Howden Joinery Group Plc

Welcome to the Howdens 2022 interim results presentation. I will begin by introducing our first half performance. Paul Hayes will then review our financial results for the period. I will then share my perspective on our 2022 performance to date and our plans for the remainder of the year. And then we'll take your questions. Howdens has delivered a very strong first half performance. with record sales and profits for the year, which for us comprised 24 weeks. Group sales rose around 16% on 2021 and 40% on 2019, being the year prior to the onset of the pandemic. Our profit before tax increased at a higher rate than revenues and our gross margin was ahead of last year as we mitigated significant input cost pressures with disciplined pricing. Our builders remain busy. We made good progress in our strategic plans, both for the UK business and our international operations, whose performance continues to improve. You will see from our R&S announcement that we've moved our ESG agenda forward. In 2021, we achieved carbon neutral manufacturing and zero waste to landfill at our Howden and Runcord manufacturing sites. and this year waste avoiding landfill at our UK depots has reached 99.5%. We've committed to the science-based target initiative signifying our intention to reduce significantly our emissions throughout the supply chain and to achieve net zero by 2050. The business delivered strong cash flow and we continue to maintain a robust balance sheet. This gives us flexibility both to invest in our growth plans for the business and at the same time provide shareholders with enhanced cash returns in the form of an increased interim dividend for this year and accelerated execution of the £250 million share buyback programme announced in February, with around £140 million completed in the period. The interim results demonstrate the strength of our local trade-only in-stock model, and we believe we gained market share in the period versus the same period last year. A strong product lineup, high stock availability, and a very engaged team together with the ongoing investments in our customer-focused strategic initiatives, which include digital, have all contributed to our first half performance. We also increased prices, which helped us defray the significant rises in input costs, which we have seen over the year to date, as well as protecting gross margin. The business delivered volumes ahead of record sales levels, record levels achieved in the same period last year. We believe our customers have an even greater level of trust in our own capability to have the right product available as and when they need it. The feedback we're getting from our regular builder forum conversations also cite many examples of how we're there for customers, not only on stock, but also on service generally, which helps them run their businesses. UK sales in period seven, being the first in the second half, were in line with our expectations and were around 8% up on 2021 and 44% up on 2019, with UK cumulative sales for the first seven periods of the year up around 14% on 2021. Prevailing macroeconomic circumstances may mean overall a more demanding second half trading conditions than those in the second half of last year, when sales increased by 21% on 2020. We plan for this and I believe that our service-orientated, trade-only, in-stock, local model will deliver sustainable market share gains across changing market conditions. Our model is difficult to replicate and compete with, and we have initiatives in place to make it more so in markets where the longer-term opportunities for us are larger than previously thought. And we are investing in the business on this basis. So I'll update you on our strategic initiatives, which are key to the longer-term development of the business, after Paul has taken you through our financial results for the first half. Paul, thank you.

Thank you, Andrew, and good morning, everyone. I'm pleased to be presenting Howden's financial results for the period to 11th June 2022. We delivered a strong financial performance in the first half, building on the record performance we achieved in 2021. Overall group sales increased by 16% as customers benefited from our trade-only in-stock business model. Sales were significantly above pre-COVID levels, we believe that we have continued to take market share we have managed inflationary pressures effectively and made further progress on executing our strategic initiatives this has enabled us to retain a significant proportion of the increased sales we generated during the pandemic gross profit was 84 million pounds ahead at 565 million The percentage growth margin of 61.9% was strong and we have significantly recovered increases in commodity, freight and energy costs through price increases. Operating costs at £416 million included increased variable costs to support the additional volume growth, inflationary cost increases and our ongoing strategic investments to drive growth. I'll give you some more colour on this later. As a result, we generated an operating profit of £149 million, which compares to £124 million in 2021 and £78 million in 2019. We were pleased with the increase in our operating margins to 16.3%. Net interest charges were broadly in line, so profit before tax was up £26 million at £145 million. We incurred a tax charge of £31 million in the period which is equivalent to an effective tax rate of 21.2%. After all these items, profit after tax was £114 million. So looking at revenue in a bit more detail. Haldon's UK revenue increased by 16% to £889 million on a total basis and was up 13.5% on the same depot basis. The UK results reflect both underlying growth across our depots and the benefit of additional growth from new and revamped depots. As Andrew will cover in a minute, trading across our core entry