Marks Electrical Group PLC

Good day, ladies and gentlemen, and welcome to Mark's electrical interim results. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session through the phone lines, and instructions will follow at that time. I will now hand over to Mark Smithson, Chief Executive Officer, to open the presentation. Please go ahead.

Hi, good morning, everybody, and welcome to Sunny Leicester. My name is Mark Smithson. I'm CEO and founder of Marks Electrical Limited, or what was now Marks Electrical PLC. I started the business in 1987 when I was 21, so February 2nd, 1987, remember it well. And I did own 100% of the business. I never had any private equity money or partners, and rather stubbornly soldiered on without any additional funding. So, I saw the light. Welcome, Josh, on board. Josh, join us as CFO.

Thanks very much, Mark. Morning, everybody. I joined in April 21, so quite recently. Prior to that, I was with Intertech Group as a regional CFO in the Middle East. And before that, I was with Intertech as the head of investor relations for a number of years in London. Got talking to Mark earlier this year. I was really excited about the opportunity for the business and joined to help with the IPO and the future. Thanks, Josh.

Yes, you've probably never heard of us. Pamiel Gordon depicted us as the UK's best kept secret. And we're planning on changing that. So I'd urge you to get on the website, have a look, see what we do. MarksElectrical.co.uk. We specialise in selling unfriendly freight, premium brands. So your big Samsung American fridge, freezer, melee washing machines and dishwashers, Siemens, microwave, combination ovens. top-end premium product is what we're really specialising. You know, it's higher margin and higher value on your vehicles. So we're chasing the £1,000 Miele washing machine rather than the £200 Vico washing machine. Same sort of margin, but obviously a lot higher value on each order. So you probably, you know, if your oven's packed up or your dishwasher's leaking water all over the floor, get on the website, have a look, see what we do. We have all our own fleet of lorries, trucks. all our own drivers. So we do the delivery ourselves. We specialise in next day delivery. So if you order before 5.30, we deliver free of charge the next day, seven days a week. That is a real key. A lot of our competitions say they do it, but they all generally charge for next day delivery. Ours is free of charge, anything over £150. And that's a real key differentiator with our business model. We deliver it ourselves, we do the installation ourselves and we also take the old products away and we do the removal of the old packaging as well and we do all the recycling all here on site and our one site here at Boston Road in Leicester, so right in the middle of England. We've now got some numbers. I'll just take you through the highlights of H1. So sales growth year on year up 78%, which is great, on sales of 37 million. EBITDA margin of 8.1%, so just over 3 million EBITDA. The next day delivery, again, has given us this great Trustpilot rating of 4.7, and that's from our 151 employees, a big proportion of that are van drivers. Incidentally, we don't have any HCV drivers, just so you're aware of that. So it's not a big problem for us. Over 30,000 items in stock, over 50 brands, so some 3,000 different SKUs. Josh will just run through the financials now, and then I'll come back in a moment. Thank you.

