Ao World Plc Unsp/Adr

Good morning, everybody. Thank you for joining us today. So we're going to start with the numbers and the key drivers behind them, and then I'll hand over to John. So, we've continued to make progress against our strategy. During the first half, we've delivered double-digit growth in our main B2C channel, the core of our business. Gross margins have been strong, reflecting the work we've done over the last few years across product and channel mix. We've previously discussed the re-engineering in mobile, and I'm pleased with the gain we've made in margin, which is helping here, but it has had an impact to revenue, which I'll come to shortly. Free cash flow of 14 million is broadly in line with profitability, and EPS was up nearly 20%. Profit slightly better than we'd anticipated, with the rest of the numbers demonstrating the continued resilience of our business model. From today and going forwards, we've updated our revenue split to reflect how we report internally and help you understand the main channels of the business better. Overall revenue was up 6.3% on last year. Mobile and B2B revenues were down year on year, which I'll come back to. And it's not our specific strategy to grow the revenues of our logistics or recycling businesses. I'm pleased that our core channel of B2C has returned to double digit growth as we'd anticipated. And this is despite the value of selling prices in the MDA market being down about 4% year on year. We're starting to see the compounding benefits of five-star members repeating and buying across categories, as well as the positive impact of expanding our range. The tumble dryer market grew by almost 100% in some months through summer, which helped solve the problem of the fridges and air conditioners that didn't sell at their normal run rates. But we're mindful of the forward impact, both later this year and in future years, of those tumble dryer sales. In our B2B channel, we've continued to optimise profitability with minimum margin requirements and dropping customers who require costly, complex solutions. And as such, we've seen our B2B revenue decline year on year, and we expect that to continue into H2. Our mobile journey continues to make progress. As we exited 2023 making losses, our transformation required materially improved gross margins and lower traffic acquisition costs. This would always come at the expense of revenue, and it's compounded with the fall in the post-pay market, and we can see the result of all that here. Whilst we're still partway through the process, and although improvements in margin and acquisition cost have largely been achieved, there is still a gap to the revenue we need, and any further reduction in the market over our forecast will likely result in a goodwill impairment. Gross margin has improved against the same period last year, and despite the inflationary headwinds in logistics and deflationary headwinds in retail product pricing, we're pleased to report improved gross margin of 24.4%. I've talked about that re-engineering in mobile and revenue has declined but a big improvement has been in gross margins where we now earn a healthy return for every handset we sell which gives us a sustainable base from which to grow this business again. Product protection plans have continued to perform well through the period with cancellation rates below the long-term average as now more than ever customers value that peace of mind that they provide. As expected, the inflationary cost of people and the uplift in rental rates has fed into warehousing costs. We've continued to spend on marketing at a broadly flat rate to sales through the period, but this year we've seen better results on direct channels than on TV. Other admin costs have been hurt by recent high levels of wage inflation, which we do expect to see come down into the future, but we will continue to drive for efficiencies and to minimise growth in these costs as we grow our revenue line. Okay, so we've talked through revenue margin and cost lines, and I'm pleased with the output profit that's grown ahead of sales at over 30%, 17.1 million. The adjustment to PBT relates to the cost of the transactions of Music Magpie. Unlike some of our competitors, we don't expense actual ongoing costs. We're very aware of the impacts of the labour budget, though, on our cost base. And we're going to have to work very hard to mitigate most of the increase. But we do expect this to be an industry-wide issue, affecting some of our competitors maybe more, and likely to drive price inflation for customers. Okay, so profits have converted to free cash flow. We've invested in inventory across our MDA and SDA ranges, and so stock days have increased slightly to 44. Our EBT purchased 10 million shares in August, broadly to satisfy incentive plans granted over the last three years, and so this is not an annualized amount, although we may well fund the EBT to purchase further shares on an annual basis. During the first half CAPEX was about 7 million and that's the continued refresh of our delivery vehicles and further investment in the recycling plant. The addition of an extruder is the last step in our plastic recycling process and John is going to talk more about this later. We expect CAPEX for the full year to be about 11 million with H2 being more vehicles and the balance of the extruder. Post the period end, we upsized our RCF to 120 million, lengthened to a four-year tenor, and I'd like to thank Barclays, NatWest, HSBC for their continued support, and I look forward to working with Santander as a new lender. We'll talk more about FY26 in June, but to alleviate concern, we think the direct impact of the October labour budget in NICs and minimum wage is about 4 million a year. Thinking about our indirect costs, where we'll get some of this passed on to us, it could be closer to 8 million. And as I said a moment ago, we're going to work really hard to mitigate these costs, as we will with other inflationary pressures. And we're really, really mindful of the wider consumer environment and our price promise to customers. We expect group revenue for the full year to be between $1.09 billion and $1.13 billion, and that B2C revenue will grow in excess of 10%. As a result of the strong first half and continued momentum we're seeing, we're again upgrading our profit guidance to deliver group adjusted PBT at between 39 and 44 million. And on that positive note, I'll hand over to John.

