DFS Furniture plc

So good morning, everyone, and welcome to the DFS Group 2025 Interims Results Presentation. I'm Tim Stacey, Group CEO, and I'm here with Marie Wall, our Interim CFO, and together we'll update you on our half-won performance. I'll provide a bit of a strategic update and also a future outlook. Marie will come and talk about the financials. So in terms of the introduction, over the last few years, we've been very focused on building compelling customer propositions across our two retail brands, DFS and Sophology, driving significant amounts of new product development, developing a digital-first marketing strategy, and training our people to be the best salespeople in the industry. Now I'll share more detail on these initiatives later, but the combination of our efforts has supported our continued growth in market share, and we're pleased to report today an order intake growth of 10.1% in the first half. We've also focused on our operational execution and continue to make progress here with gross margins up 70 basis points year on year. And our cost to operate program achieving 43 million pounds of annualized savings, well on track to meet our 50 million target by the end of FY26. Obviously growing sales, increasing margins and reducing costs has clearly driven profit growth and profit before tax and brand. And well, it's almost doubled to 17 million pounds despite operating in a market that we believe is slightly subdued down slightly year on year. Our financial position has also strengthened through profit generation and disciplined cash management. We've lowered our absolute debt levels and our leverage has come down from 2.5 times at the previous year end to 1.6 times as we target getting back into our 0.5 to 1 times range. Finally, we may remain increasingly confident about the group's prospects and fully stand by the Capital Markets Day targets that we set out three years ago of achieving 1.4 billion of revenue and an 8% PBT margin. We further strengthened our position as the clear market leader We're growing profits through our self-help initiatives. And in addition, market demand now appears to be slightly stabilising, and we do fully expect it to recover from the current levels, which are over 20% below pre-pandemic volumes. Given our high operational leverage, the profit drop through from any market support will be significant. As you know, we have a highly cash generative model, and so we expect to de-lever back into our target range over time, freeing up cash flow for further growth initiatives and healthy levels of returns. Just moving on to some brief additional headlines. Both of our retail brands performed well in the period ahead of the market. DFS's order intake was up 8% year-on-year, supported by its exclusive brand partnership sales, which reached a record high in the period, representing over 40% of total sales. The Sophology brand has performed incredibly well in the period, with order intake of 19% year-on-year, and the range changes that we made at the end of the last financial year are proving very effective. Our customer proposition and operations are in excellent shape, and MPS scores are either at record levels or very close to, reflecting all the effort of our teams across all aspects of our customer journey. Our sofa delivery company in particular is performing better than ever, and achieved post-delivery net promoter scores of 10% year-on-year, reaching record highs. So in summary, a really strong half with significant profit growth achieved and our customer propositions and our operations are in great shape. So I'll now pass over to Marie to cover the features.

Thank you, Tim. Hi, thank you, Tim. Good morning, everyone. It's a pleasure to be here today. I'm going to begin by walking you through our key financial headlines, starting with order intake. We've achieved strong order intake growth of 10.1% in a market that has been subdued. Our proprietary banking data indicates both our brands grew their market share in the period. Growth sales, which are recognised on delivery of orders to customers, were up to a lesser extent at 1.4% year on year. This is largely due to the improved order intake being back-weighted during the period and therefore the goods have not been manufactured, delivered and recognised as income in the period. Consequently, this leaves us with a healthy order bank heading into the second half of the year. Revenue growth, meanwhile, came in broadly flat, reflecting the decision we made to increase the use of 48-month interest-free credit to drive consumer demand in a weaker market. More on this later. In terms of profit, our underlying profit before tax and brand amortisation of £17 million is up 8.3 million year on year. This improvement is primarily driven by the success of our cost to operate programme with stronger gross margins and ongoing operating cost reductions achieved. Our underlying basic earnings per share of 5.3 pence is up on last year and this is consistent with the year on year profit performance. Reported profit tax of 15.8 million includes brand amortisation charges and 0.5 million of non-underlying charges related to our cost to operate initiatives. These are primarily restructuring. Finally, our closing net bank debt stands at 116.7 million, down from 133.9 million at the same point last year. It represents a significant reduction from 164.8 million the full year 24 year end now this decrease decreases the result of continued cash discipline with our leverage reducing for a peak of 2.5 times at full year 24 year end to 1.6 times moving on to our sales performance and as i mentioned