RS Group PLC

off this morning's presentation. Thank you for joining us and thank you for your continuing interest in the RS group. Welcome to our preliminary results announcement for the year ended the 31st of March 2024. Before we get into it for those physically present I'd just like to point out the fire exits they're in the corner of the of the room. There's no scheduled firearm test this morning. So if the alarm does go off, please make your way to the fire exit and follow the guidance and instructions of the fire marshals. The presentation should take about 40 minutes. I'll do a quick overview of the year and then Kate will take us through markets and numbers before I look at underlying strategic and operational progress and what we're focusing on for the next couple of years and why we're so excited about the opportunity at RS. And then we'll leave plenty of time at the end for questions, but we should get you away by about 10.15. Just before we get into the meat of the presentation again, as I said, we have recently launched new corporate values and we start all of our sessions not just with a safety moment, but also with a values call out. This helps us embed those values as rapidly as possible into the organisation and get it to be real for our people. I'd just like to call out one of those values now. We are one team. We listen, respect and trust each other. We actively seek diverse input and perspectives. We collaborate with purpose and we act as one. So hopefully you'll see us demonstrating that today. But as we expect of all of our stakeholders, if you don't see it, please call it out. And then finally, I'd just like to start with my four key takeaways from the past year. One, markets remain subdued. And although demand is stabilising short-term visibility... is limited. Lead indicators are currently suggesting a small market improvement in the second half of fiscal 25, and it certainly isn't about if markets return to growth, it's just about when, but we are being prudent and we are not counting on market recovery and we are focusing on the things that we can control. Two, this is a good company with great people, but there is a lot we can continue to do to improve this business. And it's a multi-year effort that we're working hard to accelerate. Three, in addition to organic investment, we've demonstrated that targeted M&A is an effective way to accelerate growth and value creation at RS, particularly now that we integrate more effectively and therefore M&A remains a key piece of our strategic agenda going forward. And fourth, and probably most importantly, the RS team has responded well to the difficult markets we've faced and to the challenges that the new management team has laid down for them. And given the progress that we've already made, I am increasingly confident of our ability to deliver and meet or exceed our medium term targets. So let's have a look at what happened in 24, which, as I've said, was a difficult year, but one which we ultimately delivered an inline performance and, more importantly, made significant underlying progress. A great strong comparators, as the slide says, the markets were challenging. with weak global industrial demand and aggressive electronic cycle, resulting in revenue that was down 8% on an organic basis, although pleasingly our growth accelerators either outperformed or remained in growth. Revenue was also impacted by the unwinding of strong post-pandemic trading and inflationary tailwinds that you'll hear more from Kate on later. And as a result, the financial performance that set out on the right-hand side of this slide was weak, although ultimately in line with an admittedly revised set of market expectations. And the board is recommending a 5% increase in in the full year dividend in line with our progressive dividend policy. This more difficult trading environment highlighted the needed RRS though for increased focus across the group and during the year we created much greater clarity and strategic alignment. I'll share with you in a bit more detail what we're doing to drive operational effectiveness and improve operating leverage and also how the ongoing investments in our growth accelerators are progressing and what we can anticipate in 2025. We made good progress this year with our recent acquisitions, where more effective integration is delivering greater than anticipated synergies. And we actually made an additional small £8 million acquisition post year end. And then importantly, and despite these difficult markets, RS remains well positioned as a good company with great people operating in cyclical but growth markets. We are improving this business and positioning RS to accelerate and deliver more sustainable outperformance going forward. And we're increasingly confident of delivering that outperformance. With that, let me hand over to Kate, who'll take you through the numbers.

