Howden Joinery Grp Ord

Good morning and welcome to Haydn's 2024 results presentation. I will start by introducing our performance for the year. Paul Hayes will then review our financial results for the period. I will then share my perspective on our performance and outline our plans for this year and then we'll look forward to taking your questions. The business performed well in, as we anticipated, a challenging marketplace. The results met our expectations as we continued with our investment programme, which is focused on our key capabilities, which gives us end-to-end a stronger business. Group sales were ahead of those in 2023 and were 47% up on 2019, being the year prior to the onset of the COVID. In the UK, we believe we gained market share, which helped us mitigate a significant single-digit decline in the overall size of the kitchen market. Entry-level kitchens represented a higher proportion of the kitchens we sold with sales of product in our kitchen categories collectively outperforming those of other established categories. We maintained an industry-leading gross margin with gross profit ahead of last year. We balanced recovery of cost rises with our commitment to providing competitive pricing across the board for our customers. Reported profit was in line with the previous year. We progressed with our strategic initiatives and plans for the UK business, which ended the year with 869 depots trading. Total sales of our international operations increased with a total of 78 depots trading at the year end. The business delivered strong operating cash flow and we maintained a robust balance sheet. This gives us the flexibility to continue to invest in our growth plans for the business and provide shareholders with increased dividends for the year. Today, we have also announced a new £100 million share buyback programme. The results demonstrate the strength of our local trade-only in-stock model. A strong product line-up, high stock availability, industry-leading service levels, and a very engaged team have all contributed to our performance, which benefits from the ongoing improvement in our strategic initiatives. We had a record number of customer accounts, as at the year end, with more accounts trading than last year. As well as managing an industry-leading gross margin, which benefits from purchasing and manufacturing efficiencies, the business continued to deliver KPI volumes well ahead of pre-COVID times. Given the prevailing macroeconomic environment, we expect market conditions to remain challenging. We are well prepared for this and our customers, mainly self-employed builders, are adept at managing their businesses in such times. Delivered by our highly entrepreneurial, well-incentivised teams across the business, I believe our differentiated model is the right one to deliver sustainable market share gains. Our model is hard to replicate, it's difficult to compete with, and we have initiatives in place to make it even more so. The addressable UK markets in which we have an established presence total some 11 billion, and there are significant long-term growth opportunities for us. We continue to prioritise investments in the business on this basis. So I will update you on our strategic initiatives, which are key to the long-term development of the business, after Paul has taken you through our financial results for the year. Paul, thank you.

