Halfords Group plc

Good morning everyone and welcome to the Halfords Group interim results for the 26 weeks ending the 29th of September 2023. I'm Graham Stapleton and joining me today is Jo Hartley, our CFO. In terms of the agenda for this morning, Jo will begin today's presentation by taking you through our financial performance. I'll then provide you with an update on the progress against our strategy and this year's plan before moving on to the outlook for the remainder of the financial year. You'll then have the opportunity to ask questions at the end. Before I hand you over to Joe, I thought it would be useful to start with a quick overview of the first half of the year. We've made a very strong start to the year with outstanding sales and profit growth. That's despite some poor summer weather and the fact that two of our core markets, cycling and tyres, have underperformed. In a year of continued macroeconomic headwinds and significant inflation, negatively impacting gross margin, we have maintained our focus on what we can control and here we have made good progress. Firstly, we've grown share across all four categories and exceeded our own market share targets in three of them. Secondly, we've delivered over 16 million of cost and efficiency savings in the first half. That's more than half of our targeted savings for the year. And Joe will come back to talk about that in a detail in a few minutes. And thirdly, I'm really delighted to say that the strategic investments we've made across motoring services have delivered a significant uplift in both revenue and profit in our auto centres business. These results are clear evidence that the strategic shift we've made into the more needs-based categories of services and B2B over the last few years is creating a resilient performance in volatile markets. Our services business now accounts for more than 50% of group revenue and our B2B business has grown over 37% and is now almost a third of revenue. And then finally, outside of our Halfords branded business, a really important highlight for me is that our recently separated Avela business has secured a commercial agreement with Bridgestone, materially scaling our SaaS operation. And I'll return to this later in the presentation. So that's a quick overview of half one. I'll now hand you over to Joe to talk you through our first half performance in more detail. Joe.

Thank you Graham and good morning everyone. Before I start, the usual reminder that all results are post IFRS 16 unless otherwise stated. We've also now reverted to one year comparisons only. The first half of FY24 has continued to be challenging for consumer-facing businesses. Inflation, until October, remains stubbornly high and interest rates remain at 15-year highs, impacting an increasing number of consumers coming off fixed-rate mortgages. Energy bills remain much higher than they were a year ago, and sterling remains significantly weaker than historic averages. We've seen record wage inflation, but consumers continue to be under pressure. Against that backdrop, we continue to focus on what we can control. Our 30 million cost and efficiency programme is on track and being delivered earlier than planned. We've increased market share in all of our categories by remaining agile in how we trade and continuing to offer value for money to customers in a cost of living crisis. And we've continued to optimise our garages business, seeing significant sales growth, utilisation improvements and profit growth. While the consumer environment remains very challenging and forecasting isn't getting any easier, I firmly believe that we're doing all that we can. And on that note, I'm pleased to be sharing a strong set of results for half one. Total revenue growth was 13.9%, supported by the acquisition of Lodge Tyre, which was bought this time a year ago. Like-for-like revenue growth was 8.3%, with particularly strong performance in auto centres at 18% and retail motoring at 8.2% like-for-like, highlighting the more resilient performance of our needs-based spend areas. Underlying profit before tax grew 15.8%, following two adjustments which reduced prior year profit, which I'll cover in more detail later. Within those results, gross margin at a group level was down 210 basis points year-on-year, primarily driven by the retail business, which has seen the most material impact of weaker sterling hedges. We've also continued our emphasis on profitably increasing market share in a challenging consumer environment through competitive pricing and promotions. Operating costs fell 2.1 percentage points as a percent of revenue, despite the significant inflation in energy and wage costs anticipated at our prelims. And this is a result of our continued focus on cost and efficiency, as well as the benefit that comes from significant sales growth and leveraging of our fixed cost base. The absolute highlight though has to be our auto census performance, which saw EBIT of 10.9 million, an increase of over 14 million versus half one 23, showing the considerable progress we've made in this area. I won't dwell on slide eight, which shows those same results in a tabular format, except to say that the 13.9% revenue growth has contributed over a hundred million of additional sales in half one alone. This highlights the continuing scale of change in our business. Half-won revenues of £870 million are now almost the same size as our entire retail business and in line with the total sales of the group in 2013. I'll now explain two restatements to last year's reported profit before tax, which have had the combined impact of reducing profit in the first half of last year by £10.6 million. Neither of these adjustments had any cash impact. Firstly, half 123 profit has been restated to correct FX accounting on hedged instruments within our retail business. Accounting for hedged FX instruments is inherently complex. The significant volatility in sterling around the