Thanks, Mark. So, yeah, turning to the numbers, as mentioned by Mark, we had a very strong start with 78% revenue growth in the first half. We made material investments in our cost base to drive improvements in marketing and brand awareness, and in order to further prepare ourselves and professionalise the business in preparation for the IPO that we recently completed. To professionalize a business, we've made a number of key hires across finance, HR and operations, really to facilitate the next stage of growth in our business. We finished the period with robust profitability of 8.1% EBITDA margin, which sets us well on track for our full year targeted EBITDA margin of circa 9%. In addition, we drove significant improvements in working capital in the first half and finished strongly with over 200% operating cash conversion. If I move to the key P&L items, as mentioned, 78% revenue growth in the first half, and that gives you a two-year growth rate versus H120 of 162%. On the gross margin side, gross margin was down in the first half by 280 bits. And this was driven by particularly strong gross product profit margins during the COVID period last year as a result of restricted supply last year, which drove higher than normalized margins. We also ran a promotional campaign with 10% discounts to new customers in June and July. This impacted the gross margin by circa 50 basis points in the first half. And our guidance for full year gross margin is in the range of 18 to 20%. And we believe that that type of level represents a more normalized run rate going forward. In advertising and marketing, we spent 1.9 million, which was ahead of the 750,000 pounds we spent in the prior year. This was driven by two things. We did our first ever nationwide TV campaign, which we ran in the month of June with Sky. The TV campaign represented around 30% of the increased year-on-year spend. Secondly, we started work with a new digital agency, and we changed our strategy and approach to both PPC paid advertisement and search engine optimization online, and we significantly increased our budget with Google. Our guidance for the full year for advertising and marketing is to spend between 4% to 5% of sales. Overheads increased during the period from 4.4% of sales to 6.1% of sales as a result of the investments in the new hires that I mentioned in anticipation of our float as well as our new life as a public company. In addition, we've now put our CEO's costs through the overheads base and we've also introduced an employee-wide bonus plan. Our full year guidance is for overheads between 6% to 6.5% of sales. With the additional investments made in marketing, brand awareness and overheads, this resulted in our adjusted EBITDA margin for the first half being 8.1%. This is in line with our expectations and places us well on track for 9% full year target as we benefit from further operating leverage over the investments made in the overhead base in the second half. It's also worth noting on this slide that the adjusted earnings per share is representative only as we hadn't actually listed at the time of the half year results on the 30th of September. Moving to the cash flow and balance sheet. During the first half, we maintained inventory levels versus the closing balance of March 21 and we were holding around £11.5 million of inventory, both at the end of last year as well as the half this year. So we were very happy with maintaining inventory during what has been a tough time for supply. This inventory level represents around 80 inventory days on 12-month rolling sales. We have very few debtors in the business and the cash inflow from receivables is the repayment of the director's loan pre-IPO. And of course, that is no longer in place. We increased credit limits with suppliers during the period, which allowed us to improve our payables position, albeit we still operate with a very reasonable 45 credits a day. Our working capital control in the first half allowed us to generate 6.6 million of operating cash, with a cash conversion of 217%, materially ahead of the cash conversion in the prior year. And probably worth noting that going forward, we expect a normalised cash conversion in the range of around 90 to 100%. We spent just short of £450,000 on capital expenditure, which primarily consisted of mezzanine upgrades to our warehouse facility, increasing capacity by 29,000 square feet, as well as additional delivery vehicles, where we increased delivery capacity by 58%. The resulting free cash flow was strong at £6 million, representing a free cash flow margin of 16%. And finally, we repaid all existing debt and closed the period with a net cash position of 1.3 million. Worth noting that this is before the receipt of the proceeds from the IPO primary raise, which we received in early November. I thought it would be helpful to bridge the prior year EBITDA margin to the current year margin so you can see the major areas of expenditure work and also recognising that last year was somewhat of a one-off And we're now moving to a new, more normalized EBITDA margin level. As mentioned, the largest driver of the margin reduction was the falling gross margin of 280 bits to 19.2%. And we expect that range to be around 18 to 20% going forward. As we mentioned, last year was somewhat of a one-off with the restricted supply constraints. Moving to marketing, we spent an additional 150 bits on driving our brand awareness through TV and our renewed focus on digital marketing with increased spend. And finally, as mentioned, our investments in professionalisation of the business drove an additional 160 bits on overheads. We are targeting a full year margin of 9% EBITDA margin, and expect to generate additional operating leverage over the investments made in overheads during the second half to drive up that margin in the second half. Finally, moving to current trading and outlook. In terms of current trading since the half year, October was a record month with the highest recorded sales yet. We also achieved a very good margin in October ahead of that seen in the first half results. November has been a good start, albeit the back end of November is expected to be very strong with Black Friday and Cyber Monday uplifts. We then usually experience stronger trading periods into December and January, and we will be focused on these months to maximize our full year revenue opportunity. We're targeting full year revenue growth in the range of 35 to 45%. The second half comp is tougher than the first half, as you can see on slide eight. This forecast requires revenue growth of circa 25% in second half or 10 to 15% sequentially versus H1. From a margin perspective, we expect to generate further operating leverage on the investments made in overheads. And as mentioned, we're targeting a full year margin of around 9% EBITDA. We expect to continue the work that we've done on working capital and cash conversion, and we expect a closing working capital of less than 5% of sales, and that would be versus an FY21 closing figure in March last year of 9.5%. And then finally, as I've mentioned in our admissions document, we're targeting a dividend payout ratio in the range of 20%, which we'll be able to fund from year one, And it's worth noting that that would be prorated to the time that we've been listed.