Thank you, Andrew, and good morning, everyone. I'm pleased to present Howden's financial results for the year ended 28 December 2024. Howden's performed well in challenging markets. Group sales were in line with the prior year at £2.3 billion as we supported our trade customers with our differentiated, in-stock, trade-only model and made further market share gains in the year. Gross profit was ahead of last year at £1.4 billion with a gross margin percentage of 61.6%. This is sector leading and shows a year-on-year improvement. Operating costs were £28 million higher at £1.1 billion, predominantly due to ongoing investments in our strategic initiatives. We protected the P&L with further productivity and efficiency actions to mostly offset the impact of inflation. And I'll cover this in more detail shortly. As a result, we generated an operating profit of £339 million, which was broadly in line with last year. After net interest charges, profit before tax was £328 million. So let's look at revenue in a bit more detail. First turn into the UK business. We continue to face challenging macroeconomic conditions in the year. However, despite a declining kitchen market, we held revenue in line with last year. We again maintained a disciplined approach to balancing price and volume to support our trade customers. Revenue on the same depot basis was down 1.2%. We are confident that the major driver of our consistent above-market revenue growth has been the ongoing investments in our strategic initiatives, and these reinforce our differentiated business model. We again prioritised opening new depots and we revamped 76 older depots into the new format, which drives incremental revenue. At the end of the period, we had 869 depots in the UK, and around 60% of those are in the new format. In the international depots, where we operate from 78 sites, we generated revenue of €88 million, which was 9.7% ahead. In France, we are pleased to have significantly outperformed the market with a strong improvement in the same depot sales in the year. Our Irish despots also traded well in the year and we will continue to expand our depot footprint there. Now moving on to profit before tax. This slide bridges the movement in PBT from 2023 to 2024. Starting with 2023 PBT of 328 million pounds on the left of the slide. Gross profit was £27 million ahead of last year. We were effective in implementing price increases early in the year that benefited the business by £35 million. This more than offset the negative impact of volumes and mix of £19 million. Looking at costs. Within gross profit, we benefited from sourcing and manufacturing efficiencies as we maintained a tight control on input costs. These productivity improvements more than offset the increases in freight, commodities and wage inflation. We're continuing to increase the proportion of what we manufacture versus buy-in, as returns are attractive and we retain greater control of the supply chain. We now manufacture 36% of our cost of goods sold versus 28% three years ago. In the coming year, we have announced our intention to expand our rigid cabinet manufacturing facilities based at our factory in Runcorn. This is to ensure that as we grow the business, we have sufficient capacity to meet demand. Operating costs increased by £28 million, which I'll cover in more detail in a moment. The focus on optimising margin and tightly managing our costs has enabled us to hold PBT at £328 million. This slide shows how we continued to manage our cost base while funding our growth initiatives. Again, bridging from left to right, the incremental costs of the new UK depots totaled £16 million. The other strategic initiatives spend of £12 million included our investments in the depot revamps in the UK, which drives revenue growth in the mature depots. We're also continuing to accelerate our digital strategy to support our trade customers to save them time when they're on the move. For example, this year we launched a depot-based click and collect service which is now live in all of our UK depots. This means that our customers can now see live depot inventory and make purchases through the trade app. We also continue to invest in our international business with a focus on the city-based strategy. The £4 million increase in our costs includes the incremental costs of the 10 depots we opened in 2023 and the three depots opened this year. The existing depot cost increase of £6 million related to higher inflationary costs, principally in property and labour. Other costs were tightly controlled, with the majority of inflationary cost increases being offset by productivity and efficiencies. we continued to face higher levels of property costs and depreciation. Finally, we benefited from the non-repeat of the additional costs relating to the 53rd week in 2023. So let's review our cash flow performance. From an opening cash position of £328 million, we ended the period with £344 million of cash, a net inflow of £61 million. You can see from the slide that this was after paying dividends of £116 million. Overall working capital increased by £65 million, stock increased by £8 million due to depot openings and new product introductions, and we are carefully managing stock levels given ongoing disruptions to global supply chains and shipping routes. Trade debt has increased by £58 million as a result of the later calendar end of our peak trading period in 2024. This cash has now been collected and overall ageing remains in great shape. Creditors were £13 million higher, which also reflects timings. Capital expenditure totalled £122 million as we continue to focus on the execution of our strategic initiatives. Just under half of the investment was in depot expansion and revamps. Other initiatives included investments in our supply chain and manufacturing sites, as well as expanding our digital capabilities. Tax paid was lower than the P&L expense and reflected the collection of the previously announced backdated tax credit relating to the patent box claim. Now turning to uses of cash. Now, strong cash generation remains a hallmark of Howden's business model, and this was the case again this year. The group has an established capital allocation policy, which has been in place for many years. This slide shows how, over many years, Howden's has both reinvested cash into the business to fund future growth, while rewarding shareholders with progressive dividends and returning surplus cash through share buybacks. In line with this, I am pleased to announce that the Board has declared a final dividend of 16.3 pence. Added to the interim dividend declared at the half year, this gives a total dividend of 21.2 pence, which is an increase of 1%. In fact, our progressive dividend policy has meant that over the past 12 years, Housens has increased its ordinary dividend every year. The board considered the group's balance sheet possession in line with its capital allocation policy at the start of this financial year. As a result, we are also announcing today a £100 million share buyback, which we expect to complete over the next 12 months. Now I'm going to provide some technical guidance for the year ahead. First P&L guidance, as we indicated at the trading update last November, the annualised impact of higher contributions to employers, national insurance, and the increase in the national minimum wage is around 18 million. With respect to foreign exchange sensitivity within gross profit, we have set out the impact on a full year of a one cent movement, both the Euro and the US dollar, and they're shown on the slide. Our effective tax rate is expected to be around 24%. And in 2025, the amount of cash tax will be more in line with the P&L rate. As in 2024, we received that backdated tax credit relating to the patent box claim. In the first half of 2024, we benefited from an additional two trading days. though this won't be repeated in the first half of this financial year, and is worth around £10 million worth of sales. In terms of cash flow items, we'd expect capital expenditure to be broadly in line with last year at £125 million, as we continue to invest for growth. As we mentioned in the statement, we may also purchase the freehold of our Runcorn site, which results in an additional outflow of cash, and we'll keep you posted on progress. Overall, working capital is in great shape and the balance sheet remains strong to fund both investment but also to continue to return surplus capital to shareholders. So in summary, we have performed well in a challenging marketplace and taken market share. We have been proactive in delivering productivity and efficiency savings to protect profitability. Our balance sheet and cash flow remain very strong and support our continued investment in the business. And we remain confident of delivering growth ahead of our markets while generating strong cash flow and attractive returns for shareholders. Thank you. Now I'd like to hand you back to Andrew.

Thanks, Paul. Well done.

