3i Stock

Good day, and thank you for standing. [Operator Instructions] Welcome to the 3i Group plc Results Presentation Webcast for the year to 31st March 2026. [Operator Instructions] Please be advised that today's conference is being recorded.

I will now hand the conference to the CEO of 3i Group PLC, Simon Borrows, to open the presentation. Please go ahead.

Good morning. Welcome to 3i's FY '26 Annual Results Presentation. I'm Simon Borrows, CEO of 3i Group. On the call with me today are James [indiscernible], our Group Finance Director; Sylvia Santoro, our Group Investor Relations Director.

The slides supporting our remarks have been put on our website this morning. In spite of the challenging market backdrop, we delivered another good result with a return on equity of 22%. Once again, we significantly exceeded our return target of 15%. Our NAV per share finished at GBP 30.30. Private equity produced a 23% gross investment return and also generated cash of some GBP 1.8 billion. We ended the year at 2% gearing, and we announced the dividend for the year of 84.5p per share. That's a 15% increase on last year. and represented an aggregate of some GBP 5.4 billion of dividends since our restructuring in 2012.

You will also have seen that this morning, we launched a GBP 750 million share buyback program, and James will cover that shortly. The 23% gross investment return for private equity includes a 25% gross investment return for action, and that's in spite of a more difficult trading backdrop in France from September of last year. The overall return for the non-action PE portfolio improved this year to 14% and supported by good earnings growth.

In fact, 96% of the portfolio by value grew their earnings in the year. We bought a further 7.5% of action for GBP 2.6 billion. So GBP 800 million of that was cash, with the balance being 3i share consideration. We received portfolio cash proceeds from realizations and refinancings of some GBP 1.5 billion and we got over GBP 80 million of dividend income. As we move into the new financial year, the PE portfolio is positioned defensively and has decent earnings momentum. This slide shows the spread of earnings across the portfolio. We continue to see a good performance from the majority of our investments, which you can see clearly on our value movement slide.

This slide shows that our largest value increases were overwhelmingly supported by solid performance. We again had a few detractors this year. Certiq Medical performed well, but its earnings were held back by the transition of one of its neuromodulation devices. Action delivered another very good performance in 2025. Net sales were up 16%, and and it had over 380 new store openings as well as 4.9% like-for-like growth on top of 10.3% in 2024.

Action also successfully entered 2 new markets, Switzerland and Romania. It's operating cash flow grew to almost EUR 2 billion, with cash conversion at 83% of operating EBITDA. As a result, action once again made significant cash distributions, part of which we reinvested to increase our stake last October. While the financial results were strong again for action, the broad consumer feedback was even stronger. Action gained an increasing share of customer visits, which averaged 21.6 million per week in 2025 across all its markets old and new. I'd like to 0 in on the French consumer in particular. We used this slide at the Capital Markets Day in March to show actions extraordinary growth in France since it opened its first store there in 2012.

The [indiscernible] annual on [indiscernible] is an annual study of French consumers' attachment and loyalty to retail brands. And it's been great to see that action was ranked favorite retailer amongst French consumers for a fourth consecutive year. Past winners are who's who of the strongest French retailers. So this recognition may be more than anything, demonstrates the established and enduring appeal of action in France.

As with last autumn, we see a weaker consumer in France and also lower traffic in Germany since the deterioration in the Middle East situation at the end of March. Year-to-date like-for-likes at the end of last week were 2.4% against the 6.8% comparable for last year. Trading has remained good in Holland and Belgium and Southern Europe and FMCG categories are trading well and benefiting from price reductions made in February and at the start of this month. On like-for-likes, action is about 1.5% and behind where we thought it would be at this stage of the year. And that was mainly as a result of lower seasonal sales due to cooler weather over recent weeks compared to last year. Given the strength of last year's like-for-likes in the first half and in Q2, in particular, we continue to anticipate a stronger second half, benefiting from easier comps. This slide is perhaps helpful in illustrating what I mean. How you do on like-for-likes in any given week is a function of how well you did in that week, the previous year.

Last year, I signaled that action was now too big to continue to grow at double-digit like-for-likes overall. And I suggested that mid-single digits performance was the more likely run rate as we have seen for some time in the Netherlands. So like-for-likes this year would be much easier if we were competing against the general market as opposed to competing against action vintage 2025. Within our budget, we have allowed for the challenging comparables in the first half. As you can see, Q2 is our toughest comp period for the year. And it's clear that the hurdles in Q3 and Q4, which are also by far our biggest quarters for sales and profits, yet easier. It's also sensible to look at like-for-likes over a 2-year time horizon because a 2-year view helps deal with the variances of both public holidays such as Easter and weather. So rather than say 4% to 5% over 1 year, it's probably better to look at 8% to 10% over 2 years. And as you can see, the 2-year stack for Q1 is well within the range anticipated. Before moving on, I'd like to reiterate that while like-for-like is an important KPI, action sales growth remains driven predominantly by its international store rollout. The entry into Croatia this year has gone very well, and the team is now preparing for entry into Slovenia in the autumn. The broader store opening program is moving forward as we expected with 69 stores opened up to this week.

And we remain on track to achieve our store opening target for the year, which will deliver close to 13% store growth year-on-year. Strong cash generation is also a key element of our investment case for action. And now that Action's cash balance is reaching EUR 1 billion, the Board has approved another dividend to be paid this month. and 3i will receive some GBP 255 million. As you know, action was active in the market in 2025, achieving good extensions to 2 existing debt issues as well as a total interest cost saving of over EUR 33 million, it also secured a total of EUR 1.6 billion of further debt issuance. We used our share of the cash from Actions October share redemption exercise to purchase further equity interest in action. We couldn't use all of our proceeds to buy more action equity because a number of LPs were also buyers in October. But we also bought further interest in September and January in exchange for newly issued 3i shares. Royal Sanders had another busy year in FY 2026, generating excellent sales and profit growth and acquiring Bondaleo. We took the opportunity to invest further capital in Royal Sanders and our holding is now over 90%. The portfolio apart from action in Royal Sanders is broadly balanced across our investment sectors consumer, health care, industrials and services and software.

And within that, we have a very small exposure to software. The PE portfolio apart from Action and Royal Sanders delivered a good performance. The consumer sector produced some very good growth with only a slight drag from some smaller discretionary businesses. Health care is now well poised for a good step-up in returns. As orders and sales grow across all the companies in that sector. AES and Tato both traded well relative to their sectors, and we saw decent trading across services and software portfolio. We had 2 strong realizations in the year with good money multiples and IRR returns as well as strong premia over their book values.

The infrastructure team delivered another very solid year. with GBP 104 million of cash income to the group. In continued to perform well and benefited from an outstanding return on the announced sale of TCR. TCR is the largest independent letter of airport ground support equipment. And the exit produced a 50% uplift on realization as well as a 3.6x money multiple a gross IRR of 20%. Thank you. And I'll pass over to James for his section.

Thank you, Simon, and good morning, everyone. Our total return on equity for the financial year was 22%. That's another good year of compounding. You can see the detail here. increase in NAV was principally driven by value growth of 409 per share. Foreign exchange movements were in our favor this year and added 77p. And Portfolio income and fees contributed to the net increase of 74p. The dividend payments in the year reduced NAV by 79p. That meant we closed the year with an NAV per share of GBP 30.30, up 19% from last year. You can see the components of the 0.409p per share here. It's important to note that it really wasn't a straightforward year in terms of the geopolitical and economic environment. That said, the portfolio did well. and generated GBP 4.2 billion of value growth. As Simon said, action continued to deliver with an increase in value of GBP 3.5 billion. The PE performance increases were GBP 628 million. That increase largely reflects the value growth in our other long-term hold asset Royal Sanders and in orderly and [indiscernible]. The decreases in the year are principally related to Cirtec and Wilson. Over the year, we made a number of changes in multiples nearly all of which were down, which I will cover later. But the net effect was a reduction of GBP 40 million.

The increase in the quoted investment portfolio of GBP 75 million came from the performance of AN and basic fit. The portfolio ended the period with a value of GBP 31.8 billion. Embedded in our value growth is the consistent application of our valuation processes with our cross-cycle approach continuing to serve us well. That means we come into periods of volatility with decent buffers compared to peer sets. So let's start with Action. We continued value action on a post-discount multiple of 18.5x, its LTM run rate EBITDA of EUR 2.65 billion. At 31st March, that gave us an enterprise value for action of EUR 49.1 billion. The valuation of our 65.4% holding was GBP 23.7 billion. During the year, we acquired either for cash or for 3i equity, an additional 7.5% of Actions equity. All of these equity transactions took place at our reported valuation, i.e. are 18.5x. At the same time as our cash transaction, other LPs bought and sold equity stakes in action at the same valuation as our trades.

If we look back a year to March 2025, when action was valued at an EV of EUR 43.1 billion and compare that EV to the outturn for the run rate EBITDA this March you arrive at a forward-looking multiple of 16.2x. 18.5x LTM run rate EBITDA and 16.2x is a forward-looking proxy are the 2 benchmarks we've consistently used when comparing action to our usual peer set. These 2 charts cover the core peer set over the year from March 2025 to March 2026. As usual, there are some fluctuations in the latest quarterly marks or some of the peers. This is nothing new. On an LTM run rate basis, Action's valuation multiple continues to sit well within the pack. It's above the overall average, but nearer the lower rated of the 4 better rated peers. On a forward-looking basis, action also sits in a similar position. above the average, but nearer the lower rate of the 4 better rated peers. We always referenced action and its KPIs relative to the peer group.

At the CMD, we showed the chart on the top half of this slide, store growth, like-for-like sales growth, net sales and operating EBITDA growth on both a 5-year view and over the last 12 months. Here, at the top of the slide, we repeat just the LTM charts for action and its peers. As you can see, action outperforms the peer group average on all measures, which is consistent with where it stands in terms of valuation. I also wanted to show some additional metrics, which we think are important because they further demonstrate the power of the action model. These are shown on the bottom half of the slide. sales and profit densities, cash conversion and a 2-year stack for like-for-like sales growth.

Action also outperformed the peer group average on all of these measures. Our valuation is also supported by a DCF analysis based on cautious assumptions of Action's long-term growth trajectory. Finally, I wanted to look at a longer time series as we've done before. because it's important in our valuation process that we have due regard to cross cycle or longer-term valuation benchmarks.

This slide shows Actions peer group LTM EBITDA average multiples over 5 years. This 5-year time frame includes some significant periods of external uncertainty and volatility. COVID, Russia's invasion of Ukraine the change in the inflation and interest rate environment, significant shifts in U.S. tariff policy and now a new Middle Eastern situation. By putting a greater way on averages over a longer time series, and not focusing on individual peers in individual moments. There's a lot less noise in this presentation of the comp set. We've also highlighted the average of the better rate of peers and the average of the best rated peers Costco and Dollarama.

We like this approach as a way to judge the market's consistent view of fair value for the different companies in this sector. Each quarter, the Board's valuation committee at 3i and of course, our auditors also do their own independent work on our valuations. Let's now have a look at how the rest of the portfolio and its valuation multiples compared to the peer set. This chart shows the valuation multiples for our PE assets in dark blue and the average of the multiples from the relevant valuation peer sets in light blue, with the underperformance of the market running into year-end, we have 7 out of 24 companies with a valuation multiple above the average of the peer group.

The 3 of those 7, the difference is very small. Importantly, all the assets across the portfolio remain within their respective peer group ranges. One multiple moved up and 6 multiples moved down during the year. They reflect company-specific factors end market dynamics or proximity to exit. Overall, the weighted average post-discount non-action LTM multiple across the portfolio is 13x. That's down from 13.4x and this time last year. In terms of exits, 3i had a strong year with 2 exits in private equity and 1 in infrastructure, as mentioned by Simon. These were high-quality companies that we're able to sell well despite tricky exit markets. exiting at a premium is something we've consistently done over the years since our restructuring in 2012. And that's not just in the PE portfolio.

So turning back to the business line performance for the year. Our private equity portfolio generated a gross investment return of 23% for the year. Our gross return in the year was GBP 5.3 billion, of which GBP 806 million was foreign exchange movements. In terms of realization, we saw strong cash proceeds from action and from MPM and MAIT in the year. Our investment in the year of GBP 2.6 billion is principally 3i's purchases of additional action equity. We also made additional investments in a number of other existing portfolio companies, including Royal Sanders and 1023. Overall, the overall PE portfolio ended the period with a value of GBP 29.7 billion.

In terms of the leverage position across the portfolio, we show that on the next slide. The leverage position compared to the beginning of the year is broadly unchanged. Action leverage is fairly similar. Net debt to run rate EBITDA moved from 2.7x to 2.8x. Over the 12 months to the end of March, even after its refinancing and cash distributions of over EUR 2.2 billion to all shareholders. leverage across the non-action portfolio moved from 3.5x to 3.2x over the year. As we've said before, these levels are very modest when compared to the average level of debt used across the PE industry more generally. As a reminder, we focus on simple senior-only financing structures with over 2/3 of our overall lending ex the action debt, which is widely syndicated, provided by banks.

