Currys Plc U/Adr

Good morning, everybody. I'm going to lead off and then Bruce is going to take you through the numbers. So how would I summarise what happened last year? In short, mixed, a very mixed performance. So on the one hand, we came in at the top end of the guided range on profit and on cash. And the UK's very strong and strengthening performance is very encouraging, not least because we can see the strategy working that lies behind it. And we've started this year in line. On the other hand, the Nordics performance last year was deeply disappointing, and we remain cautious about the consumer outlook. And you put those two things together, it's caused us to be pretty prudent in our planning to make sure that we are staying absolutely watertight, even in any reasonable worst case scenario on balance sheet and on liquidity, and also being cautious in the forecasts for the market going forward. We expect another year of declining markets. So that's the the prudence in our planning, if you like, but if the market is better, if we turn out to have been excessively prudent, okay, we'd rather be surprised on the upside and we will do better than, we'll be ready to do better in the event that the market is better. And longer term, we're confident. We're confident that we're building something here that's not just resilient through the short term, but in the longer term is going to prosper. Enough from me, I'm going to hand over to Bruce to talk you through the numbers from last year.

Thank you, Alex. Good morning, everybody. So as Alex has said, it was a mixed performance from a group perspective with a very strong UK performance and perhaps a disappointing Nordic performance. What I'm going to do, I'm going to step you through a very single slide on a group overview, and then I'm going to go through division by division. so at a group level we finished last year with revenue at 9.5 billion which was down six percent or roughly down 600 million pounds our adjusted profit before tax was 119 million down 38 year-on-year our free cash flow was an outflow of 74 million our total indebtedness was down roughly 100 million to 1.6 billion our adjusted eps 8.3p, down 33%. And finally, we returned £35 million to shareholders by way of dividend. At a group level, stepping through each of our divisions, starting with the UK, our revenue was £5.1 billion. On a like-for-like basis, that was down 7% year-on-year. But despite our sales being down we successfully grew our bottom line up by 44% to 170 million of EBIT. From an international perspective, our Nordic business was less positive. Revenue of 3.8 billion, like for like, minus 10%. But perhaps the most marked number that we'll talk about today is the adjusted EBIT number for our Nordic business was 26 million. That was down 81%. And finally, Greece, quite a different situation in Greece, where we had sales growth up 12% on a light for light basis. And some of that was driven by the strong macroeconomic environment within Greece. Some of it was through a program or number of programs of government subsidies that are in place, which are helping our categories. Overall profitability was down three at 18 million. And that means that at a group level, our group EBIT was 214 million. down 24%. Drilling down into the UK, as I've said, like for like sales were down seven. I think it's interesting that our online share of business was absolutely flat year on year. Our adjusted EBIT, as I've said, good step forward, up from 117 million up to 170 million, an increase of 44%. That means that our adjusted EBIT margin improved by 130 basis points to 3.4%. Our operating cash flow also stepped forward to 181 million, very much driven by that improvement in operating cash. However, our segmental free cash flow stepped back, stepped back to 16 million. There are three key factors here. By far the most important is working capital. Again, because our business is getting smaller, that means because of the structure of our working capital, lower purchases, lower sales means we've had slower stock turns. And although we've successfully reduced the amount of stock across all of our business, unfortunately, our trade payables have reduced by further. And that's why we've got more of our stock has been paid for and we've got a cash outflow. And that is one factor. Another factor is we have seen increases within our cash exceptionals offset by lower capex. In terms of a profit bridge for the UK, as I said, our profitability increased by 130 basis points at an EBIT level. And as you can see, a second year in succession of gross margin progression, up by 160 basis points, offset by 30 basis points decline within our OPEX ratios. Why did our gross margin step forward by 160 basis points? Well, there's five factors. The first factor relates to mobile revaluations. I spoke about this a bit in May. The year on year progression that has come from our mobile revaluation is worth roughly 10 million pounds. But the other factors, I guess, are part of our core strategy in terms of growing our gross margin, It works well so far and will continue to be our strategy going forward. The first is to continue to increase adoption rates of credits and services, which are so important for our customers. Secondly, it's about monetising the improvements that we've generated in terms of customer service, and the best manifestation of that is the fact that we are now charging for delivery and for installation. The third is making better choices to drive profitability using data. So that could be the products that we choose to sell, the promotions that we propose to run, or the advertising money that we put behind certain activities. That's really helping drive the bottom line. And the final component is reduced supply chain and service operation costs. So great success growing gross margin off the back of another growth the year before. In terms of operating expenses, as I say, operating expense to sales ratios declined by 30 basis points. You could put all of that decline down to one factor, and that's the fact that we lost the business rates relief in FY22. So therefore, year on year, we lost roughly £15 million worth of benefits. With the exception of that, our cost saving activity more than offset our inflationary headwinds. And the only reason the ratio didn't improve was that our cost reduction broadly fell in line with our drop off in sales. It's worth drilling into costs in a little bit more detail. Our cost inflation was significant. The headwinds continued through the year. As you can see, the biggest cost inflation came through in wages as we continue to invest in our colleagues. You can see on the graph there at the top right hand side, that if you look over the last five years, we've invested a 37% increase in colleague wages up to £10.80. The in-year effect of that was £21 million. We've also seen substantial increase in energy costs. Our energy costs increase year on year by £15 million. That's an increase of 65% year on year. And actually, if you looked over two years, our energy costs have increased by £23 million. So a substantial headwind on our profitability. We have had some good news. You'll remember in FY22, we were suffering from very heavy shipping costs. That pressure has unwound somewhat, and that's improved our inflation number by roughly seven. And then elsewhere in the business, we've got another eight million of inflation, which adds up to a total of 37. However, offsetting that, fabulous work that's taken place right across the organisation to take cost out of the business. And over the last 12 months, we've reduced our cost base by £120 million. And you can see there how that splits between gross margin and operating costs. If I was to go through each of these in turn, supply chain, an awful lot of focus on brilliant basics, getting the basics right, getting things right first time within our supply chain and our service operation. And that combined with the outsource relationships we've got with GXO and WebHelp have allowed us to dramatically reduce our cost base. Within our stores, we've changed our operating model within our stores. We've talked about this before, multi-skilling our colleagues so they're better able to help customers improve availability of colleagues within the store and at the same time reduce our costs by £36 million. We continue to work on goods not for resale, looking to work with our suppliers to lower our cost. From an IT perspective, we continue to take out some of our legacy systems to simplify our estate and also the suppliers we work with. From a marketing perspective, we're showing £13 million worth of cost saving. This isn't simply cutting marketing and therefore have lower sales. This is where we've used data to identify marketing activity that simply isn't adding value. Most of this is digital advertising, PPC advertising, where we've taken out activity that simply wasn't generating profit. And the final component is central cost. And I just wanted to spend a moment talking about a new relationship. It's now been in place for roughly a year, but we're now ready to talk about it. We're partnering with a large organization called Infosys. Infosys are helping us set up a global business services function. And as you can see from the list, this is not just traditional finance and HR outsourcing. We're looking at getting support for the entire organization. That gives us the opportunity to unlock wage arbitrage saving, as well as significant efficiencies using Infosys expertise. We've already transferred 800 heads from Curry's and Elkshop in the Nordic into Infosys. And that's allowed us to save roughly £5 million this year. And that saving will continue going forward. Moving on to our Nordic business. Again, revenue £3.8 billion, down 10% like for like. Our adjusted EBIT, as I've said, dropped from £142 million down to £26 million. Our adjusted EBIT margin falling by 280 basis points down to 0.7%. That fall in profitability has had an impact on our operating cash flow down to 63 million. And in turn, we've seen a negative flow within our segmental free cash flow, an outflow of 42 million. Again, as I described for the UK, the business is shrinking. That means we've got slower stock turns and it means that our working capital is an outflow. In terms of the profit bridge for the Nordic business, I described 280 basis points drop year on year. Again, I think we've talked about this quite a lot over the last 12 months. By far, the lion's share of that drop profitability year on year is in gross margin. A fall of 200 basis points year on year. Why has that happened? Again, much talked about. We've seen significant COGS inflation within our Nordic business. Chunk of that caused by FX impacts with the weakness of the NOC and the other Nordic currencies. At the same time, we've been unable to pass those COGS increases onto consumer during the course of the last 12 months. Why? Because demand has been soft, because there's been excess stock in the market at certain points, but there's also been intense competition. And I'm sure you've seen and you will hear more about the drop in the profit pool across the whole Nordic market. In terms of OPEX, Our costs actually in the Nordics fell in absolute terms. And you will have seen in the narrative some of the conversation about the cuts that we're making across the Nordic business, particularly in the final quarter, as the business looks to slim down its cost base so that we can improve the bottom line as we go ahead. So our costs are down in absolute terms. We are facing in, however, to significant inflationary headwinds, exactly the same as in the UK around payroll, energy, etc., but the cost-saving activities are helping us to more than offset that. And the programme of change that I described in the UK mirrors the activity we're doing in the Nordics. Finally, from a divisional perspective, just talk about Greece