Thanks, Josh. Thanks very much indeed for that. So I'll just run through our five operating pillars that we believe in with this company. So first of all, technology driven operating models. So we're not saying we've got 100 robots running around the warehouse. Pardon me. But what I have done over the years is invest heavily in technology to make the systems very easy for me to operate. I always believed, like I was saying earlier, that I could do it myself. Slightly misguided, but it made a massive difference having a great tech team. And Dr. Al, he headed that up. He's been with us nearly 20 years now and he's got a PhD in robotics. and artificial intelligence as well. So we've got a very, very good IT team which operates the back end of the systems and operates the website. Secondly, a simple distribution network. So we've got one site in the middle of England. We can get to, you know, a huge, well, 99% of the English population where their own fleets of one simple site. It makes it a lot easier to maintain and manage. It cuts down on your overheads. Thirdly, our own distribution model, vertically integrated. So when you've got your own transport, if you're e-commerce, you really do need your own transport, your own logistics. Not let the manufacturers take control of your business, which a lot of other companies do. So really believe in that. Fourthly, stocking the right products. It seems obvious and everyone says they stock the right products. I've been doing this nearly 35 years now. I understand what I'm buying. It's not just a skew to me. I understand the difference between the different size loads that you need to order and the architecture of each individual range for each individual brand. And then fifthly, providing a simple online shopping experience because it's all developed in-house and we can adjust it at the drop of a hat. It's very easy. We don't have a queuing system, ticketing system. It's all done here under one roof, one site, one location in Leicester. So it's very, very easy for us to operate and manage. So I'll just look at this. The first one here, this pricing tool, this is all developed in-house. And we're the first company we've been told by the suppliers and manufacturers to ever have one of these pricing tools. And this was all designed in-house. It's fantastic technology. I live and breathe on this pricing tool. It shows me all the stock we've got. It shows me the pricing of all our competition. And it automatically, we import the data twice a day from The French company, of all the prices, of all the market, all our competition, it updates twice daily. So it then monitors our prices and puts them in line with the rest of the market. We can set it to undercut competition. We don't actually feel like we need to. So we like to maintain the pricing, just be the same price because of our service with our next day delivery, free next day delivery. I know I keep harping on about it, but it's such a key point that we don't have to undercut. We just have to maintain the pricing in the market and it works very, very well. And that's all been designed in-house. So that's a great part of our technology. Next slide, please, Josh. Right, so we're sat, as you've probably seen, right in the middle of England, which is a great position to be in. We've got a huge site here, nearly eight acres. We expanded, put some mezzanine in of nearly 30,000 square foot. It started going in February this year and it was completed in June. That's been very useful. Incidentally, this site we believe can get us to about 180 million. So we probably won't get into that next year, but we're planning on pushing and building our market share. But we don't run like a lot of our competition. They run complicated satellite warehouses, you know, might have 15 to 20 or even more satellite warehouses, which are very expensive to manage. and maintain. Also, you don't know where your stock is half the time and you need HGV drivers to move the stock from warehouse to warehouse. Ours is very, very simple. It's just one site in the middle of England. Everyone is here under one roof. All the IT team, the data team, the customer service, the sales team, all the stocks here and all the distributions here. So it's very easy for us to manage and maintain. This shows our fleet. We're a bit like British Airways. You have different sized planes for different sized routes. We've got different sized trucks for different sized routes as well, depending on how busy those routes are. We've got three different sizes. All Mercedes. I ordered 28 new trucks last year. We're currently sitting on 38. We've got actually another 10 due. They're due in the next few weeks and we'll be shedding a few vehicles because the current fleet, we think we can get to about 450 grand a day worth. um but that's all mercedes and they're all virtually all brand new they're all maintained here on site we've got our own mechanic our own refueling station which can be very useful as well um during the fuel pandemic that holds some 40 000 liters which is virtually a month's supply of fuel it was very very useful but having your own on-site mechanic as well So if anyone knocks a wing mirror off or a bumper, it can easily be replaced and keep the vehicles on the road at all times. That's a real key part of our business. And all the drivers are all heavily incentivised and very well paid. We've grown our driver base from some 40-odd to nearly 100. over the last 12 months and that's we've done that by paying them well and they get a good basic but they're incentivized very heavily for doing installations two-man deliveries and also for good reviews as well and looking here you can see our brand partners we've got a nice distribution of brands we don't focus on any one particular brand A few years ago, we were dealing with about a third of our business was with Hotpoint, which is now Whirlpool Group. And one Friday night, they decided to remove half a million pounds worth of our discount, which actually equated to virtually all of our profit. We're only making 750 grand a year at the time. So they almost wiped us out overnight. And that really taught me a lesson not to put all my eggs in one basket. It's a good lesson to learn, albeit a very hard one at the time. So we've got a nice distribution of brands there. We focus on the premium brands like you can see. Bosch is our number one at the moment. That's just shy of 12%. And we like to focus on the premium brands. They're easier to install and the packaging is very good. So you get less damages. The instruction books are very good. Generally, the installation is easier and obviously it's a higher value product. You get better customer satisfaction as well. So it makes a big difference sticking to premium brands. But we don't exclude ourselves from the lower brands, but we focus on the higher brands, which give us a higher average order value between 550 to 600 pounds. That's about the rate at the moment. And then finally, from my side for now, a simple website. It's all developed in-house. Award-winning website. You see there our little Mark 1 robot. That's from our TV advert that we had designed in August. And we've just deployed it at the beginning of this month. I don't know whether any of you might have seen it on Sky. And we've seen a real good uplift in sales from that now. So we're really focusing on brand building. But we've got great customer reviews and all this website has all been developed in-house, all here on site with our own IT team. So we're not having to get a third party to do it, which is fraught with danger. You know, our guys, the seven of them, the coders, they're not guys who fix your laptop. They all work for us and they run our systems and they push our business on. Thanks very much indeed. So Josh will now run through some growth levers.

