Sheffield Insulations Group

Welcome to our results presentation for SIG for 2023. Just in case you don't know, I'm Gavin Slark. I'm the CEO, joined today by Ian Ashton, who is our CFO. Thank you all for coming. I know it's a very busy day, a very busy week, but great to see so many people in the room physically. And welcome to anyone who's watching on the webcast as well. Our overall schedule for this morning is relatively simple, a very brief overview from myself. Ian will then take you through the detail of the financials, and then I'll come back and give you an update on a business review at the end of the session. I think in terms of the overview on where we are, first of all, I'd just like to start off by saying thank you to all of our colleagues all the way across the business for their sort of hard work and commitment during 2023. It's always easy when the markets are good, but when the markets are more challenging, the efforts of your colleagues are really appreciated and really make a difference. In terms of the actual performance for last year, I'm not going to go through every one of the points on every one of the slides, but I would say obviously a robust performance in terms of sales going through 2023, but particularly pleasing on the financial side to see that strong operating cash flow conversion of 100% of the operating profit being converted into cash flow. In terms of strategic actions to improve the underlying operations, many of you will have been at the capital markets event that we held last year. And later on, we'll give you a little update on where we are there. Obviously, we have undertaken some restructuring in the business over the past few months, which is going to give us around 10 million pounds of annualized savings. Predominantly, those savings are in headcount across mainly head office and across regional jobs. In terms of the structure that we laid out at the Capital Markets Day, so the grow, execute, modernize and specialize, really starting to get traction with those sectors across different parts of the group. And again, we'll update you later on what we're doing there. But really, that is about making sure that we have simple, easy to understand messages that everybody across the group can understand. And obviously for the first time this time, that's separate reporting of the UK specialist markets business. So now in terms of UK reporting, you've got interiors, exteriors and the special markets, which obviously gives greater visibility and transparency to those special markets businesses, but also I think gives them oxygen to grow for the future as well. Financial discipline I think goes without saying if you look at the current market conditions and I will let Ian take you through the details of what we're doing on financial discipline in just a moment or two. No apologies from me for showing this slide again, because I do think it tells a picture about SIG. But you'll see there again around three quarters of our profit, 74 percent of our profit being generated outside of the UK, with France being by far the largest single profit making geography across the group, with 41 percent of the profit coming from Europe. our french businesses which are really well established and continue to perform well and i think what you see there is strength and resilience in that geographic diversity and also opportunity in that geographic diversity as the markets continue to improve going forward at that point i'll hand you over to ian just to take you through the details of the financials

Thanks, Gavin. Morning, everybody. Hope you're all well. So, key financials. In 2023, we made good progress in challenging markets, as noted by Gavin. The key metrics on sales, profit and cash shown here are all in line with the brief post-close update we gave in early January. Group sales were down 2% over the prior year on a like-for-like basis, a resilient result. given the further softening in market demand we saw over the course of the year. The number was helped by a residual tailwind of inflation on input costs. The revenue performance, combined with slightly higher than normal inflation within OPEX, led to an underlying operating profit of £53 million at a margin of 1.9%, lower than last year as we expected. After finance costs, this resulted in an underlying profit before tax of £17 million. And I'll look in more detail in a moment at the key elements within all these numbers. Below underlying profit, other items were 49 million for the year. The majority of this was made up of two items. Firstly, a 34 million non-cash impairment of goodwill and other assets in our UK interiors business. And secondly, restructuring costs of around 8 million for the group overall, which we've referenced previously. And I'll expand on both of these later. Full details of all the other items are in the appendix to this slide deck as usual. Free cash flow, as Gavin alluded to, was positive for the year, a good result given the low level of profitability, and it reflects the focus we've got throughout the business on cash generation. We did convert, as Gavin said, 100% of that 53 million pounds of operating profit into operating cash flow, and then after interest and tax, we were still positive at the free cash flow level, the four million pounds shown here. As a consequence, net debt did not move too much over the year, slightly up on a post-IFRS 16 basis due to normal lease movements, slightly down on a pre-IFRS 16 basis. And of course, I'll also cover cash and the balance sheet in more detail in a few minutes. This bridge