time of our interims last year exacerbated this. Following a detailed review of FX accounting that was supported by external advisors, it emerged that we'd overstated half one profit last year by 5.4 million with a corresponding understatement in the second half of last year. There is no impact on full year 23 PBT from this adjustment. Secondly, in auto centres, half one 23 PBT has been revised downwards by 5.2 million. At the start of FY23, we entered into a new agreement with a third-party logistics provider of wholesale tar and distribution services. This enabled us to benefit from significantly better cost prices through negotiating directly with manufacturers and cutting out wholesale margins. The cash flows associated with this agreement result in the arrangement being disclosed to supplier financing, although this was not the commercial intention. The reconciliation complexity caused by this arrangement, material growth in purchase volumes and stockholding, and intercompany transactions between the enlarged group contributed to an understatement of creditors and cost of goods sold. The impact on the full year numbers for FY23 was 7.3 million. Appropriate steps have been taken to gain assurance over the half-year 24 reported results. A full review has been conducted, appropriate processes and controls are put in place, and in addition to our own auditors, a Big Four accountancy firm have supported us in ensuring half-one FY24 reported results are correct. I'm therefore confident this will not recur. Finally, to reassure, neither adjustment has any impact on our mid-term CMD targets or guidance for FY24. We remain confident in our growth ambitions for auto centres and the strong profit growth in this area of the business, which we're reporting today, supports the strategy. Slide 10 bridges profit between half 1.23 and half 1.24, showing the drivers of very strong underlying growth. I started by showing the 29 million of profit reported in half one last year, and then the impact of the two restatements that I've just described, which reduced half one 23 profit to 18.4 million. In the first half of this year, we've seen just over 20 million of inflation driven by energy wage increases and the impact of FX hedges, partly offset by lower freight rates. It's worth pausing here to notice that this inflation effectively wipes out all the profit made in the first half of last year. Markets have been mixed and we've seen a year on year headwind of 2 million driven predominantly by further volume decline in the cycling market. We've invested around £4 million in price in our retail business to ensure we continue to remain competitive in a challenging market, and that is in part how we've managed to gain share in every single market in which we operate, resulting in £6 million of profit growth through share gains. AutoCentre's optimisation and growth initiatives were also a very key contributor to profit growth in the period, adding a further £7.2 million year-on-year, which I'll cover in more detail later. but the biggest driver by far has been our focus on driving out costs and improving efficiency. In total, savings of over 16 million have been realised through our Better Buying programme and reducing operating costs across the group. At the start of this year, we outlined to you the 30 million of inflationary headwinds we expected to see in FY24 from FX, energy costs and wage costs, partly offset by reduced freight rates. In the first half, we've seen around 20 million of this inflation, with the remainder expected to be seen in half two. I'll just comment briefly on the two biggest inflationary headwinds, FX and wage costs. Firstly, FX. The average FX rate in cost of goods sold has fallen from 133 in half one FY23 to 126 in half one FY24. You'll also recall we saw a 4.3 million benefit in half one last year from FX gains on derivative instruments that did not qualify for hedge accounting. Whilst this did not impact full year 23, we do see the year on year impact during the first half. Overall, FX was a 13 million year-on-year headwind in half one, and it will continue to be a headwind in half two, albeit a much smaller one. For FY25, we're 46% hedged at 123.54, broadly the rate assumed in our capital markets day projections. The other very significant inflationary headwind has been wage increases, which have driven 8 million of cost inflation in the first half of the year. We expect to see slightly lower wage inflation in the second half. Looking further forward into FY25, the recent announcement on minimum wages will bring wage inflation around £5 million higher than that which we had assumed in our capital market day projections. As we described at our prelims, we focused on driving cost and efficiency savings to offset these headwinds. The programme in total targets 30 million of savings for FY24, of which 16.6 million have been delivered in the first half across product cost reduction, organisational design, property and warehousing, and in goods not for resale. Around half these savings are expected to come in goods for resale, driven by our externally supported Better Buying programme. In half one, we delivered almost 6 million of better buying savings with benefits realised earlier than anticipated. These have come through database negotiation, tenders for our own label business and supplier rationalisation, initiatives which will continue to deliver for years to come. Organisation design and outsourcing has delivered 4 million of savings as we further streamlined our support centre, outsourced some technology engineering roles and driven efficiency savings across stores and garages. In property, 20 retail lease renewals have been completed, reflecting on average 20% reduction in lease costs. Savings in this area amounted to 3 million in half one. This also includes the benefit of lease renewals completed last year. Finally, our Goods Not For Resale programme has delivered two and