Thanks, Mark. So worth noting that this is just some ideas of the growth levers that we're heading towards, not necessarily a fully exhaustive list. But if I start on the marketing side, so in terms of current developments, we've got increased digital marketing spend, as mentioned, in terms of our PPC and SEO, and we've got a revised approach to how we're doing things. In terms of the current and future opportunities, as Mark mentioned, we're running a TV ad. We ran one both in June. We're also running one in November. And we're seeing a big uplift in traffic as a result of improving our brand awareness. And I'll come on to that a little bit more in the next few slides. On the operational side, as mentioned, we expanded our vehicle fleet 58% since the end of March last year. And we've also had the addition of a 24-7 shift pattern in our warehouse, which really improved cutoff times. As Mark mentioned, our current warehouse, we think we can do around 180 million of annual sales from our current warehouse. But we're also looking into the future and looking at warehouse development plans for future expansion to take us beyond that. On the customer offering, we have a very low penetration in terms of buy now, pay later and credit solutions. So we are looking at adding some additional buy now, pay later providers in order to improve our penetration in that market, which we believe will add some incremental customers. In terms of audio visual proposition, we have a very low market share in TV, which is part of the consumer electronics market, not part of the major domestic appliances market. And we've made some new hires there in order to really help boost our TV proposition. And we are seeing a significant uplift in terms of sales and volumes of TVs this year versus the prior year as a result of those new hires. the financial side as you can see from the first half results we're going to have an increased focus on working capital and inventory days to make sure that we're well stocked but we're improving that inventory turn and driving good cash conversion And then finally, on the right there, we do have an opportunity to add a potential captive warranty in the future. We currently operate as an agent for a warranty provider. We don't push warranties particularly hard. And it's worth noting that we don't intend on building the business around warranty sales, but it could provide some incremental opportunity in the future. Moving to the competitive landscape, so we've consistently gained market share over the years. We had a good boost to our market share in FY21 as a result of the shift online, and we had 1.2% market share of what was then a £5.3 billion major domestic appliances market. And as mentioned, this doesn't include TV, which sits as part of the consumer electronics market and is worth a further two to three billion pounds a year. So the main market that we operate in and focus on is major domestic appliances. It's worth around five billion pounds per year. And in the first half of this year, we managed to grow our market share to one point five percent. In the medium term, we're focused on growing this market share further and our long-term ambitions really are to get our market share to around 10% of the market. So we have 1.5% today and we're aiming to get our market share to 10% of major domestic appliances. At the bottom there, you can see our market shares in the different categories. This is no coincidence. Obviously, it's by design that we focus on the large, unfriendly items. So in cooking, the big range cookers, dishwashers, American fridge freezers and refrigeration and washers and dryers. We do do a small amount of microwaves, small appliances and vacuum cleaners, but we are really focused on the heavy, difficult items that we can deliver ourselves with our own fleet of vehicles and our own delivery drivers so we have a significant opportunity to improve brand awareness as as mark mentioned pamiel gordon depicted us as the uk's best kept secret in retail and you would be not surprised to hear that when we did a poll in august at 1700 adults across england only six