So on to infrastructure. The infrastructure result was better this year, mainly reflecting the uplift in the 3iN share price over the year, which increased by 5%. The underlying portfolio return over the year in 3iN was also in line with its target up 8.5%. The net investment return from infrastructure, including fee income, was 10%. Together with Scan lines, our infrastructure portfolio is valued at just over GBP 2.1 billion, and it produced a very useful cash income contribution, as you can see on the next slide. Overall cash income totaled GBP 421 million. Operating cash expenses were GBP 145 million, and we again ended the year with a healthy cash operating profit even before taking into account the dividend we got from action. So now let's take a look at our balance sheet and capital allocation. 3i balance sheet is simple and very strong. with cash at 31st of March of GBP 664 million and liquidity of GBP 1.9 billion as our RCF is currently undrawn. This is before any receipt of the approved second action dividend of GBP 355 million, which we expect to receive before the end of May. We announced this morning that we will commence a buyback program of up to GBP 750 million over the period to the end of December 2026.

Shares purchased under the program will be canceled. Let me explain the capital allocation rationale for this. When the shares traded at a premium to NAV, as they've done over most of the time in recent years, we have supplemented our business-as-usual investment by deploying significant capital to buy in further equity in action at our book value, all of which has made great sense. Today, with the current dislocation in the share price to what we see as fundamental value. We have an opportunity to use some of our capital to buy back shares at very attractive levels. It's important to note that the overall composition of our portfolio today, not least with action as a long-term hold gives us a very good line of sight on a significant and regular dividend flow. So finally, let's turn to the 3i dividend. This morning, we announced our intention to pay a second dividend of 48p. When you add that to the interim dividend we paid in January, it will make a full year dividend of 84.5%. That remains subject to shareholder approval, and would represent a growth of 15.8% on the prior year. Now before we get into Q&A, I'll hand back to Simon.

Thank you, James. I'd like to close with a few final remarks. There doesn't seem to be any such thing as a normal predictable part of a regular cycle year anymore. At this stage last year, we were all digesting the U.S. tariff policies. And this year, we have a sizable oil shock to contend with as well as the ongoing implications arising out of developments in AI. And while FY '26 was a challenging year for the PE industry, 3i generated strong realization and dividend cash flows as well as generally good growth across the larger investments in our portfolio. That solid performance is underpinned by the makeup of our portfolio and its resilience to shocks from external developments. We're careful and skeptical investors and we don't like too much leverage, and we back real companies that generate cash. One of those real companies is action, which continues to generate very strong cash flows. It has also successfully opened in 15 European countries using one format and continues to grow market share. No other nonfood retailer has matched actions rate of cross-border growth across Europe over this period. We are confident that action will continue to deliver very strong returns. We have exceptional consistency of performance across the stores at action with very high sales densities driving average paybacks of under 12 months.

Also in retail, the consumer always knows best and invariably before investors Again, on this measure, action does very well and very consistently. It may be that the current geopolitical situation will create further noise, but we will manage through that, knowing that action has traded through challenging periods before, and they've done that by being true to their ethos of investing in Action's customer proposition. So I'd like to close, as I've done before, by reiterating that we are playing a long game and will not be distracted by short-term trading ups and downs. The shape of our portfolio is the foundation and the competitive strength of our larger assets gives us a great deal of confidence in our compounding momentum over the medium term. Thank you, and we'll now open for questions.

Thank you. We will now conduct the question-and-answer session. [Operator Instructions]Our first question comes from the line of Will Wood from Bernstein.

I've got 3. I'll take them 1 by one, if that's okay. The first one is, do you still believe that the pressure that you're experiencing in action is cyclical and not structural?

Yes, we do. We -- this year has -- it started reasonably well. January was a strong month. We then we then had a change in season, if you like. And what we have seen from the end of March when there was a week of very difficult news in the Middle East, we've seen a continued pickup in our FMCG performance from the price reductions we made in February, and we've made some further ones in May, but a quite savage pullback because of cooler weather in Europe in our seasonal categories. .

And those seasonal categories going into early summer probably account for about 20% of the catalog in the stores at this time. And the biggest category in that group is Garden and Outdoor. And Garden and outdoor last year over that period from the end of March to today did a 27% like-for-like. And this year, it's at minus 3%. So we've seen very good sales in that area compared to last year, but there was a heat wave in parts of this period last year in the continent. And so we saw very high sales. We saw 50% like-for-likes in certain weeks. We haven't seen anything like that this year, and it's been particularly cool in Germany compared to last year.

Understood. The second question is on Germany. So France has been weak for a while now, and you highlight Germany slowing down. What do you think is happening in Germany? Is it the basket size again? And do you need to change anything in Germany to support that?

No. We remain very confident in the German business, but what we saw from that last week in March is a drop in footfall in Germany. That's quite different to what we've seen in France where footfall is still good. And we think it's the repercussions and probably the implications of an enduring Middle East situation and what that might mean for Europe in an economic and a defense sense. So we do think there has been a pullback in consumer confidence, and that's impacted discretionary spending as well as the weather in Germany. .

Understood. And then the final one is obviously, you gave guidance at the action CMD in March. Are you still comfortable with that kind of 4% to 5% like-for-like range and stable margins for the second half? And how does inflation help you with that?

We're not doing anything with guidance at the moment. That guidance was given about 5 weeks ago. It's too early in the year to be really taking a hard look at that. We've had less than 1/3 of our sales and profits so far this year. We've got the big periods to come. So we need to see the year develop a bit more before we start thinking about seriously or guidance change seriously.

We will now take the next question coming from the line of Gregory Simpson from BNP Pariba.

A couple of questions from my side. First one would be EBITDA growth in the calendar Q1 fraction was 7%. I think the first single-digit figure for a while. Can you maybe help us unpick some of the moving parts behind that between Gross margin, inflation and your outlook there?

Second question is -- so [indiscernible] like the Russia-Ukraine was more of a job to consumer finances on the energy side and actual traded very well through that. I guess can you help contextualize what what you're seeing now in terms of customer behavior versus back then any kind of differences you'd call out?

And then the third one would just be on the portfolio company, Evernex, which is relates to data centers, which is a very popular story for market can you maybe update on what -- on how that asset is performing? And is there still kind of a sales process there?

Thanks, Gregory. Okay. Let me deal with those one by one, too. So the EBITDA growth in Q3 I mean if you look at that first quarter, we were slightly light on sales against our expectation. It was around 20 million that we will below our expected sales. We had some supply chain costs increases that were still there, which [indiscernible] mentioned at the CMD in the first quarter from the planning issues that we had in the previous year. So that was about a 0.2% effect. There was a slight OpEx increase of about 0.1%.

There were some margin adjustments that accounted for 2% of the difference, and we'd opened less new stores in that quarter relative to last year where which again, we indicated would -- on a phasing basis, that would be more in quarter 2 and 3 than last year. So these were quite small numbers in our smallest turnover quarter of the year and our least profitable quarter of the year, which led to that. But I wouldn't overread anything into that at the moment.

So, I'll deal with Russia and Ukraine. So I think what we've seen in terms of customer behavior reaction to the current situation is most marked in Germany, as I called out. And it's been marked not necessarily in in smaller baskets as in France, but very much in footfall in terms of Germany. And I think it just suggests there's more serious issues under contemplation in that country, perhaps than than what's going on in the West or the south of Europe at the moment. And the German consumer is notoriously cautious when there is bad news around. And I don't think their politics is actually any better than ours as well. So they've got a pretty perfect storm there at the moment.

AVONEX is trading well and as you would expect in that business. But I'm not sure I can say anything more than that, actually, Gregory.

We will now take our next question from the line of Manjari Dhar from RBC.

I just had 2, if I may. My first question was on Action's inventory position. I was just wondering how you view that at the moment and the potential of future discounting on those seasonal ranges if weather doesn't pick up? And then my second question was on actual valuation I guess the question is, if like-for-like remains on the softer side for a more prolonged period, would that start to influence your thinking on valuation and that premium to the overall peer set.

On actions inventory position, again, I tried to illustrate that even though we've missed a very high comparator in the seasonal sales from last year. We -- at minus 3%, we were sort of much higher than the prior year, and we've had a decent level of sales, notwithstanding notwithstanding the weather. So I don't think we're looking at any sort of inventory challenge, and there's a good number of weeks still to go for the summer. Summer is not over yet. And would just all like to see some normal weather. So we're a long way from thinking about discounting. Where we are being very competitive is in the FMCG areas where we took down a lot of prices across the entire network in February. We've done the same at the beginning of this month, and we're planning more in the summer. And why we're doing that is because suppliers are telling us that they want to put up prices, and we are seeing that other retailers are beginning to pass on those prices. So there is going to be an environment of price increase as we roll through the rest of the year, and we want to be the consumers' friends in that .

So thanks, Manjari.I mean I think it's important to note that Action is an exceptional retail asset. Its value is defined by both its long-term performance track record and also its long-term potential. And Simon sort of summarize, that's made up of the combination of store growth and like-for-like growth, and that's going to drive the compounding story. So it's also important to note that when the -- when action was trading sort of on a significances ahead of the peer group. Historically, we didn't move the mark up we said our approach is cross cycle and designed to withstand the test of time. So when we consider any change to the valuation will be based on a discussion of valuation committee and I think to talk about moving the mark from here, you'd have to have a sustained difference performance in action across a range of KPIs and/or a fundamental reset of valuations across the sector, which would have to exclude some sort of short-term volatility. So obviously, none of these situations has occurred to date. So that's all I would say on that.

We will now take the next question from the line of Michael Sanderson from Barclays.

Simon. I just wanted to go back to a couple of areas, if possible. First of all, just to understand, Benelux and Netherlands, obviously, appears to be a bit more resilient than France and Germany. And I was just interested in what lessons that we can take from maybe some of the more mature markets to understand how some of the growing countries could evolve from here.

Second question was sitting around the store opening program. Obviously, there's an awful lot in the white space that sit around Germany. Would you change sort of phasing where you open the stores over the course of the year? Or is this -- is that framework set and you wouldn't adjust sort of the pace in individual countries? And then the third one is just a quick one. Were there any transactions in Actions equity post the most recent valuation, which you didn't participate in, but other GPs did.

Okay. If we -- I mean, I think one of the challenges when you talk about, say, France compared to Benelux or Holland specifically, is that we've seen over 60% like-for-like growth in France over the last 5 years. So those individual stores have grown remarkably over that period. And we've had many years where we've been opening hundreds of stores in France, and we're now opening around 50 stores a year.

So the like-for-likes that they have to compete against, whether the economy is strong balanced or whether it's weak, is -- it's a very high mountain for the managers to deal with. And if you look at Holland, they've just been consistently doing 4% or 5%. They've been opening single digit numbers of stores per year. It's a much more consistent profile. So I think ultimately, when France gets to 1,100 or 1,200 stores, I suspect it's going to look like that profile. It's incredibly well embedded business in France. It's very popular with consumers, and the footfall is still growing in France.

But it's going through that growth phase and these stores average well over EUR 6 million. They are -- they're bigger, busier stores than we see in the Netherlands. They're more like the Belgium stores, which are big stores in a turnover set. So it's a different phase that Netherlands is in. And ultimately, France will reach that phase, but it's got a good few years before it gets to that phase, I would say. In terms of the store opening program, you wanted to know about the phases, whether the phasing would change. I don't think so. I think the phasing is always orientated to the last half of the year. So that is the big push this year. It's slightly bigger because of the way various licensing and other requirements have come about in the first quarter this year, but it's picking up pace now. And so you're going to see it reaching last year's level and then going past it as we continue to that target of over 400 stores.

Specifically, on the -- on Germany as well.

In Germany, there is no change. Germany is due to open 60, 65 stores this year. It's been opening some stores already. The German consumer is a more cautious consumer with new logos and new brands, but they very much begun to adopt action. All that I've talked about at Germany is a market phenomenon. It is nothing to do with that action per se. We are still winning market share in Germany, and we have some very strong categories performing in Germany. It's just that the garden and outdoor in the summer categories are a bit stuck at the moment with the weather. .

And then there was -- the only recent trade has been the January trade where we bought some more action interest in exchange for new shares.

We will now take the next question from the line of Christian Holstein from Bank of America.

I have 3 of them as well. So firstly, on guidance, so the 2.4% like-for-like seems to imply about 5% needed to achieve the bottom of your 4% to 5% range. I know you've reiterated guidance, but just wondering what your underlying assumptions are like how do you expect like-for-like to reaccelerate to this 5%? Are you expecting a catch-up in seasonal sales? Or do you think the macro headwinds will subside soon? My second question is on price cuts. So you mentioned quite a few this year and more to come. I was just wondering how is this versus your initial expectations at the start of the year? And would this be a potential headwind for your EBITDA margin guidance? And then my third question was just on Germany. Just if you could give any more detail here. So like how has like-for-like growth changed for Germany or how much that we can buy, like what proportion of sales is Germany. Do you think this will be structural?

Yes. Okay, Christian. I mean -- to be clear, what we said is we're not doing anything with guidance at the moment. The guidance was given only 5 weeks ago. It was given in the knowledge that we have preplanned a series of price reductions across the portfolio. that the benefit in terms of volumes is already being seen in those areas, and we'll continue to roll up through the year, we believe and that we do have our significant sales periods and significant margin periods still in front of us.