a half million of savings in the year to date. Almost all our spend goes through a competitive tendering process as we seek to reduce costs or mitigate inflation. And in addition, we've simply stopped spending money in areas where we do not see significant value. So let's move now to go into a bit more detail on our retail business. And it's here that we've seen the biggest headwinds in terms of both inflation and the consumer markets in which we operate. Overall sales were up 4.1% on a like-for-like basis. As we've seen in previous reporting periods, there's been a marked division between performance in needs-based spend areas and performance in more discretionary spend categories. Retail motoring products saw strong life-like sales growth of 8.2%. This was driven by a growing market and a very strong market share performance as a result of the investment in price we made last year and our expansion into car parts. We saw both volume and average selling price growth across half one, resulting in a very strong sales performance. Retail cycling, being discretionary in nature, was much more challenged. The market fell 6% in half one, and despite our market share growth, this resulted in a 2.8% like-for-like sales decline. Retail margins fell 330 basis points year-on-year to 45.8%. Given the significant decrease in margin rates, I've bridged the movements on the right-hand side, and here you can see the very material impact of FX, which drove 270 basis points of the decline in margin. Operating costs grew only 0.4% year on year, with our cost and efficiency programme mitigating underlying operating cost inflation. Overall, retail EBIT was 19.6 million, down 9.8 million, We expect CBIT in half two to be higher than half one and up year on year as the benefits of our better buying programme come through, FX headwinds reduce, price investment annualises and year on year benefits in freight rates come through. Moving now to the auto centres business and the standout success story for half one. Total revenue grew 33.9% driven by the acquisition of our commercial fleet services business Lodge in October 22. The like-for-like business saw very strong growth at 18% despite a 0.2% decline in the tire market. This came as a result of increases in the volume of jobs as we grew market share and an increase in average selling prices as dynamic pricing was introduced and prices were optimized more generally. Light for light growth was also supported by some MOT volume shifting back into half one as new car registrations begin to soften the impact of the MOT deferral put in place by the government as a result of COVID. Gross margins declined 60 basis points, driven entirely by the impact of the lodge acquisition and the fact that lodge sales are higher mix of lower margin tyres. Operating cost growth at 21.2% was considerably below sales growth as we leveraged the fixed cost base and saw significant improvements in utilization, all of which resulted in operating profit growing to 10.9 million, surpassing the profit delivered in the whole of FY23. The drivers of profit growth are bridged on the right-hand side of the chart, but in summary, we're doing exactly what we said we'd do at the CMD, leveraging the platform we've built. We're profitably taking market share, driving cost and efficiency through better buying and utilisation, optimising our pricing, and seeing the benefits of our most recent acquisition, Lodge Tyre, come through. Looking forward, in half two we expect year-on-year profit growth, albeit at a rate significantly lower than that which we saw in half one as we annualise the lodge acquisition and see the impact of the shift in MOT volumes from half two into half one. I'll now cover our cash and balance sheet movements in the first half of the year. Net debt at the end of half one was £47 million compared to a year-end position of £1.8 million. Operating cash flow of 64.3 million was 10.4 million lower than the same period last year, primarily due to the normalisation of supplier payments timing, which flattered the year-end position, as I described at the prelims. You can also see an outflow of 10.3 million relating to the purchase of shares through our EBT to satisfy employee share safe schemes that matured this year. Our tax and interest payments totaled $16 million in the first half and our lease payments came to $45 million while we invested $22 million in CapEx and paid out $15 million for the FY23 final dividend. We expect to cash inflow in the second half of the year and as such expect to be in a lower net debt position by the end of the year. As a result of the increase in bank debt, net debt, including lease debt, grew versus the FY23 year end, closing the half year at £372.3 million. Leverage excluding lease debt was 0.3 times and including lease debt was 2 times, within our guided range of 1.8 to 2.3 times post M&A. Slide 20 serves as a reminder of our capital allocation policy, which remains unchanged. I'm also pleased to announce that our proposed interim dividend is three pence per share in line with that declared this time last year. Our dividend policy remains to pay a dividend that's covered one and a half to two and a half times by underlying profit after tax. So to summarise, we are seeing the benefits of following the strategy we laid out at our capital markets day. We are profitably growing market share, We're combating inflation through our focus on cost and efficiency, and we're optimising the investments we've made, delivering a much more profitable auto centres business. And had the markets performed as we expected, we would be delivering even better results today. As we look further forward, we remain confident in the strategy we set out at our CMD in April. When the markets recover, we'll be exceptionally well-placed to benefit. And with that, I'll pass you back to Graham to update on our strategic progress in half one and our outlook for the balance of the year.