percent of the english population had actually heard of mark's electrical This rose to 15% in the East Midlands, which is no surprise given that we're based in Leicester and a lot of the historical marketing have been based around the area. But what was particularly surprising to us and pleasing was that London, only 3% of people in London had heard of us, yet we send most product to London on a daily basis. So our biggest market daily is the London market. And only 3% of people in London had heard of us. So it represents a huge opportunity. What you have on the right here is what the individuals that were polled cited as the place they would usually purchase from. And probably worth noting that none of these 21% likely represents the independent electrical retailers as well. So a very big market and lots of opportunities to go for. So how are we going to try and improve our brand awareness? Well, we're really investing and reigniting our approach to marketing. We're taking a three-step approach across online, offline and social. If I take these in reverse, so starting with social, it's really important, of course, that we have a brand presence across social media channels. And we do have presence across all of the channels here. This helps with brand building, but it's not a huge driver of traffic in this sector. So whereas it may be a huge driver of traffic in, for example, a fast fashion sector, it isn't a huge driver of traffic here. You know, no one will be surprised if I say you don't go on Instagram to look at the picture of a dishwasher. If I move to the top on online, as mentioned, we've got a renewed approach in terms of our strategy to online digital marketing. On the pay-per-click side, we've got very focused activities with our new digital agency, and we monitor that very closely in terms of the KPIs and the return on advertising spend. On the SEO side, search engine optimization, we have new projects underway with both our IT team and our digital marketing agency. And we're really pleased on the progress we've made over the last six months. And for a number of generic SKUs, we're now actually on the front page of Google. We may be in position five, six, seven, whereas a few months ago, we would have been buried on somewhere on page two or three. So some strong improvements in SEO, and we continue to work on that. We also have a new project on conversion rate optimization, which we also kicked off recently. In terms of offline, so as Mark mentioned, on the TV ad side, we've run a TV ad with Sky in June. We're also running TV ads with Sky to a selected area in the month of November. And when we run these TV ads, we really do see a significant uptick in traffic And the big opportunity for us is about getting Marks Electrical in front of more people because we're competitive on price. We offer excellent customer service with our own delivery fleet. And really, we just need to get in front of more people to drive that brand awareness. Finally, on the environmental side, I just wanted to finish up with a few points on environment given the importance of this area. So during the first half, we recycled 887 tons of used major domestic appliances through the WE process. We achieved this through a partnership with the Appliances Recycling Group. Worth noting, they also have carbon neutral operations We also recycled ourselves with our in-house facilities that you can see here. 20 tonnes of cardboard in the first half, 20 tonnes of polystyrene and four tonnes of polythene. We also sold these to a specialist recycling company and that offtake generates us a small amount of income, which we also use towards our own carbon offsetting activities. So in relation to the emissions, both from our delivery vehicles as well as our insight operations, we track all of these and we offset all of our carbon emitted during the first half with specific certified carbon offsetting projects. So we offset over 1000 tonnes of our own carbon in the first half. We will also update further on our activities on the social and governance side in our full year results. I'll now hand you back to Mark.

