Marks Electrical Group PLC

Well, good morning, everyone. Welcome to sunny Leicester, the centre of the universe, as I know it. That's where I was born, and that's where we operate from. So a very convenient location right in the middle of England. I started in 1987 when I was 21, so I've been in business 35 years. Started off cleaning cookers in my dad's garage and moved through various shops, went online in about 2005 and bought various warehouses. Now I've got a huge site, 8-acre warehouse, in the center of england um in leicester i was always underfunded because i always wanted to do everything myself um i wanted a business with minimum human intervention so i invested a lot in it in the back end systems but i was i bought a new warehouse this huge site we're in now and it hampered me considerably so i was always constrained by cash i've sold some some shops um About 800,000 pounds, about two years ago now. That gave me some extra cash and some credits that I was owed and chucked that back in the business. The accountant said, no, you know, probably keep it to yourself. But I ignored his advice luckily and put it into stock and off we go. So it was like having a light in the touch paper. Once you've got some money in your business, the difference it makes is incredible. So I was always strapped for cash and now we're not, which is a great feeling, a great position. And what we do, I don't know whether you all know what we do, but we sell domestic appliances. We focus more on the premium sector. So we're not interested in a £20 Morphe Richards kettle that, you know, Amazon can deliver and throw over your gate. We're more interested in the £2,000 Samsung American fridge freezer or the Rangemaster two and a half grand range cooker, a Miele washing machine for £1,000. not your Beko £200 washing machine. We do sell them as well, by the way. We don't want to ostracise ourselves from that market. We want to cover all the bases, all the options, especially in this tough climate. But we focus more heavily on the premium sector, which is where I grew my business from. That was what I was always wanting to sell, premium products. And so we have our own logistics, which makes a hell of a difference. So we've got about 120 van drivers now, some 40 odd vans, over 40 vans now. Josh joined us in a year ago, didn't you, Josh? So I'd just like to welcome Josh.

Yeah, thanks, Mark. I joined in April 2021, really, to help Mark drive the business. Prior to that, I was with FTSE-listed Intertech. And before Intertech, I was actually with Intercape as well. And I was just really excited about the opportunity that Mark and the team here had to really grow the business and grow the market share. So I joined in April, and as Mark said, we successfully listed in November last year.

Yeah, fireworks night, wasn't it, Josh? A bit of irony there. So yeah, thank you very much. So can you flick onto the next slide, please, Hannah? Thank you very much. So revenue last year, up to the end of March, March 31st, was just over 80 million. So we hit what we'd forecast. That was a 44% growth. on the previous year, which was a 78% growth on the year before that. So we hit the number that we were aiming for, which is 9% EBITDA margin. That dropped through 7.2 million EBITDA profit. So that was very impressive. We've got over 40,000 items in stock, 40,000 boxes of products in stock. That's 3,500 SKUs which we stock. Over 50 brands, 200 plus employees now. And it's all driven around our next day delivery, free next day delivery. And that is seven days a week. That is what we do. And that's given us this Trustpilot rating of 4.8 out of five, which is market leading. No one else has got that rating. We're very, very proud of that. Thanks, Hannah. So here you can look at the market. So it's a huge market, the NBA market. It's worth about 8 billion in total. Sorry, the 5.4 billion for the MBA, major domestic appliances or white goods, however you want to call it. Consumer electronics TV market is another 2.5 billion. So it's about 8 billion, the market in total. So we've got about a 1% market share of that or did have at the 80 million at the end of March. We've been increasing that. So you can see though, end of FY22, that was the average through the year, 1.6% market share, and 0.21% for TV. So you can just see the minute share we've got of an immense market. So there's a huge runway there. Thanks, Anna. Now, financial overview. I'll leave this to the expert, Josh. Thanks, Mark.