earlier the group's order intake performance was driven by strong contributions from both dfs and sophology now tim is going to elaborate on that a little bit later in the presentation but as you can see DFS has grown at 7.8% and Sophology by 19.1%. You can see in the table that both brands reported year-on-year gross sales growth is around 10 percentage points lower than the growth in order intake. And as I said earlier, this is due to our trading performance strengthening through the half, which means that the majority of the order intake growth in half one will be recognized in the P&L in the second half. In terms of revenue, our year-on-year performance was broadly flat And that is despite the market being in decline. Revenue grew to a lesser extent than gross sales as a result of our effective strategy to invest in DFS's interest-free credit proposition. It's also worth highlighting that whilst Bank of England base rates over the half year and year have been relatively flat, the cost of providing interest-free credit has increased significantly for the group over the last few years. As you're all aware, interest rates have recently started to reduce, and it's worth highlighting that for every one percentage point movement in the base rate, our interest-free credit costs will reduce by approximately seven to eight million sterling on an annualized basis. And with any changes to the Bank of England base rate, typically impacting our interest-free credit rates with a three to four month delay. In summary then, a strong order intake performance in a market that we believe was in decline. Now on to our cost to operate programme, and I'm pleased to report that the momentum from last year has continued into the first half of this financial year. At the end of FY23, we set ourselves the target of 50 million of annualised savings by the end of full year 26. We've achieved 43 million of that target today, with 15 million delivered in the first half, and that is on top of the 27.5 million we delivered in FY24. Our gross margin as a percentage of revenue has continued to improve. And last year, we took the decision to close one of our manufacturing sites and wood mills, which has enabled us to redistribute the production of our sofas across the remaining two factories and our third party locations. Now, this has both reduced costs and improved quality through ensuring we're making the products in the optimal locations. On the operating cost side, we delivered savings through the annualisation of FY24 initiatives, such as developing more efficient operating models across our showroom and online sales teams, and also within our logistics operations. In addition, we've implemented new cost-saving measures in the first half of this year, such as through aligning payment solution suppliers across our two retail brands and also improving the efficiency of our customer service operations. The efficiencies coming through from the sofa delivery company are a real standout and is something that Tim will elaborate on later. As a result of this programme, we are developing an ever-increasing cost-conscious culture across all areas of the group, using data and MI through the development and effective use of dashboards to obtain insight and improve decision-making in our operations. Our cost savings have been achieved in a sustainable manner and without compromising the customer proposition. And Tim's going to bring this to life later, but he talks to our strong NPS scores. Overall, we're very pleased with the progress we've made so far. The group is now operating at a lower cost, which will strengthen future profitability through all stages of the economic cycle. So with the pipeline of opportunities we have, we're confident we will achieve the 50 million sterling targets set in FY23, and these savings will help us to mitigate future inflationary pressures, which include the recent changes employer national insurance contributions which have an annualized impact of five million sterling to the group moving on to gross margin and we're pleased with the progress we've made here both in terms of the cash margin which you see is up 3.3 million year one year on the chart and also the margin rate which has increased 70 basis points to 56.7 percent This is a significant step forward as we continue to make progress towards our 58% margin target, which we first set out at our 2022 Capital Markets Day. Margin expansion is driven by improvements in product margin, reflecting both the strengths of our commercial proposition and our continued focus on cost of goods under the Cost to Operate programme. These, together with favourable effects, more than mitigate the headwinds we've seen on freight rates. Now, just a note on freight rates. These were notably higher in the half, broadly double the $1,500 per container rate from the prior year, with last year's rate being more in line with the long-term average. We're starting to see freight rates come down. It's worth noting that every $1,000 change in the cost per container equates to approximately $7 to $8 million on the group. We remain confident in our ability to achieve our 58% gross margin target, and there are further opportunities to reduce our cost of goods through improved purchasing, with future anticipated interest rate reductions providing further margin support through lower interest-free credit costs. Now turning to operating costs, and as I mentioned earlier, we've made good progress here, both in reducing our cost base and in building momentum in FY24. Our total operating costs, including depreciation and interest, have reduced by 5 million