Good morning, everyone. It's good to see you all again. I've been here for eight months now, and Simon and I have been working closely together to really get to grips with the detail of what's driving our performance. As Simon said, we've been making good progress at improving the underlying operating business to make the future performance more robust and sustainable. There is still a lot to do, but today we've got a much clearer data-led understanding of how our business has performed, which is monitored in a consistent way across markets and regions. In the slides to come, I'll take you through what has been going on with the markets, the performance of the business with specific reference to the different regions, a focus on the cost movements year on year, and provide you with what is hopefully helpful pointers on what is likely to feature in the outcomes for 2025 and beyond. Let's start with the market context. Our revenue has got a strong correlation with PMI and electronic cycle. And although, of course, we expect to grow faster in the up cycles and mitigate the impact of down cycles to deliver through cycle outperformance, as the charts on the left-hand side of the slide show, PMIs have been below 50 in most major markets, indicating sentiment contracting and therefore production contracting, the worst market being Germany. Despite that, our industrial performance excluding automation and control was robust, growing by 2%. Through 23 to 24, the electronic cycle has been in reverse. While electronic cycles are not unusual, there's been a rapid transition from a high peak to an excess of available product in the market that has exaggerated the impact on electronic and associated automation and control revenue in full year 24. So now let's dig a little deeper into why the electronic peak in 22 and in 2023 was particularly high and where we can see the impact on the sales, which unwound in our financial year ended 31 March 24. You'll remember in 2022 and 23 was a time of pent-up demand and supply constraints, particularly in electronics. The top left chart is a good example in EMEA in Asia-Pacific where we measured the degree of unexpected demand that we service. This peaked at 33% at the start of full year 23 and is now normalising again at around 18%. for revenue to benefit from the shortage, availability was key. And that's what our business model is predicated on, industry-leading availability. And in addition, we had recently expanded and stocked our distribution center in Fort Worth, Texas, which enabled us to meet the rapid rise in demand in Americas, which is illustrated by the rapid increase in sales per day in the chart on the top right. This unusual demand came from core customers who increased order quantities and sales to resellers and one-off transitory customers. This is at a time of material inflation, which given our low inventory turn, especially on long-tail products, led to a short-term gross margin gain, also illustrated by the bottom chart. At the interims, we estimated that the benefit of these tailwinds in full year 23 was 95 million revenue and around 35 million operating profit. Having analyzed our data further, we identified gross margins that were higher than usual across many products in electronics and automation and control categories. We have sought to isolate the gross margin achieved outside of historic ranges, which we estimate to be a further 25 million of profit. This takes the total estimate of the post-pandemic tailwind to around 60 million profit in full year 23. This analysis provides a much more accurate view of the group's underlying trading benefit in full year 23. We've been making material improvements to our performance management systems to take the data learnings from this cycle and others, improve our ability to identify the early indicators of the change in the cycles and customer behavior going forward. This includes regular monitoring of a refresh set of commercial KPIs, which will enable us to react more quickly to changing market conditions. Moving swiftly onto the financial performance in the year. So this slide summarizes the results on a page. Whilst year-on-year revenue appears flat, adjusting for acquisitions, trading days, and FX, revenue declined 8%. This was the key factor in the decrease in operating profit. Although we took meaningful action to reduce some variable and discretionary costs, it was more than offset by associated costs. Reported, Roki includes additional capital deployed on acquisitions, and once those are excluded, Roki was 22%, which was a good result in the circumstances. Our growth accelerators, specifically digital capability, RS Pro, and the services solutions offerings differentiate us, and we were pleased with their relative outperformance. This bridge helps unpack the year-on-year movement in revenue. Revenue decreased by 1%, including a 10% uplift from acquisitions, but was down 8% like-for-like when accounting for differences in number of trading days and forex. I've isolated on the chart 95 million of post-pandemic trading