shows the key movements within the revenue number. As we've reported and as you know, market conditions were challenging across the year and in most markets deteriorated as the year went on. Our resulting volume declines were largely but not wholly offset by the continuing impact of input inflation and hence the overall 2% like-for-like sales drop for the year. The H1-H2 progression on both volumes and inflation is shown below the table. Volumes were down year over year by 9% in H1 and 4% in H2. That lower H2 decline largely reflecting the trajectory of the comparators. Absolute volumes did moderate slightly in H2 versus H1. And the inflationary tailwind dropped to a net flat impact in H2 as we lapped the H2 2022 price increases. The prior year's acquisitions, Meyers in the UK and Thermadem in Germany, which were both completed in early H2 2022, added £39 million of incremental sales year over year, most of course in H1. Both are trading well and in line with expectations. They added 1%, in fact, nearly 1.5% to our reported growth, and with an additional 1% tailwind from FX, we've reported a 1% total increase in sales. The like-for-like numbers by business are shown on the right-hand side, and Gavin and I will both discuss these numbers in a few minutes. This bridge shows the year-over-year drives of operating profit. Of course, those sales figures seen on the prior slide are the biggest driver. The first red and green bars show the gross profit impact of both the volume decline and the inflation tailwind. Over towards the right is the incremental profit from those two acquisitions that I just mentioned. The other factors are the movements on gross margin percentage and the movements within operating costs. Firstly then, gross margin percentage fell from 25.9 to 25.3 over the year, leading to the £19 million impact shown here. This reflects a more competitive pricing environment, notably in UK interiors and Poland, which is inevitable in a much tougher demand environment. We do remain happy with how the businesses are handling that and the trade-offs that are involved. It also reflects, to a lesser extent, quite a strong comparator, including some one-off benefits we had from management of pricing in 2022's highly inflationary environment, which we talked about at the time. Moving across the slide, the inflation within our operating costs was higher than normal as a result of the inflationary backdrop, as expected and as we reported previously. Employee costs are around half of our total OPEX and rose around 5% to 6%, which accounts for more than half of that 27 million number shown here. The balance of that is spread across other areas, property costs and energy costs being the main elements. Given the trading backdrop, we took decisive action on cost and have made about £18 million of underlying savings on OPEX versus the prior year, some related to lower volumes and some to more permanent savings related to restructuring actions we've taken. Finally, we've separated out on here two quite sizeable numbers that affect the year-over-year profit. An unusually large bad debt charge reported in 2022, and then more recently and notably a £4 million profit in H2 2023 on the sale of our old Le Rivière head office in Angers, an item we've been flagging in recent updates. The office they've moved into is a significantly better facility from which to run what's today the biggest profit generating business in the group. So cash flow, we're pleased to have now delivered two consecutive years of positive, albeit modest, free cash flow, despite the weakening market environment from H2 2022. This slide highlights that we converted 100% of our operating profits to operating cash, as I mentioned. In a flatter sales environment, it should be a pretty solid conversion percentage, but nevertheless, we delivered it, notably due to a positive movement on working capital. Our year-end capital was below 10% of sales, as you can see on here, which represents pretty solid progress over 2021 and 2022 in our view, and reflects increased discipline around working capital metrics and indeed productivity KPIs more generally. Just a reminder looking forward into 2024 that due to the usual seasonality in the business, we'll see a cash outflow in H1 related to working capital, which will reverse in H2. And then just looking at the other bars on this slide, the largest item on here, lease payments on our fleet and estate, will grow slightly over time with the business, as I've said before, not least with inflation, but it is a relatively stable number. On CapEx, we're a CapEx-like business, as you know. The $16 million was in the middle of the range we'd guided, increasing in H2 over H1 as expected. So between that 53 million of operating cash and 4 million of free cash flow, we've got interest and tax. Of the interest number of 35 million, roughly half relates to our bond and half to leases. Cash tax at 14 million was the same as the prior year. I'll cover the forward view of these numbers in the technical guidance. Turning to the balance sheet. A reminder here of our financing position and debt profile. In short, we've got good liquidity and long-term funding in place, and that funding is at good rates. Liquidity is healthy at 222 million at the year end. The RCF of 90 million was undrawn at the year end, as you can see, and it does remain undrawn today, to be clear. As a result, we're comfortable continuing with CAPEX investment to support ongoing enhancement of the estate and do remain alive to bolt on acquisition opportunities, albeit the bar for these