Thank you, Paul. In reviewing last year's performance and our plans for this year, I'm going to use our strategic initiatives for the business as the framework. And they're fully aligned with our trade customer-only focus, our entrepreneurial culture, and they're based around the core building blocks of service and convenience, trade value, product leadership. So these four things are to deliver and evolve our DEPO model. to improve our range and supply management, to develop our digital capabilities and services, and finally to expand our international operations. So first, depot evolution. High service levels, including local proximity and immediate availability are very important to our customers. And we continue to see profitable opportunities to open depots. We're using our updated format for all depot openings. This format enables us to provide the best depot environment in which to work and serve our trade customers and to make space utilizations and productivity gains in a very cost-effective way. So we opened 29 UK depots during the year with a total of 869 trading at the year end. This year we expect to open around 20 more depots as we continue to take a highly disciplined approach to new depot locations And overall, we have a line of sight to around 1,000 depots in the UK. We've progressed our revamp program for existing depots. And this continues to receive very positive feedback from depot staff and customers alike. And providing such a trading environment and working environment is important to our competitive position. During the year, we completed a further 76 revamps, including relocations. And that takes the total number of revamps up to 350. This year, including relocations, we plan to revamp around another 60 depots, which means by the end of this year, we will have revamped around 60% of the 670 depots which opened in the old format and have around 70% of all UK depots trading in the updated format. Next, range and supply management. Sales of new product make a significant contribution to our performance. And we've upgraded our product development programme in recent years. Total sales of new product introduced in the last two years represent around 20% of total UK product sales, with new product introduced over the last three years representing 30% of UK product sales. Sales of new product introduced in the prior year alone increased some 178% in 2024. in part reflecting major product innovations in that year, such as bedrooms and our new mid-priced kitchen families. As in prior years, our higher price ranges continue to contribute more to our kitchen mix by volume than previously. Managing our kitchen portfolio efficiently is crucial for both best availability, which is highly valued by our customers, and for profitability. More efficient new product testing means we can now bring more proven new kitchen styles to market more quickly. And our new paint to order service is also informing our ranging decisions. Platform sharing within and across our kitchen families helps us introduce new kitchen options cost effectively. And stock management and replenishment enhancements, which also includes our XDC network, enables us to provide the best availability on a larger offering and at an economic cost. All this gives us the flexibility to keep on offer kitchens whose sales may have peaked, but still remain popular for an extended period. Excluding paint to order, we have 23 new kitchens confirmed for 2025. That compares with 11 last year. And in 2023, in the prior year, with our entire offering of such kitchens organised into 11 families. We're committed to providing market-leading and competitively priced product for our customers, and value for money is a consistent feature of purchasers' buying decisions. Given the pressures on household budgets, price features very prominently in 2024 and is expected to do so again this year. With an emphasis on value for money, choice at all price points, our offering is well positioned to take advantage of this. Our kitchen new product introductions for 2025 make more colours, styles and finishes available to more budgets, including entry and mid-price points. We are innovating in other long-established product categories and are adding significantly to our fitted bedroom offering, which we sold from all depots for the first time last year. Across our product categories, we've also introduced cleaner and more delineated pricing to demonstrate the value we offer at all price points. In 2024, we brought to market 10 new entry-level and mid-level kitchens. And this year, we have 13 more kitchens for our current entry and mid-level families. These include Greenwich in porcelain, gloss porcelain, Allendale in pebble, Clerkenwell in gloss sand grey and Halesworth in reed green. We also continue to develop our higher priced kitchen portfolio, which is a large segment of the market and one most associated with high street independence. For our contemporary style premium kitchen family, which we call Hockley, we have launched five new colours, including reed green and textured dark oak. The paint to order service for customers buying our shaker style timber kitchens performed very well in its first full year and the service continues to be favourably received by both customers and depots. Customers buying our Chilcombe and Elmbridge kitchens can opt for a paint to order option in either all or just part of their kitchen furniture. In addition to the nine colours available from stock, this year we are offering 15 paint to order colour choices. Solid work surfaces, which are often but not exclusively associated with the sale of a higher priced kitchen, continues to represent significant opportunity for the group. Our solid surface manufacturing capability is now amongst the largest in the UK. Following a significant increase in 2023, sales increased yet again in 2024, as we continue to improve our offer and our service levels. Last year we increased significantly the number of decorers we offer for this service and this year we are adding some more. We will have a total offering of 63 decorers to suit all budgets in place well ahead of peak autumn trading, during which kitchen sales represent an above average mix in the portion of the total sales. We have continued to reinvigorate our offering in other categories and are invading yet again this year. Indoors, we are adding more colours and bolder styles at all price points. In appliances, we have further additions to our Lamona brand, which is the largest, which is the leading integrated appliance brand in the UK, alongside extensions to our range of third-party branded product. And in sinks and taps, we have more styles, we have more colours, and we have more finishes. Our own label flooring, which we call Oak and Grey flooring, launched in 2023 and now represents a substantial portion of the category sales. A new flooring product for this year includes innovative water-resistant laminates and refreshed entry-level decors. For Ironmongery, we've also launched our own label, which we are calling Fuller & Forge. It features door furniture in a variety of designs, finishes and styles and significantly improves our offering in a category where we are underrepresented. Our new fitted bedroom range contributed a full year's training for the first year. Sales for the first year matched our expectations and this year we are upscaling the offer. Installing fitted bedrooms suits the skills of customers who fit kitchens and they have a high cabinetry content which matches our manufacturing capabilities. We developed our bedroom ranges in-house utilizing existing design, manufacturing and supply infrastructures. Ahead of peak autumn trading last year, our offering comprised of 19 bedrooms, ranged into four leading family designs drawn from our kitchen portfolio, matched with internal accessories, including pull-down rails, mirrors, and internal storage solutions. For these families, we are adding six more colours this year, and we're also introducing Clerkenwell as our fifth bedroom family, which will be available in four colours. The new product materially increases our bedroom total offering to 29 bedrooms. We are committed to providing competitively priced product for our customers, and we have reinforced our focus on price and promotions, which demonstrates the value we offer and promotes footfall across the year. Howden's is an in-stock business, and the trade tell us that high levels of stock availability is one of the key reasons that they buy from us. Our XDC network, which enables us to offer next-day delivery service and other initiatives, which include daily traders, facilitated a service level from primary to depots of 99.98%. Now that is a world-class performance by any standard. Our in-house manufacturing capability is a source of competitive advantage for us. and we keep under review what we believe is best to make or buy by