benefit, which I talked to earlier. Around 70% of the volume and mix change is concentrated in the electronics and automation and control categories, where customers have reduced their volumes purchased and sought to burn through excess inventory build-up. In industrials, we were able to pass through cost inflation, and we have isolated the impact of the additional nine months of Resol and the nine months of Distrelec since its acquisition at the end of June. While full year 24 operating costs were broadly flat against full year 23, their number of moving parts to highlight. Inflation impact was 3%. The additional year-on-year operating costs associated with a full year of residual and nine months of district elect was 72 million, so around 8%. In response to the decrease in revenue, we reduced variable costs directly associated with the revenue shortfall, and around 15% of our cost base is directly associated with changes in revenue. We took action to reduce non-essential spending of 25 million, which includes the 2023 cost of living payment granted to colleagues, which was not repeated. We invested 13 million in restructuring, including district integration costs. This generated 9 million of in-year benefits. And together, these actions will deliver in excess of 13 million annualized savings. Given in-year performance, the annual incentives earned in full year 2023 were significantly reduced for full year 24, and we expect this to normalize in full year 25. We continue to invest in our processes, digital and technology systems and infrastructure, and this was consistent with the prior year's spend at $24 million. The net outcome of the reduction in revenue and associated gross profit reduced gross margin and flat operating costs is a 2.9 percentage point reduction in adjusted operating margin. 1.8 percentage points of this related to the post-pandemic trading unwind and includes 1.1 percentage points of related gross margin reduction. The volume reduction was partially recovered by the end-year cost actions. The expected dilution in gross margin from acquisitions flow through to operating margin. Moving on to our regions and starting with EMEA, we were actually really pleased with EMEA's robust performance, particularly in industrial. Like-for-like revenue fell by 5%, reflecting weak PMI data and the electronics down cycle, of which we attribute 2% to the unwind in post-pandemic trading. Performance was robust in France and the UK and Ireland, which in part balanced the more challenging markets in Germany and rest of EMEA, as all countries saw PMI fall below 50 for most of the year. We saw our performance in growth accelerators, digital capability, RS Pro and the service solutions, which have been longer in the EMEA market and are therefore better established. And we saw a strong performance from our corporate accounts, where revenue grew, reflecting the success of our targeted sales and marketing effort. Like-for-like gross margin was flat, with disciplined control of discount offsetting the unwinding of post-pandemic trading benefit, and we took in-year cost actions with like-for-like costs down 4%, and this includes the investment of $9 million of integration and cost action expenditure. So let's move on to the Americas. Revenue reduced by 13% on a like-for-like basis, which excludes Brazil for nine months of the year. Of that reduction, we estimate the post-pandemic trading benefit, supported by particularly high product availability in the expanded distribution center, contributed 5 percentage point. This proportionately higher impact in Americas is reflected of the concentration they have of customer spend on ANC and electronic products. The remainder we attribute in the main to the change in cycle. Resuel is a bright spot, and we've been pleased with the revenue performance which exceeded expectation. Like-for-like gross margin fell by 2.8 percentage points, of which we estimate half is the unwind of post-pandemic tailwinds and half increased competition as product was more widely available. Excluding the additional resuel costs in-year, costs were down 8% on constant exchange rates as a result of restructuring and discretionary cost action. Approximately 40% of the reduction in operating profit is attributed to the unwind of the post-pandemic tailwind. And moving to the final region of Asia-Pacific, the majority of the 15% like-for-like revenue decline in year was concentrated in Greater China and Japan. We estimate 10 million or 4% of the revenue decline was due to the unwind of the post-pandemic trading and 300 basis points of the 6.5 percentage point decline in gross margin is attributed to basically a function of the increased market competition in electronics and reduction in cost inflation. Japan is particularly concentrated in the electronics category. China's reduction in revenue is more peculiar to that market as trading sanctions have reduced our customers' revenue. Asia-Pacific is a region in development. The smaller scale increases the sensitivity in operating profit to changes in revenue. And now