is always very high. Leverage increased over the year due to the lower EBITDA and to post IFRS 16 net debt being slightly higher given the increase in lease liabilities, largely inflation driven. Longer term, we remain focused on getting leverage down to our target of two and a half times, which we still believe is the right level and the right target, but the current market backdrop inevitably pushes the timing on that out somewhat. And on the right hand side, a brief reminder of the terms of our financing arrangements. In short, we have five and a quarter percent fixed rate debt via our bond until late 2026, and the RCF terms are as shown. Capital allocation, this slide is as I've presented previously, so I won't dwell on it too long. The margin focus and the discipline around cash and working capital management we've mentioned all feed into a long-term capital allocation framework to deliver long-term value. We actively manage the branch network and the fleet, both for efficiency and to optimise performance and growth, and those investments, whether they're for additions or renewing or upgrading what we already have, all get significant scrutiny. We completed no M&A during 2023, but do continue to look selectively at deals that meet the criteria shown here. Finally, on dividends, timing wise, as we've said in the past, we will start and want to start paying a dividend once we believe it's prudent to do so, which to us means once we're consistently generating meaningful free cash, i.e. at a higher level than delivered in the last two years and when we've improved our leverage. Gavin will talk more on the operational and strategic progress across the group in a few minutes, but I'll now just take a very quick look at the headline financial results of our larger business units. Firstly, France. As you know, this is our largest country of operation profit-wise, as Gavin mentioned, in terms of both absolute operating profit and operating margin. And they had another solid year of progress, despite the fact that markets were increasingly challenging, especially in La Riviere in H2. Le Rivier solar panel segment continues to grow well, helping offset some of that weakness in roofing markets generally. But more broadly, the drops in demand in France affected the bottom line margin in both businesses as elsewhere. However, they did both maintain very good discipline. Leet in particular, given their mix includes some of the more price pressured categories such as dry lining. As you can see here, Leet remains at an almost 5% margin. Turning to the UK, at our capital markets event in November we highlighted the change in UK management reporting structure which Gavin also mentioned. This slide shows again what we've done, gone from two businesses to three, stripping out elements from both interiors and exteriors and creating a new reporting unit called specialist markets. Gavin will give more colour on what's in that business and the opportunities we see there. The rationale for the change was very clear and the key benefits are shown on the right-hand side of this slide. Overall, it's about driving increased profitability as well as growth in the UK as a whole. And the structure now provides better visibility and greater clarity of accountabilities and opportunities. It does naturally affect the reported operating margins of the interiors and exteriors businesses, especially the former, with the shift into specialist markets of higher margin businesses, generally speaking. So in that now stripped down and core interiors business, we made no profit in 2023, as you can see. So the new structure provides absolute clarity on where we are, what needs to be done, and the opportunity for improvement. One consequence of this low reported margin in interiors, combined with the current market weakness, is that following our annual impairments exercise, we decided to take a book right off of Goodwill and certain other assets of £30 million, as I mentioned on the first slide. This is, of course, a non-cash item, booked through other items, as I mentioned at the beginning. More meaningfully, as noted here, starting in H2, we've already taken out £7 million from the UK cost structure, the majority of it in or benefiting the interiors business. And here are the three year numbers for those three UK businesses. Recent declines in volume have affected the margin in all of them. Clearly, we're not satisfied with any of those margins yet, especially interiors. But you can see that despite the dip in 23, the interiors margin is already improving slightly on where it was in 2021. The exteriors business, which Gavin will talk about, have really good momentum right now, actually grew their like for like sales slightly in 2023. In specialist markets, the impact of deflation in steel was a particular issue in 2023, but we're very excited about the opportunity to get that group of businesses back quickly to the aggregate 7% margin delivered in 2021, and then beyond that once markets stabilize. And as I said, more to follow from Gavin on those UK businesses. Germany, great progress again in 2023, and you can see here the extent of it over the last two plus years since the change in management we made there. They've got things firmly back on track. Of course, it's a particularly challenging market right now there, which started during 2023, but we believe that business is now equipped to deal with that and manage through it. as well as drive real value in the longer term. Poland, on the right-hand side, is a strong business that's built on many years of very good stable management and has begun to push its ambitions further over the last two to three years, including the expansion of e-commerce that we talked about at the event in November. 