We're just really talking about a 5-week period where -- there's been a lot of noise out of the Middle East and where the weather has been cooler than last year in a number of the Northern European markets. So there's no fundamental difference. We will address that at a given point in time, but we're not doing that at the moment given how recent the guidance was given. In terms of the price cuts we're talking about, we are seeing a positive reaction both to the price cuts in February and the price cuts made this month. We're not seeing a lot of people follow us on these price cuts. In fact, they're having -- they're probably having the supplier conversations that we mentioned just earlier. So we are seeing volume pick up picking up as a result of those, and we do plan another large series of price cuts over the summer. These are very much focused on the FMCG categories. And then Germany itself, I don't think there's a lot to add. I just think you always have a very cautious competitor there. And I think it's behavior that's affecting the entire market.

And we'll have to see whether some warmer weather really changes the behavior and how much is down to weather-related factors and how much is down to perhaps Middle East or economic factors.

We will now take the next question from the line of Haley Tam from UBS.

I have three, please, if I may. First of all, could you just clarify for us what proportion of your sales actually your FMCG and household essentials that might be more resilient to have a better outlook, that would be useful. And secondly, in terms of back to Germany, the context of the like-for-like now being flat year-to-date. I think it was more than 4% last year. So I just wondered whether you could give us any color on perhaps how quickly that detrition came through really since the end of March, and so we can get a handle on what's really changed? And then the third and final question, just on the share buyback, the GBP 750 million. I think I saw you said that Action has approved a further dividend of GBP 255 million in May.

I guess I could assume we might get that times 2. So can I just confirm that the buyback you've announced is all going to be funded from cash that you're generating for the portfolio and doesn't involve any planned increase in debt?

Yes, sure. So in terms of proportion of FMC, it varies slightly by country, Haley, but it's about 1/3 of the catalog. in just how the year has gone, I guess, is what. So we were -- I think at the end of March, we were around 2% type like-for-like number in Germany. And it had a weak last week in March from this footfall issue and then it has remained subdued since that period with pretty good FMCG sales, but as I said, negative like-for-likes in the seasonal categories.

So they've been very much part of that reduction against the high comparables last year. And then the buyback, I don't think we're intending on raising any new debt. We've got plenty of cash.

We will now take the next question from the line of Andrew Lo from Citi.

Can you give the color about the FMCG mix. Could I just ask a follow-up and just simply what share of your sales do you consider to be discretionary across your whole category? And then if I could ask a sort of follow-up on the FMCG. You've clearly cut prices. You've mentioned that you've got sort of future pricing cuts. Has this always been a sort of key driver to attract new customers into the store? How do the FMCG margins compared to the rest of the range? And are you able to share a bit of light about how your prices compare to your peers at the moment before the future price cuts?

And then the final question is just a bit more of a broad question about sort of consumer behavior and response to a weak macro environment. You've obviously demonstrated in the past quite strong revenue growth in periods of high inflation when the consumer is under pressure. You clearly larger than you were before. So it may be natural to think that it would be harder to offset lower spending by existing customers with new customers. But if could you share some insights or any data allowing us to assess the market share gains from customers who are new to the action format? And how has that trended versus history and versus your expectations for this year?

Thanks, Andrew. I mean, we made some fundamental changes in the makeup of the stores in terms of products as a result of the pandemic. And I think today, we're much closer to, I would say, a 50-50 balance between what we term essentials and discretionary items. So that -- and that used to be more orientated towards discretionary items. But today, it's about 50-50. In terms of price cuts margin spread, FMCG, we have a range of margins in our categories across the store from sort of broadly speaking, 30% up to 50% to arrive at that gross margin of 40%. And the FMCG categories obviously tend to be at the lower end.

We think we are extremely price competitive this year particularly in FMCG categories, we do our pricing baskets weekly, and we think we're very much on the front foot, and we're seeing the volume benefits of those 2 rounds of price reductions we made this year. as well as the price reductions we made in November last year. I mean, in terms of the consumer response, we keep growing our customer base. And we finished last year at 21.7 million weekly visits. We're now over 22%. We're about 22.1%, 22.2%. You are going to continue to see broader adoption of action stores by customers across Europe. We have no doubt about that.

Our next question comes from the line of John Perez from Kepler Cheuvreux.

Yes. John Perez from Kepler Cheuvreux. Hope you can hear me well. Just one question for me. Could you just quickly comment and get some color on trading and performance in Eastern and Europe countries like Poland and also maybe on Italy, please.

Poland has been affected by some cooler weather. So we've clearly seen a pullback there. Nothing like as marked as as Germany and France. It's still trading nicely positively, but we have seen a pullback as a result of very high seasonal sales in Poland last year, but much cooler weather in Poland this year. Italy is trading very well and is continuing to power ahead with very strong like-for-likes indeed. .

Thank you. I am showing no further questions. I will now hand over to Sylvia Santoro, 3i's Group Investor Relations Director to address the written questions submitted via the webcast page.

So the first question is, given the discount to NAV, how do you think about buying equity versus buying more action?

Well, we've announced the buyback today because we think that this level of share price buying through our shares is a very attractive proposition.

There's another question. Is the plan to wait out the market in terms of the share price decline? Or are you considering testing the valuation of action by putting action up for trade sale or seeking an exit by way of listing?

We're not changing our long-term approach. We have had a deep dive into what's been happening with our share trading on our announcements. So we did see a big drop in November last year on the announcement [indiscernible] We saw another one at the Capital Markets Day, and we saw one this morning before I came in here. the high-touch trading is dominated by 1 institution we've discovered. They were a 6% holder in this last year. They're down to about 1% prior to this. There is a big selling coming out of 1 particular broker, which has been the party that is sold for that party in the CMD and the November, and we suspect they are doing the same again. At the CMD, we had 16 million shares traded. There was nearly 9 million, we think, of high-touch trades, and this 1 institution did 5 million of those, and it was 10x bigger than any other institution. And today, if the broker is acting for the same party, then it looks like they're dominating the trading again.

Could you explain the thought process behind the sizing of the share buyback? And if the share price stays where it is this morning, is there scope to upsize it?

So I mean, historically, we've deployed quite a lot of capital into buying of the LP stakes. We've got a very strong balance sheet. So We continue to invest behind our private equity and infrastructure portfolios. And we decided on the 750 on the basis of what would be sensible in the context of a continuing to operate within our trend lines continuing to have all capital available for normal business. So that is the basis on which we sized it. I think we're fortunate, and we spent years building a very strong balance sheet. So we've got plenty of capital to deploy .

Can you provide -- and this is back on action, can you provide some more detail on what discussions you're having with suppliers on passing through additional costs and what we should expect for the rest of the year?

I mean we are in not firsthand involved in those discussions. Obviously, that's for the buying team at action. But we obviously are pretty resistant to any significant price rises for the group. So we tend to deal with that by making larger and larger orders, given the volume growth that we're seeing through the stores. But it's very clear the behavior of the suppliers at the moment is to look for inflationary plus type price increases. And some of the retailers will be accepting that, but not all of them.

And there is a question on online competition from people like [indiscernible]. And to what extent do you believe it affected trading in France and Germany.

We think it's perhaps at the margin, but we don't think it's a significant factor. We had very good very good sales in those general merchandise categories last year, including in France, relatively speaking. So we don't think that's a major factor for us. But we completely understand at the margin, it may nibble away in certain categories.

Then we have a final question, which is on the U.S. expansion, whether you can provide any reassurance on why action can suppose to succeed in an environment will challenging established incumbent?

I mean, not many of those people who failed have the opening in international market track record that Action has. It's just opened in its 15th country. It is a pretty stellar record. They do a great deal of research before they go into any new markets. And the same is true of the U.S. and they have studied many case studies of how people have done it well and how people have done it less well. So I think we can expect them to very much focus on how to get this right. And they've been seriously looking at this for quite some time now. So I have every confidence in their approach.

I think that was it in terms of the online questions.

Great. Okay. Well, thanks for your attention, everyone, and have a good day. All right. Bye-bye. .

Thank you for your participating in today's conference. This concludes the program. You may now disconnect.

Good morning, and welcome to 3i's Capital Markets Seminar for Action's 2025 results. My name is Simon Borrows. I'm the CEO of 3i and Chairman of Action. Also on the call is James Hatchley, CFO of 3i; as well as Hajir Hajji, CEO of Action; and Joost Sliepenbeek, CFO of Action. We plan to take you through a presentation of Action's results and strategy, which has been put on our website this morning. Action's excellent track record has continued into 2025 with very good growth in stores, sales and profits as well as another strong year of operating cash flow.

Action has again delivered very significant transaction growth based on its very low prices and flexible format. The group's combination of significant cross-border store growth and sector-leading like-for-like growth sets it apart from its peer group. And 2025 was another year of very strong growth across the business, as you will see from today's presentation. We've updated our compounding slide for Action to the 31st of December 2025. Action has made stellar progress since the acquisition in 2011. It is now one of Europe's largest nonfood retail groups. It is a highly cash-generative business even as it opens hundreds of new stores, and its growing scale underpins its increasing competitive advantage.

Okay. Let me hand over to the Action team, Hajir, over to you.

Good morning, everyone, and thank you for your introduction, Simon. I would like to start by sharing an update on our 2025 performance, followed by an overview of our strategy. 2025 was a great expansion year. Net sales increased by 16% to EUR 16 billion, driven by our ongoing store expansion and like-for-like sales growth. Our like-for-like sales growth was 4.9%. This is a very good outcome, especially compared to most European retailers and should be seen on top of the 56% compounded like-for-like growth we delivered between 2021 and 2024. What is very pleasing is that we continue to see a growing number of customers shop at Action across all countries.

Our operating EBITDA increased by 14% to EUR 2.367 billion. And last year was also another record year for our expansion. We added 384 stores in 1 year, more than 1 store a day on average. And we continued to invest ahead of our growth in our supply chain backbone and in our systems to enable increasing volumes. In summary, our underlying sales growth remains strong, highlighting the resilience of our formula and our relevance to million of customers. Before talking about 2025 highlights, it is helpful to add a bit more context.

First of all, consumer sentiment and behaviors were mixed last year, strong in the South and East of Europe, solid in our home market, the Netherlands and in Germany, but weaker in France, mainly in the second part of the year. Competition was also intense across markets and mostly in France. With all this market noise, it is sometimes easy to forget that despite all of this, Action continues to grow in all of its markets. We attract a growing number of customers to our stores, selling everyday necessities and general merchandise, which performed strongly in 2025. With this context in mind, there are 5 key points that I would like to highlight. First, as mentioned, we added a record number of stores and distribution centers to support them. In Germany, Poland and Italy, we added more than 60 stores each. France and Spain followed not far behind with more than 50 and more than 40 stores.

And a special highlight was the opening of our 3,000 store last summer. Second, for the first time in our history, we opened 2 new markets in a single year, including Switzerland as a non-AU country. The welcome from our customers in both Switzerland as well as Romania was very promising and exceeded our expectations. It is a great encouragement to see that our formula works so well in 2 countries that have very different levels of disposable income. Third, in the Netherlands, our most mature market, we delivered an above-average like-for-like performance, proving the strength and relevance of our formula also in an established market. Fourth, our Southern European markets delivered strong double-digit like-for-like sales growth. And finally, I strongly believe that none of this would have been possible without the hard work and dedication of our colleagues.

Over the years, we have experienced consistent improvements in the engagement and commitment of our teams. Our colleagues are the foundation of our success, and we consider maintaining their engagement a key priority. Needless to say, we also had our share of challenges. Our like-for-like sales growth was below our expectations, mainly due to challenging conditions in France, our largest market. Our growth in France slowed down after the summer, resulting in like-for-like growth of 1.3% for the full year. If we exclude France, Actions like-for-like sales growth was 7.2%.

The majority of the challenges in France resulted from softer consumer sentiment, which led to more careful consumer spending. Our French like-for-like stores still grew 2.5% in transactions, but customers spend less per visit with fewer articles per ticket in the week leading up to paychecks. This spread across most weeks after the summer as the economic situation weakened. In this softer consumer environment with shoppers spending less, more retailers struggled. Supermarkets were increasingly using promotions and competing on price, also impacting us given our large size in the French market. I will talk more about this later. We remain focused on offering our customers good quality products for the lowest price and taking the right commercial actions. We believe that these challenging periods and the lessons we have learned will work in our favor in the long term as our formula gives us the flexibility to adjust our assortment quickly, although it will take some time for adjustments to fully translate into results.

A last challenge I need to point out is the unplanned increase of our supply chain cost as a percentage of sales mainly caused by the higher handling costs for direct sourcing. Joost will elaborate on this. Despite these challenges, we remain confident in our formula because we believe this is a very strong foundation. At the time when consumers are facing rising costs and economic uncertainty, our customers rely on us for the good quality products they need for the prices they can afford. And others simply choose us because they do not want to spend more than necessary. Both of these are clearly reflected in our strong customer growth. We welcome 21.6 million customers per week on average, up from 18.7 million in 2024. The appreciation from our customers is reflected in the many awards we won across Europe.

They highlight the strong brand awareness we enjoy and the trust we have earned from our customers across all our markets. Let me highlight 2 examples that I'm very proud of. In the Netherlands, the country where [ Action 1 ] started, we were awarded Retailer of the Year 2025. In France, we have grown into a leading retailer in just over 13 years. We were named favorite brand of the French people for the third year in a row, and we are the only foreign retailer to date to have won the title. Customer awards do not only reflect the trust and loyalty of our customers, but also the dedication of the Action teams that serve our customers every single day. I'm very proud of this, and I would like to thank all our colleagues for their commitment.