balancing costs and overall supply chain availability, resilience and flexibility. In 2024, the new manufacturing lines in and around our heightened site were fully operational for the first time. Production of the new furniture lines, which are among the most advanced of their type in Europe, totaled around 1.7 million pieces in 2024. This gives us the flexibility to make a variety of kitchen furniture, principally doors and panels, for more of our ranges at the same quality as we can source externally, but at a lower cost and at reduced lead times to delivery. Our second new architrave and skirting line made some 3.3 million pieces, and the performance levels of the new lines are now ahead of those of the original one. The line increases our total capacity by some 10 million pieces and broadens the range of such products we can manufacture, enabling us to service in-house sustainably all of the potential demand we see for these products over the longer term. Our new paint-to-order lines, which facilitate our premium price kitchen initiative, ran smoothly last year, supplying product all year round for the first time. We achieved the order turnaround time we set out for ourselves with demand more than doubling during our peak autumn trading period. Located in a purpose-built facility near our heightened site, the line gives us an industry-leading production capability in this area. Cabinet and panel manufacturing underpins our entire kitchen offering, which constitutes the principal source of group sales and a higher portion of gross profit. our run corn factory which with its high volume low cost panel making capability has always been an integral part of our manufacturing and logistics strategy and in line with our longer term ambitions for the business we're in discussions with all interested parties about our development plans for the site to give us more capacity and broader capabilities Now, such development works, which are included in our CapEx plans, would take several years to complete, and we will provide an update later in the year on how our plans for Runcorn are shaping up. Turning to our digital platform. We use digital to reinforce our model of strong local relationships between our depots and their customers. By raising brand awareness, to support the business model with new services and ways to trade with us, and to deliver productivity benefits and more leads for our depot teams and our customers. Usage of our online account facilities, which provide efficiencies and benefits for our customers and depots, continued to increase. New registrations totaled some 111,000, and around 50% of customers had an online account at the year end. Total users viewing our trade platform increased by 50%, with approaching 80% of users regularly looking at their individual and confidential prices. Customers with an online account have an average continue to trade with us more frequently and spend more than non-users. We saw high levels of engagement in our web platform, with growth in our social media presence, which also stimulates interest in viewing our products and services on howdens.com. Site visits totaled 23.9 million for the year. Amongst kitchen specialists, we continue to have the highest number of fitted kitchen site visits in the UK. And the time spent viewing the number of pages viewed per visit were also consistently high levels. Across the leading social media channels, our follower base at 610,000 was up 15%, with around 5.8 million engagements a month. In 2024, our new digitised in-depot stock management system, or live stock as we call it, commenced operating in all UK depots. The system helps depots to record and pick deliveries and check allocations and to check and confirm depot stock levels. Amongst other benefits, the system frees up time for staff to use more productively. It also enables us to have a complete visibility of the location of stockholdings by SKU across our factories, primary and depots. Our livestock and other initiatives have enabled us to launch an upgraded click and collect service to our trade customers, which is available for everyday products. Online account customers can check real-time availability of stock on a depot by depot basis, They can review individual and confidential prices at their selected depot. They can place orders at any time of their choosing. And this, this year, amongst other initiatives, we will be supporting depots with the management of their customer relationships by making our depot account management tools more efficient and more productive. Our new account management tool captures information from multiple sources and makes it accessible via a single dashboard. Individual functionality enables automation of time-consuming manual tasks in depots. It provides comprehensive data for each customer and real-time overview of accounts and leads and contacts. We expect the system to be fully operational in all UK depots well ahead of autumn trade this year. And finally, international sales. Sales of our operations based in France increased in 2024, with second half sales improving significantly year on year. By the end of 2024, we had 65 depots trading in France and Belgium. In 2024, we focused on team development, with a programme to give our teams the skills and confidence to sell Howden's differentiated model to best advantage. And the latter part of the year, the performance of the business improved significantly. We invested in the business, including through enhancing offerings of footfall driving product and introduced a regular schedule of trade days at all depots, aligned with promotional activity and more supplier support. For this year, we remain focused on team development, particularly account management, as we look to build on the progress made last year. Last year, sales in the Republic of Ireland continued to be very encouraging and we intend to open more depots there in 2025. We identified the Republic of Ireland as a market which suits our differentiated model. We opened for business there in 2022 using a similar depot location strategy to that in France, with the local team supported by our UK infrastructure and our digital platform. By the end of 2023, we had 10 depots trading with eight of these clustered around Dublin and two serving the Cork area. And in 2024, we opened three new depots, taking the total trading to 13 at the year end. Our growing presence in the Irish market continues to attract much attention locally. And this year, we expect to open around five more depots, which take the total trading to 18 by the year end. So, For 2025, we are well planned, including on our strategic initiatives. These are aimed at increasing our market share profitably, as well as delivering value to customers across all price points. We have all of our new kitchen ranges in stock, well ahead of peak autumn trading, with an emphasis on entry and mid-price ranges together with our very competitively priced premium kitchen offering. We have a structured programme of rooster promotions in place to keep Houdens at the front of the trades mind, together with other price initiatives. We will continue to make improvements to service and availability, for example, by utilising XDCs efficiently and through our daily traders, livestock and click and collect initiatives. And we are increasing the functionality we offer online to the benefit of our trade teams, our customers and theirs. During 2025, we plan to open around 20 depots in the UK and refurbish around another 60 existing depots to the updated format. By the end of 2025, we expect to have around 65 depots trading in France and Belgium and 18 or so trading in the Republic of Ireland. And lastly, outlook. Given the prevailing macroeconomic environment, we expect market conditions to remain challenging. and anticipate the total market may well contract this year. However, we are well prepared for all challenges and opportunities ahead. We aim to retain a profitable balance between price and volume as we continue to maintain competitive pricing whilst aligning our operating costs and working with suppliers to keep product and input costs controlled. We are confident that the business model is the right one to address the opportunities in our markets. In summary, we are well-placed to outperform our competitors in 2025 as we both continue to invest in our strategic initiatives and return a further £100 million to shareholders through the new share buyback programme announced today. And finally, I would like to take this opportunity to thank everyone who works at Haydn's, whether they are in the depots, in our manufacturing operations or our supply operations, in our commercial teams or in their support functions for the extraordinary commitment to providing exceptional service for our trade customers. And it's this that sets us completely apart from so many others. Thank you. So we'll now take your questions.