2023 saw especially difficult market conditions in H1 with an improvement in H2. And whilst the market is still tough today there and very price sensitive, I would say overall it is the most robust of our markets as of today. Productivity and efficiency, we are acting decisively and at pace to improve the underlying performance of the business for the medium term as well as helping the near term. Firstly, on restructuring, I've talked about the UK element of this, but across the group as a whole, we took actions during H2 that will deliver that 10 million of annualised benefit we mentioned. Some of these savings already benefited 23, but the vast majority will provide a year-over-year benefit in 2024. In the UK, in addition to simplifying layers and structures, both in central functions and commercial teams, we recently closed two interiors branches that were not a strategic priority or fit, for example. In the group center, we simplified and rationalized some of the structures and roles over the late summer. And then more recently, we made some meaningful changes in both Germany and Ireland. Overall, across the group, we've removed around 150 roles. As you can imagine, in the current climate, we're also managing the natural churn in the business as effectively as we can, managing replacements of roles very judiciously. Secondly, the lower half of this slide on broader productivity, we continue to monitor key productivity KPIs across the group, as we mentioned at the CME. And on here, I've highlighted progress on three of these. All of the businesses understand that to achieve their margin targets, they need to not only continue to grow the top line and manage pricing and mix, but that they also need to operate more efficiently and effectively in all areas. So far, good progress on that with more needed and more to come. The progress on these metrics in 2023 gives me confidence that we're focusing on and doing the right things at branch level and elsewhere. So final slide from me. So technical guidance. On product costs, there will be some increases and some decreases on individual products and categories. Overall, we now expect flat to slightly negative inflation in aggregate over the course of 2024. On capex, we're guiding to a slightly high number for 2024 as we look to continue to upgrade the estate in the range of 20 to 25 million as shown here. On interest, the slight increase in IFRS 16 leases and more significantly the interest rates therein will lead to a further increase in the interest charge. We expect it will be around 40 million, certainly within one to two million pounds either side of that. And on tax, as reported previously, we have tax assets in the UK. and the UK tax group continues to bear the costs of both our head office costs and our bond interests, and as such we don't expect to pay UK corporation tax for some time. We do have tax liabilities in our other operating companies where we generate taxable profit. Given this mix and the fact we don't yet recognise the UK tax assets from an accounting perspective, our underlying effective tax rate will remain relatively high in 24 as it was in 23. Our cash tax for 2024 will be a little higher than last year, given the phasing of some payments in Germany in particular, the 18 to 20 million in total shown here. That concludes my update. In summary, tough markets at the moment, clearly, for everybody. But we believe we're managing through them effectively and doing well relative to those markets. And we're taking actions that will help both the short and longer term, really keeping a focus on improving and strengthening the business and building on the opportunities we have. As we've said before over the last 12 months or so, the path to a 5% margin was never going to be linear, notably in periods of demand softness, but the commitment and belief in that is the same. Indeed, I'd say stronger than it's been before. With that, I'll hand it back to Gavin.

Thanks, Ian. So just in terms of the business review, again, no apologies for showing this slide again, but I think it's worth reiterating sort of how SIG is made up as a group across those different geographies. And not everywhere do we trade as SIG. So if you look in France, it's La Riviere and Litte. In Germany, it's predominantly Vigo, with VTI being our sort of specialist technical insulation business. And even though we have the flags there on the UK and Ireland of SIG being the predominant brand, we actually have four separate business units and four separate brands in Ireland. And within the specialist markets business in the UK, over a dozen different brands. So it's really important to recognize, although SIG Group is how the business is recognized, that across the group in general, we have a lot of different trading brands and a lot of different identities. Trying to generalize across our businesses is quite difficult but looking at the 2023 market conditions, I think it's fair to say that obviously demand across Europe in terms of construction was fairly subdued across most of the markets with those higher interest rates, inflation coming through, really impacting residential new build, really impacting residential RMI. In terms of exceptions for that, we would see two exceptions across our specific businesses, one being Poland, as Ian just mentioned, being more robust. And I think it's fair to say that Poland is probably