The excitement of our customers for our formula remains remarkable. Let me show you a few examples, the opening of our 100th store in Spain and the store opening in France last Saturday. We see the same effect in many of our store openings across countries. What did change from earlier market entries is that our brand awareness is now already high before we open our first store. It is impressive how quickly customers find their way to our stores in our newest markets and welcome the Action formula. A good proof point for this is Southern Europe, where Action is performing very well, our stores in Spain, Italy and Portugal are delivering our highest like-for-like growth. I often say everyone deserves an Action. Living up to this promise, we entered 2 new markets in a single year for the first time in our history. Our entries in Switzerland and Romania were very successful, and we closed the year with 8 stores in Switzerland and 6 in Romania.

Our success in these 2 countries shows how scalable our formula is and confirms our confidence for further expansion to newer markets. We are enjoying strong performance in 2 very different markets. Switzerland, the country with the highest disposable income in Europe; and Romania, a country with one of the lowest. Switzerland delivered the highest first week sales of any new store in our history. We also saw a very strong opening week in Romania, a country with 19 million inhabitants and a strong potential. Both Switzerland and Romania strongly exceeded expectations. That's why we plan to grow our store network quickly and build a distribution center in Romania to support this fast expansion. The foundation of our formula and a key reason why so many customers choose Action is that we offer good quality products at the lowest price.

To live up to this promise, we monitor our price position versus a large set of online and offline competitors in all our markets across all our product categories. This is a dynamic process. assortment and price change week by week and sometimes daily, which is why we track prices all the time. If the price gap between comparable products becomes too small, our buying team takes action. This graph shows our price positioning in Q4 of 2025 compared with Q4 2024. This comparison includes offline competitors as well as local online players. If you include global online players, the chart would not show material differences.

The index does not include promotions. However, we do monitor those as well. In each country, we compare around 2,000 products, benchmarking them against the lowest price comparable products. As you can see, we continue to maintain a strong relative price position. Let me zoom in on France for a moment. Despite our strong position, we have always stayed true to our principle of being the lowest price retailer. Drawing on our past experience in a soft consumer environment and with more intense price competition, mainly from supermarkets and especially in FMCG, we decided to implement further price reductions in Q4 to reinforce and further strengthen our competitive position. As we go into 2026, we continue to lower prices where needed and focus more on lowest price items.

Despite this challenging environment, customer traffic in our stores continues to increase, and we expect this positive trend to continue. I believe that everyone can offer low prices. That's not what it's all about. What is just as important as having the lowest price is keeping up investments in product quality without passing our investments on to customers in the form of higher prices. We believe that our customers will only come back if we offer the lowest price and deliver good quality. A clear sign that our customers appreciate our price quality ratio is the fact that our private label products again won several awards last year. I will take you through 2 examples.

First, customers voted Action's Teddy Care Baby Wipes Best Product of the Year in the Netherlands. This product is a great example of responsible innovation. The Renewed Teddy Care line is made from plant-based fibers, free from microplastic and comes in 100% recyclable packaging. Second, our Palazzo coffee capsules were named Best Buy in Belgium. This recognition highlights exactly what Action is standing for. Good quality doesn't have to be expensive. We continuously test and improve our private label products. For Palazzo, an independent panel benchmarked the taste of our cups against leading A brands. These tests showed that Palazzo was rated better than the A brands. This best buy recognition clearly confirms this. In both examples, quality went up, while prices stayed exactly the same and the lowest in the market. 2025 was a year with many milestones. We added a record number of stores, more than 1 store a day on average. For the first time in our history, we entered 2 new countries and opened 3 DCs in a single year.

Our store expansion was strong in all our markets. All new stores contribute to overall performance and deliver attractive payback times, including in France. Joost will provide more detail on this. Supporting this strong expansion, we expanded our supply chain with 3 new distribution centers in Germany, Poland and Italy. In addition, we opened a hub in the Netherlands to support our growth in direct sourcing. We now manage a network of 18 DCs to ensure good product availability and an on-time delivery to our stores. Our focus is not only on growing our store network, but also on keeping our existing stores up to date. I will elaborate on this later in the presentation. We believe that sustainability and discount retail can go hand-in-hand. Because of our scale, the impact of every action we take is even more meaningful. We established the Action sustainability program several years ago.

The 4 pillars of the program, people, planet, product and partnership were inspired by the UN Sustainable Development Goals. Let me share some of our key achievements from last year. Action is committed to reduce greenhouse gas emissions across our value chain. We reduced our Scope 1 and Scope 2 emissions by 11% compared to 2024. Versus our base year 2021, we have now delivered a 56% reduction, and we are well on track to reach 75% reduction by 2030. For Scope 3, we are engaging with our suppliers to set up science-based targets as well. At the end of the first year of our engagement program, 15% of our suppliers by emissions has validated targets in place, a good start for our objective of 80% by 2029. On product, we continue to improve the environmental and social impact of our products. We have invested in certified sustainable sourcing.

More than 99% of the timber, cotton, cocoa, coffee and palm oil used in our private and white label products are sustainably sourced, underpinned by relevant certifications like Better Cotton or Fairtrade. We met all our sustainable packaging commitments. We reduced the overall weight of packaging by 29% for products in scope, exceeding our 2025% reduction target. Next to that, we work with our suppliers to turn waste from our daily operations into good new products. A recent example is a [ bin bag ]. We collect the plastic wrap from the raw cages in our stores, recycle it and produce a fully circular bin bag. On partnership, Action wants to contribute to the communities where we operate. We focus on children as they are the future, and we believe children deserve a safe and healthy start in life. By focusing our partnership on a limited number of initiatives, we are creating a bigger impact. Let me highlight the key achievement of 2 of our partnerships.

Through our partnership with SOS Children Villages, we supported around 70,500 children last year, helping them grow up in a safe and stable environment. Action and the Cruyff Foundation motivate children to get active. We are financing the construction of safe sport courts, giving the children of the neighborhood near several of our stores, a place to exercise and start moving. Last year, we opened our first sport court in Paris. In 2025, we also welcomed 2 new partners. Maxima, the foundation dedicated to cure childhood cancer, and our support will go to Maxima partners across all action markets that provide treatment, care or research into this disease. And Fairtrade because we now support a living income for our cocoa farmers. Our chocolate has been Fairtrade since 2022. Last year, we extended this collaboration to commit to an additional living income premium that allows the farmers who produce our cocoa to earn a living income without increasing consumer prices. We are the first international retailer to have committed to this in all our markets.

And last but not least, people. Action is a significant employer. By year-end 2025, we offered over 84,000 colleagues working in our stores, DCs and offices, stable jobs and income. During the year, we created more than 4,500 new jobs. Our colleagues represent 166 different nationalities, mirroring the communities in which we operate as most colleagues live in the neighborhoods where we are located. As a growing company, we want to offer our colleagues opportunities to develop with us. That's why we put a lot of effort in creating real career opportunities.

We have a target of promoting at least one colleague for each Action store per year, retaining talent, deep action expertise and giving colleagues a chance to develop themselves. Last year, we exceeded this target as more than 3,700 colleagues received a promotion to a higher job level. We also continue to invest in training and development opportunities. In 2025, our colleagues received on average of 4.2 training hours, up from 3.7 hours the year before.

Finally, I'm also proud of our trainee programs, which enable young colleagues to grow in our organization. This was recognized in France as we won an award for this. My own Action career now spans 29 years, and I can honestly say that I strongly believe that in addition to the Action formula, our unique culture and our colleagues are foundational to our success. Our strong can-do culture revolves around our customers, how we can fulfill their needs and put a smile on their faces. This is what drives us every single day. Retaining the engagement of our almost 85,000 colleagues is crucial.

That is why we find it very important to listen to our colleagues. Every 2 years, we ask their opinion as part of an employee survey and provide them with the time to respond, resulting in a response rate of 97%. Our engagement score increased to an action record of 78%, well beyond retail and logistic benchmarks. The engagement score reflects 3 important engagement drivers: work satisfaction, motivation and fitting in. A large majority of our colleagues tell us that they are satisfied with their jobs, are motivated to perform and feel they belong at Action. The strong 2025 results show that our continued focus on listening to the feedback of our colleagues is successful. What I especially like from these results is that we see strong scores and upward trend across our company in all countries, across all departments. Our strong culture is also recognized externally.

Last year, we received awards for being an attractive employer in Germany and in Poland as well as other HR awards in Italy, the Netherlands and Austria. This confirms that our culture and colleagues are the strong foundation of our success, and I truly believe that our focus on our people is crucial, and it will always remain a top priority for me. This brings me to the end of my business performance update. And as I wrap up, I would like to present a short video that highlights our key achievements from last year.

[Presentation]

In this section, I would like to focus on our strategy update. Before I start, I want to touch upon the potential impact of the conflict in the Middle East. As it is still early days, for now, we see limited impact mainly related to fuel costs. However, it is too soon to determine the full impact.

At the same time, we have proven that our operations are strong and highly flexible, allowing us to manage significant challenge like this in the right way as we have shown during COVID and previous sea freight challenges. However, this remains an evolving situation, which we are monitoring closely, and Joost will say more about this. Moving on to our strategy. You may have seen this slide before as our strategy has remained consistent over the past 5 years, centered around our customers, the components of our strategy reinforce each other and have driven our success.

Through the 5 components of our strategy, we aim to strengthen our customer proposition, the basis of everything we do, drive international growth to capture the strong customer demand for our formula, maintain a simple, efficient and scalable operating model, supporting our consistent, unified and disciplined way of working, make sustainability accessible, reinforcing our conviction that discount retail and sustainability go hand-in-hand and treasure our people and values because our culture and colleagues drive Action forward. Our strategy is the foundation of our long-term success and enable us to grow in a disciplined and sustainable way.

Not only our strategy is consistent, also our operations are consistent. Action is the same wherever we operate. We have one brand, one store type, one way of working. We deliver a similar formula across all our markets. More than 90% of our assortment is the same everywhere, and we only differentiate if needed, for example, to meet local regulations. Our strategy sets our direction. Our formula captures the heart of our customers. It is based on offering good quality products for the lowest price. We ask ourselves what would be a good price for this product. Looking at the entire value chain, being cost conscious in everything we do, arriving at the lowest price in the market. Our assortment consists of a limited number of stock-keeping units, and it is the same everywhere. We sell basics and not a wide range of products that allow us to source large volumes, creating economy of scale in production and supply chain.

Our way of working is similar across countries with a focus on low overhead costs. And because our customers are our biggest promoters, we can keep our marketing spend relatively low. We continue to invest in technology to ensure efficiency and scalability. Last year, the migration to our new ERP system, and this year, we are starting to roll out our new POS system and workforce management system across all our stores. In addition, we leverage technology like AI to support the way of working within departments, for instance, optimizing our forecasting and HR processes. Putting customers first in everything we do is a cornerstone of our success.

Our stores offer a pleasant shopping experience and for our employees, a nice working environment. And finally, I cannot repeat this enough, our lowest prices go hand-in-hand with our continuous investments in product quality and sustainability because only this combination ensures that the customer return for repeat purchases. We attract customers from all walks of life and backgrounds with tight budgets or those who do not want to spend more than necessary. We see a similar distribution across all our markets, giving us confidence in our proposition and our potential to grow. Action offers 6,000 products across 14 categories.

Our assortment consists of everyday necessities such as cleaning products and products that enrich daily life such as home decoration. 1/3 of our assortment is fixed and always in store like Teddy Care baby wipes and 2/3 is flexible, changing frequently like our current Easter assortment. We introduced 150 new products every week. This keeps our assortment relevant and surprising and allow us to respond quickly to changing customer habits or trends. Because of our lowest price offer, our products are accessible to everyone. In fact, 2/3 of our sold products are priced below EUR 2. We delivered like-for-like sales growth across all product categories. Last year, we adjusted the store blueprint, reducing shelf space for category 14. If corrected for this blueprint change, category 14 would show positive like-for-like growth.

General merchandise performed above average and FMCG showed solid growth, both with double-digit 2-year average growth. Seasonal categories such as summer toys and summer garden delivered strong sales results in the first half of the year. And although Christmas seasonal started later than usual, the performance was strong at the end of the period. Our priorities for next year remain the key elements of our formula, price, quality and newness. As I explained earlier, every buying decision starts with the sale price we want to offer in mind. We look at the entire value chain and find suppliers and partners based on our criteria.

This ensures that we are able to maintain a clear price gap, delivering a healthy and stable margin. At Action, price and quality go hand-in-hand. This means we keep investing in improving the quality and sustainability of our products, and we also intend to keep surprising our customers with newness. Consumer awareness of Action is growing as our market penetration increases, both in more mature as well as in newer markets. In some of our newest markets, Spain, Slovakia, Portugal and Switzerland, we are gaining traction faster than ever. We also experienced strong customer engagement across our digital channels. Every week, the Action app, our website and 2 country web shops attract an average of 17.5 million visits. Our Action app is available in every country where we operate and the number of followers on our different social channels also grew by more than 25% last year.

