on consumer insight and data. And it's a combination of there were some things where we under indexed and we had permission from customers to play. And so stationary would fall into that. And there are new categories where the customer has said they would like to see that in card factory. So things like more confectionery or some other ranges. And we've basically continued to do that. And then the thing around space allocation. Oh, by the way, I think these are all just proper retail disciplines that we have put in place. I don't think... I don't think these are magic kind of bullets. But that's about making sure. So we always think of the occasion. That's where we start. So it's mom's birthday. That's the occasion. And when you enter our store, we want to get you to card first. So we're card led. And we want you to pick up the card for that occasion. And then we appreciate in a lot of cases, we may not be the primary gift, right? You might be, if your kid's going to a kid's party, we might be the primary gift. But if you're buying for your mom, you might not be the primary gift. But there are many things that we sell that are secondary gifts that are really nice to have. A candle, a chocolate that says best mom in the world or whatever it might be. And then as you go around the customer journey, wanting you to then... We want to give you some dressings. And if you're having a birthday, if you're having a party, I recently had a friend's 40th birthday party. There were lots of stuff for the table that we sold. And so it's all through that customer journey. So I'm going to turn to some questions online if I can. Get ready, Matthias. I've got a couple of ones that will be clear why I'm dodging them. Right. Well done on paying off the CL bills. By saying the other dividend restrictive debt will be paid by the end of January, does that mean no chance of a dividend in this financial year, or is it possible you could pay off by mid-Jan and include a dividend for the full year?

The term loan A restricts the payment of dividends as long as it's not repaid. Our intention, as we earlier stated, is to repay the loan at the end of January. And then once the loan will have been repaid, the board will consider paying dividends going forward.

I think also, as a board, we are focused on how we deliver shareholder value and we understand where the dividend kind of falls into that. There's a question here around, does management think the share is undervalued and any thoughts on buyback rather than dividend? I think that is a debate that will continue forever and clearly we... We consult our shareholders. We understand what our shareholder base is requirement. The board has all the information. It will have all the information it needs to consider this point, basically, when it's appropriate for us to do so. What is the split in store between cash and card or other payment types? And is the customer behavior different dependent on payment type?

Sorry, I don't have that answer. We would need to get back to you with that answer.

Yeah, so I also can't tell you the exact percentage. We have seen a small tick up in cash compared to kind of the post-pandemic when people kind of went cashless. Does Click and Collect revenue, is it under online or store-based revenue? So today Click and Collect is in our online revenue. Pet cards. The upside is as big as there are lots of pets in the UK. Are you planning to have conversation with the likes of pets at home? I think on the pet thing, we kind of post-pandemic as the pet ownership kind of exploded, we started to see, we've always done cards from the pet, but it's relatively small. And we started to see that basically explode. I think it was Mother's Day from your pet. Those types of occasions, it was phenomenal. So we kind of responded to that pet trend. We have developed further the card range and then the gifting range. We've developed a small gifting range. We won't put it in every store. We'll put it on 300 stores to see, basically to see how that trades. But again, it's in the context of we're a small store format. We've got 1,000 square feet in the store and we've just got to always trade the balance significantly. between our categories. That was my last online question. Did you?

Hi, it's Mark from Canaccord. Just a question on the product margin. Obviously, you benefited from the annualization of price increases in H1 and lower freight. How much more benefit is to come in the second half? And obviously, with the mix effect of growing gifting sales? Yeah. How do we think about origins in H2?

As we discussed, the... The targeted pricing implemented last year has been annualized. What we expect to see going forward is the continuous benefit of range expansion and a strong growth in non-card categories. But overall, we remain confident that that is in line with our expectations. And we are on track to deliver our long-term goals. And again, as I mentioned earlier, we expect about 53% of non-card sales by the end of 27.

The only other thing I add is we put out a long-range target at the CMD of a 14% PPT margin, you know, basically over the life of the plan. Very good. Any final? Go on, Kate.

Could I just ask a question on the London store trials as to you've been playing around with the product mix. How's that going at the moment and any thoughts or rollout?

Yeah, so on the London store, so there's, I mean, effectively, we have one store that is meeting its returns hurdles and two are just not quite there yet. And so there's more work being done. We've just done a piece of work around some range changes and range refresh. I think I still believe that London could do with a value card gifting and celebrations offer. We haven't yet cracked the code. I think what is really important is the disciplines that we've maintained in our property portfolio of not being overspaced or over-rented and maintaining a largely profitable store base. Those disciplines apply equally in London. And as we learn new things, we might build another store and test some more stuff. But I would say it's ongoing. Very good. Any more for any more? If not, nothing else online. Very good. So I'm going to kind of conclude today's presentation. Just thank everybody for coming in person, those that have joined us online. Thank you for your time today. Clearly, shareholders that might be on the call, I will see you either on the roadshows or as we go out and just appreciate everyone coming today. So thank you.