You couldn't help yourself, could you?

No. Okay, thanks, Mark. And good morning. We appreciate, as ever, you guys joining us. And it's nice to be bringing you the ninth, I think it is, consecutive, reassuringly boring upgrade. I think one more, we get a set of steak knives. So, in a nutshell, look, the first half has played out broadly as we expected. Continued progress on profit performance, double-digit B2C revenue growth. But that said, let me paint a little more colour into the financials that Mark's just covered. Because underneath those positive headline numbers, it has been what I'm now terming a bit of a Morecambe and Wise summer. So, all the right level of total sales, just not necessarily in the right order or the right categories. The summer was a lot wetter than usual so we sold far fewer air conditioning units and fridges than we planned to and conversely as Mark mentioned many more tumble dryers than we expected to. Broadly it played out as a score draw on overall volumes but behind the scenes the trading and supply chain teams have done a fantastic job working with brand partners to make sure that the peaks and troughs that we've been through were thoroughly uneventful for customers. Most importantly, we've continued our momentum to deepen our relationship with customers as we move from a more transactional to a more subscription-based business. I explained at full year results that we've been building this strategy now for several years on top of our foundation of being brilliant at the retail basics that we've been disrupting the market with since 2000. We're now starting to build our two year member base as well and we continue to make great headway in giving members more and more reasons to shop with us across more categories. I'm also pleased with the progress that we're seeing increasing our share of wallet which is really what it's all about from our members. And we continue to have a laser focus on cost and efficiencies that means, as we've planned, profit is growing faster than sales on the growth that we've delivered. Ergo, in simple terms, the model is working. And for the avoidance of doubt, and people have questioned us on this before, we are not driving our growth by blowing our brains out on marketing, as you can see in the numbers that Mark's taken you through. Building on what I said at full year, our mobile business continues to represent a significant growth opportunity. In the last financial year we undertook the strategic reassessment of the mobile business and we entered this year with a revised approach to the model. We're now well on the way to returning that to profitability with lots of gross margin improvement and year on year the unit acquisition costs have reduced as well. As Mark explained, we've now chosen to report the different segments of the business separately to try and be helpful for the first time, which enables you to see the sales that we've removed from our B2B business that didn't fit our profitable growth, no grit criteria. We'll continue to assess the areas across B2B, but I suspect that the bulk of that work is now complete. Safe to say that since the end of the period, Homebase, where we were the exclusive provider alongside their kitchen business, they've kind of self-selected through administration, so obviously we don't expect that business to continue. I'm pleased to report that we have just passed the latest milestone as well on our mission to produce new fridges from old recycled fridges. We're continuing to work closely with one of our manufacturing partners on this and in the last six months as Mark mentioned we've also added an extruder to our plastics plant and this means we can further refine old plastics which means we can capture the maximum amount from the value chain. So there is now a very real possibility that we will be selling brand new fridges made with our old fridge plastic at some point during the next financial year. It shouldn't be underestimated the amount of work and thinking that has gone into this and it will be the culmination of a seven year blind faith journey. We're not there yet. But the commitment and vision to make this happen with such a level of uncertainty and innovation required is the sort of thing I think that only AO can do with our long-term horizon. And that makes me really proud that we're able to do that. We've also announced recently the intention to acquire Music Magpie, which we hope will complete before the end of the calendar year. And this should set us up well on our ESG journey for the newer categories that we're now building nicely. as we turbocharged their expertise into our website with enhanced trading offers and capabilities. Our Trustpilot reviews now stand at over 600,000 reviews and we've maintained our world-class most trusted 4.8 out of 5 rating. This is something that I will never tire of telling you or take for granted. It simply does not happen by accident and it requires obsessional focus on the brilliant basics every day. This is a critical part of our ability not just to remain the most trusted electrical retailer but also to grow our profitability given how expensive it is when you get things wrong both in the short term to fix it but in lifetime customer value terms as well. It's difficult to get big and build scale in a low frequency category. In fact, until AO, it's been impossible to deliver this level of trust pilot reviews, brand relationships, and critically, culture in our category. None of these are built overnight. Vertical integration and structural economic advantage take time and blind faith at times as well. Now, all these boxes are materially ticked. Our strategy is clear and I have never been more excited about the journey that we have ahead. So to summarise, there's been another solid six months of progress on our journey. As we expected, sales are growing again and we continue with our medium-term journey to delivering over 5% PBT with double-digit revenue growth, while sharing the economics with our members along the way to fuel future growth. I'd also like to thank all AOAs that will be watching this and in particular a shout out to our drivers. It's actually sunny here today but I'm sure they often wish that peak trading coincided with summer weather instead of the wind, the rain, the snow and the floods that they're currently having to contend with. And yet, they still find a way, they still find every opportunity, not only to deliver the product, but also their pixie dust that they deliver in the moments that matter. The fact that so many of them choose to dress up at this time of year in Santa outfits for what is a very physical job, for me it tells the story perfectly about what makes AO unique. We're back to double-digit growth in our retail business, and profits are growing faster than sales, which is why we're able to upgrade profits yet again today. Simply put, as I've said, our model is working. So thank you for your time. Mark and I are happy to take questions, but please take a microphone before asking, stating your name and organisation so that anyone that's watching can hear as well. John, do you want to kick us off?

