DFS Furniture plc

Okay, good morning, everyone, and welcome to the DFS Group 2025 results presentation. I'm Tim Stacey, Group CEO. I'm here with Marie Wall, our interim CFO, and together we'll update you on our FY25 performance, provide a strategic update, and a future outlook. So I'll now provide an overview of the key headlines before handing over to Marie to discuss the financials. So I'm pleased to report that FY25 was a year where we accelerated our momentum by focusing our energies and our efforts on what we can control, so relentlessly focusing on executing against our strategy. Our customer propositions are in great shape across both our DFS and Sophology retail brands, leading to strong group order intake growth of up 10% year on year and continuing to grow our market share. We have focused on our operational execution and continue to make progress here, with our gross margins up 70 basis points year on year to 56.5%, as we target our return to a pre-pandemic average of 58%. We've achieved a further £25 million of sustainable cost savings in FY25, which means, cumulatively, we have now surpassed our £50 million annual savings target, a year ahead of expectations. The group now has a more efficient cost base to improve profitability across the economic cycle. Growing sales, increasing margins and good cost control has clearly driven profit growth, with profit before tax and brand amortisation increasing by £20 million to £30 million. In addition, we have generated good levels of free cash flow through both profit generation and also disciplined cash management, enabling us to reduce our debt by £58 million and strengthen our balance sheet, with leverage reducing from 2.5 times at the end of the previous financial year to 1.4 times as we target getting back into our 0.5 to 1 times leverage range. Finally, we remain increasingly confident about the group's future prospects. Whilst we're not expecting much support in the market in the near term, we do expect to grow profits through cost and efficiency actions and also our compelling customer propositions. Looking further ahead, we are well positioned to capitalize on any future market recovery. Given our market leading position, our scale, and the operational leverage in the business, the profit drop through from any market support will be very significant. And we fully stand by our medium term targets of achieving 1.4 billion of revenue and an 8% PBT margin. Just moving on to some additional headlines briefly. Both of our retail brands performed well in the period ahead of the market. DFS's order intake was up 9% year-on-year, supported by three key drivers. Firstly, our exclusive brand sales, which reached a high in the period of over 40% of our sales mix. Second, a focus on new product development. And finally, our interest-free credit offer, which is market-leading. The Sophology brand has performed incredibly well in the period, with order intake of 16% year-on-year. And the product range changes that we made at the end of the last financial year have proved very effective. Having established the foundations in our home business, we have now started to accelerate our marketing investment to raise awareness with customers of our offer. And we've seen an encouraging order intake performance in quarter four of over 20%, and we'll continue to invest in this key area of growth for us in FY26. Finally, the brands have been supported by our operational platforms working efficiently and effectively. Strong operational performance across the entire customer journey have collectively resulted in us achieving record established customer net promoter scores. And this has been achieved by the hard work of our fantastic, passionate and dedicated colleagues, combined with an investment in data and technology, which provides us with insight and enables us to improve our decision making and deliver a great customer experience. So in summary, a good performance, significant profit growth, and our customer propositions and operations in great shape as we enter FY26. I'll now hand over to Marie, who will cover the financials.