briefly. As I say, different to UK and Nordics in a growth situation, strong GDP growth and supported by government subsidies. Our adjusted EBIT did fall by 3 million, although I'd remind you, if you remember our first half results, our Greek business dropped back year on year by 10 million pounds. So you can see the substantial growth that the Greek business enjoyed during the second half. Our adjusted EBIT margins fell by 100 basis points. Our operating cash flow stepped back, broadly in line with our profitability. Segmental free cash flow, however, stepped up. significantly. This is the mirror of the UK and Nordic. A business in growth within our market will unlock free cash flow gains as stock turns more quickly. And quickly, just in terms of our Greek EBIT bridge, as I say, gross margins down 80 basis points. All of that was in the first half. More than all of that was in the first half as that margin recovered for reasons very similar as we were experiencing then to the Nordics. From an operating expense perspective, our cost base has grown within our Greek business as we've invested behind growth. And also we've suffered similarly from an inflation perspective in terms of payroll and energy. Moving on to cash flow. So cash flow for the year was an outflow at free cash flow level at minus 74 million compared to plus 72 last year. Now, of course, by far the biggest component of that was a drop-off in our operating cash flow, a fall by 107 million, and again, driven by the underperformance within our Nordic profitability. If I step down, the other components are adjusting items increased to 40 million from a cash perspective. The biggest single element of that is property exceptional cash flow. to do with our closed stores, dilapidations, etc. But the other component, the majority of it relates to restructuring cost as we've taken cost out of the organisation. The reason the number is so materially different year on year, you may remember we had two big cash inflows, cash settlements last year, which were not anniversary. From a cash tax perspective, cash tax has increased by 20 million year on year. £17 million of that I called out in this room 12 months ago. We knew that there was Nordic cash tax of £17 million that related to FY22, but because of some changes in structure, it dropped into the reported year. That won't be anniversary going forward. And finally, cash interest. Cash interest increased by £9 million to £26, partly because of higher average net debt and, of course, partly because of higher interest rates. And in terms of working capital, I think I've said this as I went through, overall a working capital outflow of 127 million, roughly two thirds of that was in the UK, one third of that was within the Nordics, offset by some improvements within Greece. In terms of uses of free cash flow, we returned 35 million of cash to shareholders. We made our pension contribution, our annual pension contribution of 78 million in the year. And you can see there, there's a big chunk of other that relates. It's 50 million. It's to do with unrealised FX adjustments as we've managed all of the FX movements across our opening balance in-year and closing balance. I'm happy to pick that up in Q&A or take that outside, but it's simply FX maths, which takes us to a movement in net cash outflow of 141 million. And hence, we've moved from having a positive cash balance of 44 million to a net debt of 97 million. Moving on to look at total indebtedness. So total indebtedness within Curries, we're thinking about the pension deficit, we're thinking about lease liabilities as well as net debt. And you can see that for the first time in five years, we actually saw a worsening within our total indebtedness. And that indebtedness increased by 100 million to 1.6. However, if you compare that position to where we were three years ago, you can see that our indebtedness is significantly better than that base. In terms of why, well, first of all, let me just quickly touch on stock. I've talked about working capital. Our stock across the business is down 10% year on year. That's despite the fact that we've seen high single digit COGS inflation within the business. So we have significantly reduced our stock and the health of that stock is very strong. But again, going back to the year on three years, Our average net debt for this year was 96 million. If you look at that number three years ago, it was 355 million. So our net debt is much stronger. Our pension deficit on an IAS 19 basis has more than halved from 550 million to 249. And our net lease liabilities have also reduced as we've closed on profitable stores and reduced our average lease costs. From a liquidity perspective, the liquidity numbers here are our external liquidity, so the arrangements we have with our banks. Again, I talked about this quite a lot in May. There was concern over the headroom on our fixed charge cover. We worked with our banking lending partners who were hugely supportive to us and allowed us to relax that fixed charge cover down to 1.5 times. We finished the year at 1.78. We've got a headroom of roughly 75% million of cash profit so we've got good headroom and as you can see there our net debt leverage is no challenge however the external bank covenant liquidity measures are not the only ones we use we've also got a two internal liquidity measures that we monitor to monitor whether we're happy with the shape of our balance sheet We actually shared these numbers and the methodology with you at our Capital Markets Day if you were there back in November 21. We talked about a total indebtedness fixed charge cover. So again, we're there, we're talking about the pension deficit and lease liabilities as well as our net debt would have to be more than 1.5 times and our total indebtedness leverage would be less than 2.5 times. Unfortunately, based on the trading that we've had over the last 12 months, we have slipped behind both of those internal metrics. Our fixed charge cover has dropped to 1.42 and our leverage has increased to 2.9 times. And in that situation, I see a core part of my job to recover the liquidity to protect the balance sheet and to protect the company. So what are we doing about that? Well, I guess the way I think about it is through our capital allocation policy and our priorities. Again, we shared something like this at the Capital Markets Day, and we explained that our first priority was to pay the required pension contribution. Our next job was to maintain a prudent balance sheet in line with those internal as well as external metrics. And only if they were in place would we invest to grow the business, pay and grow our ordinary dividend and any surplus cash we would circulate to stakeholders. So picking up the first one of those in terms of our pension deficit, We've just completed the actuarial valuation for our 2022 pension review. It has now been signed and agreed with our pension trustees. And as you can see, it's good news from an actuarial deficit perspective. Our deficit has fallen from £645 million in 2019 down to £400 million in 2022. And if you use those same assumptions, extrapolate them forward through to this year end, it would be down at 300 million. Now, at the same time as doing this, we've worked with the pension trustees and very grateful for their support. We've agreed a revised contribution schedule. This largely reflects the fact that the work we've been doing to reduce our deficit is ahead of where we planned it to be. And that has allowed us to reduce our pension contribution this year from 78 million down to 36. And for FY25 next year from 78 down to 50. So that gives the business 70 million more cash flow to play with during the course of that 24 month period. Now, there are some matching criteria associated with that. It's in our statement. I'm happy to pick it up in Q&A or outside. So that deals with lower pension contribution, but we need to continue to look to all aspects of our balance sheet. and our P&L to get our liquidity back where we want to, particularly in an environment where there's huge uncertainty going forward in terms of the state of the economy. So we're taking internal decisions. We are continuing and accelerating our cost cutting activity, both in the UK and in our Nordic business. We're also taking significant reductions within our capex spend. And finally, we've made the tough decision that we're not going to be declaring a final dividend for the year that's just finished. Putting some numbers behind that, our capital expenditure, we expect to be 80 million. That's the basis of the budgets that we've set for this financial year. And as you can see, that's a significant drop year on year, but much, much lower than it's been historically. We had a few questions on it from analysts first thing this morning. So if I just spend a second to say, that we're not putting the business at risk with this level of capex. We're being choiceful in terms of what we're investing and what we're not investing behind. Of course, we're being very focused on returns. There are a few projects that we're stopping that ideally we probably will bring back at a future date. So we've put them on the shelf for now. But when the market recovers, we will go back after those. And another key thing for you to have in your mind when you think about this Within our P&L, we are absorbing quite a lot of OPEX that historically would have been CAPEX. So, for example, as we switch to software as a service, that has meant that there's quite a lot of costs in our P&L that's had to be absorbed that historically would have been in this number, and hence another reason it's dropped down. We continue on cost reduction. cost reduction of 300 million in the UK over a cumulative three years basis. You saw the progress we've made so far. We think we're on track to deliver that and additional cost savings within our Nordic business. We've talked about the reduction in pension contribution, and as I've said, we're going to stop the dividend. So moving on in terms of current year outlook, well, we've started the year in line with boards expectations. Our capital expenditure, as I've said, is going to be around 80 million. We're calling out that we expect our net cash exceptionals to increase in the current financial year from 40 to 50. Some of that is because of higher property costs, more dilapidations are expected, but also the restructuring that sits around the cost out that I've described. And a big chunk of that that wasn't previously thought about is the work that we're doing in the Nordics. I've talked about the annual pension contribution being lower. The sum total of all this activity is that we expect our net debt position, rather than get worse, which we saw last year, to improve this year. We provided you some numbers in the slides for your models in more detail in terms of cash flow guidance. I don't propose to go through these, but I'm happy to answer any questions you have. So if I was to summarise, I would say The principal thing that we're thinking about is the uncertainty in the market. We've clearly had a really tough year in the Nordics, good year in the UK, but the outlook remains uncertain. Our priorities that Alex will talk about is continuing our trajectory in the UK and getting the Nordics back on track. But from my perspective, it's all around protecting the balance sheet and protecting the company from the downside risk, reducing capital expenditure, continuing to take cost out of the business, the reduced pension contribution and stopping the dividend. Final thing I would say is clearly we're making these tough choices through all stakeholders, including the support of our banking partners today based on where we are. At the point that the market isn't quite as bad as we are planning for or the economy starts to recover, of course, we will revisit all of these components with all of our stakeholders. Thank you.