year-on-year. This is despite 3.2 million of inflationary headwinds, which we've more than offset through the cost savings achieved by our Cost to Operate programme. The gross sales increase in the period has been largely driven by average order value increases, with the stronger order intake volumes in Q2 to feed into the second half P&L. And as such, variable costs have been broadly flat year-on-year. Now, I've already talked about the key areas of cost savings, but one further point worth mentioning is our use of data and customer segmentation to improve marketing efficiency. And as a result, we've been able to keep marketing costs flat across the half and offset inflation. Looking ahead through our ongoing cost to operate programme, we have a pipeline of opportunities that will enable us to run the business even more efficiently in the future. So turning to cash flow, the cash flow in the period was 48.2 million, representing an increase of 37.6 million against last year. The strong performance was driven by improved profit, lower capital expenditure and tax payments, and most significantly, working capital inflows. Taking each in turn, cash capital expenditure reduced to 10.4 million as we continue to prioritise spending or maintaining our existing assets and investing in capital light, short payback growth opportunities. We also expect total cash investment for the full year to remain within our previously guided range of 20 to 25 million sterling. Interest and tax reduced by 5.8 million year on year to 5.6 million. Interest costs were 2.4 million lower year on year, primarily due to the non-recurrence of the refinancing fees that we incurred in full year 24, and corporation tax payments were 3.4 million lower year on year due to the in-half utilisation of historical overpayments. Lease liabilities increased to 46.6 million, reflecting additional payments which fell into half one as a result of our period end date falling five calendar days later this year. Total working capital inflows increased by 24.2 million year-on-year to 28.9 million in the period. This was driven by a negative working capital model and reflects a higher trade credit and position linked to higher delivered gross sales and increased customer deposits held as a result of the stronger trading performance. There is also some additional benefit from deposits taken in the additional peak trading days up until the 29th of December. Now we do expect to see a partial reversal of this working capital position as the order bank and customer deposits normalise by the end of the year. And in summary, the business remains highly cash generative and we expect to generate strong cash inflows and continue to reduce our leverage. But let's take a look at how all of this translates into an improving financial position. We've shown three charts on the slide to show how net debt and our key ratios of leverage and fixed charge cover have evolved since 2022. Taking each of these in turn, closing net debt stands up 116.7 million, down from a recent peak of 164.8 million at the end of FY24. Now, this reduction is significant and it brings us well below the pre-COVID average level of debt that we operated with, as shown in the top chart. We also had plenty of cash headwind relative to our total lending facility of 250 million sterling. As a result of the stronger profit performance over the last 12 months and the lower net bank debt, our leverage has improved to 1.6 times, which is down from the FY24 year-end position of 2.5 times. Fixed charge cover has also improved to 1.7 times, as I show on the bottom chart. Looking ahead, it is the priority to reduce leverage further and return to our target range of 0.5 to 1 times over the medium term. In December 2024, we also successfully extended the group's revolving credit facility by a further 16 months, now secured until January 2029. The group now has a 200 million revolving credit facility secured until September 27 and 175 million until January 29. Additionally, we have 50 million in loan notes maturing in two equal tranches in September 28 and September 2030. These extended facilities provide us with sufficient liquidity for the foreseeable future, whilst also laying a solid foundation for growth and financial flexibility. So moving on to capital allocation, and whilst we've made good progress on reducing net debt and leverage, we recognise there is still more work to be done. And we thought it would be helpful to summarise our approach to capital allocation in light of this. So in the near term, we expect to remain outside of our target leverage range of 0.5 to 1 times. However, deleveraging remains a high priority. And to support this, we will continue to take a disciplined approach to cash management. focusing on maintenance capex and selective capital light short payback growth opportunities to ensure we balance investment for growth with maintaining flexibility. We also remain fully committed to delivering sustainable shareholder returns, but given our current leverage level, the board has decided not to declare an interim dividend, and this decision reflects our focus on strengthening the balance sheet in the near term. The decision on the FY25 final dividend will be based on full-year performance, net debt position and the outlook at that time. In summary, I'm pleased to be announcing a strong set of numbers for my first set of results, with the group having made a good start to half two. With a strong order book and our continued focus on improving our cost base, we are well positioned for the future. And with a smile on my face, I will now hand back over to Tim.