John Stevenson at Pill Hunt. A couple of questions, please. Just on the membership and obviously the drive into non-MDA, I know you don't want to give necessarily hard numbers, but can you talk about what you're seeing from a frequency and sales mix perspective for people as they come through that membership journey and how renewals look? And second question just on the automation opportunity in the warehouse. I guess you'd be looking at this anyway, but given where we are now, is there a more opportunity to sort of look at how you're driving product through there and the opportunity to automate?

Yes, so taking the first one on membership, membership is an important strategy for us. It's still in its early days. We're very pleased with progress on just about every metric. What we want to do is we want to educate customers that we sell more categories. Even some of our most loyal customers don't know that we sell laptops or phones or SDA or whatever it might be. So we need to educate those customers and we need to educate them that we are the best place to buy those products. And now we've fixed all the unit economics in all those newer categories. We're able to deliver better value and do that profitably. So it makes sense for us and obviously you can see that in the numbers today. So we are seeing better share of wallet from members than we're seeing from non-members. So we're very happy with that direction of travel. We're consistent on we don't release micro data on that because we think it's commercially sensitive. And equally we're happy with membership renewal rates as well, so broadly all progress is good. As far as automation is concerned, I don't think we should be making any direct decisions as a result of the inflationary budget that's been delivered. I think we should have an always-on obsession with cost and doing things more efficiently. So we will continue to do that. Clearly, costs walk into businesses on legs, and those legs got more expensive. So that has the potential to change some of the economics and thinking behind certain things, but it wouldn't be right to go into the micro detail of that, save to say that we are a growth business and our strategy is to not increase costs as we grow. So central cost that is. So obviously variable cost will go up in line. Thanks, John. Thanks.

Wayne Brown from . Just two from me. With regards to the categories over the summer that didn't sell very well, what is the plan with that inventory? So air conditioners, do you just hold on to them for a year or do you sell them through?