level ranges was good and we continue to increase our sales of higher priced kitchens. Our success in high priced kitchens reflects our great range of products, including solid work surfaces that we now offer from all of our depots. Solid work surfaces provide a good cash margin, but have a lower gross margin percentage than the group average. In the international depots, we generated revenue of 28 million euros, which was a 30% increase on 2021 after adjusting for the closure of five French depots. Our focus here remains building out the Howden's model in major cities, and we're making good progress with our strategy. Now, moving on to profit before tax. Profit before tax increased by £26 million to £145 million in 2022. Gross margin increased by £84 million, with growth in sales volumes and mix accounting for an extra £34 million. This included the solid work surface business, which we anticipate will continue to grow strongly in the second half. We were very effective in implementing price increases early in 2022 ahead of ongoing product cost increases due to inflation. You can see on the slide that price and volume benefits of £109 million have more than offset product cost increases of £25 million. There was a good benefit to margin in the first half from these early price rises ahead of cost increases, which contributed to a healthy gross profit margin percentage of 61.9%. We anticipate an element of catch-up of costs coming through the P&L in the second half, which will be a headwind to gross margins. Cost increases have included higher commodity costs freight and transportation and energy costs, and these were partially offset by operational initiatives. Operating costs increased by 59 million pounds as we continue to support the higher activity levels and our ongoing investment in our strategic initiatives. We have broken this out on the next slide. We have invested significantly in driving our strategic plan as well as supporting sales growth. Bridging from left to right, the incremental cost of the 10 new UK depots opened over this period and the 31 depots opened in the prior year totalled £7 million. Costs in older UK depots increased by £27 million over the period to mainly support the additional volume. We have also invested significantly in additional staff, including kitchen sales designers, counter and warehouse staff. In addition, we brought forward the 2022 salary increases into the first half to support our employees and we've seen some other inflationary costs in our depots. Warehouse and transportation costs were £12 million higher as we continue to invest in our in-stock model. This includes our investment in warehousing to support higher volumes and regional cross-stocking centres or XDCs. XDCs are delivering both productivity improvements in the depots and great product availability across our ranges. Given the rise in energy prices, we've also incurred higher transportation costs with increased fuel prices, and we took on more drivers to support higher sales volumes. We've also continued to make further investments in digital, helping customers with new, more flexible ways to trade with us. Commercial costs returned to pre-COVID levels as we increased our spend on brochures, trade books and advertising to support the demand increases. And we've invested in our international businesses with seven new depots in France, and we opened our first depot in the Republic of Ireland. The £7 million increase includes the cost of the 10 new depots opened in 2021. Now moving on to cash. From an opening cash position of £515 million at the end of 2021, we ended the period with a cash of £250 million, a net cash outflow of £266 million. You can see from the slide that this was mainly due to shareholder returns from dividends and share buybacks of nearly £230 million, which I'll talk about in a minute. Overall, working capital increased by £104 million to support high levels of business activity. Stock levels increased by £112 million as we de-risked our in-stock business model, particularly ahead of the peak trading period in the autumn. About a third of the increase is inflation, and we've also increased investment in safety stock, recognising the difficult ongoing conditions in the Ukraine. Due to the high levels of sales, receivables were £14 million higher than at the previous year end, with Aegean in great shape. This was offset by higher creditors of £23 million. Capital expenditure totaled 46 million pounds and included investments in depot expansion and revamps, investing in our supply chain and manufacturing sites. This also includes expanding our digital capabilities in new depots in France. You can also see the cash outflow of 25 million pounds relating to the purchase of the Sheridan's solid work surfaces business, which completed in February. This included 10 million pounds to acquire the site. was a cash outflow of 89 million pounds for the 2021 final dividend which was previously advised was brought forward for payment in the first half for the first time we also completed 140 million of the 250 million share buyback program which we announced at the year end and the outflow of 90 million relates to the payment of last year's final dividend in the period moving on to some other financial matters which are worth highlighting Earnings per share was 19.6 pence, which compares to 16.4 pence a year ago. As a result of the group's strong first-half performance and our confidence in the outlook, the Board has proposed an interim dividend of 4.7 pence per share to be paid in November. Our dividend policy remains unchanged, although we are rebasing the split between the interim and final dividend to smooth the impact of the exceptional trading in the second half of last year. we will continue to operate within a dividend cover of between 2.5 and 3 times. Moving on