Yeah, so what we've got here is the H1 and H2 split for the revenue. So the things that I'd draw your attention to is in H1 of the last financial year, FY22, where we did 38 million, we were up 78% versus the 21 million in the prior year. And in H2, we did 43 million, which was up about 23% from the 35 million in H2 of the prior year. So if you like, the comp is tougher in the first half of FY23 for us. And as mentioned in our release, we've seen a strong start to the year in the first couple of months doing over 20% revenue growth. But as we'll come on to into trading and outlook, it is a tough market despite us doing well. At the bottom there, EBITDA margin of 9%, as Mark mentioned, and an adjusted EBIT margin of 7.9%. So very little in terms of DNA because we're CapEx light. And that obviously results in a strong return on capital employed of 57% as well. So a real class leading return on capital employed from us there. And we had a good year from a cash perspective, which I'll come on to. Next slide, please, Hannah. So in terms of the P&L financials, particularly for those of you that are perhaps new to the story. So the change year on year has been very strong in terms of revenue. It was really well flagged by us at the IPO that we didn't think The 13.7% EBITDA margin that we achieved in FY21 was necessarily sustainable. There were certainly some one-offs in that COVID year that benefited a lot of e-commerce retailers. So, for example, in the gross margin, you see the gross margin was a little bit higher in FY21. That was driven by really strong product margins because we were able to be a bit more opportunistic with price when supply was so constrained. That's worked its way out of the system now. In addition to that, because the growth came really quite fast in FY21 to the business, we didn't have a huge supply of drivers anymore. And as a result, we were sending out around 1.2, 1.3 drivers per vehicle, whereas in FY22, we're averaging more like 1.9 drivers per vehicle, which effectively is saying we have nearly two men on every single delivery that we do, which, of course, is much better for customer service and a lot more sustainable from a time management perspective as well. Moving on to advertising and marketing services. We spent 5% of sales on advertising and marketing, which was bang in line with our guidance. In FY21, it was somewhat cheaper to advertise online for e-commerce players. There are rumors that some of the big players even turned off pay-per-click during the COVID period. So it was a lot cheaper for us. And we think that 5% on advertising and marketing is the spend levels that we'll be at going forward. On the overheads base, so 4.6% in the previous year, 5.8% now, and we're guiding to around 5.5% to 6.5% as our run rate on overheads. Of course, there's been a lot of change in the business over the last 12 months. Mark's really invested in the management team. So you've had myself joining as well as a number of other key hires that we'll come on to later. um you know in addition to that we we have mark taking a salary through the base now rather than dividends um so this is definitely a much more normalized level 5.5 to 6.5 of overheads in it and it's really this line in particular uh that that is really different to our peers so the overheads excluding advertising and marketing this is where we believe we we are uh very efficient uh so all in that resulted in a 9% EBITDA margin. And we've always said that we believe 8% to 10% EBITDA margin is sustainable for the business going forward. So around 8% to 10% sustainable going forward. Thanks, Hannah. Just a reiteration of what I explained here, just to really help you understand why the 13.7% was a bit of a one-off during the COVID year. So as mentioned, a slightly higher margin on the gross margin. To give you some insights on delivery costs, because I know everybody's quite focused on that. So our delivery costs year on year were up 5%, which was driven, A, by the increase in the number of drivers, as we mentioned, and improved pay and so on. And that was offset by delivery density. So as the business grew 44%, we had better delivery density in areas which helped. If you're thinking about fuel, fuel for us was up 15%. So fuel cost per delivery was up 15% during the year. And that compares with the total delivery cost per item. up 5%. So we believe that we controlled that reasonably well, given what's happening. And also worth mentioning that fuel costs is quite a small proportion of the overall gross margin. So the increased fuel costs that we're seeing at the moment, of course, we don't welcome them. But equally, they're not extremely detrimental on the margin because it's not a huge proportion of our cost. And then the advertising I've already mentioned and the overheads also mentioned. There's a bit of rounding in the charts. The previous page was 120 bits, this is 110 just to make the chart work. But it's that kind of level. Next one, please, Hannah. Coming on to cash flow and balance sheet. So you can see here in FY21, Mark invested quite significantly in the inventory. So you can see inventory went up 7 million in FY21. We continue to grow this in FY22 with an additional 3 million investment into inventory. We closed inventory at just over 14 million versus 11 million in the prior year. But we're also able to improve our payables position, not to extreme levels. Our average payables days is in the 50s. So it's not very detrimental or anything like that to suppliers. But we just managed to have better conversations. The business had expanded significantly and suppliers really recognised that. and allowed us to increase those credit lines, which was great. So operating cash conversion, 119% versus the 34% in the previous year. CapEx is very light in the business. We're pretty well invested. We just spent 1% of sales on CapEx, which was for some leasehold improvements that Mark will come on to, as well as for some additional vehicles across the fleet, which we'll also talk about. And we overall improved working capital from 10% of sales down to 5% of sales. And we think 5% of sales or lower going forward is definitely a sustainable place for working capital. So you should see, on average, moving forward, operating cash conversion in the range of about 100%. There's no real reason why that shouldn't be the case. And I will now pass back to Mark for the next section.