let's wrap up the year's performance with a summary of cash flow, starting with adjusted free cash flow. So I'm pleased with the cash performance in H2, which generated 125 million of the 151 million generated as inventory builds at the end of 2023 were converted into cash in the second half. In full year 24, adjusted free cash flow was primarily impacted by two things. In 23, we had a significant benefit from an increase in accounts payable, as those large inventory orders have been placed near the end of the year, but not as yet cash settled. And EBITDA year-on-year is reduced, as we've discussed earlier in the presentation. Working capital is a percentage of revenue increased by 3.8 percentage points, with more than half of this increase being the impact of lower revenue and the remainder a decrease in trade and other payables. the strong second half performance increased inventory turn back to a more normal 2.6 times. Capital expenditure remained steady at 1.3 times depreciation as we continue to invest organically in improving our physical distribution sites operationally, implementing product and customer management systems, and strengthening our digital and technology platforms. Net debt increased to $418 million, with the acquisition of Distrelect increasing net debt by $333 million. Our capital allocation policy hasn't changed. However, as a reminder, first we prioritise organic investment behind our strategy to support organic growth. This includes the physical system and process infrastructure we need to deliver sustainable growth as we scale and achieve improvements in operating margin. Second, financially disciplined acquisitions in this global fragmented market can enable us to accelerate our strategy. We seek to invest behind a compelling strategic rationale, attractive synergy benefits, cash returns. We target to comfortably cover our cost of capital within three years whilst maintaining sensible leverage over time. Third, we believe in sharing cash generated with shareholders through a progressive dividend policy and that we seek to productively invest and ultimately return any excess capital to our shareholders. We've announced a 5% increase in the full-year dividend, which remains adequately covered in both EPS and adjusted free cash flow. However given the sizable increase in full year 22 and full year 23 partially on the back of trading benefit from post pandemic tailwinds and with plenty of good organic investment opportunities we'd expect future increases to be low single digit until cover grows back to more historic levels. We target return on capital employed of over 20% and leverage an efficient balance sheet with a range of one to two times net debt adjusted EBITDA and depending on prevailing market conditions and acquisition opportunities. So lastly, before I hand back to Simon, here are some factors to consider for 2025 and beyond. Trading is stabilizing but remains subdued with limited short term visibility. PMIs remain weak and although some lead indicators suggest some second half recovery is possible, we're focusing on what we can control. In the immediate term, we are prioritizing investments to systems and processes which have a meaningful positive impact on operating profit margin. We expect to continue to invest around an additional 15 million this year on improving our operating model with the benefits increasingly evident as we move into full year 26 and beyond. We expect further investment is likely to enable us to access the material operational efficiencies that are available through process standardization, removal of demand failure, and removing technical debt as our systems are modernized. Additional factors just to help you populate your models. We expect our pricing strategy to offset the cost of goods sold in inflation and gross margin. On cost and interest, we anticipate around 2% to 3% inflation in our run costs, some resumption of our employee incentives, increased organic investments, as I've talked about, of $15 million, and Simon's going to give a bit more detail on that. another quarter of distri-led costs, an additional $7 million of depreciation costs, and the second year of our cost savings program, delivering $22 million of in-year benefits. Investment related to cost savings and integration is going to continue with $13 million for 2025, which is consistent with our spend in 2024. Ongoing capital expenditure is flat to last year at 50 million, which includes continued disciplined organic investment and planned spend to deliver our 2030 ESG action plan. And there are guidance points including trading days, foreign exchange, tax and a summary of the operating cost actions included in slide 33 of your pack. So eight months in, we've got a firm grip on the business and we're feeling the benefit of the measures and the interventions that we have put in place. They're starting to work. The opportunity ahead is material and very exciting. There's a lot to do, but we and the team are very much up for the challenge. Now I'm going to hand you back to Simon. Thank you.