to pensions, at the half year, the housing's pension scheme surplus on an IAS 19 basis was broadly unchanged at £144 million. In July last year, the company suspended cash contributions into the scheme as it had moved into a surplus position on a technical provisions basis. At the end of June, the scheme has remained in a small surplus on a technical basis. As previously advised, though, if there is a deficit position for more than two consecutive months, cash contributions of £2.5 million per month would resume until the scheme returns to a technical surplus. During the first half, we have brought forward our investment in some strategically important projects and have also seen some cost inflation. As a result, our capex guidance is increased by £20 million to £135 million for 2022, including the investment of £10 million in land that we advise for the full year results. Now turning to our performance over the last few years. This slide summarises our performance over the last five years and shows the phasing of sales between the first and second half. You can see how we have grown strongly over the past two years as we have traded out of the COVID-19 pandemic. In the first half of 2020, our sales were 30% lower as we traded through the lockdown period and then rebounded strongly in the second half of 2020. Overall, we've grown sales from a peak of around 1.5 billion pre-COVID to nearly 2.1 billion last year. Sales in the first half of 2022 were 40% above pre-COVID levels and PBT was 86% ahead of 2019. The chart also shows the high levels of H2 phase trading in 2020 and 2021, which is unusual in our business. This illustrates the tough revenue comparatives going into the second half of 2022, particularly when compared to seasonal norms. We are likely to revert to normal H1, H2 trading patterns going forward. So in summary, we've made an encouraging start to 2022. We delivered strong financial results and are making good progress on our strategic initiatives. Our balance sheet is healthy, and cash generation supports our continued investment in the business. And Housens is in great shape and remains confident in our business model for the future. Thank you, and I'll now hand you back to Andrew.

Thank you, Paul. As I mentioned in my opening remarks, we believe the opportunity for the Houdens model are greater than previously thought and we're investing in the business commensurately. Definitions and estimates of the size of the UK kitchen market vary. However, based on proprietary research we commissioned recently, we think it's a reasonable estimate of the market as we think about it. The market is now sized at £6.5 billion by value. This is a larger value than we had assumed previously and gives us plenty of room to increase our market share, which is higher by volume than sales at present, reflecting the weighting of our sales towards the entry-level kitchens. Similarly, for other product categories, including joinery and hardware, we now think the value of our addressable UK market is some £4.5 billion. with our share of such categories lower than our share of kitchens. This gives us a total addressable markets of around 11 billion in the UK versus the 2 billion or so sales we achieved last year prior to any underlying growth in market volumes. Turning to our first half performance and our plans for the second, I'll use our strategic initiatives for the business as a framework. fully aligned with our customer-centric, trade-only focus and our entrepreneurial culture, and based around our core building blocks of service and convenience, trade value and product leadership. These are four, and they're to evolve our depot model, improve range and supply management, develop our digital capabilities, and expand our international operations. So first, depot evolution. High service levels including local proximity and immediate availability are very important to our trade customers as we continue to see profitable opportunities to open depots. We are using our updated format for all depot openings which enable us to provide for our depot teams, our customers and theirs the best depot environment in which to do business. and to make space utilization and productivity gains in a cost-effective way by using vertical racking in the warehouse sections of the depots. We're also testing a smaller sized format using our Next Day XDC delivery service to supplement in-depot stock holdings. The smaller version may, for example, enable us to open a depot in places lacking suitable properties to accommodate the standard one, or to open an infill depot to provide a more local service in less densely populated areas. Overall, we believe there is scope now for a thousand depots in the UK, including 25 in Northern Ireland, versus the 778 trading at the end of 2021. We now have plans to open up around 20 new depots in 2022, having opened up 10 in the first half. We have progressed our revamp programme for existing depots, concentrating on our older estate where sales per depot are above average and where the largest incremental sales uplifts are expected. The programme continues to receive very positive feedback from depot staff and customers alike. By the end of 2021, including relocation, we had reformatted a total of 103 depots. The scale and scope of the revamps has been refined with an average cost per depot of around £275,000 going forward. The revamps are budgeted to pay back in less than four years and depot P&Ls are charged a reformat cost which ensures depot teams are motivated to deliver incremental sales. We've revamped 34 depots in the first half and we now expect to reformat, including relocations, a total of 90 depots in 2022 and to re-wack the warehouses of a further 39 without other modifications at present. The end of 2021, we had 210 UK depots trading in the updated format, and we expect