We are able to deliver our Action formula because of our sourcing model. We have 4 sourcing types that each play a clear role. Let me start with our importers and wholesalers. We see them as an extension of our buying team. They offer great speed to market, flexibility and access to trendy and surprising products. On direct sourcing, it offer us the ability to control product quality and sustainability more strongly, but also to continue to invest in even lower prices for our customers. Our aim is to reach 20% of cost of sales. Last year, we added at 17.6%, growing by 2.4 percentage points. In 2025, we saw lower sourcing appetite from the U.S. and the Far East, which resulted in a more favorable buying environment for us.

This led to better buying prices that we are passing on to customers through lower prices or by reinvesting in product quality. Joost will elaborate on the financial implications of direct sourcing. We also source well-known A-brands. Consumers trust A-brands product quality and know their prices. Seeing them at an action price underlines the experience that we offer good quality products at the lowest price. Finally, we consider Stocklot's as small but important element of our sourcing mix. They allow us to surprise our customers with unique one-off products. We value long-term supplier relationships. Most of our suppliers have been there already for many years. And at the same time, we are growing our supplier base and diversifying on sourcing origins.

I've already introduced the Action sustainability program. We continue to drive progress across our 4 pillars and have ambitious targets. Let me give you one example. 2026 will be the first full year of our supplier engagement program. The majority of our retailers' emissions are in the product domain. That's why we collaborate with our suppliers to set their own near-term science-based targets, targeting 80% of our suppliers by emissions by 2029. As I mentioned earlier, we do not only focus on new stores, we also invest in our existing store portfolio. To preserve an enjoyable shopping experience for customers and a pleasant working environment for our colleagues, we have a structured store upgrade cycle in place. We have a young store base.

We perform day-to-day maintenance for every store. And in addition, we perform basic store updates when needed. And we also have a more targeted process. When we see an opportunity, we will enlarge or relocate a store to capture commercial opportunities. Our refurbishment program takes several factors into account, such as a store age and condition as well as how intensively the store is used. A refurbishment brings the store up to the latest format with, for example, a new floor, new tiles, updated wall colors and improved lightning. The second component of our strategy is driving international growth.

Over the years, we have developed a successful process for opening new stores. Entering a new market, we start with a conservative estimate of the full potential. Over time, our local teams refine this estimate based on learnings. The white space potential is defined at catchment area level, considering factors such as population, the performance of nearby stores and potential cannibalization. Assessing cannibalization is important. In some cases, we promote cannibalization to reduce pressure on very busy stores as it is important to maintain a pleasant shopping experience for our customers. This is the case in some of our more mature markets, mainly in urban areas. As a next step, local teams come up with detailed store investment proposals for each specific location, reviewing all relevant elements such as site quality, expected customers, supply chain, floor space and housing costs. After that, each proposal is reviewed for approval by our real estate committee led by Joost and myself.

Store locations are selected based on local knowledge, while our central governance ensures that we maintain a disciplined and consistent approach that will deliver the right store quality. Once a store has been opened, we reviewed performance against the original investment proposal. The learnings feedback into our local plans, creating a continuous improvement cycle. We consider this approach one of the cornerstones of our success. The quality of our stores is key. Our process is careful and considerated, valuing quality over speed. It is one of the reasons why every Action store is profitable. Looking at our store potential across Europe, we have identified around 200 additional white spaces in our existing countries compared to last year.

The increase is driven by a better understanding of each market as our penetration grows. Our 2 markets entries last year in Switzerland and Romania have given us much more detailed understanding of our long-term potential in those 2 markets. Together with additional insights in Poland and Germany, this accounts for the majority of the extra 200 stores. Taking into account the 384 stores added last year, we now project that our total white space store potential is around 4,650 stores. Putting the additional white space numbers into perspective, this figure is lower than last year when we identified around 500 new white spaces. This is because last year, we expanded our in-scope countries with this year remained unchanged. We remain confident that there is a significant room to grow all our markets, including our largest market, France, where we see very strong returns from our new stores.

You may notice that the total population figure for countries not currently in scope has increased from 102 to 108 this year. This is because we added additional countries to this group. In time, and depending on the outcome of our market studies, some of these countries could become in scope for our expansion. Our expansion in Europe will continue. In 2026, we will add at least 400 stores, again, accelerating our expansion, adding the most stores in Italy, Germany, Poland, Spain and France. We are opening 2 new markets this year, Croatia and Slovenia.

Looking ahead to 2027, Bulgaria will be the next market we intend to enter. And we continue to invest in a strong supply chain and plan to open distribution centers in Italy, France and Spain this year. New DCs allow us to enter new catchment areas. A good example is Sicily. Sicily has 5 million inhabitants and will become within reach of our expansion in Italy. I'm happy to announce that we have already opened 2 stores in Croatia this month to great success. Here, we again experienced strong awareness, customers waiting in line and Croatian colleagues happy to start working in action.

That's why we are looking forward to our first store opening in Slovenia planned for September. Last year, I mentioned we would continue our market study into the United States. Today, I can share that we have decided to prepare for entering the U.S. in addition to our continuing expansion in Europe. Let me explain why we have come to that decision. As mentioned before, we have executed an in-depth market study of the U.S., taking into account the attractiveness of the Action formula, the competitive landscape, sourcing aspects and operations. From this research, we concluded there is a clear potential for the Action formula of low prices and good quality products in the U.S. We have a long history of opening stores and successfully entering different markets. We recognize the U.S. market is different, and we are aware of other European retailers having entered the U.S., some with more success than others. We have assessed the lessons learned and decided that our organization is now strong and sizable enough to execute a U.S. entry while keeping full focus on our European expansion.

Our approach to the U.S. will be in the same disciplined step-by-step way that serves us well in Europe. And at the same time, we will differentiate where needed and take a flexible approach. Let me take you through some of the practicalities of this decision. We aim to open our first store in the U.S. by the end of 2027 or early 2028. We plan to start with around 20 Action stores across North Carolina, South Carolina and Georgia. We selected these states because this is one of the fastest-growing regions. They have a diverse population, which allow us to test with different customer groups, and they also have many medium and large regional towns. Our ambition is to grow to around 100 stores by the end of 2030.

We will maintain the core principles of our formula. We will offer a selected number of daily necessities and products that enrich life across 14 categories, a flexible assortment, good quality and the lowest price. At the same time, we want our assortment to be relevant for the U.S. consumer. Right now, we are establishing a dedicated U.S. organization, combining experienced Action leaders who know Action and our culture inside out and U.S. colleagues that have a deep knowledge of the local retail market. What is different compared to Europe is that we will set up a local buying team. Looking at our plans for the U.S., we estimate the total investment over the period 2026 to 2030 will amount to EUR 350 million to EUR 400. This investment includes store locations, stock, setting up our organization and developing the supply chain.

This investment is larger than our usual European market entries, but fitting given the size of the market. We will manage this in a disciplined way, guided by our success with U.S. customers and investment returns. I'm excited that in addition to our ongoing expansion in Europe, we have now decided to enter the U.S. As Action grows, our business model becomes stronger. We have a solid foundation that consists of our formula and our culture and colleagues. Even in periods with softer consumer sentiment, such as in France, we see how the strength of our formula attracts more and more customers.

By working together with almost 85,000 colleagues as one Action team with one formula, one brand and one store format, we have built a business model that works across very different markets. As a result, we deliver a consistent performance. As we reinvest increasing margins driven by our scale and good quality products at the lowest price that surprise our customers, we have developed a cycle that keeps Action unique, resilient and strong, supporting further growth in Europe and in the not-so-distant future, also in the United States.

With that, I would like to hand over to Joost.

Thank you, Hajir, and good morning, everybody. In this section, I'm going to present and explain our financial performance in 2025. After that, I would like to provide you with a brief update on our current trading along with how we today look at the rest of the year. Before I start, however, I want to note that in our presentation today, we're using alternative performance measures. You can find the definition of these measures plus a reconciliation of these measures to the nearest IFRS measure in the appendix to this presentation. I start with a slide that I've used as the opening slide in all my presentations since I joined Action as CFO in 2018. I suspect that most of you have seen it before, so I will not dwell on it.

The point I want to make by using it as my first slide also today is that just like our strategy, our financial model remains consistent and unchanged. In the rest of my presentation, I will demonstrate the strength of our model and show how our 2025 performance continues to validate every element of it. Our financial performance in 2025 was strong. Versus the guidance that I gave at last year's 3i Capital Markets seminar, we outperformed on the stores added, but were lower on the like-for-like sales growth and on EBITDA margin. I will explain the reasons for the outcome further in the presentation.

Nevertheless, our underlying performance drivers remain unchanged. As a reminder, let me briefly walk you through these drivers. First, we do not only have a consistent strategy, but also financial consistency across countries because we have one single and successful format across all countries. Second, the successful openings of 2 completely different countries, Switzerland and Romania confirms once again that our format travels well across borders. Third, we have a proven and optimized approach for opening new stores. This includes finding and negotiating locations, executing the store build process and finally, opening the store with first-class opening teams. Lastly, the accuracy level for our full potential estimates increases as we get local teams in place and build more knowledge of the country. In our current and new markets across Europe, we still see significant white space opportunity.

This all results in extremely attractive economics. I will go into more detail later in the presentation. But in short, the payback of our stores is attractive at less than 1 year. Every store contributes positively. Our store expansion is self-funding and our double-digit sales growth creates operating leverage. All in all, our ongoing store expansion is an important long-term driver of value, delivering not only top line growth, but also growth in EBITDA and overall value. In 2025, we realized a 16.1% increase in net sales and a 14% increase in operating EBITDA. Our EBITDA margin was 14.8%, 30 basis points lower than in 2024. This performance falls short of the outlook statement that they gave in March last year, which was a margin expansion of 10 to 20 basis points.

The main drivers were a lower like-for-like sales growth than anticipated, higher supply chain costs as a percentage of sales and higher margin adjustments. I will explain all 3 in more detail in the following slides. Our like-for-like sales growth in 2025 was 4.9%. That growth was largely driven by growth in transactions. We saw a 4.6% growth in transactions, which accounted for 94% of the like-for-like sales growth. This reflects both new customers as well as higher frequency from existing customers. The remaining portion of our like-for-like sales growth was driven by an increase of 0.3% in the average ticket amount. We saw like-for-like sales growth across all our markets, but the challenges that we faced in France resulted in a soft like-for-like sales growth there at 1.3%.

However, also in France, the like-for-like sales growth was driven by growth in transactions at 2.5% -- given the relative size of France, which is roughly 1/3 of our total sales, this had a significant impact on our overall like-for-like sales growth. All other countries in the aggregate delivered a strong performance with like-for-like sales growth in 2025 at 7.2%, driven by 5.7% growth in transactions. This is the development of our like-for-like sales growth over the quarters. Like-for-like sales growth in the first quarter was a good 6.2% in spite of the fact that in the first weeks of 2025, we had lower availability due to the ripple effects of the implementation of a new ERP system.

In the second quarter, we saw strong performance of our seasonal summer assortment and had a strong like-for-like sales growth of 7.4%. In quarter 3, especially after the summer holidays, we experienced a slowdown in performance, most notably in our largest market, France, where a significant decrease in consumer confidence and increase in the savings rate impacted overall consumer spending. Nevertheless, with other countries in the aggregate continuing to perform in line, we had an overall like-for-like sales growth of 5.3%. The final quarter of 2025 was our toughest trading period. The warmer weather had a negative impact on our autumn seasonal sales and the Christmas season started later than usual.

But once the Christmas season began, demand was strong. France had mid-single-digit negative like-for-like sales growth in October and November and recovered to a flat performance in December. This gave an overall like-for-like sales growth for quarter 4 of 1.9%. On this slide, we present the absolute sales growth in the years 2024 and 2025, and in all cases, compared to 2023 and only for stores that were opened before 2023. In other words, a comparable group of stores. Portugal, Slovakia, Switzerland and Romania are not included in this analysis as the first stores in these countries were opened in or after 2023. As you can see, Action delivered continued strong sales growth across the countries.

The markets are shown from left to right in sequence of their entry and zooming in on the individual countries reveals the following. In our oldest market, the Netherlands, we performed strongly and above the average for mature markets with 11.9% growth compared to 2023. Belgium and Luxembourg were slightly lower than the Netherlands at 8% growth, but nevertheless, satisfactorily for established markets. In Germany, we continue to gain momentum with 15.1% growth compared to 2023. A strong performance in France in 2024 with 9.7% growth was followed by the softer growth in 2025, leading to a total of 10.9% compared to 2023. We had 2 successive strong years in Austria with in total 22.7% growth. In the previous years, our strongest growth was observed in Poland.

And while Poland continues to perform well above average, delivering 37.3% growth compared to 2023, our newer Southern European markets, Italy and Spain, showed the fastest growth at 56.4% and 38.5%, respectively, compared to 2023. We had another record year of expansion with 386 store openings. This growth was driven by our newer markets, Italy and Spain but also by our more mature markets, Germany, Poland and France. We also had to close 2 stores in Germany, not because of performance, but because of fire damage and the other one because we were unable to reach an agreement on the terms for extending the lease. So in total, we added 384 stores, bringing our total number of stores to 3,302 at year-end. 2025 was also the year we entered 2 new markets, Switzerland and Romania.