Yeah, so there's nothing to flag really. Fridges sell all year. There's just a spike in summer, so we might size that pretty quickly over a couple of months through. We change all the ordering and that'll flow through. From an air conditioning perspective, you don't sell that many of them in November, so we'll put those into storage as a DIY retailer would with garden furniture.

Okay, and just with regards to consumer sentiment, clearly lots of noise pre the budget. Can you just talk about frequency, AOV, more importantly, what are you seeing the consumer spend? Are you seeing them still spending down in products? Are you seeing maybe a little bit of loosening of the purse strings a bit and how you expect that to necessarily play out over Christmas?

So, I mean, Mark mentioned we've seen some price deflation come up 4%, but that goes through different cycles. So, you know, when we had the energy crisis, when Russia invaded Ukraine, customers actually traded up because they were buying more energy efficient products. There was other inflationary things that were driving the market and some of those have come back out. think the uh i expect the budget to be inflationary again i don't think you know i'm no economist as everybody knows as a washer flogger from bolton it doesn't seem rocket science to me that you stick a load of extra costs into a lot of businesses costs will go up you can't mitigate everything we've got the benefit of being a growth business so as a percentage of sales we expect our essential costs to go down and we expect that trend to continue the most important thing to for me is that the vast majority of our sales are not discretionary. It's a distress purchase. So when you think about project-based purchases are more discretionary, things like changing your fitted kitchen, if I look around the room, if everybody in here, if your fridge broke, I bet you buy another one. And that is the vast majority of our business, which makes it robust. And when you look at the demographics that we sell that into, so from an inflationary perspective, so although the minimum wage has gone up, actually inflation hurts those on the lowest incomes the most, but they're the lowest share of our demographic in our business, which again just makes it more resilient. So we're not, on a macro level, I'm not concerned about that. And in that context, even in that, if consumers are squeezed, they will generally seek out value better. And we are better value.

Ben Hunt, Premier Libran. Just another couple of questions on that. You lead to the repeat rates sort of going up, but there wasn't anything fixed. I was wondering if you could give a bit more details of that. Obviously you had a big slug of customers that came in during the pandemic, and if you're starting to see those come back and what they're buying, and, you know, context to the non-MDA.

Yeah, so I always talk about the best way to experience the difference of AO is to actually shop with us. Because on paper, well, us and all our competitors sell electricals, we all deliver them. Next day, time slots, none of these things are revolutionary. What we do is, our difference is not what we do, it's how we do it. And so, yes, we are seeing all the new customers we got through COVID. are fuel for future growth. And so the experience that we gave those customers is unquestionably fuel for future growth. We are seeing within membership people come back quicker and people buy more products from us in terms of share of wallet. So in terms of the sort of cyclical annualization of the volumes. So COVID was all time highs in terms of volumes of units put into the market. So that's what four years ago, four and a half years ago now. And for the last two or three years, we've been at all time lows of volumes that have been put into the market. And so If and when that will get some market tailwind benefit from that, logically products are being used more because not everybody's fully back to work in the way that we are as an organisation. And when you're at home, you use those products more. When you use electrical products more, they have a higher frequency to break. That said, manufacturing quality over the last 10 years has got better, so products should last longer. So exactly how all that's going to play out We're unsure. So all our planning is based around no market help and all self-help.

And then just secondly, on the mobile market, still struggling there, just wondering if you could give us sort of a view and your outlook and how much you could start to see that sort of tail off, as it were, the headwinds that you've seen.