Thanks, Josh. Yeah, thank you very much. So in summary, so we had a great first half. So the 8.1% EBITDA margin, which was great. We've got a fantastic business. We've got a very small market share in a huge market. Like Josh was saying, 5.3 billion on MDA, white goods, and then another 2 to 3 billion on TV. And we've got a very small amount of that business. So it's a huge market to go after. We've got a fantastic business. It's very simple. It's scalable. We're really pushing it and driving it. And we feel all we need to do is just get a name out there, which we're doing through brand awareness. And that's the main thing that we need to be pushing. So I'd like to close there now. Thank you and welcome any questions.

Thank you. If you would like to ask a question, please signal by pressing star then one on your telephone keypad. We will pause for a moment to assemble the queue. We'll take our first question from Tony Sherritt from Panmure Gordon. Please go ahead.

Hi, Mark. Hi, Josh. Well done. I just wondered if you could give us morning i wonder if you give us a bit of uh your view of um uh how black friday um and the sort of seasonal peak this year is going to develop you know how competitive you think it's going to be um and and what what's your view on product availability across the the peak season so that's the question thanks sony yeah so we've started off november very well uh

We resisted the urge to discount. We held fast on our margin. We didn't put a lot of discount codes out there, albeit our competition were doing that because stocks in short supply, there's no point selling all your stock before Black Friday and having nothing to sell. So stock isn't easy to get, but if you battle hard, you can find it. We've got great connections with our suppliers. We really have that built up over the 35 years. And so stock isn't easy, but if you work hard at it, you can get it. We've got so much stock coming in the next week. We've managed to maintain it, in fact, slightly increase our stock levels. We have just started now. We're seeing the benefits of the TV campaign coming through. And we've just reacted and put some voucher codes on. We did that a couple of days ago. We've seen a great uplift in sales. So it's a great start to November. We're really pleased. And we've got plenty of stock coming through.

Do you think overall, you know, the stock position market wide is going to affect the level of discounting?

Yeah, I do. Definitely, Tony. There's no point giving away all your stock and knocking 10% off everything if you can't get anything else. The manufacturers, it's not like making t-shirts where you can wrap very quickly and make a lot more. These are big brands that we deal with. They have the forecast and they've all suffered the COVID problems and the semiconductor problems. So stock isn't widely available. So I think a lot of the big boys will

will resist discounting too much so margins should hold up very well there's no point giving away stuff if you can't replace it okay just one final one if i may uh just just wondered um in terms of the level of online penetration um of the mda market where do you think it's sort of settled down at a post-covid level i know that covid keeps sort of flaring up a bit but But where roughly do you think it is relative to pre-COVID?