So thanks, Kate. It's great to have you on board. And as you can see, Kate has got up to speed very quickly and is bringing much greater rigour to understanding what's driving performance at RS and more importantly, how to improve it. So I talked in my summary about more difficult trading conditions highlighting the need to increase focus across the group. And of course this starts with strategy. During the year we revisited strategy and put much greater clarity around it. And most importantly put in place detailed multi-year action plans that better focus and prioritise our people and our resources on the things that really matter. Our strategy now realises and recognises that suppliers and customers are at the heart of everything we do. But as the wheel says, and starting at the top, on customers, we can't be all things to all customers. And so we'll focus on those where we see the opportunity to generate significant potential lifetime value with high complexity and low volume, high service needs, whilst not forgetting the long tail of mainly transactional customers that we will continue to serve, but in a more cost effective way. Clockwise on products, we need to focus on those core industrial MRO categories where there is a technical and specialist support need and where we can differentiate, which for us is automation and control and electrical, including MRO electronics, but supported by a range of adjacent and pull-through categories and a broad product offer where there is consolidation potential and where availability and immediacy is key. We need to continue to build a more solutions orientation in the group, but we need to restrict the services and solutions that we provide to those that are scalable, that we are best placed to provide, that satisfy our target customer needs, and importantly, that they recognize and are prepared to pay for, and that enhance loyalty and ultimately pull through of our core product. In terms of customer experience, of course, we need to continue to provide a multi-channel market-leading customer experience, recognising that we are multi-channel but digitally enabled, and that customers should expect and receive a consistent tailored service and best-in-class customer interactions that reflects their potential but also their costs to serve. And then finally, we need to deliver this with operational excellence that leverages our physical, digital and process infrastructure most effectively and to achieve this all with great people. And this strategic clarity is already creating much greater alignment across the group and prioritisation of key actions. When growth is strong, you might get away with not looking at driving improvement. But particularly in a solutions-oriented distribution business like ours, there is a need to continually drive operational effectiveness, irrespective of where you are in the cycle. And last year, we re-established this discipline at RS. We put in place a new senior leadership team made up of existing executives and new external hires and created and empowered a small executive committee to lead RS in the next phase of our development. And it's this empowered executive team and strengthened functional capability that is setting, aligning behind, coordinating and driving our change agenda. Next, we've also clarified and simplified our operating model to empower our teams closest to the supplier and the customer. We've created clear accountabilities across the organisation to ensure rapid and effective decision-making, supported by enabling functions to ensure we realise efficiency and scale benefits, and accelerator functions that set high-level group direction and share and enable best practice. This is all supported by an enhanced performance management system and process and a much better suite of operational KPIs that Kate referred to earlier that improve visibility, accountability and allow us to drive better delivery. And then last, we recognise the need to evolve the RS culture to support this change agenda. And we've engaged over 350 of our people to define and drive that evolution. And most clearly, it's represented in our purpose, our strategy and the four new and common corporate values, one of which you heard me refer to at the beginning of the presentation. And these are reflected in clear behavioural expectations that we are embedding into our people performance and development assessment processes. So the progress that we're making on operational effectiveness is already beginning to deliver improved agility and better execution across the organisations. But last year wasn't only about driving operational effectiveness. It was also about creating more focus on operating leverage. And we recognised the need to react to the challenging trading and commence cost reduction actions in all three regions and across functions, including accelerating the integration of Distrelec. Together, these actions will, as you've heard from Kate, deliver in excess of £30 million of annualised cost savings by fiscal year 2026. But the work on the operating model, together with a detailed review of the investment cases behind some of the growth investments we're making, has highlighted a significant additional opportunity to improve productivity and efficiency through harmonising some of our processes where customers don't value differentiation. And we've started to drive this work. We are continuing to optimize our supply chain. And I think I mentioned at the interims that this time last year, I could pack quicker than our picking system could deliver the products to me at our newly extended and invested distribution center in Germany. Well, I'm pleased to report that is no longer the case. And through tuning the system and through a greater focus on continuous improvement, we have nearly