Both are off to a strong start and performing ahead of our expectations. Today, we have 9 stores in Switzerland and 11 stores in Romania. As shared by Hajir earlier, our ambition for 2026 is to add at least 400 stores. The main growth countries will be Italy, Germany, Poland, Spain and France. We're also entering 2 new countries in 2026, Croatia and Slovenia. On 11 March, we opened our first store in Croatia, our 15th market, where we today have 2 stores. An important driver of our financial performance is our margin management. A key asset of our model is the flexibility of our formula. 2/3 of our assortment is variable and changes over time. Besides surprising our customers on an ongoing basis and remaining relevant, this allows us to have consistent gross margins across categories and over time.

Not on the slide, but if you were to make this chart for the price buckets, so a bucket with articles priced up to EUR 2, a second bucket with articles priced between EUR 2 and EUR 5 and a third bucket with prices above EUR 5, the gross margin percentages for these buckets are also comparable. In terms of gross profit, i.e., the euro amounts, in 2025, circa 2/3 of total gross profit came from the first 2 buckets, so the up to EUR 2 and the between EUR 2 and EUR 5 buckets, while the remaining 1/3 came from the above EUR 5 bucket. As a rule, we pass on changes in our buying prices to customers. That means that the overall gross margin doesn't change as a consequence of changes in the buying prices, nor do we want it to increase autonomously.

This is what a true discounter does. I can add that in 2025, our prices for comparable products decreased by circa 1.5% because we were able to pass on lower buying prices. Nevertheless, you have seen increases in our gross margin over the recent years. And again, in 2025, gross margin increased by 40 basis points to 40.8%. There are 2 reasons for these increases. First, an increase in the share of direct sourcing in our sourcing mix. As Hajir has explained, in our sourcing mix, we combine domestic suppliers for flexibility and newness and direct sourcing for cost advantage to support lower prices and better quality or both. We do the latter by using roughly 2/3 of the lower cost of goods sold from direct sourcing to strengthen our customer proposition in the form of lower prices, better quality or both. The other 1/3, we need because we have higher operating expenses and extra risks with direct sourcing.

This part explains why direct sourcing has a higher gross margin. The second reason for margin increases is mix effects, mostly country mix and to a lesser extent, category mix. Because of cost differences between countries, we also have price and margin differences between countries. That means that the change in the sales mix over the countries can also lead to changes in the overall gross margin. In recent years, this has been an explanation for a part of the margin increase. The increase in 2025 of 40 basis points is mostly explained by a higher share of direct sourcing. On this slide, you see the contribution margin of our stores. First, indicating on the left Y-axis by the contribution margin per store in euros in the blue bars. And second, indicated on the right Y-axis by the contribution margin as a percentage of net sales indicated by the orange dots. The graph includes all stores opened before the 1st of January of 2024. So that means the vintages that are open more than a full year.

The graph shows that all these stores contribute positively. We do not have any loss-making stores. In fact, contribution margins are very consistent across the portfolio regardless of the country and also for all vintages, which reflects that we are maintaining all our stores well. And importantly, we have never had to close a store due to underperformance. Even when we include supply chain costs in this calculation, which are 5.3% of sales, the conclusion remains the same. All these stores are profitable. Here, you see the same store level contribution margin as on the previous slide, but now group by country. We show 10 countries here as Belgium and Luxembourg are combined and only stores opened before 2024 are included.

This means that Portugal, Switzerland and Romania are not part of this overview, but these countries are already showing an above-average store contribution in 2025. As you can see, the average store contribution margin is 24.7% and margins are consistently well above 20% in every country. Overall, this once again highlights the strength and consistency of our economic model. On this slide, you see the attractive payback period that we achieved for new stores. The slide shows the average performance of stores opened during the 2022 until 2024 period. The visual shows the average investment, net sales and store contribution for all stores opened in this period. Last year, we presented these figures over a 4-year period. We've now updated this to a 3-year period, which we believe is more meaningful. It reflects the more recent vintages, aligns with our 3-year maturity assumption and removes any COVID-related effects that we still had in 2021.

This 3-year view will be our standard going forward. Having said that, if we had included 2021, that would not have substantially changed the outcome. Just as we saw last year, we continue to achieve an above an average payback period of significantly less than 1 year. In our more mature markets, the opening of new stores can also lead to cannibalization of one or more existing stores. This is always included in our analysis and decision-making, whether it is in the white space potential that Hajir has shown or in the decisions of the real estate committee about new stores. And to illustrate this further, if we take the calculation of the payback period of new stores for our biggest country, France, where we continue to open a significant number of stores, and we allocate the negative sales impact of cannibalization to the new store, we still achieve a payback period of approximately 1 year. Capital intensity per store remains low. For stores opened between 2022 and 2024, we spent circa EUR 600,000 on average per store.

As a reminder, we rent all stores and we pay relatively low rents because we choose not to be in high street locations. This investment figure includes our capital expenditures, but also preopening expenses such as training for new employees and preopening rent. In last year's analysis, we showed an upfront investment of around EUR 0.5 million per store. The higher figure in this 2022 until 2024 period reflects inflation and the use of a more recent time frame, which includes a higher share of stores opened in countries with higher construction costs. In 2025, we realized a net sales per Action store of EUR 4.8 million.

We continue to see new stores ramp up quickly in terms of sales in the first year and grow to maturity after 3 years. In fact, already in the first year, stores reached around 80% to 85% of the pro forma mature state sales level. After that, vintages develop in line with the like-for-like sales growth with all vintages delivering positive like-for-like sales growth in 2025, including our earliest. The upfront investment shown on this slide does not include working capital. If we factored in working capital, the payback period for new stores would even be shorter because we operate with a negative working capital. As Hajir explained, direct sourcing remains a key pillar of our sourcing strategy as it strengthens Action's customer proposition. For that reason, we've increased the share of direct sourcing over recent years and aim to continue this with a strategic target of 20% of sales.

Direct sourcing allows us to source products with a lower cost of goods sold compared to sourcing from wholesalers with more control over product quality and sustainability. As a rule, we use roughly 2/3 of the lower cost of goods sold to reinvest in our customer proposition in the form of lower prices, better quality order combination. The other 1/3 we need because we also have higher operating expenses for direct sourcing. This relates to activities that would otherwise be performed by the wholesalers. Some of these are in our overhead, for instance, the people that we have in East Asia and the direct sourcing team at our international headquarters. But the biggest part is in our supply chain, where we have the cost of inventory handling. You've seen that over the years, we've added 4 hubs in total to our supply chain network.

These hubs receive and store direct sourcing volumes that are not sent directly to our distribution centers. Direct sourcing and sourcing from wholesalers also works through differently in certain respects in our balance sheet. Our way of working with wholesalers is that we agree contracts that are then, in most cases, held in stock by the wholesalers until ordered by us when needed. Only the goods that we have received based on these orders are therefore included in our trade inventory.

However, we report the remaining purchase commitments in our financial statements as a contingent liability. Also for direct sourcing, we have commitments when we agree contracts. However, in this case, our payment terms are free on board. This means that our inventories of trade goods for direct sourcing also includes goods in transit or our sailing stock as we refer to it. Also, the order quantities are typically higher, mostly because of the economics of volume buying directly from producers and from sea freight.

Therefore, relative to when we source from wholesalers, direct sourcing has a higher share of inventory versus purchase commitments. When looking at the numbers on the slide, it's also important to note that these are balance sheet positions that reflect, on the one hand, the trends of our growth and changes in the share of direct sourcing, but they're also impacted by events like, for instance, the timing of Chinese New Year. The increase in inventories and commitments in 2024 was mainly driven by direct sourcing. During the period following COVID, the larger supply chain experienced disruptions causing frequent delays in deliveries and sometimes resulting in out of stocks. In response, we brought forward purchases in 2024, leading to longer lead times and higher ending positions of inventories and commitments.

In 2025, most of these disruptions were resolved, which resulted in normalized positions in inventories and commitments. At last year's 3i Capital Markets seminar, I guided towards a 10 to 20 basis points expansion in 2025 versus the 15.1% EBITDA margin realized in 2024. Instead, our EBITDA margin decreased by 30 basis points to 14.8%. So let me explain the reasons behind this lower outcome. First, my guidance was based on an also higher guidance for our like-for-like sales growth of at least 6.1%. The difference with the lower 4.9% realized meant that we had less operational leverage than we would have otherwise had, which more or less would have given a flat EBITDA margin. Then on the slide, you can see how you get from the 15.1% in 2024 to the 14.8% in 2025. First, our gross margin. I've already explained the main driver behind the 40 basis points increase being a higher share of direct sourcing.

We calculate our gross margin as sales minus cost of goods sold. But after that, we also deduct margin adjustments to get to a gross margin after margin adjustments. These margin adjustments are margin components that are not in cost of goods sold, but that we allocate with the 2 biggest components, duties and charges and stock losses. Duties and charges are product levies that vary by country. They include packaging tax, taxes on batteries, sugar and waste from electrical and electronic equipment.

Over recent years, they have increased both in number as well as in rates with a further significant increase in 2025. In most cases, it's possible to pass these through to customers. As they are different per country, they are then an element of the country mix that is increasing gross margin. Stock losses is what other retailers often refer to as shrink or shrinkage. This has been fairly stable over recent years. But in 2025, we did see an increase of circa 10 basis points. In euro terms, this is clearly a significant amount and an issue that we are addressing. Unfortunately, this is not an action-specific problem. In this context, our aim is to avoid further increases rather than to achieve a reduction. All in all, the increases in margin adjustments offset the 40 basis points increase in gross margin, meaning that gross margin after margin adjustments was more or less flat.

Our EBITDA margin benefited by 30 basis points from operating leverage. This is lower than in 2024 and 2023, where it was 80 and 170 basis points, respectively, both years with exceptionally high like-for-like sales growth. Finally, operating expenses reduced the EBITDA margin by 50 basis points. This is in spite of the fact that we have been able to offset cost inflation in a lot of lines with productivity improvements. There are 2 clear reasons for this increase. First, higher supply chain costs. As a percentage of sales, these increased from 5% to 5.3%. This was for a large part driven by higher costs for direct sourcing.

As I have explained, to the extent that this is as a consequence of a higher share of direct sourcing, this is offset by an increase in gross margin. However, in 2025, a significant part of the higher supply chain costs were caused by an increase in the period that we held direct sourcing products and inventory, leading to higher-than-normal costs for product handling and inventory, mostly in our hubs. As there was no offset for these higher costs in gross margin, this led to a reduction of our EBITDA margin. This doesn't change the long-term attractiveness of direct sourcing. In other words, we have an opportunity in improving our planning processes and systems. However, a part of these higher handling and inventory costs have carried over to 2026. Second, we celebrated the opening of our 3,000 store in June 2025, with, amongst other things, a one-off net payment of up to EUR 300 for all eligible employees at a total cost of circa EUR 26 million or 20 basis points. This payment will not be repeated in 2026.

Our high sales density is another element of our financial model. Compared to other nonfood retailers, Action historically has high sales per square meter. In 2025, we added a record 384 stores with relatively more stores in the last quarter. That explains the difference between our like-for-like sales growth of 4.9% and the 2.6% increase in sales per square meter. Historically, this increase has been higher, reflecting the exceptionally high like-for-like sales growth in the 2022 until 2024 period. Last year, operating EBITDA per square meter also bears the effect of the 30 basis points lower EBITDA margin. In 2025, our capital expenditures increased by EUR 10 million or 2.7% to EUR 379 million. As a percentage of sales, CapEx was 2.4%, down from 2.7% in 2024. Over the past 7 years, we've seen a clear downward trend in CapEx as a percentage of sales, reflecting our scale efficiencies.

In the allocation of total CapEx to the categories, compared to the presentation of last year for 2024, we've moved circa EUR 10 million from store expansion because this is actually related to refurbishments, enlargements and relocations, which are part of the store maintenance category. It's also important to note that average store CapEx cannot be calculated by simply dividing total store CapEx by the number of stores opened in a given year because expenditures for stores opening in the last periods of the year are usually capitalized after all invoices are settled early in the following year. In 2025, average CapEx per store was around EUR 550,000. This number is relatively stable over the last 2 years with upward pressure from inflation and country mix, offset by cost reduction efforts. CapEx for new DCs was EUR 36 million in 2025.

This increase reflects the opening of 3 new distribution centers. Our investments in technology in 2025 decreased compared to 2024, mainly because 2024 included circa EUR 25 million of ERP cost versus EUR 16 million in 2023 and circa EUR 6 million in 2025. The migration was successfully completed at the start of 2025 and over the 2022 until 2025 period involved a total CapEx of almost EUR 50 million. Our technology CapEx also includes other significant projects, some of them also multiyear. In 2025, we are, for instance, changing our POS system, and we're also migrating to a new workforce management system. What is also included in technology CapEx are changes and additions to our website and app. Digital communication with our customers is an important area of investment for us.

Finally, technology CapEx includes licenses that we acquire for existing applications related to our growth in stores, distribution centers and employees. As mentioned by Hajir, we also maintain and modernize our stores through basic updates, refurbishments, enlargements and relocations. In 2025, we invested EUR 41 million in store maintenance and RERs. This is circa EUR 10 million lower compared to 2024, which can mainly be explained by the limited opportunities for relocations and enlargements in 2025. Another element of our financial model is excellent cash generation. This translates into a consistently high cash conversion. In 2025, cash conversion was 83%, in line with our historic levels, where 2023 was exceptionally high at 104% due to very strong sales in the last quarter, resulting in an exceptionally low year-end inventory level.