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. We achieved revenue growth of 4.4% year on year in a market which has been subdued amidst macro uncertainty. Our underlying profit before tax and brand amortization of 30.2 million is up 19.7 million year on year, and our underlying basic earnings per share of 9.2 pence is up 7.7 pence. Now, this improvement is driven by the revenue performance, 70 basis points of gross margin expansion, and the success of our Cost to Operate programme, along with lower depreciation interest charges resulting from disciplined cash management and lower levels of net bank debt. We have continued to focus on deleveraging to strengthen the Group's balance sheet, with net bank debt decreasing by 58 million to 107 million and bank leverage decreasing from 2.5 times at the previous year end to 1.4 times as we progress towards our 0.5 to 1 times target range. To summarize, FY25 was a year of profitable growth, delivering strong cash returns and a significant improvement in leverage. Moving on to our sales performance, and the group achieved long, strong levels of growth in a market that was marginally down in value terms year on year, and a propriety banking data indicates both our brands grew their market share. Tim will talk to this a little bit later on today. The order intake when measured on a comparable 52 week versus 52 week basis was up plus 10.2%. The strong momentum maintained from half one into the second half and similar levels of growth at around 10% experienced in each half. DFS performed well with like for like order intake growth up 8.7% as our exclusive brands resonated well with the customer. These brands are enhancing our customer proposition. with perceived quality and on-trend designs contributing to growth in both average order values and order volumes. Syphology also performed well, and we were pleased to see the impact of the range in price changes made at the end of the last financial year, driving stronger conversion rates and translating into like-for-like order intake growth of plus 16.2%. on a reported basis group order intake grew by 8.7 percent reflecting the impact of the 53rd week in fy24 moving on to sales and our gross sales increased plus 5.8 percent which is lower than reported order intake growth now this is due to two factors firstly easter fell later in the year meaning that some orders placed in this high demand period could not be manufactured and delivered in the financial year And secondly, there was a shift in customer orders to ranges with longer lead times. As a result, the group ended the year with a resilient order bank coming into FY26. Revenue, which we show at the bottom of the table, is reported after deducting VAT. The cost of providing warranty products and interest-free credit subsidy costs grows sales. Revenue growth at 4.4% was lower than gross sales growth of 5.8%. Now, this was driven by the decision in DFS to offer customers extended 48-month interest-free credit in key periods to increase affordability and also to drive conversion and sales in a softer market environment. In summary then, a strong top-line performance outperforming the market through our relentless focus on our market-leading customer proposition. Now on to our cost to operate programme, and I'm pleased to report that we have had another good year of progress, sustainably reducing our cost base through this programme. At the end of FY23, we set ourselves the target of 50 million annualised efficiency savings by the end of FY26. As at the end of FY25, we have achieved 53 million of benefit, with 25.5 million delivered in FY25, on top of the 27.5 million we delivered in FY24. This means we've achieved the 50 million target one year ahead of plan. So let's take a look at some of the components. In FY25, we achieved a further 10.5 million of gross margin benefit, reflecting ongoing progress and rationalising both our own manufacturing operations in FY24 and in FY25, consolidating supply across our external manufacturing partners. This has both reduced the cost of goods sold and improved quality through ensuring we are producing our products in the optimal locations. In addition, we have improved processes to clean through cancelled orders and damaged items more effectively. Moving on to operating costs, where we have delivered a further 15 million of cost benefits. This has been achieved through improving the efficiency of our operations across our retail and customer service teams, our group support functions, and the sofa delivery logistics operation. Key initiatives within this have included restructuring to leaner operating models, improving and streamlining our processes, enhanced procurement and using data and insight dashboards to drive operational efficiencies. The efficiencies coming through the sofa delivery company continue to be a standout and Tim will elaborate on this a little later. In addition, we've continued to reduce our property costs through property lease re-gearing opportunities. These cost efficiency initiatives have contributed to us delivering over a 40% drop through to profit from the incremental revenue generated in the period. And these have been achieved in a sustainable manner and importantly, without compromising the customer proposition or the capacity of the group to leverage market recovery. And again, Tim will mention this a little bit later on in our presentation. Overall, we are very pleased with the progress we have made. The group is now operating with a lower cost infrastructure which will strengthen future profitability through all stages of the economic cycle. The cost discipline we have implemented, along with the cost-conscious culture we have fostered, will help us navigate future inflationary pressures, which do remain significant. So on to gross margin. Gross margin as a percentage of revenue includes by 70 basis points year-on-year to 56.5%. This represents a third consecutive year of growth and good progress towards our 58% target whilst ensuring that we continue to offer customers great value and innovative quality products. In absolute terms, gross profit increased 30.9 million year on year to 581.7 million. So looking at the individual building blocks, the revenue growth resulted in an incremental 23 million of gross margin with the balance driven by margin rate improvement The 70 basis point margin rate improvement resulted from strong progress on our commercial product margins in combination