I'll just start off with two questions. The first is just to follow up on the outlook. So you've obviously talked about the likelihood of the kitchen market potentially being down this year. This year, obviously, you're saying depot sales were down slightly. It seems to comprise the market being down mid to high single digits, but you've obviously outperformed that significantly. How do you expect those two contributors to move into 2025? I appreciate it's early in the year, but I'm just trying to work out the potential that your same-depot sales could still be up this year, despite your outlook for the markets being down. And then secondly, it's just on the international division. I think you've previously talked about the possibility of hitting break-even there in 2026. I just wondered what the latest was on that.

Sure. Yeah, you're right, and it is pretty early to call how the year is going to play out. I would point to the surveys that the depots are seeing, you know, the surveys that we're doing with customers are, you know, are progressing very nicely and are up well. That may be, you know, the fallout, whatever's happening in retail in their January sales, but we are making good progress, you know, to the start of this year. I would say also that we are, you know, extremely well placed for whatever eventuality comes out of the market this year. I'm particularly pleased of how we've managed profitable growth in the business in a, you know, contracting market. And we've managed our gross margins particularly well. And that's the focus for the depot teams right across the country that we continue to take um all of the opportunities that we see and we take them profitably um i think i'll stress the point that i said in our presentation our builder customers who you know we talk to regularly through our builder forums that we meet regularly you know particularly the established ones are still busy as you like you know you can look right out into the year and they still feel very busy so you know our Our total focus in the business is keeping really strong relationships with our builder customers who are spending more frequently with us. So, you know, I do not feel, you know, I'm far from gloomy on the market this year. I would say our teams across the business are in probably the best form I have seen them in for a long time and often, you know, positive morale in the business, which we absolutely have. You know, often translates into great performance. I think we've got one of the best trading plans that we've ever had laid out in front of us for the year. It's fully understood by the depots and we've got a lovely rhythm going through the year. So I don't think we feel we're going to get much help from the market. I think that's probably well understood. But, you know, we love a fight. And I think our job is just to continue doing what we are doing so well, taking profitable volume growth, managing our cost base appropriately. And, you know, I can see potential for something a good year. Your second question is about France. And I pointed, you know, pretty straightforwardly to we went fast a couple of years back when we opened a number of depots and that was learning for us. We acted quickly on it and we strengthened up the team. So we've brought in one of our great UK traders, a guy called Zoran Zalek. He's out in France. He's been there a year. And he is bringing all of the goodness of Houdens to the French market. In addition, we've appointed a new CEO of France, a guy called Sebastian Krycek. And the rest of the team, very strong in France. So I'm completely confident in what we've got from a team point of view. um we've just gone steady on depot openings because we just want to consolidate where we're at um and we are making very good progress you know we think the french market would have been down around about seven last year that seems to be what's reported publicly and we made a proper swing in the back half of the year and sales progress has progressed further uh forward uh since the back half of the year into the start of this year so I think we're in a good place. Where you get to on break-even depends on how many new depots we pop down in France. But our job is to get sales per depot up, to increase the account base, get the account base active. But I'm confident in our plans. Whether it's 26 or 27 for break-even, we'll be making good progress to reducing losses there. Next question, Christian. Just down at the front here.

Thank you. Kristen York from Deutsche Numis. Three from me, please. First of all, I know it's difficult to read into much from current trading at the start of the year, but are there any sort of trends that you'd pull out? And was there anything in current trading which drives the view around the market for 2025? Secondly, could you please just touch on the independents as a grouping and how you feel they've performed since 2019? For example, have we been seeing businesses go out of business, et cetera, there? And then thirdly, just any sort of views on price in the market, given obviously OPEX and national insurance contributions, et cetera, continue to go up. I assume a lot of competitors don't really have much margin to play around with. So just a bit of sense in terms of which that cost inflation can be. Thank you.