Thanks, Phil. Yeah, guys, so there's four key pillars, key focuses for us to drive the business forward, continue doing so. Firstly, customer proposition. Secondly, brand awareness, operational capacity, and then financial performance. So they're the four key pillars that we see that we need to focus on. Hannah, can you do it? so here if you look at this chart the center of the universe is that me that's where we're based leicester so marks electrical hq everyone is under one roof there by the way so we've got all the it team that developed the software developed the website and and help run the whole total business we've got the sales team here the custom service here joshua myself are here the accounts team the logistics, so all the warehouses here as well. So it's very easy for us to manage. So we can literally walk around the warehouse, talk to all the staff, see what's going on, see any problems that might be occurring and head them off before they become a bigger issue. So all the vehicles all leave here in the morning and they all return back to base at night. So any reverse flow stop, any returns or the recycling of the packaging, it all comes back here. So, and the old appliances as well that we collect and charge for. So it's almost like getting reverse flow, filling your lorries up for a return journey leg in effect. You can see that we've, Introduced here, we've expanded our service offering. So the bottom left down there on the UK chart, Devon and Cornwall, we introduced that initially because when we flowed to November the 5th, we were delivering just from Newcastle down to Exeter, offering the free next day delivery seven days a week. We then thought, you know what, let's try and move into Devon and Cornwall. We tried that during the next day. A bit too long a day for our drivers. So even though we were just giving them a three-day working week, but it was still not quite effective for us. So we're doing that on a two-day run. So just go down there and stay overnight. And that's working really well. We didn't even advertise down there. So just passive advertising. sales that we achieved in the first week of doing so we achieved to fill four vehicles straight away so we thought you know what let's give it a try in the Glasgow and Edinburgh area as well so consequently we tried that because we're actually equidistant it's five hours and one minute from Leicester to Penzance and it's four hours and 59 minutes to Glasgow so we're situated perfectly geographically which is rather fortunate being as I live here and so We added those extra postcodes in, and that's been very successful as well. So it's really a great location for running the business. So we are going to stick to this one model. We're not going to have 25 satellite warehouses like most of our competition have, which are very, very costly to run. You have to have HTV trucks trunking stock between warehouse to warehouse. Very, very expensive, not particularly environmentally friendly, and it just adds huge on costs. Plus also you're in the hands of HGV drivers. When there's an HGV crisis, you're just paying a fortune to acquire those drivers. And basically your business grinds to a halt if you haven't got those people. So we believe that in a nice, simple operating model, which is what we've got. So very overhead light, minimum human intervention. So we've got a very good IT team who built the software to make it very simple to run for very few people. So it's cut down on the back end office requirements. So next slide, please, Hannah. Thank you. So you can see there's some SKU development. Josh, do you want to just talk about the finance offerings?

Yeah, I'll go through both. Yeah, so just showing here on the left, really, that we're expanding SKUs over time. Obviously, as we've become more of a nationwide electrical retailer of choice for people, we need to be expanding our electrical categories and also some ancillary categories too there. So you see taps, that sounds unusual, but it's actually really Quooker boiling taps that have average selling prices of 1,000 to 1.2 thousand. So really premium items that it makes sense for us to deliver. We're not talking about going into the general bathrooms and plumbing market. We've also added air conditioning and we've added barbecues recently. You know, big, heavy items, difficult to deliver, works perfectly with our own fleet. So just showing that over time that we are expanding our SKU categories and you should see us do that going forward. On the right hand side, our finance offering. So we had very low penetration this time last year. around 3% to 4% mark of our total sales was on a form of credit. We've since added Clearpay and Klarna for buy now, pay later options. We've also changed our traditional Barclays finance to V12 retail finance. And we see quite a mixture across those categories. So for example, Clearpay and Klarna, their average order price is between £300 to £400 for a whole range of different items. And then V12, the average order value is about £1,500. So, you know, range cookers over 12 months, 24 month payment plans, a whole range of different offerings that we're now providing to the customers. We've been very careful. Obviously, there's a lot of press around BNPL at the moment. We've been extremely careful in selecting Clearpay and Klarna, believe it or not. In my role as CFO, I get approached by a buy now, pay later solution probably once a week via a cold email from all sorts of buy now, pay later solutions I've never even heard of. And we were just very focused on making sure that we go with the market leaders, Clearpay and Klarna, who are in communications with the regulator. And we really think will be the first movers. We're also looking at integrating the Apple buy now, pay later solution when that comes live. And we know that this is what consumers are demanding. They want to have this flexibility and payment option. But as we say, 10% of our sales in March and growing, we've seen some growth in that in the recent months as well. Next one, please, Hannah.