with a positive contribution from foreign exchange. Together, these more than offset the adverse impact from freight rates. Our product margins improved 140 basis points of 14.6 million and 10.5 million of this resulted from our cost to operate program, as I mentioned earlier. We benefited from an improved US dollar rate applied to our Far East purchases, The average dollar rate paid through the period was five cents favorable year on year, resulting in a 5.2 million or 50 basis point margin rate benefit. Freight rates remained elevated over most of the year linked to the Red Sea closure and averaged over twice the amount of the previous year, resulting in 11.9 million or 120 basis point margin drag. It's worth noting that every thousand dollar movement in freight rate per container impacts our annual freight cost charge by circa seven to eight million pounds a year. So we're encouraged that our current gross margin would be at the 58% target if freight rates are back at the long-term average levels of one and a half thousand dollars per container and interest rates settled at market consensus expectations of around three and a half percent. Now we obviously cannot control these elements and we see further opportunities to continue to strengthen our product margins through our value optimization initiatives. Moving further down the P&L, our operating costs, inclusive of depreciation and interest charges, increased 11.2 million a year to 551.5 million. Walking through the chart from left to right, the absolute cost increase is primarily driven by a combination of volume, which has increased with the growing revenues of the group, inflation, which is predominantly driven by wage inflation, and the cost of the annual bonus, and cycling some rates rebates, which we received in FY24. We've also invested in our customer proposition with the launch of new exclusive brands and investments in marketing to drive growth in our home proposition. Our cost to operate programme has enabled us to offset a significant proportion of these cost increases through a 15 million year-on-year cost saving, which is what I talked about a little earlier. On top of this, interest and depreciation charges have reduced by 4.9 million. Within this, finance costs have reduced 3 million year on year, primarily as a result of our lower average net debt throughout the year. The group has reduced capital expenditure from historical average levels of around 30 million to around 20 as we prioritise reducing our debt. This recent low level of capital investment is the main driver of the reduction in depreciation that we've shown. So turning to cash flow. Free cash flow generated in FY25 was 57.8 million, an increase of 72.9 million year-on-year driven by strong trading, working capital inflows due to a strong order intake and sales performance in the final quarter, and lower interest and non-underlying charges. Looking down the cash flow table, our strong free cash flow generation has been supported by a disciplined approach to capital expenditure, as I previously highlighted. Maintenance capital levels have been maintained at our historical level of 1.5 to 2% of sales. Growth investment has been prioritised towards proven opportunities. And in FY25, these have been focused on showroom refurbishment, enhancements to showcase our new exclusive range, such as Ted Baker and Lazy Boy and Deerfest. Interest costs reduced 4.4 million year-on-year to 14 million, reflecting lower average levels of net bank debt in the period and the non-recurrence of the financing costs we incurred in FY24. Corporation tax payments of 3.7 million were low relative to our profit performance, and this is due to using historical overpayments. Lease liability payments reduced by 3.7 million where the prior year was impacted by additional payments which fell into the longer 53 week accounting period. There was a significant working capital inflow in the year. The majority of our sales are made to order and as such we operate with a negative working capital model with customer deposits and final payments occurring before payments fall due to our suppliers. The significant working capital inflow reflects the strength of our order intake and sales performance in the last quarter and one fewer VAT payments. Finally, the total cash flow for the year is supported by not funding a dividend payment during the financial year as we prioritise deleveraging. As a result of our disciplined cash management, our bank leverage has reduced significantly from 2.5 times last year to 1.4 times at the end of FY25. So I'll conclude today with capital allocation. In summary, we remained focused on strengthening our balance sheet. The group's capital allocation priorities are for the group to operate with net debt levels of 0.5 times to 1 times trailing 12-month EBITDA, to invest to maintain the group's asset base and support future growth, and to pay ordinary dividends with a dividend cover of 2.25 times to 2.75 times earnings per share and to make special returns when leverage is expected to fall below the lower end of the leverage target range. Whilst our financial position has strengthened due to improved profit performance and disciplined cash management, our current leverage remains outside our target range. So given the near-term economic uncertainty, we have determined that to build further balance sheet resilience, the focus should be on further reducing net debt. Therefore, we have taken the decision not to recommend a final dividend. We will continue to maintain strong capital discipline to bring our leverage into our target range. Now we do remain committed to returning to the dividend register and providing sustainable shareholder returns and we will make a decision in March 2026 on the payment of an FY26 interim dividend based on our profit and leverage expectations for the full year at that time and the future outlook for the business. So in conclusion, I'm very pleased with our FY25 performance, both in terms of our profit growth and the deal leverage we have achieved. Our well-invested customer proposition and the success of our cost-to-operate programme leave us well-placed to capitalise on future market recovery. We will, however, continue to plan prudently, focusing in the short term on growing profits through our commercial initiatives, cost actions and further strengthening our balance sheet resilience through robust cash discipline. I will now hand back over to Tim.