to end 2022 with around 330, having also reworked the warehouses of a further 137 depots without other concurrent modifications. By the end of 2022, such depots in aggregate will represent around 58% of our UK estate. Next, range and supply management. Discipline range management is crucial for both best availability, which is highly valued by our customers, and for profitability. In recent years, we have reorganized our range architecture into fewer families, removing duplications and improving the balance between new kitchen introductions and timely discontinuations. In 2021, we introduced a more efficient way of testing new kitchen colors and finishes, which we call Find the Gap. We will be running this program several times this year to promote more agile, informed ranging decisions. Around 40 depots had exclusive access to new colors and finishes in some of our more popular ranges for a limited period, following which we were able to select which ones to roll out to all depots. Several of the colors and finishes that we tested in this way feature in our new kitchen lineup for 2022. We've been able to bring these more proven new kitchen styles to the market more quickly. In 2022 we will be managing range introductions and clearances, so that the current UK range count available to all depots is around 80. A similar number to the 2021 year end total, organised around 9 families versus 10 in 2021 and this was 11 in 2019. Range renewal and development are important contributors to our competitive position, and we are committed to providing market-leading product for our customers to sell to theirs. New product launched so far in 2022 included 19 new kitchen ranges with more emphasis on higher-priced kitchens and ensuring our more popular styles are accessible to all budgets. We have innovations in other categories, for example joinery, which also attract footfall and can lead to incremental kitchen sales. Entry-level kitchens have traditionally been our strongest performers, and we continue to support this market segment with the introduction of new product in 2022. We have new ranges in both modern and shaker styles, including the introduction of our new entry-priced smooth shaker kitchen family called Whitney, and it's available in three matte colors. Recent introductions of higher price kitchens have proved very popular. We are improving our offer to these market segments where we are underrepresented again this year. For the timber shaker families introduced in 2021, we have added new colours, including Chilcombe both in reed green and the most popular colour in our Find the Gap tests and in charcoal together with Elmbridge in sage green. We have a new builder-friendly in-frame solution, a look often associated with High Street Independence, for both modern and more traditionally styled kitchens. We're also refreshing our most successful families with new market leading colors chosen from those tested in the Find the Gap program for which we have made space by consolidating shade options within other colors. Solid surface worktops are frequently but not exclusively sold with higher priced kitchen ranges and earlier this year we acquired Sheridan, a long established and leading industry specialist for the manufacture, fabrication, laser templating and installation of premium work surfaces. The acquisition has helped us accelerate our plan to develop Howden's work surfaces as a market leading supply and fit business in a growing segment of the market in which we are underrepresented. This initiative supports our plans to increase sales in particular of higher priced kitchens for which we have an enhanced NPI program. Bringing more of our solid surface capability in-house simplifies delivery of the service, gives us more control over it, and we are benefiting from the experience that Sheridan's team bring. Our manufacturing capability has increased by Sheridans, which will lower installation costs with associated margin benefits for these products. With the rollout of the Hyden's work services to all regions, the number of solid surface worktop orders significantly increased period on period in the first half. We continue to innovate in other categories with a significant number of product introductions indoors, including new grey laminate ranges to flooring, which includes new herringbone colours and in appliances with further additions to our Limona brand, which is the leading integrated appliance brand in the UK. Sales of new product made a significant contribution to our first half performance. Total sales of new product introduced in the period and last year represented around 17% of UK product sales in the first half. That was well up on last year. Sales of new product introduced in the first half of last year increased 200% in the period. And half one sales of 2022 new product were up some 48% on last year's new product sales for the same period. Higher priced kitchens combined with more of our kitchen mix by volume than in the same period last year. And the change in mix contributed to a significant percentage increase in average kitchen order value. Howden's is an in-stock business, and the trade tell us that a high level of stock availability is one of the key reasons that they buy from us. We protect and facilitate high stock availability in several ways. This year, we have continued with our policy of holding enhanced levels of safety stock as a contingency against unexpected demand patterns and interruptions to supply, with heightened emphasis on stock manufactured in-house. We have long-term relationships and agreements with many of our suppliers and being a manufacturer ourselves, this helps us anticipate potential issues in our supplier factories. We manage the inbound logistics for 75% of our bought-in SKUs from factory gate, which improves our visibility of how