a little bit further through the economic curve than we are, say, in the Western European markets and in the UK. And also Germany, where overall demand is now probably weaker than we've seen in Germany for quite some time. But when you start looking at how the individual businesses are performing and those levels of specialization that we're starting to move into, if you look at the acquisition of Thermodam, which was done in 2022, the impact of Thermodam last year really helped us to grow in that very specialist screed flooring area in Germany and overall now our market share in screed flooring in Germany is around about 30% so still managing to develop in those specialist areas even in weaker market conditions. I think Ian has mentioned more about inflation, but I think probably we would see this year as being broadly flat to maybe negative in terms of inflation. It's very difficult to pinpoint how we think inflation will be looking forward to through 2024, but that would be our broad view. We've already seen deflation in certain product areas, certainly in terms of wood and in terms of metals. I appreciate some of you may look there and think, well, zinc is very specific, so why are you highlighting zinc? But just to give you an example, in La Riviere, we would sell around about 40 million euros a year of zinc-based roofing products, which equates to about 7,000 tons of zinc products. So zinc for us is a really important metal In terms of volume, we actually do more in zinc roofing than we do in lead and than we do in copper in France. So hence the sort of specific there in terms of zinc. In terms of the like-for-like revenue performance, all we've really tried to do here is kind of simplify with the bar charts and obviously putting the like-for-like growth there and separating out for the first time UK interiors, UK exteriors and UK specialist markets. But what you can see from the bar charts on the right-hand side there, as well as what we've done in terms of like-for-like performance, the absolute scale of the individual businesses within the group, And obviously, as we mentioned about France being the single largest profit earner, you'll see that France, in terms of French exteriors, very close to being half a billion euros. If you look at Germany, it's very close to being half a billion euros. UK interiors, over half a billion pounds. These are very significant businesses in their own right and play a really important part going forward. Obviously, quarter of a billion of pounds in the UK specialist markets business reported here for the first time separately. And as you work your way down the chart, you do get to those smaller businesses at the bottom, being Benelux and Ireland. I think as we highlighted last year, Benelux has had some challenges. We brought a new managing director, a guy called Bert DeRue, into the business in October last year, and a new finance director into Benelux in February of this year. new management team in place, some work being done there in terms of the structure, hopefully giving us a better traction for the Benelux business going forward. And as I mentioned a minute ago, we've got four separate business units in Ireland. And even if you look at the performance in Ireland for last year, two of those business units actually performed really quite well in Ireland last year, and two were weaker. So even in the smaller markets, there's quite a few moving parts there in terms of which businesses are doing well, and which businesses have got more challenges. operating margins that we did for the individual trading businesses we've just highlighted here and again the bar chart is really just to give you the scale of the operating profit within the group of each of those individual businesses what we've reiterated there in that second column is our medium term operating margin targets for each of the individual operating businesses they absolutely align to what we said at the capital markets day at the end of last year That combination of operating margins over the medium-term, that's what would bring the group back to a 5 percent operating margin overall. But when you look at those numbers on the bar charts on the right-hand side, again, just reiterates the importance of France and Germany as our two main operating businesses in mainland Europe, but also their operating profit and the margin level of the UK specialist markets business. UK interiors, I think as Ian mentioned earlier, we've obviously got some challenges in terms of improvement there. We have got absolute plans and commercially and what we want to do in that business. We remain totally committed to that 3% margin target going forward for UK interiors and obviously some improvements still to come in terms of Benelux as well. But absolutely reiteration of the group's 5% margin target and the individual margin targets within the individual operating businesses. In terms of the strategic framework and how we're actually working, and really just again reiterating some of the capital markets events highlights, if you look at that four pillar strategy across the bottom of the chart there, being the sort of the route map to get to that 5% margin target, grow, execute, modernize, specialize, was really about simplification of messages and just making sure that everybody within the business could really get to grips with what it is we wanted to do. Growing above market growth and sort of growing market share is really important to us. And obviously some of our businesses are in markets that are at different points of evolution. What