Howden Joinery Group Plc

Good morning everyone and welcome to the Howdens interim 2020 results presentation. Thank you for taking the time to join us on our conference call or to listen on the webcast. I'll begin by introducing our performance in the period. Mark will then review our interim financial results. I will then share my perspectives on our performance in the first half and our plans for the remainder of 2020 and then we'll take questions. Our performance was materially impacted by the changed socio-economic and trading environment brought about by COVID-19 and led us to making a loss of 14 million in the first half as a whole. Sales in the first half were 29% lower than in 2019, with all of the shortfall attributable to trading in the second quarter, which started on the 23rd of March and which for us was when UK lockdown commenced. During the second quarter, we initially closed all our UK depots and then undertook a phased reopening of them, at first with a skeleton staff and with restricted trading hours, as we established and developed ways depots could operate and be supplied safely in a socially distanced environment. By the final period, period six, we returned to all depot, if not full scale trading. Operating at closer to a full complement of staff, UK depot sales in period 6 were some 74% higher than in period 5, at around 74% of 2019 levels. And the business was trading profitably again following losses in periods 4 and 5, when on average under half our depots were trading, and total sales in these depots were around half those in 2019. Depots have reported that our policy of return to all depot trading earlier than some safely and with full stock availability is appreciated by our customers whose ability to work was curtailed by lockdown. In the first period of the second half, period seven, UK sales were up 38% on period six and increased 2% year on year. Kitchen surveys and the number of builders trading with us have been trending upwards in recent weeks, and we've seen some signs of pent-up demand. Sales of everyday items have represented a higher proportion of the mix than in normal times, and the lead bank ended period seven above pre-lockdown levels. I am pleased with how the business has responded operationally to the immediate challenges of COVID-19 and how we are preparing for a post-lockdown environment in which trading conditions and demand patterns may be at least periodically different to those in the past. During the period, our priorities have been to take care of our people's wellbeing, which is paramount during this difficult time. We have adopted a safety-first consensual approach when considering returning people to work, recognising the importance of employee involvement and safety at work issues in the context of COVID-19. Steps taken have always been by reference to prevailing government guidelines and guided by the recommendations of our health and safety team leaders. We have introduced a discreet online resource focused specifically on issues arising from COVID-19 and provided financial support to those on furlough. We reduced cash expenditure where it couldn't be deferred whilst protecting essential areas. We ensured that we had sufficient stock available for depots and continued with the works at our distribution facilities at Rons. We deferred new depot openings and some refurbishments and refits of existing depots. We supported our customers and local communities by reopening depots safely with new working practices as soon as possible, which required finding new ways of depot working and re-engineering how our factories operate and how we supply depots. by increasing our stock levels to ensure depots could supply customers with immediate needs, which has also meant we have supported our depot partners, with whom in many cases we have long-term relationships. By lowering prices, which also enables us to give the depots more flexibility and margin and be well incentivised to maximise sales. And by launching new services, call and collect, which enable us to trade in the second quarter and an online kitchen design service initially operated by our designers working from home. We are applying learnings from this period to the ways we do business and how we operate. Lockdown has, by necessity, increased people's propensity to shop online and the introduction of our call and collect and remote kitchen design services act as pathfinders for online upgrades. Operating under COVID conditions is helping us determine if there are surplus costs and inefficiencies in the business and how we can utilise IT to free up time for depots to use more productively and manage stock more effectively. Our learnings will help us deal with varying degrees of social distancing, which may affect inbound supply, manufacturing and distribution, and summer all of the depots at different times and ways. Looking forward, we believe that whilst overall there will be a more challenging and demanding marketplace, this can play to the advantage of our in-stock local model, provided we introduce the differentiation of offer and do so profitably. The initiatives we had in place prior to lockdown are in line with this objective, based around our core building blocks of trade service and convenience, trade value and product leadership. These are evolving our depot model to use space more efficiently and to create the best depot environment in which to do business with and to support our customers. Improving range and supply management to help customers buying decisions and to access supply chain benefits and to make productivity gains, thereby increasing service and availability at an economic cost. Using digital to raise brand awareness, to support the business model with new services and to free up time for depot staff and customers to use more productively. I will update you on these and our operations based in France after Mark has taken you through our financial results. Mark.