Thanks, Bruce. So let's get behind some of those numbers and talk about what we're doing to improve them. And let me start with the Nordics first. So as you've heard, a long and successful track record of growth in sales and profits in the Nordics was brought to a very abrupt halt last year. And it's worth saying at the outset that irrespective of what we've done in response, What happened in the market in the Nordics last year would have meant in any event, a sharp reduction in Elkshop profits. So let's have a look at what happened in the market. I mean, the first is softening demand. So the market went backwards by 4% year on year in the Nordics last year, fueled by multi-decade lows in each of these markets in consumer confidence. It has picked up a bit in recent times, but these are still very low consumer confidence numbers by historical standards. And at the same time as that demand softened, so as you've heard, costs increased, both the cost of goods sold and operating costs were subject to, again, for the Nordics, unprecedented levels of inflation. And at the same time, the nature of competition in the Nordics made it very hard for us to pass on that COGS inflation in higher prices. In the Nordics, there are competitors such as Komplet, NetOnNet, Verka Kaupe, Power, Elon, ProShop, Bilka, who for slightly different reasons, all at different times during the course of last year, explicitly prioritized growth over profitability. And in doing so, they bought stock, in some cases quite heavily, to fuel that growth at the same time as demand was falling, which caused a double hit, a discounting and a clearance double hit to market pricing during the year. And as you see some examples on the right hand side, that's taken the market profit pool in the Nordics to near zero in the past year. So that combination of softening demand, cost inflation and vicious competition would have, as I say, in any event, have resulted in a very sharply declined year of performance in the Nordics last year. That said, our response could and should have been sharper. We could have spotted the market trends a little sooner. We could have taken action, particularly on costs, faster. And with the benefit of hindsight, the balance of our trading, solving between sales top line and margin rate could have been a bit better. So that's what was. Now, I'm confident that we're doing the right things. And we're doing it, first of all, because of a refreshed leadership team. We have new local leadership in the Nordics, not just the guys on this slide, but also we've got two new country heads as well who are bringing new clarity on the situation, grip on the actions to improve it, and energy in getting the work done. And we are bringing a much better balance, for one thing, to solving for top line scale with profitability. It's always a tricky balance to strike, but I'm confident for this year, we will be able to stay roughly twice as large or better than the next largest competitor in terms of protecting our number one market share slot, but we will and are improving gross margins. Let me build on some of the things you heard from Bruce to share a bit more detail about the actions that we're already underway with in the Nordics to improve profits. Starting with that better services adoption. In the online, in the Nordics as in the UK, we have a new platform, GNFR and GNFRC in the Nordics, which enables better services adoption rates. And that's one of the things that we're driving, as well as better services in store. Services aren't the only margin accretive thing that we're driving. On the right-hand side, you see accessories as well. Very positive for margin and some of the changes we're making online and in the till area in the stores are seeing better adoption of those margin accretive accessories as well. Credit is another service where we're improving our adoption rate driven by a better deal that we have now with Santander, but also insurance amongst other services. We've got a much more flexible subscription model now, which is launched first on tablet and on mobile with promising early results. Margin accretive services and accessories, both of those we will and are improving adoption. Just as in the UK, we're not chasing less profitable sales. That means more pricing discipline, particularly on discounting. It means lower promotional intensity. And then finally, again, just as in the UK, we are reducing our costs in the supply chain and service operations in the Nordics in a way that benefits gross margin. So all of this action is underway. And we will see and are seeing improved gross margins in the Nordics in FY24. It's also cost action that we're taking. And this is also underway. We've taken about 15% of central headcount out of the Nordics over the past year. And we're also doing much more than we have previously to exploit group synergies. First of all, in the Infosys relationship that you heard Bruce talk about, that's a global relationship for us, and we're making more use of offshoring and outsourcing in the Nordics. Second, we've moved to a single group IT function with procurement benefits and cost synergies across that now unified group team. And third, on GNFR, goods not for resale, we're renegotiating as a group with the principal suppliers there and harnessing some group benefits, as I say. In stores, we've closed some less profitable stores. We're renegotiating leases on renewal, and we've imported from the UK a successful program on multi-skilling of colleagues, which enables without loss of customer facing time, significant colleague efficiencies. And then finally, there's the same work that we're doing in the UK to improve our marketing efficiency. is taking effect in the Nordics. So action underway already on margin and on cost, which gives us confidence that even without any help from the market in the Nordics this year, and we're not counting on it, without any help from the market, we've hit bottom last year on profits and we'll see a substantial improvement year on year in the Nordics next year. One thing I should mention, by the way, you see on the right hand side of this cost slide that a bunch of these initiatives are permanent. And there's going to be at least 25 million pounds of recurring annual benefits from those cost savings. I mentioned that we're not anticipating any help from the market and we're not. We expect the market to continue to be tough in the Nordics and in the UK. And both went backwards last year. Our planning anyway, is for both to continue to go backwards in the next 12 months. And in the UK, Let's turn to that because that's a very contrasting performance and therefore a slightly different set of actions that we're taking in the UK. The market share did slip last year. I think it said of the half year that it slipped by slightly more than we were comfortable with. And so we saw as we rebalanced our trading approach, we saw an improving trend in the second half. But we kept our number one market share. And despite a seven percent decline year on year in sales, as you see, we're able to affect substantial improvements in gross margin, 160 basis points up year on year in the UK, building on the 110 basis points of improvement that we saw the year before, a substantial driver of the profit improvements that you've heard about. Let me go into one level more depth on what we're doing and what we are going to continue to do to improve those gross margins. The first thing is higher services adoption and two big services we've called out here, credit, which is now near 18% of our sales in the UK up from very little a few years ago to, as I say, nearly 18% now. And care and repair back into growth. That core service of ours, 310 basis points up year on year. Importantly, both of these, credit and care and repair, have seen significant gains year on year in online. And that historically was the weakness that we suffered from, from historical channel shift towards online. We were less good. at selling those margin accretive services. Well, we got better at it and we intend to get better still. You've heard about monetizing the customer experience. I'm gonna say a little bit more about that in a minute, but simply put, as you improve the experience you give to customers, so you can charge more for it and the customer will bear that because they're still getting good value for money. We're not chasing less profitable sales and now we've got better tools and better analytics, we don't have to. We understand better than we did previously end to end where we truly make money in this business It's allowed us, as you've heard, to take substantial cost out of our PPC and other digital marketing means, as well as be more selective on our promotions. Another big contributor to improving gross margins, as is the reduction in supply chain and service operations costs, which is nicely on track. All of this rests on more capable and committed colleagues. And if this might sound a little fluffy for some in the audience, we don't make any apology for this. All of these improvements in the profits in the UK would not have been possible without the fundamentals of retail, of more engaged colleagues leading to more satisfied customers. It's very hard in our business for the experience of the customer to exceed that of the colleague, which is why these numbers on the left are so important. A 13-point improvement in the independently measured by Glint levels of colleague engagement over the past few years. They are more engaged. But that's not the only retail fundamental that we've been improving. We've got a better range. We've got market leading now, availability, and we've invested quite painfully in the early years of the transformation in price so that we won't be beaten and trained the competition that there's not much point in taking us on. All of this investment is now bearing fruit. And this is an important point that without these fundamentals, it would be very hard if possible, if not impossible for us to affect the improvements that we are now seeing in profits. They're the foundations on which we can now solve for improved profits as well as keeping the colleague and the customer experience high. And our customers are happier. I mean, again, we get this measured independently. And NPS had another year of record performance last year in the UK, up another 90 basis points and accelerating as the year went on. And the reason for that is because we are improving the customer experience at every stage. And I'm going to give a bit more color on this because it matters, because it's not just nice for customers. It's also worth money. The first thing to say about the customer experience that we give at Curry's is it is of an unusual scale and complexity. There aren't too many, in fact, there are no competitors who get anywhere close to 26 million products a year. The repairs number down the bottom, that 600,000 big box repairs that we do every year, we get on for nearly 3 million repairs every year. This is a big and complex beast of a customer experience that we give. And therefore the prize of getting it right is accordingly large. the financial prize of getting it right. And the approach that we've taken to improving the customer experience has been pretty simple. And you see it in the middle here, we spot pain points in the customer experience, we fix them, and then we put a process in place to prevent them from recurring. And you see some of the results of this on the right hand side. So the store purchase customer satisfaction score is up another 200 basis points year on year, as we've done a really good job of leveling up the performance of underperforming stores, We've put a new assisted sales journey in place, which better tools