this stock is flowing through the supply chain. And we utilize multimodal freight routes to minimize disruption and optimize delivery times. We are improving stock replenishment by supplementing depots core weekly delivery orders through a next day service via a regional cross-stocking centre which we call XDCs and by rebalancing where we hold stock. Feedback from the depots and customers using the service has been extremely positive and we see XDCs as a key enabler to delivering the high levels of service and availability which differentiate our offer. The improvements to stock replenishment enable depots to hold deeper stocks of faster selling lines and make it simpler and more efficient for them to deliver superior levels of service and availability, backed by certainty over lead time. This also frees up time and resources spent on stock management, for example, on interdepot transfer of stock, which we can be using more effectively with customers. We developed this capability with third party logistic partners and in the main utilising their existing infrastructure. By the end of period six, the service was available to around 530 depots, up from 400 at the end of 2021. And we plan to have the service available to at least 725 depots, around 90% of all UK depots by the end of this year. We keep under review what we believe is best to make or buy both in terms of cost or overall supply chain availability and resilience and flexibility. In 2019, investment in manufacturing technology enabled us to make the doors for our popular Hockley kitchen ranges. Since then, further investments that we're making in new lines would enable us to make frontals for more of our kitchen ranges, at the same quality as we can source externally, but at a lower cost and at a reduced lead time to delivery. We expect the new lines, located at our Howden site, to commence manufacturing frontals by the end of 2022. In the second half, our second architraven skirting line will also be operational, enabling us to service in-house more of the substantial increase in demand that we've seen for these products. The supply of kitchens to the trade is Howden's principal activity, and we make all of the cabinets and some of the other products we sell, which is a source of competitive advantage for us in several ways. Given our plans and ambitions for the business, we intend over the next three years or so to expand our kitchen manufacturing capacity and capability and to reconfigure some of the supporting infrastructure. Firstly, we intend to increase the scale and scope of our manufacturing operations at Howdens and plan to reconfigure the site so that it is dedicated primarily to manufacturing. We have acquired five acres of land outright and committed to acquiring a further 20 acres subject to planning, which will enable us to extend our factories and put in new lines to increase our cabinet manufacturing capability and to give us the capability to make kitchen frontals in more styles. With this investment, we will have capability to make doors for the majority of our kitchen ranges whilst retaining the benefits of sourcing from external suppliers, who will continue to provide around half of our kitchen frontals by volume. We expect to start manufacturing some of the other door styles currently sourced externally in early 2025. Secondly, we're investing in a new purpose-built warehouse and distribution center for Howden's manufactured product located five miles from Howden in Capitol Park. Once built, the picking and dispatch for Howden's manufactured products will migrate over time from Howden site to Capitol Park. This will help facilitate Howden's site to become dedicated primarily to manufacturing, allowing the site to flow and operate more efficiently with room for further expansion if needed. As a purpose-built facility, Capital Park enables us to improve how we deploy space for bulk storage and would also reduce our usage of third-party warehousing, which is becoming increasingly scarce and expensive to source. With the contractual arrangements for Capital Park now in place, we expect subjective planning for the works to complete over the next 18 months or so. Now turning to our third strategic initiative, which is our digital platform. We use digital to reinforce our model of strong local relationships between depots and their customers by raising brand awareness. by supporting the business model with new services and ways to trade with us and to deliver productivity benefits for depots and their customers. As we enhance the capabilities of our trade platform, usage of our online account facilities, which provide efficiencies and benefits for our customers and depots alike, has continued to increase. New registrations exceeded 40,000 in the first half, and the service is being used across the week, both in-hours and out-of-hours. On average, around 40% of all customers trading with us are also logging in to our trade platform. So far this year, we've seen average weekly logins to our trade platform increase by 88%, with around 69% of users regularly looking at price. Their price. Customers with an online account have, on average, traded with us more frequently and spent more significantly than non-users, and proportionately more of them bought across each of our product categories. In 2022, we are adding to our capabilities, including new app-based functionality, which take our digital offering up to the next level. The Trade app, which puts more of the local depot in a builder's pocket, was launched in February this year. The app replicates core features of the online trade platform, including a user's account details and credit status, making these readily accessible for them whilst they're out, about and working. Users can view their open orders and new features will include rapid check-in at any