Yeah, thanks. Thanks, Tony. So, I mean, pre-COVID, we had about 40% online and about 60% on the high street stores and moved around a lot during that COVID period. But since the stores reopening around April, we think it's going to settle at around 60% online and about 40% on the high street. That's what the GFK data is telling us. It's bobbing around that kind of at 50% to 60% level in terms of online sales. So we think it'll settle at about 60%, particularly given that some competitors are talking about stock closure programs.

Okay, thanks very much. Well done, guys.

Thanks, Tony. Thanks, Sonia.

Thank you. I'll just remind everybody again, if you would like to ask a question, please signal by pressing star, then one on your telephone keypad. We have another question from the line of Matt Evans from Equity Development.

Hi, Jen. Thanks very much for the presentation, Matt Evans at Equity Development. I just had a question, if I may, about I suppose the sustainability of your key differentiators, if I can put it that way. I mean, just Personal experience, if I'm honest, I was pretty blown away by my experience with Nance Electrical last month. I was looking at the exciting world of condenser tumble dryers, which I needed. You guys were top on Google. When I searched, had a chat with one of your customer services representatives on a Sunday afternoon, delivered the following morning to me down in London at about sort of 8 or 12. Lots of communication along the way. I thought that was pretty outstanding.

Thank you, Matt.

Well, I mean, as you said a couple of times, I confess, and that's my mistake. I hadn't heard of you guys before, before sort of, you know, that need, you know, that search. And now I won't shut up about it, to be honest. Thank you.

It's great to have a customer like you.

Well, probably and possibly, we talked about sort of, you know, price ranges. It was probably 550, 600. So, you know, so I might actually, in a way, be a sort of a typical customer you know, customer, I suppose, or first time customer. And as you mentioned before, it wasn't too much price, it was, you know, the household names didn't have, you know, the Bosch, you know, tumble dryer I was after, and couldn't tell me when they'd be back in stock, whereas you guys, you know, it was there, it was very clear, the whole process was so smooth. With next day delivery, you know, for me, the key differentiators were, were the availability of stock and the next day delivery. Are you confident, I suppose, in the resilience of that model as you scale up, as you continue to grow, that you'll be able to be delivering on those pretty key differentiators and elements of something that really should be able to drive brand awareness and customer satisfaction?

Yeah, absolutely, Matt. You know, a bigger site's on the radar. We said we can get this site to 180 million. So more vehicles, more stock. um i mean that is the key it's quite simple what we do but we don't have to trunk it all around the country like a lot of our competition we don't deliver to the outer reaches of you know scotland albeit it's a beautiful place but we don't deliver up there and we don't do a lot of mid wales we don't do cornwall so we go to where we can get to the same day that is the key differentiates between us and a lot of the competition a lot of the competition rely on using the manufacturer's logistics which is fraught with danger. You're letting someone else in control of your own business. We want to keep everything under control here. That's what we do. Vertically integrated. If you're doing e-commerce, you've got to have your own logistics. They all work for us. They're all very well paid. We've got a low overhead base as well, which means you can reward your drivers. So we don't have a problem losing drivers as a lot of our competition, they've had that problem. And we don't run HGV vehicles to trunk stop between satellite warehouse to satellite warehouse, which also increases your risk of damage as well. So it's, yeah, we can definitely scale it up. And we are doing, you know, we started doing more discounts. We could scale it up a lot quicker, but we're growing at a nice rate and we want to make some money. That's our plan. We're not here to dominate the world overnight. We want to actually make a profit. Yeah. Thank you. Thanks very much for your customer as well. Pleasure.

Thank you. There's no further questions, so I will now have back. Hand back to Mark Smithson for closing remarks.

Thanks very much indeed. So thanks, guys, for joining us on our first ever interim earnings call this morning. We're really happy with the performance we've delivered in the first half with 78% revenue growth and good profitability. which shows our differentiated earnings model. We've successfully completed our IPO and welcomed our new investors on board and really look forward to the second half of the year and the future ahead as a public company. I hope you all have a great day and thanks again for joining.