Okay, thanks Marie. So I wanted to sort of step back really and just kind of explain a few of the enablers that drive our strategic progress. And we focus on three key areas that underpin our business model. First, it's around leveraging our vertical integration and scale. Second, it's around utilizing data and technology. And finally, it's around harnessing our unique people and culture. And these combine to drive our underlying performance. Through leveraging our scale, we aim to provide a differentiated customer experience in order to drive sector-leading gross margins. Now, the group has a 39% market share by value. based on global data research with sales densities over three times that of our nearest competitor. Given our scale, well-known brands want to work with us to develop unique sofa ranges. In DFS, we work on an exclusive basis with high-quality brand partners that resonate strongly with our customers, including, for example, French Connection, Jules, Country Living. Our recently launched partnerships with Ted Baker in FY24 and Lazy Boy in FY25 are all performing well, and our exclusive brand sales mix has reached a record high of over 40% of total DFS sales. Our supplier partners across the world offer us priority to all new ranges to sell on an exclusive basis, ensuring that we stay ahead of the curve in terms of new product development and innovation. In terms of our own manufacturing, we produce around 20% of what we sell through our own UK factories, and our scale enables them to operate really efficiently. They also enable us to offer short lead times to customers and, importantly, insight to help us optimize cost pricing from ranges sourced from our third parties. The scale of our buying power in this sector enables us to source efficiently and deliver industry-leading gross margins. And as Marie mentioned, we've grown our gross margins this year by 70 basis points. We're now looking for further growth as a result of combining the commercial buying teams of DFS and Sophology under one commercial leader. And that will enable us to share best practices and further leverage our buying scale in future. Finally, we're a major customer of our interest-free credit lending partners, and this enables us to offer a market-leading proposition. This year, we offered IFC on a 48-month term to customers in DFS to drive demand in key periods, especially with the market being relatively subdued. Moving on to vertical integration, this enables us as a group to capture value across the entire supply chain. We have a highly skilled, experienced and creative design team that research and identify emerging trends in the wider home and fashion categories and then go on to design products that are not only right for customers, but they're efficient for us to manufacture and deliver. As one of the largest manufacturers of sofas in the UK, we ensure that we run our factories as efficiently as possible. And importantly, we integrate that operation with our logistics business on a just-in-time basis. This reduces the working capital invested and increases the speed to market and delivery for customers. The sofa delivery company, our logistics operation, is the largest two-person delivery company in the UK. It was, again, a real standout performer for us this year. It delivers for both of our retail brands using the same infrastructure across seven days a week and offers an installation and delivery service which is absolutely focused on providing great customer service. This is evidenced by record post-delivery MPS scores achieved at the same time as reducing our delivery cost per order despite inflationary cost headwinds. Finally, we have sector-leading customer service and repair teams who use the latest technology to triage customer requests and, if necessary, deploy one of our super-skilled 300 repair people to fix any issues for customers. The control of the end-to-end customer journey means that we can deliver a great experience for customers and also operate incredibly efficiently compared to our competitors. And as I mentioned earlier, this has led to record established customer net promoter scores and help fuel our reduced costs. Now, we use data and insight across our business, and it drives innovation, better decisions, and a continuous improvement mindset, both to customer service and operational efficiency. And we've made significant progress in the last few years in simplifying how we store, access, and connect data by developing a hub that sources data from 85 different sources, internally and externally. We use data right across our business, for example, to power our commercial offer with space-based productivity models and detailed price elasticity scenario planning management tools that help our buying teams set the promotional and pricing strategy in order to optimize performance. We also use data in our marketing to improve the efficiency of our spend, and our team recently won the Bloomreach Data-Driven Leader Award, recognizing our effective and impactful