doubled the line shipped per FTE per hour at Bad Hurstville over the course of the year, which creates significant additional capacity in that distribution centre. Staying with supply chain at a network level, we've closed our Newport distribution facility, but continue to increase flexible local fulfilment capacity, completing a large and more energy efficient fulfilment centre in Spain and increased our 3PL footprint in Asia-Pacific to get product closer to the customer. And process harmonization is also enabling the last block on the chart, technology simplification. we've started to converge our SAP applications and simplifying our SAP instance, so extracting and standardizing key processes. Over time, this will allow consolidation of our over 800 plus applications that we currently support and reduces both complexity and ongoing management and maintenance costs. So the key takeaway from the efficiency work that we're doing is that the 30 million annualized cost reduction action, which we have already actioned, is just the start of our drive to improve operating leverage in this business. There's a ton of other things going on throughout the organization that will increase in efficiency and we expect to see, as Kate has said, significant additional improvements in this over time. And whilst much of our efforts during the year was focused on improving the efficiency of the underlying business, we also continued to invest in our growth accelerators, but with greater focus on more effective programme management and improved delivery. We are enhancing our digital and customer experience across the organisation. And there's too many actions to explain the activity sufficiently here. But whether it's rolling out AI to enable search capabilities in 27 markets or cleansing our customer data to improve targeting and engagement, we continue to invest significantly in improving our customer experience whilst reducing our costs to serve them. In terms of product, we continue to enhance our product offer through things like better supplier partnering and range optimisation, selectively investing in expanding our RS Pro range, and also, importantly, our Better World sustainable range, which is now up to 30,000 products and available in 30 countries. And then finally, in value-added services and solutions, the one thing I'd particularly like to call out is the progress that we're making in developing a more standardised, scalable and global integrated supply offer. Everything that we're doing, every live programme, many of which are multi-year, now has a detailed project plan. It has a rigorous programme management structure in place. It has clear milestones and good payback. And as Kate said, that's why we expect to invest around £40 million this year of operating costs in these growth accelerators, which is an increase of about £15 million over last year. And as you've heard me say before, the large fragmented markets in which we operate provides us with opportunities to accelerate strategy and value realisation through consolidating, in a value disciplined way of course, businesses that accelerate product and service solution development, enhance product range, give us increased scale, or where we can drive significant operational efficiencies. And although it's a bit of an eye chart, those are the four boxes under each of the acquisitions that I'm about to talk about now. Clearly, though, the value creation is not only the ability to pay the right price, but also to deliver the benefits and to integrate effectively. And I'm pleased to see that this is a muscle we're really building. And as a result, our recent acquisitions are delivering. Let's start with Rezul. Rezul has significantly outperformed our operational expectations and we're already starting to realise some of the revenue benefits that we anticipated when we acquired Rezul. In Distrelec, the middle column, we have accelerated our initial integration plans and our expected and delivered cost savings are already exceeding those anticipated when we made the initial investment. And so whilst trading in Distrilec in the fiscal year 24 has been weaker than anticipated, although in line with our comparable EMEA markets, we still expect returns on our Distrilec investment to exceed our cost of capital by fiscal year 27, as originally anticipated, and with the longer-term benefits of the acquisition remaining extremely attractive. And with our recent acquisitions exceeding expectations despite difficult markets, this gives me the confidence that selective M&A will continue to be an important source of value creation for us going forward. And just the last block on the chart, post-year end, we've acquired Trident, a specialist MRO distributor and service provider in energy and natural resources in Australia at the beginning of April for £8 million, adding to and enhancing our already strong Australian business. So stepping back from the detailed performance in fiscal 24, I think we're very well positioned. RSE is what I thought it was, as the chart says. A differentiated and good business, the critical link between some of the world's leading suppliers of technical and specialist ANC and electrical products for MRL applications, and a broad and diverse customer base that wants to purchase small volumes and where high service levels are valued and key. We are the leading global distributor in large fragmented markets. We have a clear competitive advantage in multi-category high service products and service solutions that is digitally enabled and data rich. We've improved strategy and we're focusing, aligning and prioritizing executing better whilst continuing to invest in our growth accelerators to drive further out performance. What's set out below is that this is applicable to all of our businesses, despite