Yeah, so on there, thanks, Josh, for that one. Interestingly, by the way, you probably, or as the figure here that Curry's penetration on finance for their revenues is like between 20 and 30%. So we've got a bit of headroom there to push for, Josh, on the BNPL. So you've got plenty of offerings, you know, with the consumer issues that we're all reading about in the press and the media at the moment. Looking here, you can see we've got 50-odd brand partners. They're just the leading ones that we deal with. You can see that Bosch are there at 11.7%, Samsung there at 10%, Rangemaster, LG, Neff, some real Miele, AEG, the real key premium brands that we really go after. We don't put all our eggs in one basket. I learned that a few years ago with Hotpoint. when I was doing about a third of my business was with Hotpoint. And one Friday night, they decided to withdraw half a million of my discount. We're only making 750 grand a year. So it was a real a real kick in the teeth that one. So it sort of taught me a big lesson not to put all my eggs in one basket and to spread the risk amongst many brands. So it's been very useful, particularly through the pandemic. Well, one particular supplier might be struggling with semiconductor chips. So you've got someone you can pull a few more leaves and increase the revenue with a different supplier. So it really makes a difference spreading your risk amongst many premium suppliers. Also, selling premium product in particular, you finally get less faults with these products, a better package, so less damage, better instruction books, easier to install. There's a whole host of things. So we do like to focus on the premium sector, but we're not ostracising ourselves, like I've said before, from the BCO. We still want to sell the lower-end entry-level product. Looking on there also in the chart at the top, you can see add-on services. So in that, that includes extended warranties and the removal of old packaging, the two-man deliveries we do and installation services. So we don't rely on any of these things. So with the consumer spending, the squeeze at the moment, if someone comes along and buys a washing machine for £399, They don't need to go for installation. They don't need to go for an extended warranty. We don't rely on pushing these extra add-on services. We can just sell the washing machine. They can have it delivered free the following day, seven days a week. And that is a real key part of this business. We don't rely on extended warranty. And this is only, we just do it for a third party. It's not a captive like a lot of our peers have where they might make a lot more margin, but it's fraught with danger because it's is on your balance sheet as a potential risk. Ours is just, we take a commission. So a five-year guarantee for let's say a hundred pounds, we get a, let's say a 20 pounds commission for selling that warranty. So we just, that's just a straight drop through to the bottom line. So we don't push extended warranties, albeit we do like selling them if someone wants to buy one, because it's an electronic transaction and it's free cash effectively. So thanks, Hannah. Looking here, you can see the looks like a bit like a heartbeat. And in fact, that was my heartbeat when I saw it last June, when it dropped down, our Trustpilot rating dropped to almost a 4.6, it went to 4.7. You know, we really, really are focused on this. And we look at every bad review, you know, Josh gets a chart showing him exactly when it's dipping so we can look immediately and see if we get any you know we're monitoring that the reviews that are poor because generally speaking you get a five-star review or a one-star one so there's not many in between but the one-star ones we like we really do look at them closely as we do the other ones as well um but we did a tv campaign last june it was about 380 000 pounds So it was not help funded by any brand. It was just purely funded from our pocket. So it was very expensive, but we learned a big lesson there because we were flooded with orders. It was a great problem to have. We were short of vehicles, short of drivers, and we couldn't answer the phone quick enough. So our reviews dipped. So we learned a good lesson there. We've since recovered from that position, albeit the sales revenue was good, but we It clearly causes a few issues. And we learned a lot. You can see we had a nice steady rise again. So things are looking very good. we do really push hard looking at and maintaining those good reviews. And that's all driven and derived by having your own drivers. It's not third-party logistics. Everything we do or virtually everything we deliver ourselves, apart from the exception of a few DPD items where it might be filters or the odd vacuum cleaner going to an area where we maybe don't go to or it's not worth going with filters, for example, for a cook-up. But it's all about having your own drivers. It really is a key part of the business. Thanks, Hannah. So here you can see, you know, when we floated with Pamuel Gordon, we were depicted as the UK's best kept secret. You know, in effect, we still are. Only 6% have heard of us when we floated last year. Now it's up to, you know, we've earth shatteringly moved the needle to 7%. So... Our biggest market is actually in London, where we grew it from 3% to 4%. So it just shows the runway and the opportunity ahead of us that there is so much more that we can do. And the market we're looking at is particularly the John Lewis market. You know, you've got curries with a huge market share of nearly 30%. The bottom right quartile of that pie chart at 27% is the Mamas and Papas stores. So the independents, a lot of which are close down when the fathers and mothers decide that they don't want to continue running. Perhaps the kids want to pursue a different career. So they probably sell the building and then retire and close the store. We've seen a lot of that happening. You've got John Lowe's with a 15% market share. They're more interested in closing the stores and turning them into apartments or offices. So that's where we're looking at. You've obviously got AO, which is a very good business. We've grown enormously, and then Argos as well. So we're predominantly looking at the market with John Lewis, the ABC demographic. That's what we're chasing after. Thanks, Hannah. So here on activity now, Josh, by joining us here, he's now become the guru of marketing. and we'll go through some of this now.