Thanks, Jo. So as you can see from Jo's summary, against some challenging headwinds, we've made good progress in half one. As I mentioned at the beginning, we have continued to focus on the controllables, delivering cost and efficiency savings, growing market share and investing in our strategically important motoring services and B2B businesses. I'm now going to cover in a bit more depth how we've progressed against our strategy. And I'll start with a reminder of a slide we shared at the prelims in June, which captures the essence of this year's plan. As you can see, in a year of continued headwinds and economic uncertainty, we've centered on what we can control, and that is how we fully optimize our platform. We said that this year we would leverage the investments we have already made in our unique digital and data-enabled platform, and that we would ensure customers make the most of our differentiated and highly convenient shopping experience across our combination of stores, garages, and mobile vans. This forms the basis for year one of the mid-term plan that we set out at the CMD, which you can see here on the slide. We outlined our intent to deliver 1.9 billion of revenue, 90 to 110 million of PVIT, and a 5.5% operating margin. As you can see, we said that the majority of our profit growth will be delivered by a combination of market recovery, increased market share and a focus on cost and efficiency, which together more than offset the significant inflation. So how are we doing against the plan? Joe has already covered inflation and cost and efficiency in some detail. So I'm going to move straight on to talk about how our markets are developing and the progress we are making in market share. It's fair to say that whilst both inflation and cost and efficiency have performed as expected, some of our markets have not, particularly towards the latter part of quarter two of the first half. At the prelims in June, we showed you this slide, which sets out what we expect in year one of the CMD plan. I won't recap the detail now, but broadly we said we expected retail motoring would see market growth as the car park continues to age. In cycling, we predicted further contraction in market size this year as customers continued to be cautious around any high ticket discretionary spend. In consumer tyres, we predicted market recovery as miles travelled continued to increase and customers are no longer able to defer essential maintenance. And finally, in motoring services, we expected the market to remain broadly flat. On the next slide, you can see how this has played out in half one. It's a mixed performance across our markets, with retail motoring and motoring services performing well, but a much softer than expected performance in the cycling and consumer tyre markets. Briefly taking each in turn, in retail motoring, according to JFK data, the market has grown slightly ahead of our expectations for a number of reasons. The very hot weather at the start of Q1 benefited areas such as pressure washers and car cleaning. and the very needs-based areas of spend like oil continue to perform well. In cycling, the market remains depressed from a combination of the cost of living crisis and the poor weather over the peak summer period. These tough trading conditions have resulted in substantial market consolidation. In consumer tyres, we haven't yet seen the expected post COVID recovery in line with the increase in miles travelled. Drivers continue to delay essential maintenance for longer than anticipated. Market data shows an increase in the number of tyres being replaced, which are either borderline or totally illegal. We estimate that one in four vehicles on Britain's roads currently have one or more illegal tyres. And last but not least, motoring servicing, where the DVLA suggests growth in the market ahead of expectations as we see the impact of an ageing car park. So as I said, a mixed performance across our four core markets. Moving now to market share. This slide sets out the share gains we said we expected to see in FY24. The good news is that despite the challenging headwinds, we remain confident in our strategy and ability to grow market share. And as you can see on this slide, we are making solid progress with positive share gains across the board ahead of expectations. In motoring, the GfK data shows that we're delivering strong growth in volume share at plus 3.8 percentage points year on year, well ahead of our target. This performance has been driven through a combination of investment in price, extending our motoring offer to more categories, product innovation, and the motoring loyalty club, where we now have just under 3 million members. In cycling, where the market remains soft, we've seen excellent share gains ahead of our expectations at plus 1.8 percentage points year on year. This is partially driven by market consolidation, where Treads, our performance cycling business, has benefited, and by further product innovation, particularly in our own brand ranges. In tyres, as you can see, we grew 0.4 percentage points of share. The improving performance here has been driven by the benefits we're now realising from the integration of our acquired businesses and the improvements we have made to the customer proposition. And finally, motoring servicing. Here, data from the DVLA detailing growth in the MOT market shows that our share gain is in line with expectations. So, positive results across the board and a clear indication that the investments we are making in price and proposition are