Look, I mentioned earlier about current trading. It is early in the year. And I think we would say we are seeing customers shopping around. That would be a feature of some of what we're seeing, and that may be indicating why we're seeing more and an increased number of surveys that we're doing for customers. The team, you know, I spend a lot of time in front of the depot teams right up and down the country. They would say the customers might just be taking a wee bit more time, particularly if we are at the top end of the kitchen. Somebody has saved time. They're probably going to do it anyway and they're waiting for planning permission on extensions. That's normally fairly safe. But, you know, there is a feature of customers, you know, wanting value. I would say we've been very strong in opening price point, which is a heartland territory for us. Remember, all the kitchens we sell, whether it's opening mid or top end, all come off the common carcass platform made in Hyden and in Runcorn. From a margin perspective, we're comfortable whether it's opening mid or top end because we drive incredible margins at all three levels. It's not that much different. So we would be facilitating customers if they want to get the full look of their kitchen, there's some element of trade down, which sort of works for us. So you'll see customers wanting a blue look and they'll do it in an open price kitchen on our car. So they may even invest in a solid work surface to get the combination together. So we're able to place, whether it's own-brand appliances versus big-branded appliances, we're able to get customers to the right place for it. So I think those are some of the dynamics going on. I think our builders are becoming even more reliant on us because I think some of the competitor sets are – I think struggling on availability. And I don't know what that points towards, but we hear pretty poor service levels in the market. And I mentioned our 99.98% service level, which is just an incredible feat from what the supply chain team and the factories do for our depots. So I feel pretty good. I'm pleased with the progress that we've made on the better end of the kitchen range. I think I've always felt this business has got a big opportunity in the better end of the market. And that continues to remain a very big part of the market. We've seen independents drop out. And if you face sort of an independent product offering versus a Houdens product offering, somebody in an independent doing a £40,000 kitchen, you can get it much, much cheaper with Houdens working through the trade. So people find these routes to market, I think, in tougher times. So, yeah, I think we'll continue to put pressure on the independents. And I think Houdens evolved. You know, seven, eight years ago, I would have described it as a product follower. And one of the reasons I've not shown all the product we've got coming to market this year is because we are absolutely a product leader and we are being increasingly sensitive about what we're bringing to market because others are trying to copy us. So I would point to, you know, the good independents will continue to do well. And, you know, it's a made-to-order type product, so you can sort of survive. But rents and salary pressures, I think, are enormous for them. And we've seen with our progress into things like Haydn's work surfaces, We've seen a number of the independent operators who are, you know, make sort of mom and pop type local places, finding it very difficult to compete with our offering as we get more and more volume. In terms of price, look, we would take the view, you know, it is kind of, you know, it's a weight national insurance and we've been clear about the costs that have been put into the business from that. We don't feel customers should take all of that pressure. So, We've gone in with a sensible price increase and I know it's slightly lower than some others. So that gives us an even greater differential. So we've gone in with about a three and a half and I'd be looking to maintain and retain a lot of that. And I'm not getting any pushback from the teams when we do our regional board meetings. The teams feel very confident about where we're at in pricing. We've been smart through the commercial team about how we've applied pricing. So there are everyday footfall drivers in our business that we would be absolutely blistering keen on to make sure that we are repeat seeing customers coming into the business. And we've got a big mantra in the business. The more joinery and doors volume that we drive, the more time we get to see builder customers. And the more time we spend with builder customers, the more time we get to understand where the leads are and where the opportunities are for us. And that's where we're so difficult to compete with because we're not competing with a national price file. Our depots are incentivized to run their pricing on the local level. So they will take kitchens at lower margins or higher margins, but it's very difficult to compete with our depot teams who are very aligned to making bonusable profit for them. So I'm pleased with how the price increase is going. I suppose that's the shorter answer to your question, Christian. Thank you.

down at the front there yeah yeah good morning Jeff Larry at Redburn and two questions I'll go one at a time if I can your EBIT margin this year is probably going to be at its lowest level for getting on for 15 years in a normalized volume environment is there any reason why historic margins can't be recaptured

I'll go and then you go in afterwards. Yeah, absolutely, Jeff. I think we're feeling some weight from losses in France. We're feeling some weight from not having volume going through the factory. I think like a 1% volume would account for roughly 0.4%. So you're right, a 14.6%, getting it back up to 17. And we, you know, post-COVID, we were as high as 19%. I can tell you, Jeff, we are absolutely focused on getting that metric back. And it gets helped by volume put through Haydn's work surfaces, which has got a lower mix. And the team are doing a fantastic job on driving volumes and efficiencies through that, getting it right first time for customers. Getting France losses reduced. driving the mix on things like bedroom furniture, which we're very pleased with, which has an accretive margin to non-kitchen product. So, yeah, I feel we will absolutely get back there in the coming years.

Lovely. And second question around vertical integration. You've given us some helpful numbers about where you've journeyed from and to. Is 50 odd percent still a realistic target?

I think it is by volume, but not by value. Yeah, I think sort of a 40, early 40s by value feels about right for us. You know, we're very strong on manufacturing, cabinetry, skirting, worktops, now solid work surfaces. end panels and Julian sitting at the front here has been very curious about what else we can take back that stable long run production volume and bring it back to the UK and what we've done on some of the panel lines that I referred to in my presentation has just been outstanding and you go to the factory and you see just world-class manufacturing going down our production lines and we can do more And I think we can get curious about some other areas in joinery, for example, which we're doing some early work on. We've acquired some space at the back of the factory in Howden. We've got development plans for Runcorn. It's a critical part of our operating model. And I've been very keen to make it even more productive. So that's where our head is, around about 40% of our mix. We will always buy... draw runners, hinges from Austria or the Far East or a combination. You know, appliances is not a business we would ever enter into, but we add value to it by creating our own brand and being really specific about trade quality and where we source it from. But, yeah, I think we're in our strongest single place on manufacturing than we ever have been from a leadership point of view and investment plan point of view.

I'll just ask a point, part B, if I may, on just that. You did an amazing job last year offsetting input cost pressures. I guess there was some positive effects in that bucket. Can Julian work his magic again and defray input costs?

I think one of the things that we are outstanding at in this business is a program management effort of taking projects and identifying opportunities for efficiency improvements. We've always been outstanding at that in the vertically integrated part of the business, and I think we've got even stronger. And we do the same thing at the front end of the business as well, driving productivity in depots, taking some of the depot drudgery out to help in productivity terms. And things like livestock and XDC have made the depot manager's life so much easier and all the teams so much easier. But, yeah, I think we'd be, you know, with some of the European suppliers under considerable pressure for volume. You know, if you're out and you're touting for business, Hidens is your best account. And that comes at a price. And, you know, we've been very strong on our vendor buying agreements at the start of this year and we're seeing some good early successes on that. So that'll be part of the mix this year. Just up the front here. Thanks, Jeff. Sorry, Paul.

Hi, Ben Vero, RBC. I'll do three as well, please. Just firstly on the UK depot target, so you've reiterated the 1,000. How should we think about the road to that? Is 20 depots a year the new thinking? Second on France, just to follow up, What do you need to see there to pull the trigger again with regards to accelerating the depot rollout? And what's your thinking on the depot targets there? And then thirdly, just on CAPEX, how should we think about that over the coming years as you look to build out additional capacity?