use of customer data and analytics. Another example is in our retail stores, where we're able to significantly improve our overall store-by-store performance through the use of store-level dynamics balance scorecards. Now, this improves the visibility and provides real-time insight across our people, processes, customer, and financial lenses, store-by-store. And finally, in the sofa delivery company, we have powerful dashboards that enable us to drill down in detail to drive performance. For instance, we can review the individual real-time van crew performance at any day, at any time. We also use dynamic AI-driven routing software to improve route planning. And the combination of the dashboards and these insights has helped us deliver a 10% efficiency improvement in Sidelco and reduce failed deliveries to record lows. Moving on to technology, we continue to innovate with more technology included in our sofas than ever before, including our recently patented heated seats, wireless charge points, wine coolers, speakers, and even vibrating seats, including our recently launched CineSound ranges. These are all performing incredibly well. We continue to look to improve the customer journey in order to provide a seamless experience across all of our channels. In DFS, we recently launched an AI driven personalized homepage on our website that changes the content based on where the customer is on their journey. We're also using a CRM platform in Sophology to develop AI-driven email marketing campaigns, and this improves the personalization of individual communications to customers, depending on where they are in their journey. And there's some early indications that this has yielded significant conversion rate and average order value increases in Sophology. Our proprietary intelligent lending platform, ILP, now has multiple interest-free credit lead lending partners across both DFS and Sophology. This enables us to achieve high first-time accept rates with customers in order to help us manage subsidy costs. It shortens transaction times and enables our in-store colleagues to improve conversion, especially at busy times. In our customer service operation, we're enhancing colleague written emails by using AI to draft written responses to customer service tickets. And this has helped reduce resolution times and increase colleague productivity. Now delivering an exceptional customer experience requires a dedicated and passionate workforce. And it's the commitment and talent of our people that truly drive our business forward. We take great pride in the unique culture that we've cultivated across our group. We have deeply ingrained customer-led values and a set of leadership behaviors that define our culture. This drives high levels of engagement and ultimately, we believe, performance. We constantly listen to our colleagues through our Your Say survey, and we've made good progress with colleague engagement, stepping forward 12% year on year. Our colleagues tell us that they feel engaged and proud to work for the group, and that's evidenced by voluntary colleague turnover reducing to 15%, which is relatively low in our sector. We invest in our colleagues to help equip them with the right skills and to develop them and help them progress. And I'm very proud of our senior leadership development programme, which focus on developing our most senior leaders in the business, over 30 graduates in the last 12 months. In addition, our group leadership academy offers opportunities for colleagues to develop and strengthens our future leaders in terms of the pipeline. And that's proved really popular with more than 500 of our managers attending workshops in the last year. Now, to help ensure colleagues stay with us and thrive with us, we want to create an environment where everyone feels welcome, valued and respected. Diversity in our teams helps us in many ways, from obtaining different perspectives, increasing creativity and innovation, and being better able to serve the communities in which we operate. Our six colleague networks connect like-minded people and help us activate change and engagement initiatives identified in our inclusion agenda. We're constantly seeking to raise standards here, and this year we've achieved the strategic level in the diversity in retail inclusion maturity curve. We also want to ensure that our people can work for us whilst managing their busy lifestyles. So recognizing this, we've adapted the retail model in DFS to increase the availability of part-time roles. In FY25, DFS's part-time mix was 58%. Finally, we're working towards equal gender representation in our business and are making progress here with 41% of senior leadership roles now held by female colleagues. Onto sustainability. Now, we are committed to reducing our impact on the environment, and in March 2025, we announced that we had obtained validation from the Science-Based Targets Initiatives, or SBTI, of our emissions reduction target to cut our emissions by 90% across scope 1, 2, and 3 before 