Thank you. That's good to see. Thanks, Marie. So I want to just start off briefly by talking about the state of the market as we see it. The top left chart here illustrates our market share by value as based on the global data survey. And this shows that the group is the largest business in the UK upholstery sector by some way with 36% market share by value. We're over three times the size of our nearest competitor. So this provides us with significant scale benefits across our business. And you'll hear about that more on the following slides. There is still a material fragmented tail in the market, which makes up about 25% of it. It's made up of independent chains, small businesses, and some of the generalist retailers. And in terms of some of the competitor movements within there, we know that some of the generalists have entered into the sector and they may have taken share from some of our specialist competitors. But as for the independents, they've been in decline for a long period of time now, and we continue to see them as a donor category to our business. See in the middle chart how our share has evolved across our specialist competitor set on a monthly basis. And this is using our proprietary Lloyds banking data. We have a track record of growing share across all economic cycles. And over the last 12 months in particular, we've made significant progress. Finally, on the chart on the right hand side is the market size over the last few years. And the key points pull out from here is that And in the year 24, adjusting for price inflation was at its lowest point, with volumes at 20% below pre-pandemic averages. We know this. However, we do expect the market to recover in time. There's a number of reasons for that. Firstly, there are more rooms in UK households than ever before with sofas in them. And at some point, these will need replacing. Secondly, we know that consumer confidence is a big driver of sofa replacements. And confidence levels recently have stabilised. Now, given that household savings are in growth, as consumers become more confident, we believe that they'll be more willing and able to spend on big ticket items. And finally, housing transactions have been in growth for the last 10 months. And housing transactions drive around 20% of our market. And these recent growth in transactions will provide a nice tailwind going forward into the future. So turning to profit growth and staying at the highest level here, we see three key areas to drive profit growth for this business. The first is focusing on what we can control and that builds on the successes over the last few years and especially in the first half that you've seen to improve our own profitability. Specifically growing profitability through like for like sales and also the clear white space in front of us to increase the Sophology showroom estate by up to 15 new showrooms and that's a 25% increase on the estate today. In addition, As Marie pointed out, we've got an opportunity to grow our margin by 130 basis points by targeting improved sourcing and also looking to the benefit of falling Bank of England base rates. And we'll continue to optimise our cost base to offset future inflation. Secondly, as I said earlier, market volumes are below 20% below pre-pandemic levels, and we do expect that market to recover. The good thing is that we do have the capacity across our business to handle much higher volumes without adding in further structural costs. And particularly as a cost that we've taken out recently, that's improved our operational leverage, which should enable a profit drop through at an incremental rate of 40% of any incremental revenue. Now that should convert to cash at a healthy rate of over 75% of PBT, given the relatively low maintenance capital requirements and our negative working capital model. We also have growth opportunities beyond the core upholstery business. We have a great asset in the sofa delivery company, and we see opportunities to leverage that in the future and more on that shortly. We're also targeting to grow our share in the non-upholstery home segment. from 1% to 4%, first starting in the £3 billion beds and mattress segment. Now we've laid down all of the infrastructure to support our growth in this area and we've utilised some of our exclusive brand partnerships to sell branded beds. Going forwards, we should be in a position to start to market this and build customer awareness and drive sales and profit. Just moving on to our particular sector in sofas. So moving on to our winning integrated retail proposition. And we believe that having this sort of business model is absolutely critical for our particular category. So we know from the results of our biannual surveys covering 3000 people who are in market for a sofa that around 90 percent of customers will start their journey by researching online. and 85% of those customers will require the all-important sit test before being willing to commit to a sofa purchase. After all, on average, customers retain their sofas for around seven years, so it's a decision you don't want to get wrong. Now, we have two complementary retail propositions that are set up to meet these customer needs. To start with, we have well-invested digital assets from our website to being the first sofa retailer to offer augmented reality visualization of sofas through a mobile device. We have the marketing power and scale to be able to invest and stay ahead of our competitors. And we have high levels of brand awareness