So we see mobile, we called it out as one of the biggest opportunities in the business. Every single customer has got one. When you look at frequency of purchase, although the renewal of mobile has slowed, it's still the product that you probably renew the fastest. It's certainly the product that is most important to you and it doesn't work in people's lives. It's a high value product as well. So mobile is a really, really important part of our business and you'll see more of that as we go forward. But the mobile market in its shape is changing and evolving at quite a pace. It's not that long ago you used to get a new contract every year, then it became every two years, then it became every three years and on a lot of contracts now it's every four years because devices have got more and more expensive. I don't know whether it's a reason or a need to change your phone, I think has reduced. Even I haven't got an iPhone 16. I'm probably quite well placed to get one. And so people's sort of cycles are changing. There's more of the market moving to SIM only and SIM free separation and the disaggregation and the disconnection of the phone and the contract. So what's important for us is that we position ourselves so that the business that we have is good and profitable, not dysfunctional as it was. There's been quite a bit of consolidation in the market as well, both at a network level and from a retail perspective. And we think we're in a good place now and we think we're very well positioned for the plans that we have going forward and you'll see more of that over the next year or two. We'll keep working sort of backwards with the knife.

Thank you. Caroline Gulliver from Equity Development. I had a follow-up question. It was also on mobiles, and in particular the gross margin outlook. You know, you had a really good move in the gross margin in the first half. Part of that was obviously due to the mobile restructuring. And I just wondered if you could give some more colour on the outlook for the second half in relation to sort of the outlook. You know, you stopped off on iPhone 16, you know, the outlook for mobile sales and the gross margin outlook.

yeah so so broadly the the the job on fixing the margin is done in mobile so the sort of there's not going to be a sort of step change improvement into uh into h2 um we do we are a slightly seasonal business we do have a different mix in h1 and h2 and typically and it isn't the case last year but it is if you go into previous years our h2 gross margin should be slightly lower um than it is in h1 and that is our sort of typical profile um so you know as we get a different mix of goods they come through the sort of on the Morcombe and Wise analogy that we seem to have picked up today. It's a different order of cost, but it comes out of the right number at the bottom. And so in H2, it will go back slightly, but it should still be a step-change improvement on last year.

But they avoid us without Mark and I not dancing out of this.

Hi, Alison Lager from Deutsche Neumis. Three for me, if that's okay. First one on mobile as well, actually. So just thinking about you fixed the unit economics and you're thinking about how you put value into the kind of membership program. Is there any potential for kind of interaction between those two things? Now the unit economics in mobile are better. Like, would you look at wrapping that in?

Possibly. Okay.

And then second one around the smaller appliances, just wondering kind of where you are versus your kind of target in terms of range expansion, in terms of broadening out, if you give yourselves a kind of score out of 10 in terms of where you're looking to get to.

Yeah, I'd say we're six and a half to seven now out of ten on the smaller appliances of where we want to be on range. On the range, in terms of fixing the unit economics, I would put us at an eight and a half out of ten. The vast majority of that work is now done. And then in terms of education, in terms of customers knowing that we sell those products, I would probably put us at a three out of ten.

And kind of marketing, I guess, and kind of communication is what's behind that education piece. And then third one, totally unconnected, just wondering whether there's been any update in terms of that potential for government-mandated take-back of electricals. Have you heard anything new on that front recently?

We haven't seen anything, but it feels like we've got a good government that wants to legislate more. So I think direction of travel is probably more interference Thank you.

Bruce Hubbard from Lancaster Asset Management. Just to step back on the gross margin, you're up about 500 bps on your low points four years ago. You're up about 300 bps on your run rate before the stresses of COVID. Could you step back and just help us understand what's changed, what hasn't changed, whether your price position has changed? Because it's a really massive move.

Yeah, so there's quite a lot of moving parts and not one sort of single, simple answer to it. And so we've got better at our margins right across the piece. And so product margin has improved across all categories over that period of time, and certainly that's helping. We've taken away a lot of drags, and comparing to a pre-COVID period, whether it was B2B-focused sales, whether it was the impact of affiliates and that type of thing, or discounting, So there's a number of behaviors that we've changed about how we sell. Some of the channels that we sell into that had structurally lower margins have sort of come away. And we've seen the reshaping of revenue over that period. Product margins have then improved. And then we've done a good job on cost control that sits... in that bucket as well. So our last mile delivery cost is in there and the logistics team have done a great job on optimizing delivery costs and delivery vehicles and so on. And so it's a combination of all of those things that have changed. We've also implemented the delivery charging Now, some of that probably has offset product margin to a degree, and we look at this in an overall basket. But there's a number of things that go in there, but broadly it is that we are probably getting slightly better buy prices, we're being more efficient on how we deliver things, and competitively, we charge customers the market rate, and customers get a great deal from us. So it's a basket of stuff, but there's not one big change in there when we look over that time horizon.