I'm not sure about that. I think from a performance perspective, so we've split it here between performance and brand building. Performance, the online marketing is now very much a numbers game. It's all about being present in the online auctions for pay-per-click on Google and then making sure that you're also driving activity on your search engine optimization and your conversion rate optimization on the website as well. So We've invested quite heavily in here in the last 12 months. We've hired a new agency to help us across these areas. And we work with them extremely closely, reviewing numbers on a daily basis to understand which auctions we're in, how the auctions are performing, what it's costing us, how that works. You get to certain spending levels and you get diminishing returns quite rapidly. So we're very, very careful about how much we actually spend on digital. It's really easy to spend a huge amount, but it doesn't necessarily mean that you will get the return on ad spend that you need. So we also focused on brand building. As Mark mentioned, we did our first ever Sky TV campaign in June last year. We also did some Sky in November and December and we've started to do some work on Channel 4 and ITV and YouTube as well. We expect to expand more in this area in the next 12 months. So certainly want to push this a little bit harder. Again, need to be careful about where we spend the money and how we spend it because TV advertising is expensive. But we will be selective and consistently do this across the year. In June, we've launched a new TV ad. It's showing on Sky TV at the moment. And what we're seeing that's very exciting is that the brands now want to work with us and help us co-fund some of those adverts so that we can reach a wider audience and do a bigger campaign. And that's fantastic because go back 24 months and there's no way Marks Electrical would have been able to ask one of the major leading household brands to actually support us in an advert. So that's a really exciting point. Social, we've not done a great deal in social media over the past 12 months. We do intend on pushing that a little bit more in the next 12 months. You don't go on Instagram and Facebook to pick your next washing machine necessarily. But that being said, it's really important to create that subconscious awareness for the customer so that they've seen us active on their social media channels regularly. And when they come to using Google to search for the next washing machine, they feel like they know us already and they're prepared to work with us. So hopefully that will move the needle on that in the next 12 months. And that will really contribute to improving that brand awareness from 7% that Mark took you through. Thanks, Hannah. I'm moving to growth in web traffic and returning customers. You've got web traffic growth shown here in the top left, so we grow that significantly over the past few halves. Our CRM database, We've also grown that steadily too. We don't send lots of spam emails. We're very restricted in terms of how frequently we actually send an email to customers. We only do it around once a week. We noticed that when we were doing it twice a week, we were actually seeing that the database declined faster than it grew. So we're very careful to not send too many emails to customers and really just send them an email once a week, showing them the interesting offers and deals that we've currently got going on. We only actually started tracking the database accurately in September 21, which is why the chart starts at that point. So again, this is a new focus area for us, making sure that we're serving up the right content across email. Um, you can see here our total order growth and our returning customer rates. So we've been quite good at maintaining a returning customer in the range of 25 to 26%. Um, it dropped to 24% when we had that huge amount of growth, um, but we're doing quite well to maintain it. And the eagle-eyed of you here will look at the web traffic and look at the total orders and say, well, that looks like a drop in conversion. That is true. And that's just a function of the fact that we're doing more television, more display advertising, more YouTube, and it's very much top of funnel. So we're starting to get people onto the website who are having a quick look. Oh, I've not heard of Marks Electrical before whilst they're watching TV. Have a quick look and then probably not come back to us, you know, maybe for a few months when they actually need a product. So doing more prospective advertising is definitely going to impact your conversion rate. But equally, it's all about top of funnel and really trying to get more people looking at Marks Electrical. Thanks, Hannah.

Thanks, Josh. Yeah, so operational capacity here. So you can see here our driver installer team. March last year was at 78 and March this year we closed at 160 and I think we've got about 120 approximately now the fleet of vehicles was 24 we've almost doubled that now December 2020 I ordered 28 brand new Mercedes trucks the last three actually arrived last week so that was a good move I got a very good price pre-price rises Consequently, they've had numerous price rises, Mercedes have. They're all Mercedes. Every one of our vehicles, they all come with a three-year unlimited mileage warranty. We have the boxes specially built, very lightweight boxes with big Delandia tail lifts on them, which help for the delivery of the unfriendly freight. So if you're trying to get a big American fridge freezer off, you want to give you guys the right tools for the job. And having a good lorry is a real, real necessity. Warehouse space, we've increased that. We've put a new mezzanine floor in. That cost us about 300K. June last year, we had that installed. So that increased the warehouse space. We've subsequently had a little bit more added as well. We've also increased the way we stack products in the warehouse. So it's really, really increased the warehouse space, which is great. When we moved in here five years ago, we had about three and a half million pounds worth of stock. I wondered how it would ever fill it. And now it's sort of, it's certainly getting full. But it's also installed a 24-7 warehouse operation. So we didn't used to have that time afloat. We were almost 24-7, but the weekend we had quite a broken sort of shift pattern. So we've changed that now. We've got the guys work four days on. four days off, the same as our van drivers do a four-day-on, four-day-off shift pattern. So effectively, our people are already working the four-day week, the vast majority of them, and they absolutely love it. There were some who sort of didn't want to actually change to the four-day-on, four-day-off initially, but now they do it, it's a great shift pattern. So You end up working hard for the four days you're here, but then effectively with your days off as well, you only work five months of the year. So it's a great job, keeps your workforce motivated. They get very well paid as well. I mean, that's another point. We do already pay at the top of the pay scale. We have increased that throughout the year as you have to do so. so we make sure that driving stores get very well paid and rewarded for good reviews they get rewarded for installations carrying products upstairs american fridge freezers carrying those into houses anything that's you know outside of the basic delivery they get rewarded extra cash so that incentivizes them and gives them the incentivization to actually carry out the job rather than turning up and you know, intake of breath, oh, I didn't really want to do that. You know, they actually, police have these additional services for themselves to actually carry out. At the end of the day, it increases their hourly rate considerably. So that does make a difference. They all go through a training process, showing them how to install American fridge freezers. You know, it's not just one simple brand. You know, you've got Samsung, LG, Hayer, Hisense, Fisher-Paykel, Rangemaster, Bosch, Neff, Siemens. It goes on forever. So they're all different. They've all got slightly different ways that they're installed. And it's a real key part of the business, understanding that now. You know, Amazon can't just go in and steam straight into doing, you know, understanding how you do all these deliveries. It's not an easy thing to do, especially with their transient workforce. Ours are as specialised. team of people that understand the installation and that's what it's all about you vertically integrated logistics business all part of our retail business as well well online retail business so you know we get a margin from the from the e-commerce and a margin from the from the delivery as well the logistics so put it together and it makes for a nice margin which makes you very strong control of your own destiny which is what i've always been about i don't like relying on anyone else um hence why the investment in software so back end software, your own logistics, we've got our own fuel tanks, when there's a fuel crisis, we've got enough supply for almost a month's worth of deliveries, which was great. So everyone all being on site, we also have our own mechanic here as well. So anyone knocks a wing mirror off, we've got two mechanics now, so that they can put a bumper back on or, you know, straighten something out, fix a tail lift. So it really keeps all those vehicles on the road all the time. And it is a key part of the business. Thank you, Hannah. Here, that just shows our warehouse. Bottom right, you can see there about six months ago, we were only stacking American fridge freezers too high. We now go three high, which sounds ridiculous, but at one time, that was the insistence from the suppliers, the brands, and now they realize that it's actually you can go three high, which also gives you that ability to increase the amount you can get in your warehouse, which is great. So we reckon we can get out of this current facility circa 250 million which is a great position to be in. We have got plans as well. We're in talk with other developers in the mid-term, short to mid-term, for a possible move to a lot bigger facility, which is not far away from here, which is just shy of 600,000 square feet, which you could mezzanine as well, which would probably get you to, you know, a circa 800 million revenue. So that's the aim. That's what we want to do. Thank you, Hannah. Thank you. So there, Josh, you want to talk to that one?