and training for colleagues and multi-skilling has been really important. This has been big and painful, but really worthwhile. And in short, what it's done is preserved the specialism of colleagues. So the customer still gets the expert advice, but means we've got much greater flexibility to serve the customers coming in with much more flexible in our capacity utilization. And what's that resulted in is a 15% year on year decline in store colleague cost, while moving forward to the percentage of customer facing time from 45 to 60%. So a 15 percentage point improvement in customer facing time. More time in front of customers, less cost. That's the prize of the store NPS improving. Big box delivery and installation at a record high. That's gone up 400 basis points year on year as we've done things like better communications, better tracking, reduction of damages and fewer technical failures. Collection, well, we don't get everything right. And we had a dodgy start to the year on customer satisfaction on collection. Peak, we suffered from some significant disruption from well-trailed problems on the small box supply chain out in the market. Took us a bit of time to recover from that, but we did. And you see in Q4, back up 320 basis points year on year as we got better at using the stores and put more consistent processes in place. And finally, repairs, the in-home repairs these are, are already at high scores are now record highs as we've got better at repairing things rather than replacing them as well as matching parts to the right goods. So a bit of color to explain what we're actually doing to improve the customer experience. And this is worth money. And the example here is from the big box delivery and installation that you saw on the previous slide, the actions that I talked to on the left-hand side, and then the benefits on the right. So what are these benefits? Well, first of all, If you're installing a washing machine in a customer's home and you get it right first time, there are fewer repeat visits, and that's worth money, about £9 million of annualised cost benefit from improving right first time. Your costs of acquiring customers are also lowered because more satisfied customers tend to come back and they tend to recommend you, which in turn facilitates the lower advertising spend that you've heard about. Third, a better service encourages more customers to adopt it, and you've seen a 490 basis point year on three improvement in installation adoption rates as the service has got better. And then finally, if it's better, you can charge more for it. And we charge for all big box deliveries and installations now. And, you know, some fact packet maths, when we're doing about 3 million delivery and installation and recycling orders per year, if we're charging now upwards of £10 per order on an annualised basis, And we haven't seen the full annual benefits of this yet, but on an annualized basis, that's 30 million pounds of high margin services revenue more. So when we talk about why we're pleased about the rising NPS, it's not just because we're lovely people, it's because that's worth money. So those are the retail basics that we're doing a better job of. There are two big differentiators, as you know, in this business, things that make us different from the competition. One is having online and stores together, Omnichannel, and the other is services. And online and stores together, well, it's still the winning model. Still two thirds of customers prefer to shop this way. And as you heard from Bruce, actually the proportion of sales in store ticked up last year as the channel mix stabilized. But the important point here is that we're learning to make money out of this as well. Omnichannel has always been the winning model in technology retail, but the challenge has been with more sales online, Can you make as much profit doing it? Well, I think we're showing with a 45% increase year on year in profits in the UK that we are. But then there are the services, the second of our big differentiators. And I'm going to call out a couple of these. First of them, the credit that helps customers afford their technology. And credit is important. And so it's good that we had a good year. It's important not just because it makes customers happier and our credit customers NPS is significantly higher, It's important because they spend more, 20% more on other services credit customers spend and 10% more or 10% higher average transaction value in stores from credit customers. And they are significantly likely to come back, not just 70% likely to return and shop with us in the next 12 months, but we see over 50% higher repeat basket rate from credit customers. So they're valuable. So it's good that we're growing them as you see on the right hand side that we are at a 12% growth. in credit customers last year to 1.94 million. We're up to now, credit sales grew by nearly a quarter and we're now seeing a very healthy adoption rate of nearly 18%. So this is good for customers. You can see that because they're happier and it's good for the business because we're building something quite valuable here in this book of credit customers, of more valuable customers who return with the recurring revenue that comes along with that. That's building and is a good store of value. There's more to come on credit. We don't think we're anywhere near full potential on this yet. Even though it's worth flagging, there are some headwinds in the current financial year, one of the causes of our caution. With higher interest rates, we've had to put our APR up. Everything else being equal will serve to dampen demand. So we're being pretty cautious about promising another big leap forward of credit penetration this year. But we are doing some things differently. to counteract those headwinds. We are, for example, introducing new personalized credit propositions this year, backed by better CRM, backed by better data, and will allow us to get after, you may recall, that 4.9 billion pounds of approved credit limits that customers haven't yet made use of, the open to buy, if you like. And we're much better able to tap into that after some slightly frustrating delays, but we're there now on the data and on the CRM. So much for credit. important for us and going in the right direction. The second is back to that worthy video that you saw at the start on helping to give customers technology longer life, in particular through our care and repair. And this is not just good for customers, but it's good for us as well. Services sales are significantly more profitable than just selling products on their own. So it's good that we're growing them. And this is the flagship service. We've got across the group 14 million care and repair customers now, 9 million in the UK. And as you can see, we're growing adoption, notably in stores where that levelling up that we've been doing between store performance and the better assisted sales journeys have really kicked in to improve an already pretty strong performance. But some signs on the right-hand side that we're starting to get our act together on selling this stuff online as well. It's just a start, 90 basis points year-on-year improvement isn't enough to break out the bunting for. but it's an important start and we have the platform now and we've learned some things on how to do this and we see substantial potential for further growth there. Third and final of the sources of value that we're building here after credit and after care and repair is on subscriptions and in particular on mobile subscriptions. Our own mobile virtual network operator, ID, which is ours, it's not a joint venture, And it's principally a subscriptions rather than a SIM only business. And it's part of a mobile market that had a much healthier year last year and a mobile category for us that had a healthier year last year. You'll recall the historical problems that we've had with our car phone warehouse business. That's all in the past. This is now a smaller business. but integrated, profitable, and growing category alongside all the others. And within our mobile category, ID, our own mobile virtual network operator, is in good shape. I mean, it's growing, as you see on the right-hand side, growing quite healthily, 13% subscriber growth up to 1.3 million subscribers. And this early start to this financial year has been very healthy. as well, continuing that trend. Customers are happier. And we've got a competitive advantage here with the new deal that we signed with 3, which allows us, in effect, to offer the average customer £200 off the mobile network operators per year on their subscription. So we've got an advantage to build on, and we're doing so. Now, I think Bruce touched on that this is a This presents an in-year headwind on profit and on cash as you grow the book faster. But we're certainly not holding this back because this is something valuable for the long-term health of the business that we are keen to grow. And those of you who follow the telecoms market will know that those subscribers are valued at anything between £200 to £300 plus per subscriber in the market. So what we are building here is certainly something of value. As well as the retail fundamentals that are heading in the right direction, these three big stores of future value build what we call customers for life, credit, care and repair, and subscriptions that are in good shape. So looking forward, well, what do we look forward with? Well, first of all, we look forward with prudence. You've heard it from Bruce. You'll hear it from me. Our first responsibility is to protect the shareholders. We've had a big hole in our performance last year from the Nordics. I mean, in a business that makes 200 odd million pounds of EBIT when one part of it makes 116 million less year on year, that's gonna leave a hole and it did. Now the strong and strengthening UK performance is very encouraging and we know what's behind it and we're gonna keep going with it. But there's no getting away from that Nordics challenge last year and the outlook remains uncertain. We're certainly not calling a sustainable, sustained consumer recovery just yet. There are some positive signs maybe, but we'd rather be prudent And if we're wrong on the upside, great, we'll be ready and we'll be ready to make the most of it. But what are we building here? We believe what we're building here is a business that's not just resilient in the short term on ample liquidity and a very strong balance sheet that we've got and able to deal with any reasonable worst case scenario quite comfortably, but something also that's fit for the future and fit to prosper, whether it's the more engaged colleagues, the more satisfied customers, the proven winning model in the market and building some quite interesting sources of recurring value in customers for life as well. And all of this is enabling the UK business to show some quite healthy increases in profits. So as you've heard, it's yes, we make no apology for taking the tough decisions that all stakeholders, whether it's banks or shareholders or the business or the pension fund have kicked into to make sure we're absolutely watertight against downside risk. But on the upside, we fully intend to keep going on the trajectory of the UK business. Super important that we do. We're on it. We know what's behind it. We're going to keep doing those things while we get the Nordics back on track. When this new leadership team that we have, we're certainly not waiting for the markets to improve those health help actions on margin and on cost. We're confident we'll get us to where we need to be. So with that, thank you for your attention. And we're happy to go to your questions, which I think Dan is going to compare.