Okay, I'll leave the last one to Paul and I'll do the other two. Look, I think we've signalled, we've always done around about 30 new depots a year and we've signalled 20 this year. I wouldn't read anything peculiar into that at all. I think it's just a matter of the maths. We want to get more depots in London because it's just so difficult to get around London for the trades and we want to put more in. It's just harder to find them. I think we find a feature that there's more new builds and they take longer to come through. And I will be absolutely adamant that we never will take a depot that's not in a primary site. So of our B8 trading, you know, industrial estate type sites, we always want to be pretty prominent when you get in there. So I'm fussy. Part of the 20 is me being a bit fussier. I could probably do a few more than 20. I'll see. I've said around about 20. That sort of feels to be the figure. And I suspect it will be that sort of cadence as we get through to the 1,000 that feels about right. So I think we're very comfortable with that. We're very comfortable with how we're landing depots. We've become very programmatic and everybody's comfortable with how we lay it out. The amount of displays that we do at the front is the right sort of number of displays for a builder wanting to bring in his end consumer. our behind-the-counter product works very well. And the whole place feels open, easier for people to manage on one level. So I think our format's fantastic. In France, yeah, look, I think at times when you want to grab control of a business, you put the right team in. We had 10 of the managers over in London celebrating the success that they'd had in the second half of last year. So they were sort of event winners. And I had dinner with them, with Zoran and Sebastian, on Wednesday night. The excitement about opening up new depots in France is amazing. And, you know, we were talking about opportunities in Beyrouth and in... tour and the list went on and on so they are mad keen to get back to an opening program and I'm saying no we stabilize we get the sales per depot up to the right sort of level which isn't the case in every case so then we get the team in the right place and I'm very confident that we're getting there so we'll be back on with opening up depots I would have thought next year and the year after and We'll not let good sights pass us by. If we need to mothball something, we will take it and secure it. On depot targets in France, I think we can very comfortably see 250 there. Very comfortably see that. In Southern Ireland, I can see 40. And we'll see how we go because you're sort of exploring. I think the Houdens of old always used to see 100 depots ahead of it. But, you know, France is a very large market and the kitchen market size, including appliances, isn't that different to the UK. And the competitor set over there, you know, would have operated in that traditional model. They haven't got stock. They're not serving trade. I think they look at us coming in and seeing the rate of growth that we've got versus the market, and you'd say that Haydn's is really making a difference in France. And just to give you some sort of reassurance around the team, the belief in the business model amongst the depot managers and the leadership team is unquestionable. You know, this in-stock, serving trade, helping the trades make money, being there for them all the way through is just simply the best way to get a kitchen done and that seems to be working as well in France and Ireland as it does in the UK.

In terms of capex levels, sort of indicated 125 million for 2025. As we look forward, we've obviously done our strategic planning and we can see that we'll continue to support the business in terms of the right investments. It's around about 5% of sales, which seems like a sensible level of investment just to keep working through and investing where it makes sense. The one thing I did mention is there's sometimes some opportunities around maybe some land transactions. We mentioned Runcorn. It's an opportunity to potentially but by a site that we will be there for another 25 years or so. So actually the maths make it more sensible to own it rather than leasing it. So we're looking at things like that. That would be on top, but very much stands on its own. I don't want to share too many details because obviously we're in commercial negotiations, but if you're thinking something like 30 million or so, something like that, it'll be that kind of ballpark well within our sort of balance sheet capability.

Thank you, Clyde Lewis at Peel Hunt. You've pushed on, obviously, fairly hard with the branch refurbishment program in the UK. How have you sort of been evolving that? Are you starting to tweak what you're doing with the refurbs? And do you need to sort of, you know, sort of start to move that on again. So the early refurbs again are sort of, you know, looking at the newer refurbs and think, oh, we wish we had that. So that was one question. I suppose linked to that as well is the XDCs. How are you evolving your thoughts around what they're doing, how they're doing it? Is that an area for some sort of future change, I suppose, in the near term? Third one was really around the bedroom performance. It would be really useful to sort of get an idea of I suppose the scale of the market there, where you are, how easy is it to sell bedrooms from a kitchen depot, again I suppose partly The racking, you know, bedroom doors were significantly taller generally than a lot of kitchen doors. So how are you evolving things on that front? The last one, no more after this one, is joinery. How would the joinery performance have fared relative to the overall branch performance? Was it better or worse than that number?