Our excellent cash generation is also reflected in our operating cash flow of 12.3% of net sales, gradually increasing from 7.3% in 2019. Last year, we completed 3 financing transactions. First, in March, a debt repricing transaction, repricing EUR 3.5 billion, delivering annual recurring interest savings of EUR 19 million. Then in October, a cross-border EUR 1.6 billion debt raise split between a $1.3 billion tranche and a EUR 490 million tranche. We again hedged the U.S. dollar exposure fully back to the euro, and we hedged 100% of the interest rate risk on this U.S. dollar tranche, resulting in an all-in euro fixed rate of under 4.6% on this portion. As part of this transaction, S&P upgraded our public credit rating to BB+ with a stable outlook while Moody's reconfirmed its Ba1 stable rating, which they had upgraded earlier in the year from Ba2 positive.

The proceeds of this transaction, together with EUR 150 million surplus cash from our balance sheet, were used to fund a EUR 1.74 billion share redemption that was completed later in October. Finally, also in October, we completed a leverage-neutral repricing and extension transaction, pushing out the maturity of EUR 580 million of our senior term debt by 4 years to 2032 and repricing a total of EUR 3.125 billion of our debt, generating annual recurring interest savings of EUR 40 million. We've de-geared since the October transaction, reducing our net leverage from 3.4x to 3x by the end of 2025, driven by our continued EBITDA growth and cash flow generation and including a dividend payment of EUR 450 million in December.

This slide summarizes our operating performance over the past 3 years. The results highlight the strength of our financial model with net sales up 16%, operating EBITDA up 14% and a record number of 384 net new stores added, which is an increase of 13% compared to our base end of 2024. Finally, I would like to update you on our trading performance so far in 2026 and share our outlook for the remainder of the year. Today, we are in week 13. As a reminder, Action operates a 52-week and 12-period reporting calendar with quarters of each 3 periods with 4, 4 and 5 weeks. That means that we are today in week 5 of our period 3, which is the last week of our first quarter.

The information on this slide covers year-to-date until last week being week 12. As you can see, our overall sales growth for these 12 weeks was strong at 14.5%. Like-for-like sales growth was 4%. The like-for-like sales growth year-to-date was mainly driven by a 2.7% growth in transactions. This 4% like-for-like sales growth is slightly below where we expected to be with outperformance in January, but slightly below expectations in February and March period up to date. If I compare to quarter 4 last year, we see a clear step-up. Although this is also true for France, with positive 0.9% year-to-date versus negative 2.7% in quarter 4 2025. This is where we are behind versus our expectations. The challenging consumer environment in France continues. But we see that the actions that we've taken by lowering prices, increasing promotions and making changes to our assortment are working. We still have more to come, and it's also true that some simply need more time to take full effect.

All other countries in the aggregate are performing slightly above our expectations. Last year, we ended with 3,302 stores. Our store openings in 2026 are on track. Up to and including week 12, we opened 24 stores. By the end of this week, we'll have opened 9 more stores, bringing our total store count to 3,335. Last Sunday, our cash and cash equivalents stood at EUR 900 million. In line with our practice of recent years, we are planning to pay another dividend. Given the current geopolitical and economic uncertainty, we will do this once we have reached a level of cash and cash equivalents of circa EUR 1 billion, which should be early May. In terms of outlook for the year, let me start by stating the obvious. The ongoing geopolitical tensions in the Middle East will increasingly influence global supply chains, will most likely lead to higher inflation and will certainly impact consumer confidence and spending power.

This makes it difficult to provide a robust outlook at this stage. But with that proviso, I can still say the following. First, if I look at the number of stores for 2026, our ambition is to add at least 400 stores. This year, Italy will have the most store openings, followed by Germany, Poland, France and Spain. And we'll have 2 new countries, Croatia and Slovenia. Today, compared to last year at the same moment, year-to-date, we're actually 18 stores lower. That is because the spread in our planning this year has relative to 2025, more stores in the second quarter. So I can say that we are on track to realize this ambition. Second, we expect like-for-like sales growth to continue at the current level in the first half of the year and slightly higher in the second half.

This reflects the lead time for some of the changes that we've made and continue to make to prices, promotions and assortment, in particular, in France. It also reflects last year's development over the quarters in like-for-like sales growth performance. For the year, that means that I expect to come in at around 4% to 5% like-for-like sales growth. Finally, our operating -- our EBITDA margin. Last year's EBITDA margin was 14.8%. If I look at the current year, the continued investment in prices and promotions will lead to a slightly lower gross margin, more in line with 2024. Also, with the expansion in like-for-like sales growth, as I expect, we will have the benefit of operating leverage, but there will also be inflation in our OpEx lines. If I add that all together, I expect that we'll be able to keep our EBITDA margin stable at 14.8%.

And that brings me back to the uncertainty of the here and now. There is, of course, a downside risk from possible scenarios as these events in the Middle East unfold in the form of higher costs. Whilst we are hedged on electricity costs, we are seeing higher diesel for transport and there may be knock-on effects on sea freight pricing.

But at the same time, we know that our format is resilient, and we have seen that our performance is robust over economic cycles. Our format and operating model also provide the flexibility to adapt as we have shown during the COVID crisis and the ensuing supply chain disruptions. And with that, I hand back to our Chairman, Simon Borrows.

Thank you, Joost. In a very short period of time, Action has become a significant market participant in over a dozen markets in Europe, including those that many other retailers have failed to crack such as Germany. There's been plenty said about France today, and this is not the first time we have had challenging trading conditions in that country. But when you stand back, Action's achievements in France over 13 years have been pretty remarkable. They've built a national chain with some EUR 5.6 billion of sales, together with highly profitable store contribution margins and significant operating cash flows.

The French business is also still growing strongly and taking share in a very tough market. And the French consumers consistently show their appreciation and come to Action stores in increasing numbers each year. What Action has done in France is also the template for the expansion being executed in the other scale markets in Europe, namely Germany, Poland, Italy and Iberia, each of which are growing fast and will become significantly more important in the sales mix in Europe in years to come. Given Action's growth and its success across a variety of markets in Europe, the team began studying a possible U.S. entry over 2 years ago. There have been many who have tried and failed with the U.S. and quite a lot of them have been British.

But those who have succeeded have been able to build very large and profitable operations, which have become a significant weighting in their overall organizations. We and the Action team have studied the precedence in detail, good and bad. And the learnings from this work have been factored into the choices Action has made on the entry strategy in the U.S. We have a good level of confidence that Action's low-price format can be successful in the U.S., and Action's team has more than earned the right to tackle this market. My nickname at the 3i Investment Committee is Mr. No. But in this case, I believe that over time, the U.S. will become a very significant growth opportunity for Action to sit alongside its already considerable pan-European growth opportunity.

Let me close with our usual slide, which neatly illustrates the compounding growth of Action and how the sales growth is developing relative to some giants of the retail sector. 90% of our attention at 3i remains on the long-term compounding benefits of Action's growth machine rather than a preoccupation with short-term like-for-likes. And with that, I'll now hand back to the moderator before commencing the Q&A session.

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Will Woods from Bernstein.

The first question is just on the U.S. proposition. I suppose can you be any more specific on where you see a gap in terms of assortment or customer in the U.S. market? And then what do you see as the parameters for success here? Is it that you look towards 2030 as the kind of we'll give it 2 or 3 years and see how it goes? And then the second question is on the store maturity curves that you're experiencing. There's been a lot of worries out there about Action store maturity declining or store maturity curve declining. If you looked at the like-for-likes that you presented in Page 45 versus the kind of 2019 or 2022 cohorts, would you still see positive like-for-likes in your more mature stores in your older cohorts?

Thanks, Will. Hajir, do you want to tackle the U.S. and maybe, Joost, you pick up on the maturity curve point?

Yes. So on the U.S., as we said before, we have done an extensive study for a long period. And I think where we really believe that we can differentiate ourselves is coming up with our unique concept of offering 14 categories and really offering the lowest price and a good quality assortment. I think it's quite comparable to what we're seeing in Europe, actually, if you just look to what we're offering because of our speed and changes in assortment, it's never the same and 2/3 is changing. And I think that's also where we see the opportunity in the U.S., very much on price and a good quality. If we then look to what I said in my presentation, so we will start with the first 20 stores. And of course, we will review that, but we have a clear business plan also for the U.S., which we're also going to monitor closely based on the performance in the U.S.

So if I look at like-for-likes and considering your question, so how does that compare for the various vintages, let me first repeat what I had in the presentation saying that in the Netherlands, which is our oldest market, where we only opened 3 stores last year, our like-for-likes for the country was actually above the average for Action in 2025. What I haven't shown you on the slides, but I have made a remark about it is if you look at like-for-likes across the vintages, I'm seeing positive like-for-likes across all vintages. And also the older vintages are performing in line with the more recent mature vintages. So these are the more recent vintages after this 3-year period that I've mentioned to reach maturity.

We are now going to take our next question. And the question comes from the line of Gregory Simpson from BNP Paribas.

Two from my end. Firstly, could you -- just given the current kind of macro uncertainty, could you remind us of the rough mix of more essential versus more discretionary items in terms of sales today? And then secondly, can you maybe talk a bit more about what you're thinking or budgeting for in terms of CapEx per store in the U.S. and paybacks you're kind of thinking just to kind of contrast with Europe?

Do you want to, Hajir?

So in our -- across our 14 categories, we bring everyday daily necessities. We define the level of daily necessities based on the customer needs. And next to that, we're bringing newness in, in the form of seasonality and in certain categories.

And if I look at the financial model that we've made for the U.S., let me first say that I've emphasized the fact that we have very consistent financials across our markets in Europe, but it's also true that there are nevertheless differences per country. And they are sometimes explained by cost levels, for instance, in construction, but could also be in certain P&L lines. And usually, that is then also reflected in pricing as well as in income levels. And just as 2 examples, and Hajir mentioned them, we've entered Switzerland and Romania this year, and the 2 countries are obviously different and that reflects in our financial model as well. So having said that, we've made a model for the U.S. that needs to be refined, and it will be refined based on the results that we're going to have in the first stores. The model works. I'm not going to give a lot of detail about these differences. I can say that the CapEx per store that we expect is on the high end of what we have seen so far in Europe.

It's fair to say in Switzerland that you've seen much higher CapEx and you've not moved very far away from your payback period.

We are now going to take our next question. And the questions come from the line of Haley Tam, UBS.

If I could ask a few, to start with the U.S. as well. Thank you for the clear framework on the cost over '26 to '30 in the store rollout. Can I just confirm, is this a gross cost we're talking about here or a total P&L loss? And is there any guide you can give us in terms of the phasing over the 4 years and when you might expect the U.S. to be profitable?

Second question, just in terms of the EBITDA margin, Joost. Thank you for all the detail on the moving parts. There's lots for us to think through. But can I take away that maybe 4% to 5% like-for-like we're expecting this year is a good enough level to support at least a stable EBITDA margin, as you said, this year on an ongoing basis?

And then the final question, if I may, just on like-for-like growth being stable in H1 and then to improve as your Action's start to have benefit, particularly in France. Can you give us an indication of what you're planning for or expecting in terms of the intensity of competitive pricing? Is it to stay at the current level or perhaps to normalize from here?

Yes. Why don't you take the first bunch, the gross cost point over 4 years, the U.S. profitability, et cetera, and the EBITDA margin, then maybe you could talk about the pricing in France.

So the amount that Hajir has given for the total investment in your terms, as I understand your question, Haley, I would say that, that is a gross amount. So it does include inventory. It does not include accounts payable. So in that respect, I would say it is gross. I'm going to be careful about saying something on your question of when will you reach profitability in the U.S. Hajir has explained that we're building a team there.

She's also mentioned the fact that we'll have a buying group in the U.S., which is different from how we expand in Europe. That means that looking at the store base, we will have a relatively higher costs for the country office. And that will also mean that we will reach profitability at least later than when you compare to our European expansion.

Then in respect of your question about EBITDA margin, is a 4% to 5% level of like-for-like sales growth enough to give a stable margin? The answer is yes. In fact, last year, I mentioned that at this level, we should even be able to have a slight increase. The reason that this is not the case or that in the guidance that I gave, that is not the case, I've also explained, and that is the fact that we are investing in lower prices and promotions this year, which means that we expect a lower gross margin.

Do you want to talk about the French pricing, et cetera?

Yes. So on an indication, the consumer sentiment in France is not going to change overnight, and we also do not expect that it's going to change the coming period. Having said that, we have been able to lower prices in Q4, around 450, and we also have continued to lower prices in Q1. Joost talked about the performance in the first quarter versus the last quarter of the year where you already see an improvement.

On the competition and the prices, that is very difficult to indicate because I think if we now see energy prices going up, normally, you also see that the pressure on price competition is also coming down. So this is really something which we monitor closely, where we are on top of it. And if needed, we will continue to lower prices.

We are now going to proceed with our next question. And the questions come from the line of Andrew Lowe, Citi.