delivering. I'll now take a few moments to walk you through some examples of how we have grown our share in retail motoring, cycling and tyres across the first half. Starting with retail motoring, where we've grown share through a combination of extending our offer and product innovation. The best example that I can give of where we have extended our motoring offer is in specialist car parts. Our entry into this £1 billion market earlier this year has driven a four-fold revenue increase. Customers have responded positively to several initiatives, including our never-beaten-on-price promise, a step-changing convenience with a new click-and-collect-in-60-minutes offer, and adding the fourth B breaks to our 3B's proposition. At the same time, we've continued to bring new and innovative products to our retail motoring customers. These include the market-leading Nextbase IQ dashcams and a huge range change in our own brand car seats aimed at providing better choice and innovation with sustainability front and centre by the utilisation of recycled fabrics. Moving now to cycling, where we are making the most of consolidation in the market. Over the last 12 months, we have seen 35 large independent bike dealers close or go into administration, alongside two large retail cycling chains, two bike brands, and three big distributors. That gives you a sense of the scale of change we are seeing across the industry. And with household disposable income squeezed, we don't foresee things getting any easier here in the short term. The good news is that as you can see, our TREADS performance cycling business is well-placed to take share as this part of the market consolidates. With growing brand awareness and excellent Trustpilot rating and market-leading finance options, our TREADS business is going from strength to strength. TREADS is also a key contributor to our B2B revenue through Cycle to Work and in total is now delivering double-digit like-for-like growth. At the same time, we also continue to innovate across our Halfords retail cycling range. For example, here you can see the new Boardman SLR 8.9 men's road bike, which combines a best-in-class spec with a market-leading price point. Moving on now to consumer tyres, where we focused on two key areas to drive share growth. The first is value for money. Here, enhancements to our value credentials have been instrumental in driving our market share in Half 1. We've improved our own brand budget tyre range with sales up 14% in the first half. We've also made our tyres more affordable with initiatives such as Never Beaten on Price promise, combined with our market leading range of financial services offers including Buy Now Pay Later. Combined these initiatives have seen our value for money score improved by 4.6 points in half one. The second is convenience. With the obvious distressed nature of this category offering, customers' convenience is a key part of our strategy. Here, our focus is on same-day fitting of tyres across our national garages. Over the first half, we have seen sales growth of 66% on same-day fitting, with customers rating this proposition highly. And for the ultimate convenience, our Halfords Mobile experts come to you with an industry-leading 4.8 Trustpilot rating. So as you can see, when you combine value and convenience, it's a winning approach. So to summarise some great progress. However, we are not just growing market share, we are growing it profitably. And the best example of this is our auto centres business. Here our focus has been on utilisation, specifically reducing labour turnover and ensuring that we drive demand into those areas where we have the capacity available to service it. The good news is that the ongoing focus here means we are seeing a statewide utilisation improve, increasing 7% in half one versus our 10% full year target. The introduction of dynamic pricing not only helps customers to see their quickest, nearest and best value options across our garage network, it also helps us significantly improve margin per work tower. This is a consequence of being able to push demand where we need it most, improving efficiency, driving high utilization and higher profit. That concludes my update on the very positive progress we have made across the key pillars of growth that we outlined in the CMD and at the prelims in June. I'm now going to spend a few minutes on the mid to long-term elements of our strategy. And I'll frame this around the progress we are making in our consumer and B2B businesses. Starting with our consumer business and our motoring club. After a very strong first year, I'm pleased to say that the club continues to grow. The benefits clearly resonating with customers looking for value in a cost of living crisis. Now with just under 3 million members, we anticipate significantly exceeding our sign-up targets for this financial year. We continue to see growth in the number of members new to the Halfas brand at 40% versus 31% in November last year. The mix of premium members is a critical measure for us, driving cross-shop recurring revenue and lifetime value. This has increased in-year to more than 10% and growing, supported by the recent launch of premium till sign-up capability in our retail stores. We're delighted that the club is delivering on its goal to change customer retention behaviours in retail, as demonstrated by the significant increases in both frequency and breadth of shop. As we showed at the CMD, the club is an acquisition tool which drives customers from our retail stores across to our garages. Year