Thank you, Andrew, and good morning, everyone. Reviewing the financials for the first half of the year, let me start by looking at some of the headline numbers from the income statement, which for the first time is reported under IFRS 16. Moving from left to right, on the top row to begin with, as you can see, Howden Joinery's UK revenue fell by £185 million to £453 million, a 29% decrease on 2019. Group sales also decreased by 29%. Gross profit fell by £128 million to £276 million. The percentage gross margin of 59.4% was down from 61.9% in 2019, reflecting mixed changes and, as you would expect, the impact of carrying fixed manufacturing costs during reduced levels of production. Howden's made an operating loss of £10 million in the half, down from a £78 million profit in 2019, with operating costs reducing by £41 million. These costs benefited from government furlough payments, lower variable costs associated with lower sales, IFRS 16 adjustments and the closure of our Dutch and German operations in 2019. These factors more than offset the costs of inflation and continued investment across the business. Now moving down to the second row, net interest charges were up by £5 million, reflecting the impact of the adoption of IFRS 16. As a result, there was a loss before tax of £14 million. This compares to a profit of £78 million in 2019. Looking at cash flow in the first half of the year, this included share repurchase expenditure of £10 million, capital expenditure of £22 million and a £3 million contribution to the pension scheme. We also benefited from various other receipts and deferrals connected with COVID. I will go into more detail on this later in the presentation. Overall, we had a net cash outflow of £14 million and ended the period with £253 million of net cash. I'll now go into some of the detail behind the headline numbers. Let me start by talking about revenue. Howden's UK turnover of £453 million decreased by 29% on a total basis and was down by 30% on a same depot basis. We have shown the performance split between quarter one pre-COVID when sales were up 1.1% on a total basis and down 0.8% on a same depot basis. In quarter two, sales were down 56% on a total basis and down 57% on the same depot basis. I will show more detail on quarter two performance on the next slide. In continental Europe, turnover of 12 million was down by 3 million pounds. Sales in our French and Belgian depots fell by 19% in euros. This slide gives more detail on the trading pattern during the first half and the first trading period of the second half. As you can see, steady progress has been made following the initial impact of COVID from an 87% reduction in sales in period four, 55% fall in P5, and a 26% reduction in P6. Period 7 saw further progress and moved positive, with sales up by 2%. I will come back to the second half outlook later on. Let me now talk you through the movement in PBT from £78 million in 2019. Gross profit fell by £128 million. This is the net effect of several features as shown in the chart on the right-hand side. If we bridge from 2019's gross profit of £404 million, there was a £4 million impact from pricing. Secondly, a large fall in volumes and mix changes compared to the first half of 2019 reduced revenue by £183 million. In addition, there were a number of factors that impacted the cost of goods sold. There were reduced costs arising from the volume and mix changes. As mentioned earlier, we were also impacted by carrying fixed costs at lower levels of production. The net effect was a reduction in costs totalling £60 million. Also affecting cost of goods sold, we saw higher input costs. This resulted in a net decrease to gross profit of £2 million. In addition, there was a £1 million impact from exchange rate movements in the first half. Together, this gave a net falling gross profit of £128 million to £276 million. Gross profit margin was 59.4%. If I now turn to the other factors that contributed to the movement in PBT, reverting back to the chart on the left, operating costs reduced by £41 million, which I will address on the next slide. Net interest and other finance charges were £5 million higher than in 2019, reflecting the impact of adopting IFRS 16. The net result was a loss before tax of £14 million. Let me now explain in more detail the main movements in operating costs from £327 million in 2019. Firstly, the incremental costs of the 44 depots that we opened in 2019 totaled £6 million. Costs in older depots decreased by £13 million, mainly reflecting decreased levels of activity. Cost increases incurred to support future growth, total £4 million. This included the cost of the Rawns development, which we have previously announced. There was a net reduction in other operating costs of £8 million, again, the result of reduced activity. we claimed £21 million in furlough payments in respect of the first half, £15 million of which was received in cash in the first half. Closure of our Dutch and German depots in 2019 benefited the first half result by £5 million. And finally, costs reduced by a further £4 million as a consequence of adopting IFRS 16. This meant that operating costs overall fell by £41 million to £286 million. Let's briefly turn to the remainder of the income statement. If we look at the