some of their regional nuances. And whilst our regions have different starting points, they are all aligned in this direction of travel. With EMEA, which is the yellow block, where we have our most developed proposition and the broadest market and industry exposure, it's all about expanding high lifetime value customers and share of wallet. It's about product and range curation. It's about solutions expansion. and operational excellence. And all of this should drive accelerated outperformance and better operating leverage. The purple block in the middle in Americas, where we are much more automation and control and electrical focused and have a much narrower industry exposure, it's about expanding those high lifetime value customers and share of wallet just like EMEA. But also expanding verticals, range, category and solutions. This will lead to margin optimisation. And all of this will lead to less volatility and more sustainable growth, margin improvement and better operating leverage. And then last but not least, in Asia-Pacific, where our country businesses have a range of maturities and with more electronics exposure, particularly in China, Japan and Hong Kong, it's about building cost-effective critical mass over time, continuing to evolve towards the Americas and the European high-service model, also expanding high lifetime value customers and share of wallet, but also range and particularly MRO expansion, category and solutions expansion, all of which will lead to more sustainable growth, more scale, reduced volatility and better operating leverage. And most importantly, each region now has a clear and specific action-orientated multi-year strategic plan against which they are delivering. Just quickly, because Kate has touched on this a little bit, we are operating in cyclical growth markets. But the important piece in this is they are growth markets. As the chart, I think, on this slide demonstrates, we're pretty closely correlated to both GDP and industrial production. And as Kate has said, the best external demand signals are probably PMIs. We are coming to the end of a particularly sharp electronic cycle and we are seeing the unwind of some post-pandemic trading tailwinds. But when you look through this, we've consistently grown at about double industrial production over the medium term. Going into 24-25, PMIs remain volatile, generally below 0.5, and the market demand remains subdued, albeit generally stabilising. But we do have limited short-term visibility, and so whilst internal and external lead indicators suggest some market problems, improvement in H2. We are planning for a broadly flat year organically but I still expect us to meet or exceed that two times growth in industrial production over the medium term and for this business to continue to outperform. And in the meantime we're focused on improving our the fundamentals. There's a lot we can do in this business through a multi-year program that will focus on our growth accelerators, continuing to drive operational leverage, continuing to focus on operational effectiveness, And there is much more improvement to come in this business, which enhances how the organisation will respond when the market returns to growth and positioning the business to effectively accelerate into the next cycle. So finally, reflecting on my first 13 months here, it's been challenging and probably more challenging than I initially anticipated when I took this role. However, I'm really pleased with the way that RS is responding. And in my executive career, I have never seen a large organisation achieve so much in one year as we have done in fiscal 24. In part, that's due to Kate and our executive colleagues and their exceptional efforts. And I'd like to thank them for their extraordinary support in setting a lining behind and driving this change agenda. But it's mainly due to everyone at RS. We have the one asset in this business that everybody else would die for. We have passionate people who are demonstrating that we are one great team seeking to deliver brilliantly, doing the right thing and making every day better, which just happens to be our new corporate values that I referred to earlier and what we are seeing demonstrated and embedded across our organisation every day. Our opportunity is significant, and make no mistake, there's lots of potential here. We're working hard, but increasingly on the right things, and we're making progress, even if, depending on markets, it'll take a couple of years for it to get fully reflected in our financial outcomes. But I'm sure you'll remember from my presentation of last year's prelims, when I'd only been here for three weeks, that I talked about our medium-term targets of top-line growth of twice market, mid-teens adjusted operating margins, greater than 70% cash conversion, return on capital employed greater than 20%, and 30% operating drop-throughs. Well, after 13 months in this business, I'm increasingly confident that we will deliver or even exceed them. So if that hasn't come across in today's presentation and why that confidence is well-founded, we're actually intending to provide you with a bit more colour on it at an investor day on the 24th of September in London. So please feel free to save that date and we'll tell you more about that presentation and that meeting later in the year. But with that, it's the end of the formal presentation and I'd like to now open up the meeting to questions. There are about 90 people online, so what we'll do is we'll take questions in the room first and then from the conference call facility and any other questions online. There are some people dotted around the room with microphones. If you could raise your hands, state your name, the institution you represent and then your question, we'll do our best to answer it.