Ben Hunt from Investec. Just a couple of questions. Firstly, on your cash flow guidance, the one area missing I think is on working capital and what should we expect that to be or some sort of picture if the Nordics continues to see sales slowing. The second question is on your second half gross margins in the UK and it looks like the exit rate sort of even softened a bit. Your peers yesterday reporting actually a stronger performance in the second half. Was it a bit of an underwhelming performance there? What's held you back given everything that you've been doing in terms of the self-help with credit adoption and charging for delivery. Could we perhaps see more of a tailwind going forward? And I'll hold back there for now.

Bruce, do you want to kick off? Yep, absolutely. So working capital, you're right, we're not guiding to a movement in working capital. As I think I described two or three times during the presentation, the implications of a slowing business, and we are assuming that both our UK and our Nordic business level of sales will drop year on year, would naturally mean a negative impact on working capital cash effect. Now, we will obviously resist that. We will work hard to look at the efficiency of our stock turns, look at the underlying base of stock debtors, as well as managing our creditors to try to offset that. So we're not guiding, but I think trying to get towards flat would be our ambition. In terms of margin in the second half of the year that's just finished, I think the slides that we presented showed excellent progress. You're right, the margin progression in the second half was the same as the progression in the first half, roughly 160 basis points, but I would call that a success. In terms of the margin as we look ahead going forward, clearly there's going to be a full year effect of the initiatives that we've described to you. So there'd be some upsides. But unfortunately, there are also some headwinds. So I think in May, I described to you the fact that the network debtor upside, roughly 35 million of that will be non-repeatable next year. partly as we lose some of the RPI upside that we enjoyed this year, but also as our subscriber base starts to run off from the Carphone days. So that's one. Alex just mentioned ID. We are growing our ID business, but that's an investment actually because we own the customers and from an accounting perspective, but also from a cash perspective, it means that upfront we're in essence giving consumers a mobile phone handset. We're taking the cost of that, but we're enjoying then the commission downstream. And the final headwind that we're facing into is credit. Again, Alex described it. We're obviously seeing increases in interest rates. That will have a knock-on implication in terms of our cost of credit, our cost of funds within our consumer finance. We're offsetting it to a large degree by increasing our APR. but probably not quite enough. So continued progression on margin based on the initiatives, but quite a few headwinds as well.