is really important for us though, is this is not about growing market share at any cost. This is about growing market share sensibly and profitably. In terms of execute, that is about how we do what we do. That is about developing our plans around operational excellence. It's about making sure that the way that we operate in the group is the most effective and the most efficient way that we possibly can. modernization is also something that we can work on even when the markets are a little bit softer and i'll talk a little bit more about that as we go forward and then that specialization point which we really highlighted again last year this is about growing our business in more technical more niche higher margin higher returning areas as well as improving the operation in what historically has been seen as the core businesses What I want to do just for a couple of moments is just give you a couple of examples of what we're doing in each of these areas across the group. And we'll really just start with the UK exteriors business, which, as Ian said a moment ago, had a relatively positive 2023 in actually growing and developing its revenue. The third bullet point there on the left hand side in terms of launching the solar offering in UK exteriors and just to be clear our UK exteriors business is predominantly a roofing business and our route to market before has always been flat and pitched and now we are very much flat pitched and solar so solar is a really important part of that UK exteriors business. If you look at the customer MPS improvement as well, I think what that really shows is a real transformation of the culture in that business and of the customer focus in that business under the managing director, Chris Lodge, who's been in place there for just over a year as the MD of that business, but really having an impact on how that business is seen by the customers. The branch openings and the branch refreshes that we mentioned there on the right-hand side, really important within this particular business is the trade counter areas within the branches, and probably historically weren't really given the focus and the importance that they ought to be. But by having really well merchandised and really well laid out trade counter areas, you can drive those pickup higher margin sales that obviously make quite a difference in terms of the overall results. And what I would say with UK exteriors now is we've got a genuinely specialist business that's really focused and continuing to make progress even in challenging markets. In terms of France, as we mentioned earlier, France continues to make really good progress in how they do what we do, which really comes under that banner of execution that we spoke about earlier. Branch performance, productivity, product mix, all really very much in focus, and a lot of expansion in private label products in France. And private label product, particularly in consumables and ancillary items, again, is really important in terms of driving margin, driving the mix and giving the customers great value. And I think if you look at the points there on the right-hand side, as Ian mentioned, solar, really important part of the French business, a little bit like UK exteriors. It continues to grow. It continues to give us opportunities for both service and product innovation. But I think France, under Julien's leadership, and he's now been the MD of that business for about four years. But in terms of the execution of the plan and continually improving how we do what we do, really making huge inroads. In terms of UK interiors, and I think it would be remiss not to talk about UK interiors probably as the part of the group that needs the most work, the most support to get the business to where we want it to be. And by turnover, it is still the highest turnover single business unit that we have within the group. But I think if you look there at those highlights, taking a number of headcounts out of the business is never an easy decision to make. It obviously has quite a significant impact on individuals within the business. But we had to do that to make sure that we could get the cost base to where we need the cost base to be. Around about 50% of the headcount saving in UK interiors came from two branch closures. One was in I and one was in Loughborough, but about half of those headcount savings actually come from the branch rationalisation programme. The new branch pricing model, it is a piece of software. It's a program that I think helps our branch colleagues not only to price competitively, but also to remain disciplined in the way that they're pricing. And this is reiterating to our branch colleagues, this is not about market share at any cost. This is about selling more intelligently, and it's about making sure that we are protecting the margins wherever we can. And again, I would say if you look at that customer engagement score at the bottom point there, that really is about rebuilding our credibility, rebuilding our trust within our UK interiors business across our customer base, which in UK interiors is quite a broad and varied customer base. In terms of modernization, and we could talk for a long time about modernization, but I'm really just picking on Germany. Under the leadership of Alphonse Horn, who's now been back in the business for about three years, but a lot of progress being made in terms of modernization in Germany, particularly when you look at the omnichannel development. And the omnichannel, you remember from the capital markets event, Marcin, who's the MD of our Polish business, gave