2050. Now our emissions are weighted heavily towards Scope 3, and towards that we launched an In This Together engagement campaign with our suppliers to set their own science-based targets. Now initially we sought buy-in to cover 20% of our Scope 3 emissions, and we surpassed this by achieving support for 59%. And I'd like to thank our suppliers for working collaboratively with us on this important journey. Tackling our Scope 1 emissions is proving challenging due to the significant investment and innovation required to upgrade our legacy electricity infrastructure and also really the limited availability of heavy electric stroke hydrogen vehicles in the market. However, we remain committed to our reduction path and we are working to address these challenges in the coming years. This year, we've introduced an electric vehicle only policy for our company car scheme, and that will be rolled out in the next four years. And we've also launched EV and hybrid vehicles to our repair and service managers on the road. We're making good progress to ensure our business can make the most of the opportunities that a circular economy will bring and to deliver sustainable performance and are working towards ensuring responsible and sustainable use of materials through transparency and traceability across our supply chain. So pulling it all together, as a result of our strategic progress, we have delivered on our key financial focus areas of growth, margin progression, and cost optimization. We've talked about our growth sales being up 6% in a relatively subdued environment, our margin increasing by 70 basis points, and delivering on the cost savings a year ahead of plan. Collectively, that's helped contribute towards growing profits by £20 million year on year. As Marie mentioned, when we start to deliver profits with good capital management, we deliver strong, free cash flow in this business, and it's managed to strengthen our balance sheet significantly in the year. Looking forward to the future. If we look at the market drivers, they are delicately balanced. Some are stabilizing, some are trending in the right direction. Starting with consumer confidence on the left-hand chart, both the overall index and also the climate for major purchases scores have stabilized somewhat, but they're still below pre-pandemic levels. If you look at the middle chart, property transactions have been in year-on-year growth now for 15 months, and we're starting to see that level of increased activity feeding into upholstery purchases. I do acknowledge there's been a recent drop-off in the last couple of months, but it's still in growth year-on-year. Looking at real household disposable incomes, now these are improving and expected to continue to grow, but consumers are clearly saving rather than spending at the moment, and savings levels remain at relatively high levels. Finally, clearly we acknowledge that the autumn budget may be lingering on consumers' minds, and certainly is around here, and potentially dampening appetite for big city items in the near future. So look, in summary, based on all the data that we see externally and also internally, we're not currently expecting the market to recover significantly in the short term. But that said, we look forward to FY26 in a positive mindset. We do expect to grow profits this year in FY26, but continue to focus on what we can control. First, by enhancing our customer propositions, and second, through continued gross margin progression, and finally, by disciplined cost management that Maurice talked about earlier. Trading so far this year, 12 weeks in, is bang in line with our expectations. Order intake is in growth year on year. Margins are going in the right direction, i.e. up, and costs are being managed. In terms of capital investment, we expect to continue to incur relatively low levels, but up slightly year on year to around 24 to 28 million. And that's reflecting at least one new Sophology showroom, which we've opened recently in Carlisle, but also additional showroom refurbishments across both of our retail brands. It's worth noting that we're currently hedged at 3 cents favourable to our FY25 actual rate, and every cent is worth around £1 million of profit improvement, and that will help contribute to our gross margins. We do expect to incur around £15 million of inflation in FY26. Just for context, that's £5 million higher than FY25, and that increase is primarily driven by the full-year impact of the employers' national insurance increases and also higher business rates that are due to come in in quarter four. Taking all of these factors into account, we are comfortable where the current consensus is at this early stage of the new financial year. So turning to medium term profit growth, we see three key areas of focus. The first is what I've said before, is continue to focus on what we can control to improve our profitability. Specifically, we'll continue to invest in our product development, continue to leverage our scale, and offer great