The only thing I'd add to that, Ben, would be, clearly you have a choice where you strike the balance. I mean, our top line went backwards by 7% in a market that went backwards by 6%. Some other competitors who might be moving gross margins forward are happy to sit on double digit sales declines year on year. We don't like that because we like the benefits of being number one and we enjoy the benefits, not least with our suppliers that our scale gives us. And as I shared, you know, the half year, we're a bit uncomfortable by how much market share we were losing. And so that's why we saw the exit rate improve on that. Now, you might call 160 basis points of year-on-year market gross margin gains underwhelming. I mean, I'll agree with you that we're nowhere near full potential. And the things that we've been talking about today, whether it's continuing to build on what we've demonstrated we can do, which is sell more margin accretive services online as well as in stores, whether it's refusing to chase unprofitable sales because we don't have to, because we've got better tools to do it, it's continuing the supply chain and service operation operating cost reductions, which we will do. So none of the things that we talked about, we plan on let up on, we plan to let up on, and nor do we think we're close to full potential. I said at the outset, we're getting back towards the long haul back to an acceptable absolute level of profits in the UK. We're certainly not done yet, but you know, 45% year on year growth is pretty encouraging.

Okay, great. And if I, if I may just one more question on a sort of more raising Nate, some of, some of your friends across the pond are getting quite excited about the replacement cycle. going towards the end of this year and into next year. How are you feeling about that, particularly in context of not chasing these unprofitable customers or those sales? Does it impact that replacement cycle? Just any thoughts on that?

It certainly doesn't impact the replacement cycle, because when we talk about not chasing unprofitable sales, it means not giving away delivery for free, so you lose money on the transaction. It means not spending so much on PPC that it's impossible to make any money, even if the customer buys something online. It means not giving more than you need to away in promotions or discounting or markdowns. And those are the things that we mean by not chasing an unprofitable sale and account for a big chunk of the 7% year on year sales decline. So that's one thing. I mean, you're right. I mean, Best Buy and Corrie Barry and her team have been talking quite excitedly about the the product lineup. We've deliberately not done that because we've been cautious. And I'd much rather be coming back to you later in the year to explain why we're doing better rather than the other way around. But there are some encouraging signs in appliances. There's some really good new energy efficient appliances coming on stream. Some of the big TV manufacturers, the Koreans in particular, are bringing out some pretty exciting new models that build on the existing OLED technology and get pin sharp pictures Even at extremely large screen sizes, there's new VR potential in gaming. Gaming is already big and growing fast for us and could go a lot further. And VR could well be the next big trend. The good thing about us, though, is that we don't have to predict these. By virtue of our scale, we're going to be first in the queue whenever suppliers bring something on stream anyway. So if there's some uptick from the replacement cycle and from new product introduction, then great.

Thanks. Adam Thompson from Liverum. First question, please, just one on data. So you mentioned using that um, to, to help drive profits and how that can be a big help. So can you just maybe give a little bit more detail on how you're using these pools of data that you're building up across the different parts of the business, perhaps linking those to give a fuller, um, customer proposition and, uh, maybe with reference as well to how that impacts your, your, um, acquisition costs, customer acquisition costs and any trends you're seeing there. Um, within the Nordics as well, um, sounds like, you know, confident of achieving that profit growth year on year this year. Um, Perhaps just a little bit more color on the drivers of that. And to your minds, you know, if there is a big risk around that, you know, what are the key risks as to how that, if that isn't achieved, you know, what are the risks there? And finally, just on ID Mobile. So some good growth there, just the drivers of that growth. And then you did touch on it, but just, again, your thoughts in terms of how strategically important that the mobile part is to the overall group now.

Right. Three quite meaty questions there. So let me let me start with the Nordics. Clearly, it will be helpful if the macroeconomic picture improved, but we're not counting on it. And so I mentioned the Nordics market. GFK measured went backwards by four percent year on year. Last year, we're assuming something similar for the year to come. And so we're not assuming things get any better in the macro. What we're focused on is the self-help actions that don't depend on the market getting better. So all of those initiatives that we talk to on margin and on cost, whether it's the margin accretive accessories and services sales, whether it's not chasing less profitable sales, whether it's taking the supply chain and service operations costs down in the Nordics, none of that depends on anyone other than us. It's just up to us to do it. Likewise, the costs. if anything, or even more certain because it's in our control to make more of group synergies in areas like IT and GNFR and outsourcing, which is what we're doing. The headcount reductions are absolutely in our control and we've done it. We've taken 15% out of overhead and we'll get the full year benefit of that this year and so on. So can we stand here confident we're going to do better this year than last? on profits in the Nordics, absolutely. But that's not, you know, unfortunately, that's not a particularly high bar. So we aim for a substantial improvement year on year in Nordics profits. And, you know, if the market does come back and you've seen some signs that we showed the data of improving consumer confidence, particularly in Denmark and in Finland, but some signs of life on that front in Norway as well, then, you know, then we'll do better. But we're trying to keep our under promising and over delivering theme this year and keep to that theme this year. So that's what's in our control. Likewise on data, we haven't talked very much about it simply because we'd rather tell you when we've done things rather than what we're planning on doing. But you're right, we do have some very rich sources of customer data in this business, whether it's from the credit accounts, the mobile subscriptions, the services accounts like the care and repair, or the loyalty schemes. We've got 11 million Perks members in the UK and an astounding proportion of Nordics adults signed up to the customer club in the Nordics. And all of this comes with rich access to data. We've spent money and worked hard with Microsoft in particular to bring that data into a usable format. And the one thing that we are talking about today is our confidence that we can use that to better stimulate utilisation of the unutilised back book in credit, that £4.9 billion of unutilised credit. That's what we're talking about now. There are obviously many other applications of that data that you can be assured we're working on, but we'll tell you about that when we've done something with it. ID, I think, was your third question. So, I mean, as you see, the growth has perked up nicely. over the past year. And as I say, we've had a strong start to this new financial year as well on ID, which might cause us some short-term headaches on profit and on cash. All right, we'll swallow that and explain it because it's undoubtedly a valuable asset that we're building here. And what that's been driven by, first of all, it would be impossible had we not negotiated the improved deal with three that allows us to effectively sell plans at a £200 discount to the principal competition. So that's the first thing. We've got a price advantage versus the competition. The second is we're doing the hard yards on improving the customer experience here as elsewhere. And in your pack, you'll see, I think, a six-point improvement in ID NPS during the course of the year. And it's part of a mobile category that's back into profitable growth for us as a business as well. And, uh, you know, we've, we've got many of the attributes of a successful mobile business here, as you know, whether it's the relationships with the handset manufacturers, the scale of customers that we have coming into our channels and the capability that we still have in the business. So, um, we're, we're quietly quite confident that we're going to continue this trajectory on ID.