Yeah, I'll take this one. So what's key for us and our vertically integrated delivery model is to maximise the value on every van. As Mark mentioned, we are focused on the premium side of the sector. We do the full range of products across the sector, but we have a really strong skew towards premium goods. And this is really reflected in the chart that you can see here. So the grey bar here, is the average selling price, including VAT of a typical cooking item or a typical dishwasher. And then the blue bar is our average selling price of the item over the last 12 months. So you can see in most categories, we are operating at the premium end. You know, if you look at TV, for example, average price in the market for television 466 based on the gfk data and and we're selling on average nearly double that we also get reverse flow revenue so we offer the customer the opportunity to take the packaging away we bring that back to our site here that's our recycling equipment that you can see so that we can recycle the polythene plastic the polystyrene and we also can take away they use domestic appliances that you can see here and make sure that they're recycled properly and we get paid by the customer for that so it means that when the van is returning back to base we are actually generating an income on on the return leg too not not mentioned on this slide but worth noting as well that we do pay to offset all of our carbon so all of the carbon from our delivery vehicles as well as our site here at boston road is all fully carbon offset so from that perspective we are we are carbon neutral as well. We'd like to move to electric vehicles in the future, but the capacity of heavy goods vehicles at the moment, medium goods vehicles, it's not strong enough in terms of electric battery capacity, but we'll certainly be one of the companies that's first signed up once the capacity does actually get to a level that we can utilise it. Next one, please, Hannah.

Thanks, Josh. Yeah, so we're nearly there, guys. Hopefully we're not boring you too much. One of the things I failed to realise when you float your company on the stock market, when you become a POC, is the value that is for recruitment and attracting high-level staff, which has been fantastic. So you get people actually wanting to come and join you. When you're a private business, they're not quite so interested. You might be profitable, but there's not so much future. But we've got some fantastic key hires that have joined us. Josh was the first one, obviously the best one as well. And all those other ones with the stars there, you can see there's James there, head of operations. He came from DHL. He is in charge of running the warehouse. Michael came from Domino's Pizza. He's Josh's number two. He's fantastic as well. Heather, HR. She came from Burt's Snacks, which was fantastic. And then Mark Gregg also came from the biggest, big outfit, LG. So he's come from the other side of the fence. So it's great having the person that doing the buy-in for television, he came there predominantly to do the buy-in. So having a PLC outfit, it really, really makes a big, big difference for recruitment, which I've completely underestimated and didn't see that, but it's a real added benefit. Thank you, Hannah. So here you can see, Josh, thank you.