second column of numbers on the table, the impact on the first half of adopting IFRS 16 was an increase in operating profit of 3.9 million pounds. This is more than offset by an increase in interest charges of 4.6 million pounds. As a result, as we've seen, our loss before tax was £14.2 million. This led to a tax credit of £3.3 million, the effective tax rate being 23.2%. This gave a loss after tax of £10.9 million. This result gives a loss per share of 1.8 pence compared with earnings of 10.3 pence in 2019. As previously announced, the dividend and share buyback programmes have been suspended until further notice. Shareholder returns will resume as soon as the Board has greater clarity about the impact on the business of COVID-19. Prior to the announcement I've just referred to, we spent 10 million pounds repurchasing shares. Let me now turn to cash flow. From a position of having net cash of £267 million at the end of 2019, we ended the first half with net cash of £253 million. Looking at the change since the end of last year, let me draw to your attention a number of items that explain the movement. Firstly, we took advantage of government support where appropriate to bolster our cash position. I will explain this further on the next slide. Networking capital decreased by £19 million, which, again, I will address shortly. Capital expenditure totalled £22 million and included spend on the next phase of our Rawn's warehousing strategy and also investments in digital. Corporation tax payments were £12 million. As I've already described, we spent £10 million repurchasing shares in the first half. And there was a £3 million contribution to the pension scheme. The net result of these and other movements was a cash outflow of £14 million, meaning that we ended the first half of 2020 with net cash of £253 million. At the start of the COVID crisis, we took a number of steps to secure our cash position including postponement of depot openings and non-essential capital expenditure, curtailment of operating costs, cessation of our share buyback and dividend programmes, and agreement with our pension trustees to defer deficit payments. In addition, we have taken advantage of available government support. As a result, our first half cash flow benefited from furlough receipts of £15 million and tax payment deferrals of £61 million. the closing cash without government support would have been £177 million rather than the £253 million reported. As I've already said, net working capital decreased by £14 million. Within this, stock increased by £34 million. This was impacted by COVID contingency planning and the introduction of new kitchen ranges. Debtors fell by £39 million, reflecting the pattern of trading that we saw in quarter two. Creditors increased by £9 million, partly as a result of the cash management actions just mentioned. Let me quickly bring you up to date with the balance sheet position of our pension scheme. At the end of 2019, the deficit stood at £57 million. A number of factors had caused this to change by the end of the first half. Firstly, from the P&L, there was the current service charge, administrative and interest costs, of 11 million pounds. Secondly, a decrease in the discount rate increased liabilities by 119 million pounds. Thirdly, the group made a cash contribution of 14 million pounds. Finally, with asset returns being 140 million pounds higher, the deficit at the end of the first half of the year was down by 23 million to 33 million pounds. This, of course, is the balance sheet deficit calculated under IAS 19. Our deal with the trustees, however, is on the technical provisions basis. This agreement, reached in June 2018, is to pay £30 million per annum for up to five years until June 2023. Also under the agreement, deficit contributions will be suspended if the scheme's funding position reaches 100% of the scheme's funding basis for two consecutive months and resumed if the funding position falls below 100%. Let me finish with some brief comments about trading in the first period of the second half of the year and costs for the rest of the year. Period 7 saw total UK sales up by 2.2% for the first four weeks of the second half and up by 0.3% on the same depot basis. Regarding the full year 2020, clearly, there are currently many uncertainties and a number of factors that need to be considered. As highlighted in February, regarding operating costs compared to 2019, we will benefit from not bearing the £6 million cost of closing our European operations in Germany and the Netherlands. However, as we announced, there will be further operating costs of around £20 million in 2020 compared to 2019, £6 million of which has been incurred in the first half. These costs include the impact of the dual running of old NDC and Phase 2 of our new distribution centre in Rawns, also increased pension charges and additional depreciation. These cost increases are in addition to the impact of the ongoing growth of the business, inflation and new depots including further openings in France. Capital expenditure is now expected to be around £60 million for 2020. This includes the next phase of RONs, digital investment, around 20 new depots, including four in France, and depot refurbishments. On that note, I'll hand you back to Andrew.