Mike Benedict here from Berenberg. Um, couple from me, please. So firstly, it looks like the medium term 3% margin target has been pushed back to the longer term. I wondered what's changed in your thinking there. And then the second one, obviously, recently announced a strategic review in Greece. Any recent thoughts on that?

Yeah, I mean, on the first point, it's the only thing that's changed is a more prudent assumption about the consumer. That's all. Nothing that's in our control has changed at all. And if the consumer recovers faster, then we'll do better sooner. But given the continuing weakness and uncertainty surrounding the consumer in our two core markets in the UK and the Nordics, we just don't think it's prudent to make promises that we're not confident that we can keep, that aren't entirely in our control. That's the only thing. We've made a more prudent assumption about the market and everything flows from that. That's all. If it's better, we'll do better. On Greece, no, we don't have anything to update you on except to say that some of the things we spoke about about the Nordics don't really apply to Greece. I mean, we're in a position of strength in Greece, and this is a healthy business in a healthy economy with newfound political stability as well. And this is an excellent business. It was a great asset, but in truth, it's got limited synergies with the rest of the group. So it looks like a good time to explore our options there. But as I say, we're doing this from a position of having done everything that we need to do to strengthen the balance sheet and liquidity elsewhere. So we're not a forced seller here. If we don't get a good price for it, we won't sell it. We'll be perfectly happy to keep it. But it seemed like a good time to explore options. There's nothing more to update on the process than that.

Morning, Warwick Okinds from BNP Paribas Exxon. Two questions, please. The first is you've talked about credit headwinds in the year ahead, like higher APR, for example. Are you actually seeing any change in customer behaviour right now or is this just an anticipation? We're being prudent.

We're not seeing it just yet. In fact, we've started the year quite healthily on credit adoption levels. But we would expect everything else being equal, a higher APR and a 500 basis point higher APR to dampen demand. And that's what we're prudently anticipating, yeah. And the second factor, even though, as you know, we don't take any credit or fraud risk ourselves, all of that sits with our partner bank, BNPP. Nonetheless, in an environment where an increasing cost of credit that Bruce referenced and potentially some pressure and stress in the book, we haven't seen it yet, but there's some potential for higher bad debt rates that may cause the bank to reduce its lending appetite. Hasn't happened yet, but we're being prudent and assuming that it will.

Thank you. And just on your store portfolio, could you maybe talk about some of the opportunities in the UK around rent reduction? I'm assuming you haven't changed your view of the number of stores there, but also the Nordics, where you see the store count over time evolving to?

Yeah, I mean, the honest answer is we don't know, because for the long term, we can't predict what the online share of business is going to be and the knock-on impact that has on the shape of our omni-channel model. So what we're doing is we're preserving flexibility. So we're still at five years or less average remaining lease length on the stores. We still keep a very close eye on store profitability. Individual store profitability has to get over a certain hurdle rate, and it has to make sense as part of a network. And where it doesn't, we close stores. We close a few, sort of a handful every year. We've closed a few more in the Nordics this year for reasons of unprofitability or near unprofitability, and we could get out of it. profitably in a way that shores up the performance of the Nordics. But overall, I wouldn't be guiding you to a significantly lower number of stores in the medium term, because at the moment, actually, the channel shift has stabilised, as you've heard, probably on the upside of people's expectations, how strongly stores have come back from the pandemic and stayed strong, in fact, ticked up in terms of share of business over the past 12 months. So we like, and if you ask what I hope, I hope this continues because we like the advantages that having both stores and online together can bring. And in the UK, back to that 45% year-on-year profit increase, we're showing we can make something profitable as well as preferred by customers out of this model. Bruce, do you have anything to add on stores?

So certainly in the UK, we continue to make good progress renegotiating lease terms. Roughly 30 stores a year we have been renegotiating and we've been getting circa 25 to 30 percent reductions within terms. So that's been helpful. Just one thing for your models, when you look at our financials, it appears on the face of it that rental costs within the UK from a cash perspective has gone up. That isn't the case. There's a timing challenge where in FY22 there was only 11 lease payments made and in FY23 we got 13. So actually, if you take those two out, our costs have gone down.

Hi, Nick Coulter from Citi. Just to follow up on Warwick's question, please, on the Nordics. Perhaps one for Bruce first. In terms of the scale of the medium-term savings opportunity that you see in that region, clearly you've delivered and are delivering quite a transformation in the UK. Does that sort of end-to-end opportunity exist in the Nordics? In short, is there more to go for in the Nordics?

Yeah, we're not calling out an absolute level of saving. As some of Alex's slides showed, we have made good progress already in the final quarter of last year. We put changes in place that on a full year equivalent basis will generate circa £25 million worth of unlock. There's more to go after. But I think the Nordics is starting from quite a different place from the UK. So when we called out £300 million of cost savings over three years in the UK, there were clear opportunities across multiple areas to unlock that saving. I would say that generally the Nordic businesses run as a tighter ship and therefore the scale of those opportunities are smaller. But nevertheless, there's a long shopping list. All the areas Alex talked about, goods not for resale, IT costs, marketing, stores, central, all of those we are absolutely looking at. But I would say the overall quantum is not to the scale it was in the UK.

Just one build on that. One thing to bear in mind is that, candidly, we've done very little historically to realise group cost synergies between the UK and the Nordics. And we talked today on the offshoring and the outsourcing, the IT and the GNFR in particular, as going after some previously untapped opportunities, and they're potentially quite substantial.

Thanks. Maybe if I could just probe a little further. Is the cost to serve in the Nordics broadly equivalent to the UK or are there structural differences that kind of inhibit that comparison?

I mean, from a overhead perspective, I mean, we've never shared this kind of thing before, but I guess if you were looking at things like average salaries within the Nordics, they are higher. So there are some aspects like that that probably filter through most aspects of the business, whether it's outsourced provisions, supply chain service or in stores.