And I think, I'd just add to that, I think a couple of things. One, what has been consistent throughout, one of the things I'm really proud of is our price promise. Some of you have probably heard of this, never knowing the undersold, or sometimes knowing the undersold, or maybe this month, maybe next, I don't know, is it in or is it out, it's the okey-cokey price promise. Ours is always on. with just anyone, anywhere, anytime, on anything, we will match them. Our people are just empowered to do it. They will go, they'll check it. You don't have to come with both grandparents on a Tuesday evening, hopping on one leg, fill eight forms in. If you ring up and it's real, we match it. Not bothered what the margin impact is. It's about the depth of the trust that we have with customers. They know that we will always be genuine on everything that we do. And so there's no margin creep here into pricing or nothing clever that's going on. That policy has been consistent all the way through. And then when we talked about the pivot to profit, we talked about our core UK-focused, primarily MDA business, being an incredibly good, profitable, cash-generative growth engine that paid for lots of... things for us to go and investigate you know we went and learned 160 million lessons in germany it didn't work but i'm still glad we went and tried it we tried loads of stuff we in our b2b business some things work some things didn't you know we've taken some things out of our b2b business But it's still bigger than some of our listed peers that we compete with. So as a channel, it's still a really good piece of business. And you don't always know whether things are going to work. When we set off on a seven-year journey to do fridge recycling and making new fridges out of it, I had no idea what it was going to cost. I didn't know we were going to have to buy an extruder. I didn't know China were going to change the rules on buying plastic. There's loads of uncertainties when we go into things. But we go into them with a sort of strategic conviction of, is this the right thing to do? Do we believe in what we're doing? Membership is another very good example. You know, everybody said to us, nobody will join, nobody will pay £39 to join a membership scheme for an electrical retailer in a low frequency category. It's not going to happen. You're mad. And normally when people say we're mad, we know we're on to the right thing. but it needs conviction we don't know exactly what it's going to be but in the short term you do get the costs of it and so what we're seeing is a rebalancing where we've got less experiments going on we've got more certainty we've got more data supporting that and we've taken our central overhead now down to whatever nine and a half ten percent of sales something like that I believe, and if you look at the numbers that we've upgraded to today, it's just under 4% PBT, which, to Bruce's point of when we started the Pivot to Profit, getting to 4% PBT for a lot of people was unimaginable. For us, it was just a journey. Well, actually, I believe that that 9.5%, 10% central overhead can get to more in a corridor of somewhere 6.5% to 7.5%. Also, just the right kind of growth continuing delivers you 5% PVT. This is a really good, profitable, cash-generative, cash-converting business. And we can see all that. We've been doing it for a long time. And so that doesn't mean we're going to stop investing in things and stop exploring things. But more of the business is more mature. It's more predictable as a result. We've got getting, whatever it is, 10 million customers in the base takes a bit of time. So we're just a more mature business. Andy?

Hi there, Andy Wade from Jefferies. Non-MDA categories, could you give us an idea of how much of a contribution they made to the B2C revenue growth during the period? We were here six months ago, I guess, and you were talking about how the process, you changed the process and it's now fixed, the margin's fixed. So has that all played out how you expected it to?

Broadly, we don't do category split outs and we're not going to start doing category split outs. The most important thing is that all the sales that we're making in that arena are now margin accretive to our plan and not a drag. So our strategy is to get more share of wallet, is to increase the mix into those categories, but we don't have any plans to start splitting that out.

And the categories are going nicely for us and there's plenty of opportunity for us to go out there. Our share relative to the market is small and so we've got an awful lot of headroom to grow in those categories.