depot, order status updates and an easy order collection function. Around 20% of our digital account holders are already using the app. Capabilities we added in 2021 are helping end users interact with Haydn's online at each stage of their buying decision, creating higher quality leads for our designers and our customers. Images viewed of real kitchens, which utilizes user-generated content to showcase Haydn's kitchens in people's homes, totaled 10 million in the first half. And this content is being used by both customers and by our designers. Our kitchen visualizer, which features multiple layouts, styles and configurable options, is raising end user familiarity with our kitchens and our appreciation of their priorities, leading to a higher quality of contact with our kitchen designers. The market leading search functionality, which we now have, has enabled users to find the product, advice and instruction and kitchen ideas that they're looking for in a much more efficient way, which is of benefit to the teams, the customers and end users alike. We continue to see high levels of engagement with our web platform and growth in our social media presence, which stimulates interest in viewing our products and services on Howdens.com. Impressions were present in 19% more organic searches a month and site visits totaled 10 million. The time that users spent looking at pages increased by 84%, with the number of pages viewed per session also up. Across social media sites, our follower base at 432,000 was up 24%, with 1.3 million users actively engaging with us monthly. And the fourth part of our strategy is international. Our continental European operations based in France continue to make progress. The ex-appliance kitchen market in France is estimated to be worth around 4 billion, with most kitchens purchased through kitchen specialists and DIY stores. As long-term followers of Haydn's will know, we tested our ability to access this sizeable market in several ways before adopting a city-based approach, serving solely trade customers, led and staffed by people who embrace the Haydn's way of doing business. The performance of the refocused business gave us confidence to open up more depots, and by the end of 2021, we had a total of 40 depots trading in France and Belgium. We believe the appreciation of the advantages of our trade-only in-stock model, our service levels, and our competitive pricing is growing. And our account base has grown by 31% this year to date. In the first half of 2022, total sales in local currencies increased by around 19%, with a gross margin a little above the UK's, as our offer in France presently has a higher kitchen content than in the UK. We are opening more depots this year and by the end of 2022 we expect to have increased the number of depots trading to around 60, including 35 located in the Paris area. We have opened seven depots so far this year and closed five which didn't fit with our strategy going forward. We've also opened for business in the Republic of Ireland. We are using a similar approach to that of France to fit the population distribution of the Republic of Ireland and with the depot teams supported by the UK infrastructure and digital platform. Our initial phase of openings will be clustered around Dublin and in our Ogil Sandiford depot, which opened in April and four will follow in the second half of this year. Our arrival in the Irish market is attracting much attention locally and we are encouraged by depot sales to date. For 2022, we are well planned on our strategic initiatives which are aimed at increasing our market share profitably. Higher stock availability was a major contributor to our performance in 2021. And for the remainder of 2022, we will continue to hold enhanced safety stock levels, including heightened emphasis on manufactured product at Howden's. 19 new kitchen ranges were on sale by the end of June, well ahead of our autumn peak trading period. And we have a program of rooster promotions in place to help keep Howden's front of mind in the trades mind. Howden's work surfaces is now available to all regions backed by recent investment. We will continue to invest in key capabilities, including improvements to service and availability by utilizing our cross-stocking distribution centers. And we are increasing the range of services and functionality that we offer online. We'll be manufacturing more in the UK as our investments in our new kitchen doors and skirting capabilities come on stream and our solid surface business grows. During 2022, we plan to open around 30 depots in the UK and refurbish around another 90 existing depots to the updated format. In France, we plan to have around 60 depots trading by the end of 2022 and to have opened around five in the Republic of Ireland. Lastly, Outlook. The business has delivered a strong first half performance and we are confident of our business model across changing market conditions. We aim to retain a profitable balance between margin and volume whilst allowing operating costs and working with suppliers to keep product and input costs controlled. To date, the price increases we've put through underpinned by our differentiated and service-orientated offer have landed well. Sales in each of our periods one to seven continue to advance versus the comparable ones last year. And our lead bank suggests builders remain busy at present. Whilst following last year's heightened demand for our product, we were up against record comparators, including for our peak trading periods. We have at present the momentum for another successful year in 2022 and plans in place to deliver one. So thank you for listening. We'll now take your questions. If you could just... introduce your business and yourself before asking the questions. So Christian, would you like to start and then we'll... Thank you.