Yeah, just finishing this section, as Mark said, we're nearly done. The ones I'd point out here that you haven't seen on the other slides is the average revenue per employee. So we aim to have an average revenue per employee in the range of about £500,000. Key metric for us, you know, a lot of listed businesses can quickly escalate in terms of overheads and cost and number of people. And we think this is a really important metric to check that we are being as productive as we were before. and hitting around half a million pounds per employee. Some of our competitors, if you looked at them, they would be in the range of three to four hundred thousand pounds per employee. So we do believe that we've got a good productivity gap there as well. And in the bottom left hand side, we've announced a maiden dividend at a 20 percent. payout ratio with the 0.67p being the final two-thirds dividend that will be paid in August to those on the register in late July. Thanks, Hannah. So current trading and outlook, just to give you some insights into what's going on in the market, because obviously everybody on this call, I'm sure, is really focused on the impact on the consumer. So some stats there for the MDA market, Feb, March and April down 5, 6 and down 12% in April. That is a very material swing. for the major domestic appliances market. It's quite a consistent and resilient market. As Mark mentioned, 80% of what we do is from distressed purchases being predominantly major domestic appliances. And the market of MDA is generally quite resilient. You see those kind of swings in the televisions and the laptop markets. But to be down 12% in April as a market is quite a significant move. We were up over 20% in April, which we're obviously very happy with. But the way that we're looking at the year ahead, as you would expect us to, is just taking each month as it comes along, being very, very focused on the business, very focused on making sure that we're delivering great customer service, trying to grow that brand awareness, which we think is the real opportunity. So even with with the market declining, there is still millions of pounds per day of business being done in major domestic appliances. And it's just really important that we get our brand out there and we really show the top quality service that we can deliver at a price that's completely comparable with our competitors on the right hand side. So just to reiterate Outlook. We're saying there's definitely strong competitive pressure, particularly across online advertising and across pricing. Strong revenue growth year to date. We're certainly hopeful that will continue and we'll be pushing very hard to continue to drive that revenue growth. And again, we're focused on controlling the overheads and trying to achieve an EBITDA margin. In the next 12 months, as I've said, our outlook is between 8% to 10%. We just delivered 9%, but we're really focused on making sure that we grow well, but we grow well profitably. We're not trying to gain market share at all costs. We want to make sure that we continue to have that profitability as a differentiator. Thanks, Hannah.

Thanks, Josh. Thanks, Hannah. Yeah, so just to wrap up and summarise, so, you know, last year was a fantastic year, you know, revenue growth 44% to 80 million, an EBITDA margin of 9%, you know, market leading customer service and a huge runway ahead of us. We've got, you know, a 1% share of a £8 billion market to go after. So it's a huge market. It might be in slight decline. So, but the amount of market share we've got is so small, you know, there's a huge runway ahead. So we weren't, Thanks very much for listening. Hopefully not too bored. And we'd welcome any questions, please. Thank you very much indeed. Thank you.

Thank you, gentlemen. And we've had a number come in. So let me make a start. What proportion of your marketing budget are you spending on brand TV? But how likely is it to change in the future?

I'll take that one, Mark. Yeah, so we expect in the next 12 months that we've said we're going to spend about 5% of sales on marketing as a whole. Within that, around 30 to 40%, I would expect to be on television and display-based marketing. As we move forward over the years, I expect that will probably increase because as we mentioned, TV is quite expensive and obviously as the business becomes bigger, you have more pound notes and you can actually get into TV quite a bit more. And I also mentioned the return from Google in terms of PPC. it diminishes quite quickly. So I think as the business grows, you will expect us to spend a little bit more incrementally on Google as we're a little bit better known, but really putting more into that brand building ever more every year going forward.

Okay, thanks. I see you detailed there how you're going after the John Lewis part of the pie. How do you compete against AO who are, one assumes, going after the same part of the pie in the higher end products?

Well, I mean, we're the only ones that can deliver free tomorrow. Everyone else charges more than us. We've got very complex tracking software, which tracks whoever we want to track. So our prices are fully aligned with the market. So first of all, we're at the same price. And secondly, we don't charge for next day delivery, you know, end of, you know, it really is that simple. So we're cheaper. So, Across the living crisis, you know, people are careful with the cash, you know, not less frivolous. So they're going to actually hunt around for a better bargain. And we're cheaper. Loads cheaper. That used to be our strap line. At the end of the day, you know, it might only be 40 quid, but, you know, if a washing machine's 400 pounds, that's 10% cheaper. Yeah, fair point. It's a massive market. You know, we've got a minute market share. That's what I always come back to. and we deliver free on our own trucks and do it tomorrow.

Okay, well, let's come on to the point there about, you know, small market share and people are still going out there and buying white goods. Given the sharp slowdown in the market volume since February, are competitors staying rational in terms of pricing or is there a sign of increased discounting and voucher activity to stimulate demand?

No, not particularly. You know, the cost per click has gone up considerably, so the Gareth Ford Williams- Those josh was saying earlier, the cost for advertising online is more expensive. Gareth Ford Williams- So we've definitely noticed an increase in that, but the actual selling prices, the suppliers, you know they know the brands don't want you trashing the price of their products, just to get that sale. You know, ultimately, people have to make it, you know, we're here to make a profit. Now, we are not at all costs going after revenue and sacrificing margin. We're here to make a profit and a return for our investors. We could, you know, drive the revenue up considerably by slashing a lot of prices and discounts and stuff. But, you know, at the end of the day, we want to make some money so we can reinvest and get return for our investors.