with DFS, for example, being the most searched for term in our sector on Google versus Sofa. As for the all-important sit tests, we have good geographical spread across our two retail brands. DFS has full representation in showrooms across the UK and Ireland. And Sofology, as we open the 15 more stores I mentioned, will also be in a strong position. We continue to invest and maintain our assets to high standards, creating a welcome and inspiring space for our customers to showcase the fantastic products to levels that competitors can't match. And this results in sales densities of around three times that of our nearest competitor. Finally, in this day and age, we provide the ability for customers to transact in a way that best suits them. This includes, for example, our shared baskets in BFS that enable our sales colleagues to build an order in the showroom and then the customer can go home and complete at their leisure. So to sum up, with a well-invested base, asset base across our digital and physical channels, we'll continue to invest in that to innovate and evolve. And this resonates really well with the customer journey in this space. Again, staying at the highest level, into design inspiration and selling. And I think we've been fantastically blessed to have some great designers in our business. And we source from the biggest suppliers around the world. And this allows us to innovate with our products and have the best ranges in the sector. Due to our scale, we can attract and work with well-recognized brand names, such as French Connection, Jools, Ted Baker, Country Living, House Beautiful and Grand Designs. And these brands carry a lot of weight with the UK customer. We work with these brands on an exclusive basis to provide a competitive advantage. In addition to adding to our exclusive brands portfolio, we've continued to innovate in our products. We've introduced more technology than ever before into our sofas, such as wireless charging points, wine coolers, speakers, vibrating seats, and recently we've patented heater seats, all of which are driving up average order values. We've been investing in data across the organisation the last few years to drive improved decision-making. Our data-driven marketing approach enables us to market at highly localised levels in a very efficient and effective way. Recently, we've won the Bloomreach Data-Driven Leader Award, recognising our impactful use of customer data and analytics. And the teams in-house have been nominated for four UK Search Awards for Best Use of Search and Best In-House Team. Now, we've always been creative from an above the line point of view. And recently, our digital first execution of the recent DFS advert has been used as an internal case study at YouTube for effective platform and digital first creative thinking. Finally, we believe that our highly trained and motivated sales colleagues are the best in the business, and I'd like to thank them for their efforts over this last few months. We developed a good mix of full-time and part-time colleagues, which allows us to flex our deployment based on footfall and data. We focus on matching our colleague profiles to the towns and cities they serve, and all of this drives conversion and MPS. At the end of the first half, we made a change in our organisational structure with the introduction of some additional group functions, including buying and marketing. We believe that this will further drive synergy benefits through facilitating knowledge sharing and embedding best practice across the group. Now, moving on to DFS, our longest and established brand, whose core target market is mid-income families. DFS achieved order intake growth of 7.8% in the period, principally due to higher average order values, which were up 4%. The AOV growth has been driven through new product developments, especially, as I said before, in our higher price exclusive brand ranges. Overall reached a record high of over 40% in participation. In the period, we also launched exclusive ranges from our new partner, Lazy Boy, who are worldwide famous for comfort. And they're trading well. Along with this, you'll see the guy in the middle here, we've enlisted a basketball icon and fellow Nottingham Forest fan, Shaquille O'Neal, that's true, as our brand ambassador for our market-leading range of reclining furniture. And we're really excited to be working with him, especially on social media, where he's a huge presence. And we hope to replicate the success that he's brought in the US in a very similar role with other furniture retailers. We've also invested, as Marie said, in periods of four years interest-free credit to stimulate demand and enable customers to trade up to higher price point ranges. Our DFS core values of think customer, be real, and aim high are fully embedded across the teams and across the business in terms of our mindset. And I'm really proud to see our colleagues living these values day in, day out. And their efforts are feeding through to very strong post-purchase net promoter scores for the period, which were close to the all-time record highs that we've seen in the last few years. Moving on to Sophology, which targets slightly older and more affluent customer demographics. Now, Sophology has had a very strong first half. You may remember in our last full year results that we talked about making significant changes in the range in quarter four of last year. And so far, we've changed around 75% of the ranges. And this new proposition has