a really good insight into how that omnichannel process works in the Polish business. And we are basically taking the bones of that omnichannel process within the Polish business and transplanting it into the German business, but then obviously making sure it's fully appropriate for the German business itself. What we've done is we've taken the project lead, who's a guy called Bartosz. He's been working with Christina Schultz, who runs the modernization program in Germany. And they've been working together to make sure that the omnichannel process that we launch in Germany at the half year this year, fully appropriate for that German business. And we will actually roll that omnichannel process into the French business during the second half of this year as well. In terms of technology at branch level, it's little things like 90 percent of the branch customer collections now being signed for digitally. What does that actually mean? What it actually means is on the trade counter, there is the equivalent of an iPad, The customer, once they've got their product, their order appears on the iPad. They just touch the iPad to say they've collected it, and it goes away. It's speedy, it's paperless, and it also links in directly to their account so they can get their collection note via email. So a huge amount of work on modernisation going in across the group. It's really important to us that even when we're operating in a sort of slightly more challenged market environment, that we continue to improve the process as we continue to modernize to make sure that as and when we do get market recovery, we're in the best possible position to take advantage. In terms of specialization, really what we've done within in separating out the specialist markets business in the UK, it's very close to quarter of a billion of turnover, even last year made an operating margin north of 4%. And what we've done is we've separated that into almost three sub areas. So construction accessories, building structures and building solutions and performance materials. The construction accessories really is when we get involved in early stage new build, whether that be residential, but also more and more getting into infrastructure projects, into rail, into the nuclear power stations, particularly into the water industry where we do see quite a lot of fertile ground going forward. You'll remember when SIG acquired Myers Construction Products. I'm really pleased to say that Tim Nicholson, who was the MD of Myers, is now heading up our construction accessories business in total. So he's looking after Myers, he's looking after the old SIG construction accessories business, and we also have a business called F30 in the Southwest. And I think it's particularly good when you make an acquisition and you keep the previous leadership and ownership within the business, and then they develop further to run more parts of your business, which is exactly the same as what we've seen in Thermodam in Germany. In terms of building structures, if any of you ever fancy a day out in Carlisle, please feel free to give us a call and we'll take you to our business called Stedman's in Carlisle, where we actually manufacture steel insulated buildings. But one of the things that we're doing there is really developing this innovative solar canopy manufacturing capability And it's quite different to just being a metal fabricator because what we're really playing on there is our inherent strength in building steel structures as opposed to just metal fabrication. And it's a really important part of the group. And we see that solar canopy business has been really important in developing building structures going forward. And then obviously performance materials, so acoustics, vibration, fire protection, thermal insulation. But a lot of what we do here, this isn't just about selling. There is a lot of manufacturing and fabrication involved in these businesses as well. And as we continue to report specialist markets separately in terms of our UK performance, we'll continue to give you more and more colour as to what these businesses do. And as I said, very happy to host any of you in Carlisle if you'd really like to see our manufacturing plant up there. I think it would be remiss of us not to mention ESG and the progress that we're making in some of these areas here. If you look at our targets and the five key commitments there on the left-hand side, so being net zero carbon by 2035, that number you can see there of 42,015, that's metric tons. So you'll see we're actually producing fewer metric tons of carbon than we were last year. We continue to make progress there. We continue to electrify our forklift fleet. We continue to look for higher efficiency ways of delivering our product. It is fair to say, as a distribution business, we have a large number of commercial vehicles on the road. And in terms of technical alternatives to diesel, that is probably still the most challenged area, but making good progress. Looking to be zero waste to landfill by 2025. We're currently just shy of 95% of that. I think it's fair to say that in some of our markets, some geographies are further advanced than others, but we continue to make really good progress there. And obviously, in terms of health and safety, that lost time incident frequency rate reducing from 11.1 down to 8.4. Because I think it's really important that everybody who comes to work at SIG believes they've got the right to go home safe and healthy at the end of a day's work. And it's really important that within that overall ESG agenda