Okay. You are a member of a mutual buying group for independents. Is there a revenue level where they might not want you as a member or when it might make sense to go direct and when do you expect to reach that point?

Yeah, well, I mean, you know, it's always under review. It has its benefits, a lot of benefits, and it also has a lot of negatives as well. You know, there's a cost to be paid to that buying group. You know, we're a big outfit and it's always under review, but, you know, Currently, it's great. It works very well for us. All the accounting process is very, very simple and they're very easy to deal with. So it is not a problem whatsoever, but we always review it and we've got a very good relationship with them and we want to continue and build with them.

Okay. Are you taking on some risk if more and more of your customers are buying products on finance?

Josh, you want to take that one?

Yeah, no. So, I mean, as mentioned earlier, we were very careful when we were selecting the buy now, pay later partners. We're not taking on more risk because we pay through our gross margin and don't bring that on balance sheet. So it's not a captive finance offering. We don't have it on balance sheet. It's funded by the partners and they charge us through the gross margin for that. So if you were to do it on your own balance sheet, you may have the risk.

um but then you you might have a bit more in gross margin so that's the offset okay um you touched on both the level of your overheads and how you're very comfortable that you can maintain that and we talked about the operating margin which you talked about maintaining between eight and ten percent on a sustainable basis going forward um you know how how i suppose how what drives your confidence in your ability to keep those um those numbers at those levels when your competitors struggle?

Well, I mean, we could, Hannah, we could just stay here as we are. You know, we're growing, as Josh was saying already, we've already grown 20% in the first couple of months. So, you know, we've got the overhead base in place already. We don't need any more management. We've got all the lorries and trucks. We've actually got too many, which is a great position to be in because we write them off over three years. So anything that's four years old, um is a free vehicle sat there so we've got plenty of trucks we've got the capacity to deliver you know over half a million excluding bat per day you know if you do the sun's air you know that's 160 odd million pounds we could do um you know we're not saying we're going to get there yet that's a little way off but the overhead base is already in place we've got virtually two drives on every vehicle which is great for the customer service like josh was saying earlier um And all we need to do is add additional drivers. So for every 30 drivers we've put on, we might need one more person in customer service. And that would really be the difference of maybe one more person in the warehouse on a shift. So the actual overhead increase would be quite minimal now. Because we're all based at this one site, that's what makes such a difference. We are not operating 25 other warehouses around the country. And we all know the cost of running those is a fortune. You get lazy people working in them who don't want to do a job. Josh and me will be running around, tearing around the country, checking what they're all doing. And lo and behold, you'd have numerous problems in each one or a problem in several of them. So we're going to maintain this single site and that's what controls our overhead.

Okay, thank you. What's the outer limit of your category expansion?

Oh, Mars. Who knows? You know, anything we can make money out of that's a sensible add-on, premium product. We're not chasing a Morphe Richards kettle, like I was saying earlier, at £20. Amazon are quite welcome to pursue that. We're looking for premium product. We've got a premium customer base. And... And that's what we're going to focus on. So, you know, we might go move into IT and premium IT and premium small domestic appliances, premium vacuums. You know, that's what we'll chase after, those extra incremental products as well. But, you know, we've got a massive market already just to get better at doing what we do, just switch on a few more SKUs, stock a few more SKUs with the likes of, let's say, Bosch or Samsung or LG or, You know, instead of stocking 75% of their range, let's go for 95% of their range. You know, and that's what's right in front of your nose. Why chase after other stuff that, you know, it's like looking over the fence thinking, oh, I could do that or sell sheds or lawnmowers or garden furniture. I mean, you can, you know, you stick to what you're good at. That's what my dad told me. I've yet to find it, by the way.

I think the evidence will contradict that, Michael. And I think then on a closing question then, you detailed in the presentation that you had up to the ability to reach 250 million of revenue in your existing facilities. And you're very much built around a one centre model. How much further can you push the business beyond that and maintain that one centre ethos?

Well, you know, I grew to 1.6 billion. And if anyone listened on the call, remember Comet. So there was Comet and Courage. They were the gurus of the major domestic appliance industry. And AO came along with a brilliant idea and carried it out very, very well and took Comet out. And yet Comet were the fantastic business in its day. But clearly people can come along and revolutionize what's occurring. You know, and if you want to have 300 stores around the country or 25 satellite warehouses or more, you know, they're very costly to operate. And to me, it seems like common sense to have all your products under one roof from a central location and deliver out to an area that you can get to. We don't need to go to John O'Groats. or the Outer Hebrides. We're not after that. We're going to go to where people live and we can get to 99% of the population of England tomorrow. So I think that's enough to go after.

Lovely. Well, thank you very much for your time. We look forward to hearing from you again in six months' time. And a reminder to everyone that you can also see the research that we published earlier this week on the website.

And our shares are very cheap at the moment.

A great note to end it on. Thank you both. Thank you, Hannah.

Thanks very much, everybody, for listening.