to date, the proportion of MOTs in our consumer garages coming from loyalty members is just under 40%. Overall, the club remains a core part of our strategic plans over the mid to long term, with vehicle and vehicle health data absolutely central to our lifetime strategy. As we have said previously, our goal here is to drive stronger data analytics, predictive modeling, monetization, and even more profitable utilization alongside a highly personalized customer experience. You'll remember that at the CMD, we set out our longer term plans to bring the Fusion Town experience to more towns across the UK. This year, we have seen incredible results across our two Fusion towns, Colchester and Halifax, where the biggest shift in performance has been across our garage services. This includes our physical garages and the motoring service areas of our retail car parts where we fit 3Bs and refer customers across to our garages. To give you a sense of the scale here, our Halifax garage has gone from being ranked 200th on sales to second in our garage estate and is now running better than both Halfords and industry averages at 17% EBITDA. That's more than double the profitability pre-fusion investment. These results have given us the confidence to accelerate investment in our fusion programme in half two. We've identified 10 towns with a similar catchment and demographic footprint to Halifax and Colchester and sites where we can materially expand physical capacity. We will invest circa 1.8 million of capex in half two to enable major changes to our operating model in both the garage and retail car park. Moving on now to our B2B business, which now accounts for a very resilient almost third of our total group revenue. At a headline level, half one saw our biggest ever six months in cycle to work and the biggest ever six months for our commercial fleet services. Just some of the highlights here include the launch of our new cycle to work portal for SME businesses, making it even easier to sign up to participate in our cycle to work scheme. As a result, we've already surpassed the total volume of cycle to work clients that did business with us in the whole of FY23. And in our commercial fleet services business, we continue to attract new customers with a strong pipeline of contracts. As a reminder, we are already working with the likes of DHL, DPD, Every and Yodel, alongside some substantial local government contracts. Finally for today, I'm delighted to be able to report some excellent progress for our Avela SaaS business. On this slide, you can see a reminder of what our Avela business is and what it does. For our customers, Avela delivers a full end-to-end digital solution, which streamlines process and delivers improved efficiencies. And for Halfords, Avela delivers resilient contracted B2B recurring revenue. Along the bottom of this slide, you can also see the brands we currently work with. Last month, we announced an exciting new partnership with Bridgestone to implement our Avela technology across the US, where Bridgestone has 2000 consumer garages and a substantial fleet of mobile vans. In addition to show their confidence in our business, Bridgestone have also acquired a 5% stake in Avela for $3 million. Due to launch in early December, this landmark moment presents an incredible growth opportunity for Avela, with significant scope to develop further over time. Bridgestone operates across 150 countries with more than 9,000 workshop locations. And as you can see here, across the breadth of our existing contracted partnerships, there is substantial global growth opportunity of over 100,000 garage service locations. I'm thrilled by the progress our SaaS business is making and the partnerships we are creating with significant motoring services companies. So that concludes our update on half on performance and the strategic progress that we've made. To close today's presentation, I'll now move on to the outlook for the remainder of this financial year. Our B2B businesses and needs-based categories continue to show very strong growth. However, trading in the first half of the year has been volatile and we've seen some recent softening in high ticket discretionary spend areas. It therefore remains challenging to predict whether these trends will continue. We continue to expect profit before tax to be weighted towards the second half of the year as inflation annualises and we deliver the balance of our planned cost and efficiency savings. As such, assuming trading conditions on average continue to reflect what we have seen across the year to date, we believe underlying profit before tax will now fall within a narrower range of 48 to 53 million. To conclude, half one has delivered good strategic progress with a strong financial performance, given the inflationary consumer and macroeconomic headwinds we continue to face. We have delivered outstanding sales and profit growth and market share gains across the board. However, we have seen two of the four markets in which we operate become more challenging towards the end of the first half of the year. We believe that our strategic investments provide a strong platform for growth and we're well positioned to take advantage as markets consolidate and improve. Looking beyond FY24, assuming the markets recover, we expect profit growth in FY25 as we take a step forward on our mid to long-term expectations of 90 to 110 million underlying PBIT as outlined at our Capital Markets Day in April, 2023. Thanks for listening. Joe and I will now be happy to take your questions.