that we make sure that our colleagues feel safe, feel that they're working in a safe environment, and feel that they're working for a business that really cares about their future. And if you look at our employee engagement, obviously very stable there in terms of the employee NPS, which is good. We want people to feel that SIG is a place they can work, they can build a career, they can develop going forward. And then obviously scope three emissions there with the first data captured. And what I would just say about scope three is, there is a huge amount of data capture and data analytics analytics involved in scope 3 and there's a huge amount of work going on right the way across our supply chain with both our suppliers and our customers to make sure that we continue to move forward but overall we're very pleased with the progress that we're making across the esg agenda Just on people, again, I think it would be remiss of me not to mention Germany, Poland, and France. In Germany, we received the Canunu Award, which is a really very significant people award in Germany. The two people you can see pictured there, on the left of the picture is Alphonse Horn, who is the MD of the German business. On the right is Christian Kieser, who's the HR director in Germany. In Poland, we've now got a great place to work certification. And in France, we've now got a top employer certification. So I think culturally, we want our people to feel that SIG is a great place to work. And these areas of recognition, particularly in some of the European businesses, really help us to foster that culture that we want to be seen very much as a people-driven business. So in terms of strategic progress in 2023 and kind of summarizing what we believe that we achieved, we absolutely recognize that we operate in a cyclical market. And it's no surprise to anybody either in the room or watching on the webcast that these markets have been challenged during 2023. But we need to make sure that we're in the best possible position for when the markets do turn. The one thing about cyclical markets is eventually they do turn. That better organization structure, fewer layers of management, closer impact for myself and Ian in the operating businesses, and closer communication for our colleagues in those businesses to both myself and Ian and the support functions that can help. We've mentioned about the ongoing actions in UK interiors and in Benelux, and we've got improvement plans for those businesses, and we do see those as important businesses going forward and do remain confident in what we can do with those businesses in the medium term. And that penultimate point there just really mentioned about that continued investment in modernization, making sure that we're spending the money judiciously, making sure that we are developing our business model in a way that fits our customer pattern. But as I said, omnichannel coming to Germany in the first half of the year and then coming to France in the second half of the year, really utilizing the strengths of what we've done Poland over the past couple of years but the key thing about positioning the business for future growth is making sure that we are as ready as we possibly can be for when those markets do turn so in terms of a very brief summary obviously we see the sales performance as being robust in many of our markets we would absolutely see that we've gained market share sensibly and certainly held on to market share but obviously there has been a margin impact across the whole group from lower volume In terms of 2024, I think it's fair to say that we would see that weaker demand backdrop continuing across most of the European markets during 2024. Obviously, in terms of the UK, there's some kind of political event probably coming up in the autumn and we'll see how that impacts the UK market. And then for the longer term, I think, again, we remain absolutely committed to the 5% operating margin target across the group, as we outlined at the Capital Markets Day. And the detail that we're showing in the targets of the individual operating companies add up to that kind of 5%. As we generate higher margins and we maintain strict control over the cost base, that will help us to generate more meaningful cash. As Ian said a few minutes ago, that gives us the ability to look at dividends going forward. And to be clear, we absolutely want to be a dividend-paying business, but we want to do it at a time when we believe it's sustainable and we can continue it and we can continue to develop a dividend. In terms of M&A, we didn't do anything in 2023. We do continue to look at opportunities. I think it's fair to say that we'd be looking in those higher margin, more specialized areas where we believe that we're really going to generate medium to long term shareholder value by owning differentiated businesses as opposed to necessarily just looking for more volume in the areas where we've been historically associated. So hopefully, that gives you a good counter through 2023, the results, our confidence in the future, and the way that we are looking at 2024 and beyond. Now, we are going to move into a Q&A session. We're going to do Q&A in the room first, and then we'll move on to any questions that we have from people watching the webcast. If you've got a question, I would ask you to raise your hand, to wait for the microphone to arrive. If you could give us your name and the institution that you represent, and then ask any difficult questions you've got to Ian, and we'll do our very best to answer them for you. Thank you very much.