landed very well with the customer, evidenced by the 19% year-on-year order rate within the period. In addition to the new ranges, Sophology's merchandising has also been elevated. A good example of this in our showrooms is where we have the new Paramount recliner sofas, which are housed in inspirational home cinema room sets with sofa speakers connected via Bluetooth, the large screen TVs, and we even provide free popcorn to give you the full cinema experience. We've introduced promotional activations such as limited editions and introductory pricing to drive conversion both in stores and online. And finally, post-purchase MPS stores like DFS are strong, again, close to record highs. Now onto our platforms, firstly sourcing and manufacturing. Now our objective across sourcing and manufacturing is to produce goods at the best cost and quality that enable us to offer the best value for money to our customers, whatever the specification. We're proud to operate two of our own factories in the UK and have strong relationships with some of the largest manufacturers in the world. Operating our own factories provides us with a number of benefits. First, we know how much it costs to produce and transport sofas. And with this knowledge, we know exactly what's optimal to manufacture ourselves and what to outsource. It also helps us with our supply negotiations. Second, we can offer shorter lead times to customers than those that are sourced from overseas. Something that's a competitive advantage, particularly at certain times of year, such as I've been in the run up to Christmas. Our scale and strong relationships with our third party suppliers enable us to obtain products at the optimal cost. And through our use of data, we continue to work with our suppliers to identify things like the causes of defects, to improve quality and reduce the cost of repair. And we're seeing this come through in terms of benefits. And our established customer net promoter scores, which are taken six months after purchase, are at record highs. As Marie mentioned earlier, our sourcing and manufacturing strategy has contributed to growing our gross margin 70 basis points year on year. And with the brand operational changes I alluded to earlier, We hope this will facilitate us further leveraging the group's buying scale and support us in reaching our 58% gross margin target. Moving on to logistics, the sofa delivery company, as you know, was formed by bringing together the logistics arms of DFS and the Sofology brands to form the largest two-person sofa delivery network in the UK, providing a first-class delivery and installation service. With national coverage and a seven-day operation combined with the group's scale, we utilize cutting-edge technology such as AI-driven vehicle routing scheduling and data-rich KPI dashboards, all of which combine the sofa delivery company to offer the lowest cost per order in the market and provide the highest levels of service. These are seen in the post-delivery NPS scores, which are at record highs, and the cost base, the cost per order, is reduced by 4% year-on-year despite cost inflation. With capacity available in the network and our anticipated volume recovery, we expect to see further operating leverage benefits in Sofa Delivery Company in the future. In short, Sofa Delivery Company goes from strength to strength and we're super proud of it. Now onto our people. Our people are the group's most important asset. We want to offer an environment for colleagues to develop and progress. Our popular leadership academies offer opportunities for colleague development across various subjects, helping us to strengthen our existing leaders and develop future leaders. Sessions have been delivered to over 350 colleagues in the period, with modules focusing on sustainability and data proving especially popular. Now, creating a great place to work where everyone feels welcome and can be at their best is crucial to our future success. And to that end, we've created six colleague networks which help us unite like-minded people and enable us to become a more inclusive group. Each of our networks has senior leader representation, helping us activate change and engagement initiatives across our growing communities. We are constantly seeking to raise standards and last year we achieved the accreditation in the inclusive employers standard. Onto sustainability, we've made good progress on our commitments where we established a sofa cycle framework back in 2020. We are constantly trying to develop our ambition to become a circular business. We obtained validation from the science based targets initiatives of our near term emissions reduction target, underpinning our commitment to minimize our environmental impact. Given that our emissions are weighted to Scope 3, it's crucial that our partners are aligned with our ambitions, and I'm pleased to say that we've secured commitments from our partners to develop their own science-based net zero plans covering 59% of our Scope 3 emissions. Our scale is significant enough for us to be a driving force in this sector, and through a collaborative approach with our suppliers, we are working to ensure responsible and sustainable use of materials through transparency and traceability. And in the period, we're pleased to confirm that all of our tier two and three suppliers are now leather working group certified, setting important standards, including to ensure our products, for example, are not contributing towards further