Thank you, Mark. I will be talking about our performance in the first half and our plans for the second in the context of COVID-19 using the initiatives we had in place for 2020 as a framework. As a reminder, these revolve around depot evolution, range and supply management, digital development and international. But first, I'd like to talk about our customers. At the end of the first quarter, our overall account base was stable, with our core credit account holders as a whole spending more with us, and the total number of transactions and the number of customers trading both increasing at a higher rate than total spend. The onset of lockdown at the start of the second quarter clearly had a very material impact on our customers' ability to operate their businesses and to trade with us. And the overall level of activity is measured by total transactions declined in the second quarter at a similar rate as total sales. During the second quarter, however, the level of our engagement with customers improved from a low base period on period, materially so in period six, when all our depots were trading for the entire period once more. Whilst remaining below 2019 levels, total transactions in period six were more than 50% above the total for four and five combined. And the number of customers trading with us and the amount they spent with us also increased significantly. Building trusted relationships with trade customers is central to everything we do. And what remains a very difficult time for them, we aim to support them in the right ways where we can. We have helped them with lower prices and feedback from customers show that they appreciate that we reopened depots as soon as we could with new services and ways to trade, that we've remained in stock throughout the period and the COVID measures we took to enable them to trade safely with us. I will return to these as I update you on our performance in the context of the initiatives I mentioned earlier. First, our depot plans and ways of trading under COVID-19 conditions. While we always want to provide the best customer service we can, the welfare and safety of our staff and our customers is always our first priority. Throughout lockdown, we have followed prevailing UK government guidelines as the minimum standard we should apply as we consider how and when depots could recommence trading. We maintained an emergency provision to support the NHS, care providers and vulnerable people. With the number of depots trading and the ways of trading changing through different phases, our first step was to introduce a lockdown call and collect operation, initially operated by a skeleton staff in a limited number of depots and behind closed doors. We subsequently increased on a phased basis the number of depots trading in this way. We then reopened depots with closer to a full complement of staff once we were comfortable that we had additional safety measures and protocols in place to do this and that staff understood the standards we were working to. By the start of the final period of the first half, all our depots were trading once more. We believe the operating procedures and measures we put in place and ownership of these at depot level provided us with the best opportunity to trade safely in the period and will help us deal with subsequent lockdowns which may be instituted at short notice and which may be applied on a regional or a local basis in England and differently in Scotland, Wales and Northern Ireland. Turning to our 2020 depot reformat and depot opening plans. By the end of 2019, we'd opened 60 depots in a new format aimed at creating the best depot environment in which to do business with our customers at no material change to the fit-out costs of a new depot. By racking product vertically in the warehouse section of the depot, we believe that there are ways to make space utilization improvements. with the potential to make productivity gains from reduced picking times. We are confident that the updated format is an improvement at the same cost on the traditional one, and the improved densities offered by re-racking product vertically also enabled us to put our full offering into a smaller space, increasing the potential number of depots we could open in the UK. All new depots opened will be formatted in this way, and we had planned to open 30 depots this year. In the first half, we put our opening programme on hold as we prioritise maximising cash flow and finding ways depots could trade safely under COVID-19 conditions. In the second half, we now intend opening around 15 new depots. By the end of 2019, we converted 11 existing depots to the updated format as a test to understand the rollback opportunity of the updated format in the existing depot estate. In 2020, we were planning to convert around 30 more depots to the updated format across the country, so that we could continue to learn how best to apply this opportunity within the existing depot estate. We still intend to do this, having reduced the number of depots we were planning either to open or to re-rack without further modifications. In the first half, we completed the conversions of the 18 depots at which works were underway prior to lockdown. And in the second half, we intend to convert a further 11. This year, we are budgeting for an average reformat spend of £225,000 as we apply the learnings from depots converted to date. We now plan to re-rack around 25 depots without further modifications in 2020 versus our pre-Covid plan for 50, including five which were underway prior to lockdown and completed in the first half. At the end of 2019, we had a total of 71 new format depots, comprising 60 new ones and 11 refurbished depots, and had re-racked a further 62 without further modifications. By the end of 2020, assuming our revised depot plans for 2020 are implemented as I've described, we will have in total 115 new format depots comprising 75 opened in the new format plus 40 refurbished ones. And we will have re-racked a total of a further 87 without other modifications. Next, range and supply management. New kitchen ranges each year represent a significant portion of sales as product life cycles shorten. In the first half, we had new kitchen ranges launched