value for money for customers, and really offer a leading customer experience. In addition, we have white space in front of us in terms of Sophology, and we're looking to increase the Sophology showroom estate by up to 15 new showrooms, and that's a 25% increase on the current Sophology estate. We have 150 basis points of margin to go for, and we're targeting through improved sourcing, as Maurice talked to earlier, and improvement this year, and that will continue as we optimize our margins, but also our costs. Second, we know from all the data we see that market volumes in the upholstery sector are around 20% below the pre-pandemic levels. We do fundamentally believe that the market will recover. And when it does, the profit uplift we will get will be very material. Given the cost that we've taken out of the business, the operational leverage that exists, and our capacity that still exists, The vertically integrated business model will handle much higher volumes and the profit drop-through will be around 40% of incremental revenue, which will be significant. This should convert a cash to a healthy rate of around 75% of PBT, given our relatively low maintenance capital requirements and our negative working capital model. Finally, we have growth opportunities beyond our core upholstery business. We have a great asset in the sofa delivery company, and we see opportunities to leverage that further. We're currently trialling providing two-person delivery service to third-party retailers through the sofa delivery company infrastructure. Now, we will believe that there will be additional opportunities, especially with seasonal furniture retailers and lower-volume sofa retailers, to offer great customer service and also maximise the utilisation of the assets, and this will generate incremental revenue. We're also targeting to grow our share in the non-upholstery home segment from a 1% market share currently to 4%. And we're starting in the 3 billion pounds beds and mattresses segment. We've established all of the foundations to enable future growth, including the rollout of our warehouse management system. And we've also started to expand our exclusive brand partners into upholstered bed frames. We've consolidated supply and improved our gross margins. And as I mentioned, we're now accelerating our investment in marketing to increase customer awareness of our home proposition. We're targeting 100 million of incremental revenue in the medium term. Last couple of slides. I showed this slide back in March, but I just wanted to reiterate what's happened since our last capital market stay, which seems a lifetime ago in March 2022. We set out targets, medium term targets of 1.4 billion revenue and an 8% PBT margin. Now, it wasn't long after that that the cost of living crisis started, interest rates started to increase, and that caused the contraction in the upholstery market segment. Illustratively, if we'd have not done anything as a business, we'd have been in a significantly different position as I stand here today, in a loss-making position of minus 6%. However, we've grown our market share and we've taken significant action on costs in a sustainable way and become more efficient and effective. And as a result of these, this year's results are around 3% PBT margin in FY25. Looking ahead, there are two further building blocks that take us back towards our 8% target. Firstly, we expect to deliver our target of 58% gross margin. That's 150 basis points on what we've reported today. And secondly, given the significant market recovery potential, we expect to further grow our top line. Given our established asset base and our existing capacity of 40% revenue to profit drop through, that will be achieved, as I mentioned earlier. And we only need the market to recover by 60% of what is lost to get to that 8%. We're therefore confident that we can deliver the 8% PBT target in the medium term. Okay, I'll finish with this slide. I think we had a good year, focusing on what we can control, executing our strategy. We've grown our market share, increased our margins, got to the cost target year ahead of plan, reduced our leverage, and that's been in a relatively subdued environment. I think, having been here 14 years, I can safely say that our customer propositions have never been in better shape, and all elements of our business model are working. Vertical integration really leads to established customer scores being at record levels, and I'd just like to, again, thank the teams for that. The new financial year, we're only 12 weeks in, but it started in line with our expectations, despite the relatively warm summer, and we will deliver profit growth. We expect to deliver profit growth in FY26. In the medium term, we do see significant profit growth potential, and we're confident, with a little bit of support from the market one day, we'll deliver on our medium-term targets. Okay, that concludes the presentation. I'll now invite Marie back up so we can start a Q&A. Jonathan, straight in.