Looked at the full rundown, the P&L, though. I mean, the consumer, everything else being equal, is more affluent in the Nordics than they are anywhere else in Europe, including in the UK. And certainly not in FY23, as we've seen. But in FY22, the Nordics was making 3.5% EBIT margins. So even if some people costs and the like are higher, that certainly hasn't inhibited the Nordics profitability historically.

Right. Then one follow-up on an audience, if I may, just on the marketplace, how's that performed in what has been a period of turbulence and how does that shape your thinking going forwards?

Our marketplace extended stock, I mean. Yeah, your extended range. Yeah. I mean, it's made a contribution. We haven't broken out exactly what. And the short answer is there's been no material change year on year and it's proportional contribution. Thank you.

Yeah, morning Richard Chamberlain, RBC. So yeah, another one on the Nordics please. Have you, under the new sort of management team, have you made or are you planning to make any sort of significant range changes or skew reductions in response to the demand environment there? And then Bruce, in terms of the sort of leverage metrics, you were sort of hinting, I can't remember your comments about the pension trustees, have they Are they asking for you for a sort of accelerated timetable in order to bring the leverage metrics back to target in response for the lower cash contributions? And what sort of capex projects are you guys deferring? Are there any particular areas there? Is that also eating into maintenance capex, or is it all sort of longer-term projects that you're deferring? Thanks.

On your range question, Richard, and Bruce might want to say something on the stock and the working capital angle, but the short answer is no, we haven't made significant reductions to the range, but Bruce can talk to the stock. I mean, when it comes to the capex, again, Bruce can build, but the short answer is we've taken a very payback oriented view. The things that pay back in short order are the things that have made the cut and the things that are strategically essential have made the cut. So as you would expect, given what we've just been talking about, the credit, care and repair services and ID have all been substantially protected from any capex reductions.

So I guess Ben talked earlier on about what our ambition was for working capital. As I reflected, you would expect an adverse movement within our cash impact from working capital as if the business continues to get smaller, Our expectation is to work harder on that. And part of that is to work with our merchandise planning teams, with our commercial teams, to constantly challenge them in terms of stock lead times, depth of stock within stores, etc. So that is a constant challenge in both the UK and the Nordic business to manage that stock down. Shall I carry on with it? So in terms of the pension trustees, Eric, the chair of the pension trustees is in the room today. I have to say that I think we've got an extremely strong working relationship with the trustees. We spent a lot of time stepping through the situation of the UK business today as the group where it is today in terms of the overall liquidity of the business, the state of the repayment of the deficit and where we are with that. And I think both parties have reached a stage where we're now happy with the profile. We've reduced cash contributions roughly by 80 million over the course of the remaining seven years or six years of which it's front loaded. 70 of that is coming this year and next year. There are no specific requirements in terms of our liquidity linked to that. However, as I hinted when I was talking, There is a pension, a dividend matching component. So, for example, in the current financial year, we've declared no dividend. If we did make a dividend payment, that would result in a further contribution to the scheme. That is also true next year as well with the reduced contributions. So there is an assumption in terms of what the underlying level of dividend will be and a matching.

Got it. OK, thank you.

So we've received a few questions online from Simon Bowler at Numis. I'll ask these in turn. So first of all, what sort of profit or cash headwind is expected in ID Mobile?

Well, we're certainly not going to call that out in terms of a quantum, but certainly as we've worked through the implications of investment, clearly it depends on how fast we grow the business. But I would say that there is high single digit impacts from a P&L perspective and a bigger impact than that from a cash perspective. But it obviously depends on the shape of the idea and how long the growth continues.

Thank you. The next couple are then, first of all, can you explain the changes that have been made to the adjusting items policy? And can you further explain the 50 million item in other cash flow And especially, can you tell us how much debt is held in the Nordic entities related to that 50 million? Goodness me. Right.

Sorry, would you give them one at a time?

Yeah. So first of all, can you explain the changes to the adjusting items policy?

Yeah. So what we've done within our adjusting items policy is we've been far stricter in terms of what hurdle you need to jump for an item to become adjusting. So broadly, we've agreed with our audit committee and with our board that to be adjusting item, a item or a collection of items that are similar need to be greater than 10 million. So that has meant that items that perhaps would have been adjusting in the past have gone through underlying.

Okay, and then the next one then was on the 50 million other in the cash flow. Can you just give a bit more explanation about what it relates to? And then related to that, how much debt is held in the Nordic entities?

Yeah, okay. So from a... I guess I'll describe the maths. So clearly there's been significant movements in particularly the NOC, the SEC, Danish Krona, Euro compared to the Sterling. So what we have to do in order to true up our cash flow and our balance sheet is to translate opening balances. Then at opening rates, we've then got transactions during the year at average rates and closing cash balance. at closing rate. And by doing the maths, you end up with a difference. And that's what the 50 million equates to. And I confess, I don't know the number off the top of my head in terms of what the Nordic debt is, but our revolving credit facility is split. So a component of it is UK based and a component of it is not based. Do you know what the number is?

It's roughly half and half at any one point in time.

Okay. So it isn't quite half and half, but I think that's a good proxy. Thank you.

And then the final one from Simon is how long do you think the business can maintain capex at the 80 million level?

My personal view is that it's probably too low a level. Historically, we've talked about our level of capex being around 1.5% of turnover. So when our turnover was 10 billion, roughly 150 million. So clearly down at 80. It's significantly less than that. My personal view is that we should be trying to manage the business with a lower level of capex than 1.5%. Maybe a sensible proxy that we haven't talked about internally would be to look at cash exceptionals and capex together. It would be that kind of scale. But it's that kind of shape that we're going for. Probably 80 is too low in the long term, but Does it need to go all the way back up to 150? I would question that.

So let me build on that in a couple of ways. Firstly, I think answering Richard's question earlier, we're not taking any risk with the business through spending 80 million a year. Perfectly adequate maintenance, for example, is included in that and all the KLO stuff and InfoSec is amply catered for in that. So that's the first point to make. Happily, Bruce and my personal views coincide on this one. The the answer is probably somewhere between 80 and 150. And what we've done this year is we haven't taken any risks on the downside with CapEx, but we have foregone upside. And we've done so knowingly to protect the balance sheet and liquidity against the downside risks as we've been talking about. I mean, one example of that, in the Nordics, we have a very healthy and thriving SME-facing business, a B2B business, because a business like ours has many of the attributes to to serve SMEs very well. And we have a much smaller operation in the UK. At some point, we're going to want to take the learnings from the Nordics and apply it to get after the large, growing, profitable and fragmented UK B2B market that's accessible and build on our small operation there. We haven't invested behind that currently, even though ideally we would have liked to have done. So we've foregone some upside, as you would expect. but we haven't taken downside risk.

Thank you. That's the end of the online questions. Is there any more questions in the room?

Well, in that case, I just thank you all for your time and just repeat the core message that I think you've heard more than once is that we make no apology for protecting against possible downside risk in an environment where we've had the hit in the Nordics and where the outlook and the consumer is still in such an uncertain place. If If our assumptions turn out to be too prudent, then great. Then we'll be ready to benefit on the upside. And we'll be ready not just to keep the Nordics back on, get the Nordics back on track, but keep this very encouraging trajectory in the UK going. Thank you all.