and in stock with synchronized rooster promotional offers earlier than last year. 11 of the 13 new ranges were on sale in January prior to lockdown. First half MPI kitchen sales were ahead of last year's when new ranges were launched later. Earlier introductions meant we were well positioned with product as we turned to all depots trading. With the remaining five new ranges for the year launched by the end of the first period of the second half, we have all of our 2020 kitchen NPI on sale well ahead of our traditional peak period 11 period. Managing the number of kitchen ranges efficiently is crucial for both best availability, which is highly valued by our customers, and profitability. We have made progress in getting back to the discipline of fewer, deeply stocked, higher performing ranges and depots. A key part of this is the timely discontinuation of underperforming ranges and the management of clearance stock from the business. At the end of 2019, we had 67 current ranges, including initial stock of some ranges for launch in 2020. We are targeting 16 clearance ranges this year. By the end of 2020, we expect to have 66 kitchen ranges, including initial stock of some 2021 MPI ranges. We believe around 65 current ranges is the right number for our market at present. We continue to aim to remove at least the number of ranges we add. Our dedicated manufacturing and supply chain is crucial to the success of our in-stock offer. It supplies all product, whether manufactured by us or sourced externally, to all our depots, which each have individual and changing day-to-day requirements. It is structured to respond to these needs and to meet the demand of period 11 when sales are typically more than double the level of those in other periods. Operating under COVID conditions has meant finding ways to re-engineer how our factories operate and how we supply and distribute to depots. With the onset of lockdown, we initially closed substantially all of our manufacturing and supply facilities, running only with partial operational teams on each site. This ensured we could continue to receive inbound shipments from external suppliers so that the appropriate stock would be available in the business once we were comfortable that depots could recommence trading and we could supply them safely. We then designed, with employee consultation, a series of social distancing measures, work processes and practices to prepare for a phased return to work at the appropriate time. With additional safety measures in place, in April we were able to reopen our manufacturing sites in Howdens and Runcorn and associated distribution facilities, and we were able to maintain stock availability as demand and the number of depots trading changed. Since reopening supply, we have continued to work through processes with COVID bottlenecks. We can now manufacture all products whilst maintaining social distancing, and our efficiency whilst below pre-COVID levels is now much improved. We have continued with our policy of holding increased levels of safety stock when we believe this is necessary to protect our in-stock offer against potential disruptions to our supply chain and to accommodate irregular patterns of demand. We first did this as part of our Brexit planning and again ahead of lockdown. We have already seen pop-up Covid outbreaks with the potential to disrupt inbound supply and we have navigated with safety stocks and backup sources of supply. And as we recommence all depot trading ahead of some, we have seen some evidence of shortage buying of some of our product lines, and we have had reports of extended delivery times being quoted by some of our competitors. Our ability to utilize our disaster recovery capacity has also helped us to remain in stock as depots have reopened. We also took temporary additional storage space pending some warehouse capacity at Ron's coming on stream, which we expect to be in September. We continue to keep under review what we believe is best to make or buy, both in terms of cost and overall supply chain resilience and flexibility. We have benefited from significant engagement with our supply base, both in support of our 2020 plans for improved product range, availability and price during lockdown. We have long-term relationships with many of our suppliers, And being a manufacturer ourselves has helped us have early sight of the potential COVID risks for our supplier factories. We also operate on xWorks rather than delivered terms with our suppliers, which enables us to work directly with our shipping partners to resolve logistical issues and provide us with earlier warning of orders that might be running late. Turning to our digital platform. We see digital as a means to reinforce the Houdens model of strong local relationships between depots and their customers. The first half, the digital investments that we've made were particularly instrumental in doing this at a time when relationships and ways of doing business were disrupted. We've continued to see increased activity on our web platform and growth in our social media presence, which also stimulates interest in viewing our products and services in Houdens.com. Houdens.com impressions were present in 1.4 million more organic search results a month. Visits to the website in the first half increased by 31% year on year. In the second quarter, average visitors exceeded 350,000 a week and then passed 500,000 a week for the first time. The proportion of our total range being browsed increased with page views for kitchens up 61%. The contacting of depots through the website has increased by 58% in the first half and brochure requests by 34% in the second quarter. Across social media sites, our follower base at 153,000 was up 136% by the end of the period. And we were reaching nearly 9 million users a month, with the percentage of those actively engaged with us up 255% year on year. With restricted movement in the UK, Howdens.com provided a key access point for customers to the business. And in the period, we extended the range of services we provided online. In January 2020, we rolled out the online account facilities, which we developed and then tested in the latter part of 2019. Prior to lockdown, user feedback of the