Yeah. So, yeah, I think when I inherited Howden's, I inherited a state that I think was quite tired, actually, and needed spend on. I think, Geoff, you probably pointed that out when I first joined. And I didn't want to do... What often retailers do is invest in a revamp program that sort of becomes an exciting thing and then, you know, doesn't quite pay back. And we've developed something here that absolutely has. Of course, our thinking has moved forward with it. But I think what we've been so pleased with, the principles of the layout are very solid. So, you know, walking in and seeing probably twice the level of displays, you know, 400 square feet moving up to 800 square feet. It's still small, but it packs a punch. And you look across to a manager sitting out front, not in an office. He's out front with his customers. And there's a business development team out front. And there's a counter with, you know, somebody serving that's always there. So you do not see somebody and you walk into our dep. It's a highly interactive environment. And then it gets more private as it goes back. So, you know, into the planning areas. And then there's a room where we take customers in and we convert at a very, very successfully high rate. So the layout and the principles we feel are absolutely solid and don't need changing. You remember we did this because we went into the warehouse and we vertically racked products and we did it more efficiently. And then all the work on XDC and making sure we had fast selling SKUs in the warehouse. So we're happy with all of that. But displays do need changing and they go as part of the depot managers team. They update their displays. I think at the same time we have got better. And we've built a mock shop in Rons where we bring suppliers and we get our latest thinking. So they've moved on, but they're not massively different from the initial ones. It's not like you need to go back and blow them up and start again. But as we've done solid work surfacing, as we've done bedrooms, you've got to bring some of those products in and show them off. And we're capable of doing that within the layout and very minimal sort of capex. So, yeah, that all feels pretty good. The team have built a skill that they wouldn't have had, which is going back and refitting a depot and doing it with minimal disruption to the teams. So XTC has been an innovation that you probably wouldn't see anywhere in the world from a kitchen retail point of view. And I started thinking this through with the team because we were moving around about 11 million pieces in between depots. And we're down well below a million pieces moved in between depots. It was a small industry going on and, of course, a sort of hidden cost in the business to it. So, XDC was funded by taking out that, I think, you know, wasteful work of moving stuff around, customers not getting factory fresh product and availability being quite difficult to, you know, get all in one go. But we still did it because, you know, depot managers incentivized to make sure builders do well. But we've become very sophisticated on how depots get stock and when XDC is used. XDC is the most expensive route to market. So our systems will... look at an order. They'll look at when the customer needs the order and it'll use the cheapest route until it fulfills through XDC. And then really smartly, what the teams have done is they've put an auctioning process between depots. So an XDC will come around and depots can take space off the cube and with it for themselves if you like so there's always a hotly fed competition between depots using the space and our utilization of xdc has gone way up to you know high 90s now so there's very little wastage out of it and we're covering the costs pretty much across the business bedrooms uh i'll correct you on this one uh we use uh we don't put ranges in for bedrooms um You'll have seen in kitchens, larder units and walk-in cupboards have become a very big feature of what people want in the UK. So you open up your larder unit, you see coffee and breakfast and all that kind of stuff or drinks cabinets. Those tall height units work in the kitchen, in the bedroom. So we haven't added any extra SKUs into that. Look, we've been very encouraged by bedroom sales. I think it's done exactly what we thought it would do and it's growing at the rate we want it to. I've always been very careful about this because I do not want anybody being distracted from kitchens and doing bedrooms. So we've been very clear about you do not take kitchen displays out to do this. And we carefully think how we do present kitchens, whether it's on the edge of the display space in the showroom. It's the icing on the cake for us. It's never instead of the kitchen. We saw a really nice adoption rate of people buying kitchens and doing bedrooms during peak trading. We've made a great start to bedrooms this year. And the new bedroom brochure of which there are copies outside, you know, is a substantial move forward as we, you know, we're serious about the market. From memory, there's a couple of players in the mid part of the market, Sharps and Hammonds, they do about 100 million each. The market, I think, is about a billion. The accessible part of the market is about three-quarters of that for us. So it's a chunky little opportunity for us and very much the type of stuff we like to sell. So if you're up doing a bedroom in between a kitchen fit, generally there's no plumbing. Generally there's no electric. So it's a nice, easy fit-in job for the trades. What we've got to do is make sure all the trades know. And you can tell them, but you've got to tell them and tell them and tell them again. We do bedrooms. And often a big win is when a tradesman does a bedroom for himself and the fit, the feedback we get on the fit and the quality of the product is fantastic. And we've been stronger on sort of opening price. Our entry into the kitchen market originally was, you know, nought to sort of £3,000 kitchen territory. Same thing we will be doing on bedrooms even stronger this year. I think that was it. Joinery. Joinery, it's not much really to pull out of sort of joinery versus kitchens. I think we found the door market just slightly harder. We were in transition on flooring last year. Both, again, getting into good growth this year. We always measure sort of the footfall through joinery and flooring, particularly things like skirting. There's not a huge differential really to point out between the two.

Hi, Charlie Campbell, a couple of questions. Just firstly on the buyback, just wondering why 100 million, why not another number? And then secondly, just thinking about residential landlords, a lot of changes in that industry, quite a few landlords selling up. Are they changing the way that they, or the frequency or the spend on renewing kitchens? Because that's obviously a reasonable chunk of your business. Just wondering what you're hearing from that segment.

If I take the buyback question, we've always been very open about our capital allocation policy and obviously investing in the business is the priority. progressive dividend that we continue to deliver. And then we look at sort of anything strategic that we're making and then the rest we look at distributing back to shareholders and buyback is sort of the preferred mechanism that we get feedback on. So sort of the decision to make 100 million was kind of very much driven by the strength of our balance sheet and where we're at. So within that, you saw the strong cash performance this year. That benefit is also from things like the patent box where we collected that cash in the year as well, took into account where we are and received the balls that are in great shape and aging. So that very much sort of mathematically drove that decision and sort of just generally demonstrates the strength of the Howlands cash generation model, which hopefully everyone appreciates.

I'd say regarding your comment on the sort of residential people selling up, and there's not much in it for folk doing the buy-to-let type market. Those flats are still around, and those flats, even though they're owned by, not owned by landlords, still need kitchens changing from time to time. And that would largely centre on our anything up to £4,000 kitchen range, which we are absolutely knocking it out of the park on. So we see no shortage of demand at that sort of end of the market. Where we do get excited, we see a lot of university change. We do very well on that. We do a lot of work with councils. I would say we like people moving homes. And I think we would also say that we will see that coming more as the Labour government gets into building more. And I don't think we would point to the change in landlords either being, you know, in private landlords being involved more or not as a thing for us. We just wouldn't even say it. Is that largely it then? Great. I'll call it quits there. Thank you very much indeed. Thanks for coming up. Thank you.