deforestation. Moving on to outlook. So, Our profit expectations for the full year have increased, and trading in the second half, I'm pleased to say, has remained strong, with actually order intake increasing from the 10% that we achieved in half one. Our year-to-date order intake as of Sunday is 11% year-on-year, following a record winter sale at DFS and continued strong performance in Sophology. Now, looking forward, we are starting to trade against our strongest period last year in quarter four, which was 6% up. So we don't necessarily expect this 11% to continue for the rest of the year. But our performance is better than we expected and is a testament to the customer propositions we developed, our operational execution and the super hard work of our people, for which we're incredibly thankful. Now, assuming lead times remain extended due to the Red Sea closure and that we experience no further supply chain disruption, we do expect to deliver full year underlying profit before tax brand amortization above previous analyst consensus in the range of 25 million to 29 million. Just looking ahead and briefly looking ahead here, looking through the market drivers, and I think our view would be that they're stabilizing or slightly trending in the right direction now. Starting with consumer confidence, you all know. They are slightly below pandemic, but you can see the trend is on the up. And that's encouraging, given that 80% of our business is driven by replacement. Property transactions, the middle chart, they've been in growth now for the last 10 months. And we expect this to feed through as a nice tailwind as those purchases get completed. Finally, looking at the right-hand side, looking at household disposable incomes, and these look to be at an inflection point with the OBR forecasting return to growth. In addition, the ASDA disposable income tracker indicates that as of January this year, households in three of 13 regions now have spending power higher than pre-pandemic levels. We know that savings rates are also particularly high. So in summary, there are starting to be reasons that this market will recover. Although, don't ask me, which I'm sure you will do in a minute, when. Last couple of slides now. I think this one's important. This kind of is the audit trail back to the March 22 capital markets day. And we set out targets back then of 1.4 billion of revenue and an 8% PBT margin. Now, it's just after that time that the cost of living crisis started and interest rates started to increase, cost inflation flowed through. And as we've said before, the upholstery market did contract significantly. And I think this is illustrative. Without action, with a market decline of over 20%, base rates going from less than 1% to 5%, and cost inflation, we would have been in a difficult position making a loss of around 6% if you just took the numbers and then see it. We've been working hard on self-help for the last three years, and that's the middle box. You know, we've set out back in 22 to gain market share in the sofa market, and we've done that. We've achieved over three percentage points, market share gains, and that's mitigated some of the sales loss. I think you've seen in the cost to operate programme, something in the region of 43 million delivered to try and offset base rates and the higher inflation. And that's enabled us to get to a reported margin of 3% in half one. Now, looking forward, resetting and saying this is now going forward into the medium term. We do expect to deliver on our target of 58% gross margins. There's a few things going in our favour, and whether that's Bank of England interest rates or the freight rates normalising, but also we have a lot of self-help ahead of us in terms of cost of goods. So that's a target that we remain committed to, and we've still got more work to do on costs to get to our 50 million target. And if we start to see market recovery and grow our top line, given our market share now and the operating leverage that we have, having taken out all this cost, any revenue growth will drop through at 40%. That'll give us a really accretive margin. So we're therefore very confident we can deliver the 8% PBT margin in the medium term. At least now I'm going to conclude now. So look, I guess, you know, standing back, we're all very aware of the geopolitical uncertainties and the bearing views on the UK economy and what's going to happen in April. But despite all that, what we know is that we've had a good half by focusing on the things that we can control. We've grown our market share. We've improved our gross margins for the fifth consecutive half. We've reduced costs and therefore increased profitability. And that, you know, enables our financial position to improve, obviously, reduce debt. And that's our focus for the next couple of years to bring the gearing down. I'm pleased to say that the second half has started really well, and therefore we've increased our profit expectations for the year. Standing back from my position, having been here 14 years, our customer propositions have never been stronger. Our operations are in great shape. Our customer scores are amazing. Our colleagues are really fired up. And it's nice to see the market stabilising. I wouldn't say growing, but stabilising. And therefore we're confident with a bit of the market recovering, We're confident in the medium term and the targets we set out before. So that concludes our presentation. I'll now invite Marie back up and so we can start the Q&A.