Cool, thanks. And then sort of just going back again to that 13% B2C revenue growth in the period. Now, what I think probably we've all spent a bit of time talking about is the removal of the negative factors that drive that. So there's been drags on the revenue from the changes in propositions and bits of revenue that you stepped away from.

what about the positive elements that have been driving that what what do you see as the key factors that have got you got you to 13 13 growth i guess and not the removal of the negatives yeah so uh and and the removals of the negatives were all a bit uncertain of what customers will stick which customers won't stick and so on uh but it i i realize this is repetitive and boring but uh it turns out When you treat customers really well and deliver incredible service and brilliant value, they come back. And so all the metrics across the business just get better over time. But as I said earlier, our difference is not what we do, it's how we do it. And so my belief in TV advertising is pretty low now in terms of moving the dial for us. Because you go out and what are we doing now in TV advertising? Was 499, now 399, this weekend only. I don't know if you know DFS has got a sale on, by the way. And so I think we've done the hard miles. of getting to, I think, with something like 40% spontaneous brand awareness now. And so TV helps in that journey. I don't think we need to keep reminding customers through TV advertising in that way. I think we're better to invest a lot of that. And you've seen it in terms of the, I called out, we're not blowing our brains out to drive it through marketing dollars. We're investing it in the proposition and just being brilliant for customers. And it pays. But it takes time. It's a long-term strategy, not a steroidal hit.

Yeah, I guess one of the reasons I was thinking about that, because obviously, you know, the proposition has been a good proposition for customers and you've been doing the right thing and getting deliveries there on time, even pre-COVID, and you weren't growing at this sort of rate pre-COVID. So I guess I'm sort of comparing and contrasting. You were at times, obviously, but not consistently, I wouldn't say, in the later years. So I'm interested as to maybe phrasing it another way, then what's changed versus then?

Well, so if you take the example of somebody that might have come to us through an affiliate, let's say in some of the ways that we were trying to reach new customers, then how many of those customers will then come back direct if we're not in those affiliate channels? Some will, some won't. And it's all a bit uncertain. For us, it just does come back to deliver on all the fundamentals. And we're investing in membership, and membership is definitely helping. Members get even better value. So we've got our price promise. My ambition is that members save five times their membership fee. We're not there yet. We are for some customers, but en masse. But as we educate more customers into more categories, then that's the direction of travel for them. And so we have member discounts that are exclusive to our members. And we want them to save more. It's a simple philosophy, but it's one that we're taking incredibly seriously. But again, it's another journey that is going to take time.

Not to put words in your mouth then, but it sounds like one of the things that has changed is that you had potentially more transient customers before and more loyal customers now, and you're building on that because you were talking about the affiliate customer that may or may not have come back before, whereas now you've got less of those customers.

Honestly, Andy, it's a mix. we will have acquired a customer potentially on a loss-making basis through an affiliate that is a sort of CAC investment if you think and then some of those customers will come back in the future and so you cash the check in the second half and you know when you when you get into I always think sort of if I think about investing in businesses I always see businesses that talk about two and three customer lifetime value and they're factoring two and three cycles into what they're spending. We did a bit of that and it was very dangerous and it was very expensive. There's a value to just being big. Some of our competitors are finding that. I don't know how many deliveries we're going to do today, but I didn't get up this morning and think, oh, my God, did 120 double-deck trailers leave last night? Oh, my God, did everybody come into the outbases? Did 1,000 drivers turn up this morning? Did all the van roll? It's a machine. It works. It takes some building, and it takes a lot of lessons on how you get there. You know the old 10,000 hours thing? We've got, I don't know what it is now, but 10 or 11, maybe even 12 now, years average service around our senior leadership team. It takes time. All these things take time. In our recycling business, we're still learning the plastics plant and how to get the value out of it. So it's just the benefit of time.

Cool. Thanks very much.

Sorry. It's Charlie from HSBC. Most of the more interesting questions have been asked, but can I ask why you've extended your RCF at this point, given your net funds is going up and a relatively stable inventory level?

Yeah, I mean, so simple answer is it funds the Music Mag by acquisition, broadly.

My answer is I think it's normally better to get an umbrella off a bank when it's sunny.

Anything else? Good.

Okay. Thank you very much for everybody's time.