online account service was favorable and usage rates were rising. Since then, the adoption rate has continued to increase. By the end of the first half, 19% or so of our credit account holders had been registered to use the service, with 38% using it out of our normal trading hours. Around 40% of the users made a payment or downloaded a document. Average payments per customer were also well above the company average level. Curated on our website, the first generation call and collect service we introduced provided a way in combination with our in-depot measures for customers to trade safely with us following the onset of lockdown. With planning meetings in our depots or in our people's homes not permitted, a new personal kitchen design service was also made available online. Users can send us design requests, attaching images and measurements of their current kitchen and indicate design and style preferences. Depot designers equipped with online design and conferencing tools to work from home could then plan kitchens and transmit submissions to the depots to deal with as they reopened. Feedback from users and the depots has been positive and we are making the service a permanent feature of our offer. In the second half, we will continue to improve content and add more capabilities to our platform. We will be adding further account, lead and project management features together with functionality, which assists local communications between depots and their customers. For new customers, we will be introducing a digitized account opening option in depots, and a new, more efficient online account opening process which reduce the time spent on and the costs of administering and processing applications. Having digitized our product and marketing content in 2019, we can deploy these cost-effectively across multiple channels and programs and add fresh content efficiently. We will be using CGI to extend the number of kitchen range layout options which can be viewed online and adding content which users have shared which showcase our kitchens in people's homes. Lastly, international. In 2019, we decided to focus our operations based in France by way of a city-based approach and we closed our operations in Germany and the Netherlands. We appointed a French national to lead the business and opened five depots, four around Paris and one in Lille. In France, lockdown occurred a little earlier than in the UK and all of our depots were closed on the 17th of March, at which point sales were up around 3% year on year. By adopting our safety first approach and taking similar measures to those in the UK, we then reopened for business with depots operating in a call and collect mode with depots starting to trade again on a phased basis during the first two periods of quarter two. The government ended lockdown in France on the 11th of May and depots were open to normal ways of trading with appropriate safety protocols in place. We are pleased with how our business in France performed during the first half and the start to the second half trading. Whilst first half sales were down around 19% year on year as a result of the onset of lockdown, sales increased significantly year on year in the final two periods. Sales expectations of the depots opened in 2019 are encouraging and sales in the first period of the second half increased by 46% year on year. We are now targeting four depot openings in the second half of 2020, taking the total number to 31, including two in Belgium. In summary, the loss for the first half overall was as a result of the level of trading in the second quarter, which was significantly impacted by onset of lockdown. The business returned to profit in the final period of the first half, following losses in the previous two. The business responded well operationally to the immediate challenges of COVID-19. We took care of our people with a safety-first, consensual approach to return to work, reduced cash expenditure but protected essential areas, supported our customers with lower prices, new services and safe ways to trade with us, reopened safely and quickly with new working practices as soon as practicable with all depots trading by the start of the final period with a full complement of stock. Turning to the second half, our first priority remains the safety of our people and customers, with the focus of the business on delivering our H2 plans and preparations for peak period 11 trading. We aim to retain a profitable balance in the light of prevailing market conditions between price and volume, whilst working with suppliers to keep product and input costs down. We will continue to manage our stock levels actively to protect availability both of manufactured and bought-in product, We have contingency plans to enable us to trade under the range of COVID conditions we have seen to date. We have all of our 2020 kitchen MPI on sale well ahead of period 11 and further rooster promotions planned to keep Howden's front of mind. We will continue to improve content and add more capabilities to our digital platform. In 2020, we intend to open around 15 depots in the UK, four in France and convert around 30 existing depots to the new format. Depots have reported that our policy to return to all depot trading earlier than some safely and with full stock availability is appreciated by customers whose ability to work was curtailed by lockdown. In the first period of the second half, period seven, UK sales were up 38% on period six and increased 2% year on year. Surveys and the numbers of builders trading with us have been trending upwards in recent weeks, and we have seen some signs of pent-up demand. Sales of everyday items have represented a higher proportion of the mix than in normal times, and the lead bank ended period seven ahead of pre-lockdown levels. We remain cautious on underlying market conditions given the ongoing COVID-related economic uncertainties and the impact of the outcome Brexit trade negotiations may have, on which more detail is set out in the R&S announcement. However, I'm confident in our business model through changing economic conditions and the benefits our initiative will bring to our performance. Thank you for listening. We will now take your questions.