I've got a couple. The first one is for Simon. 3i Group shares are now close to 20% discount to NAV. So arguably, it makes more financial sense for you to use the Action cash flows to buy back your own shares rather than direct stakes in Action. So the question is, what authorizations are required in order to do this? And how quickly could you potentially launch a buyback? It was mentioned that Action is expected to pay a dividend in May. So is it possible to do it before this or full year results be feasible?

The second question is on the white space figures that you've given hopefully on Page 34. When you update the assumptions each year, do you update the assumptions for all of your markets? You mentioned which markets drove the 200 increase. Italy and Spain didn't feature in there, but you've clearly got very good momentum in those markets. So I'm curious why those white space assumptions haven't gone higher?

Do you want to pick that one up and then I'll come back on the buyback question.

Yes. So on the first part around the assumption -- so white space figures assumption for all the markets was the question?

Yes. Did you look at all markets? Or did you...

So what we normally do is maybe to clarify the process, once per year, we have all the local teams together with the central team looking into the white space potential, the learnings of last year and see how we can adjust and improve that per country. So that's been covered for all the countries which we're having in place. If we look to Italy and Spain, they were driving a big part of last year. So that exercise has been done extensively. If I said the majority of the 200 is coming out of the 4 countries which we have mentioned. Italy and Spain is adding up to a couple of stores, but not significant anymore compared to the exercise which we have done in the past.

Okay. And then on the buybacks, we take regular authority to do this at the AGM. So we have authority in place, and we will refresh that in June when we have our AGM for this year. We're sort of very alive to the pros and cons of this, and we obviously monitor it against other priorities for our cash. We don't have any gearing. The balance sheet is very strong. And I think if the discount was sustained, then we would very actively consider this, but I can't say more than that at the moment.

We are now going to take our next question, and the question comes from the line of Manjari Dhar from RBC.

I also have 2, if I may. My first question is on the U.S. as well. I was just wondering how are you thinking about growing brand awareness in the U.S. versus in Europe, where you're already quite established? Should we expect some higher marketing spend in the U.S. in the early days? And my second question is just on gross margin. I appreciate you commented on gross margins for this year. But over the medium term, should we expect gross margin to increase further as direct sourcing increases? And what time line are you looking at for that 20% direct sourcing target?

Yes. So maybe to start with the U.S., we expect in our assumptions that in the first phase that we will invest more on marketing than what we have done in the European countries. Having said that, if you just look to the Action concept and -- well, the customers' reactions in Europe, we also expect that over time, that will be in line with what we're having here in Europe. But for the first period, we absolutely expect that it will be higher.

Joost, do you want to talk about the gross margin?

Yes. So Hajir mentioned the fact that last year, 2025, the share of direct sourcing was 17.6%, and we've also said that our longer-term strategic objective aim is to get to a level of 20%. Having said that, it's not a straight line. So buyers can make choices. And these choices can also mean that they allocate volumes differently also depending on, let's say, the circumstances in the broader supply chain. The reason I'm saying that is obviously that last time that we had disruptions in that area, we also saw that percentage actually slightly decreasing for a period of time before it started to increase again. And as I said, I don't know how this is going to develop, but it could be the case that in certain scenarios, there will also be different choices impacting this percentage. Having said that, if the percentage increases, as I have explained, that will mean a higher gross margin because of the reasons that I have explained, the fact that we need that because we also have higher costs.

Yes. The plan is to get to 20% at some point, but whether this is the year, let's see. Okay. I think that's fine, Manjari.

We will now proceed with the next question, and the questions come from the line of Jeremy Kincaid from VLK.

Three questions from me. Firstly, just picking up on the direct sourcing point again. So just so I understand it correctly, there will be obviously some cost savings, but then you pass 2/3 of that on to the customer and then 1/3 is to absorb costs. But then on top of that, there's also a working capital drag due to the nature of the accounting and the goods being on boats and being transported. So does that mean your cash conversion will deteriorate as you do more direct sourcing? Or is that working capital effect calculated in that 1/3 absorbed cost bucket?

My second question is on France. Obviously, in March, there was a tax -- a EUR 2 tax put on small parcels, which were being imported, which obviously could impact some of your competitors. I was wondering if there was a noticeable impact on your sales arising from that? And then finally, on the POS and workforce management system, I'm just wondering if we should estimate or expect any margin upside in the future from those investments.

Do you want to take this?

So your question about working capital impact from a higher share of direct sourcing. So if you look at the payment terms that we have for Europe, this is 60 days and 30 days for small and medium enterprises. For direct sourcing coming from East Asia, it is 120 days. So that kind of offsets, if you like, what I've explained about the fact that it's earlier in our inventory. Migrating POS and workforce management, I do not expect an improvement in EBITDA margin coming out of these. POS is very much driven by end of life of our previous product and migrating to a more modern, but in terms of functionality, at the beginning, it's offering more or less the same. And the same is true for the workforce management system.

So I think the other question is in relation to the EUR 2 tax on small parcels. Any impact?

So I think that we see tax increases across different countries. And we just take that into account. So that is not impacting in a different way.

We will now take our next question, and the questions come from the line of Jon Perez, Kepler Cheuvreux.

Can you hear me?

We can hear you. Yes.

Great. So you've mentioned repeatedly that new store openings are receiving a very warm welcome. I'm keen to hear if you are seeing that those new stores would -- are reaching a mature level of productivity of sales faster than in the past. So that's the first question. And then on the U.S., to what extent do you expect to use similar or different sourcing model approach as in Europe?

Do you want to take the first, Joost, and Hajir take the second?

Yes. So if I understand the first question correctly, you're saying because we have a higher awareness in some of the newer markets from day 1, does it also mean that the stores reach maturity faster? And could be the case for some of the very early stores. But if I look at the newer countries overall, that is not really the case. So we're still seeing comparable ramp-ups versus the market of a couple of years ago.

So on the U.S., we, of course, are planning to use our own supplier base. We, of course, are using to also use our supplier base in Asia. And next to that, we also will make sure that we have teams in place to source locally. So that's going to be kind of the mix of how we're going to approach it in the U.S.

I am showing no further questions. So I will now hand over to Silvia Santoro, 3i Group's Investor Relations Director, to address the written questions submitted via the webcast page.

The first question is on the U.S. and how much overlap do you expect between the European and U.S. assortment?

Well, so our assumption now at this stage is that around 40% will be quite similar and 60% will be different in the U.S.

And we've had a lot of questions on the current risks driven by geopolitical uncertainty and specifically also about energy cost increases. So what is the management team doing to mitigate some of these risks?

So how I'm looking now to the situation and everything what's happening around us in terms of energy prices going up? Well, as Joost was explaining, we see it now in the fuel cost, which is still very limited if you look to the total cost. If this is going to take longer, it, of course, can have a potential risk on sourcing. But having said that, it is fair to say that we have a healthy stock level already in, in terms of everything what we are sourcing from the Far East, and that has also to do with the early Chinese year. So we have shipped a lot of our products already last year and early this year. So for this year, it's not really a risk. And at the same time, I think we had similar situations and challenges around the COVID period and the war in Ukraine, where we also really were benefiting the flexibility of the format also using our different sourcing approaches, including our wholesalers in Europe. And I think this is also coming back to the point of Joost referring to the direct sourcing or target. I think that the flexibility in the format really allow us to make different choices as we are continuing.

Following up from that, can you give a bit more granularity as to what percentage of the sourcing mix is China, India and Europe?

So around 50% is China, I would say 47% Europe, like 3% India.

Moving on, we've had a lot of questions on the competitive situation across Europe, and they have different tax. So some are talking broadly about pan-European competition from Temu. Some are asking specifically about France and whether it's still driven by Leclerc. So could you comment on the French situation and the pan-European situation more broadly?

So as I also explained during my presentation, price and having the lowest price is for us really a key element. So we are monitoring all the competitors across all the markets all the time. And as I said in my presentation, this is a dynamic process. So prices are changing every day. So that means that you could find the lower prices at a competitor, but at the same time, we're always acting. Online or offline players doesn't matter for us. And also promotion is something which we really are following very strict, and we're very much on top of that.

If we look to France, and this is something which is not new if you look to the 33 years that Action is existing, sometimes supermarkets in a country start competing on price. And of course, that is also something which we then take into account and where we're acting on. This is very much on promotion and in FMCG. So a very short period, but we are really on top of it. And that is also what we have shown in France. We have reduced more than 450 prices at the end of the year. And also in 2026, we have continued in France to reduce more than 100 prices. And at the same time, we also have done that across the other markets.

Can we just pick up on Temu and general merchandise because general merchandise actually performed well last year across the piece.

Yes. So Temu is -- has, of course, an offer in ranges, which we are also offering very much in general merchandise. I think general merchandise over the last 2 years is still performing very strong at Action. And next to that, I think that we also have a lot of daily necessities, which are not comparable.

And just a quick follow-up question on competition, whether newcomers like NORMAL, you think present particular threats?

I think NORMAL is for us, one of the competitors. And there, I just need to explain that Action is quite unique in offering 14 categories and changing assortment continuously. NORMAL is one of the competitors, which we, of course, also take into account in all our price measurements every day. But this is very much FMCG personal care related. So it is only related to one of our categories where, of course, like just all the other competitors in all the other categories, we are following up and acting on.

The next question is on France, whether what you're seeing in France would make you change the mix of new openings? And would it make sense to increase other regions relative to France because of the weakness of the consumer there?

So I think our strategy is really to continue doing where we are very well at, and that is France has, at this moment, a low consumer sentiment, but we still really see the number of customers going up. We see that we have won the French price for the third time in a year. So for me, it is really making sure that we're focusing on lowering prices and offering the lowest price. And I really believe that also in France over time, we will see that sentiment changing. We still see a lot of potential in France. And at the same time, we're also opening stores in those countries where we see more positive trends.

I mean we had a couple of little videos on the presentation, one of which was an opening in Marseille last weekend or something, and you saw what was going on. It was Mayhem.

Absolutely.

We now have some financial questions. And can you guide on the impact of weather on the Q1 like-for-like and what the underlying performance excluding that is?

So I can say directionally that the weather hasn't helped, especially in period 2 or February. I cannot give a concrete -- I cannot put a concrete number on that.

The next question on financials is that you have a gross margin range of 30% to 50% roughly depending on category. And can you elaborate on what that might be on an SKU level? So within a different category, are there lots of -- is there a big range at an SKU level?

Yes. So what we are doing all the time is setting the prices in the market, making sure that we are the lowest everywhere. In some of the markets, the competition on certain SKUs is bigger than other markets, and that means that you need to accept a lower margin. What is important to mention is that on all the items, we're making a healthy margin. So there is not one loss-making item in our store, and that is also not needed if you look at the flexibility of what we are offering. But of course, if you look to the margins, it differs per SKU based on your competitive landscape.

And sort of following on from that is a slight nuance on the question. Would you be willing to accept the lower gross and EBITDA margins if this were to drive higher like-for-like sales growth?

I personally believe that if you just look to what we're doing and also this year again, we're investing continuously in terms of offering the lowest price. And next to that, we, again, this year are investing extra margin to make sure that we can cope with all the challenges which we have faced at the end of the year. So I do not see any reason to change that whole approach.

I mean just to recap, in every country except for France, we're achieving good like-for-likes. And in France, as Hajir has indicated, we've taken down quite a lot of prices. So we are using that flexibility that we have to tackle the situation in that given market.

So we're seeing some follow-up on the guidance and drilling down a bit. And what level of like-for-like sales growth in '26 is needed to; one, maintain EBITDA margins; and two, expand EBITDA margin. So if like-for-likes were similar to 2025, should we expect the EBITDA margin to decline again?

So just to start with that last part. So last year's like-for-like came in at 4.9%. I've guided now between 4% and 5% and between 4% and 5% in combination with stable EBITDA margin. I mean, directionally, a higher like-for-like gives more operating leverage and obviously helps EBITDA margin and the other way around. But I can't give a concrete formula for that.

Then a little bit of a challenging question on last year's EBITDA margin guidance. So the question is, surely, you know when you're investing into price and promotions or changing the share of direct sourcing. And so why was this not in the EBITDA margin guidance when you gave it last year? So expecting a buffer because you're a respected and conservative team? And can we assume you have factored this in for 2026?

I mean, to start with the last question, yes, we have factored everything that we know today in our guidance. And maybe I wasn't clear in my explanation about especially direct sourcing and the way it impacts our bottom line. So a normal situation is that, that is neutral. The reason it was negative last year is because we had the product longer in inventory and therefore, had the higher handling and inventory costs, which -- and I've phrased that as an opportunity, but it does mean that our planning hasn't been well enough. And if the point is that, that wasn't included in the guidance, I can confirm that. But that's also why I said that, that is an opportunity for the future.

The next question is, does the EBITDA margin guidance include any expenses related to the U.S.? And if so, how much?

Everything that we spend on repairing is included in our P&L. That was also true, by the way, last year. And it is also true this year, and therefore, it's also included in the guidance. But then I can't give a specific number.

A question on proximity sourcing and how -- and what that means in terms of fuel burden. And so how would the increase in proximity sourcing impact your costs?

Well, I think Joost has explained the overall impact of sourcing via wholesalers versus our direct import and the financial impact. It could be that the coming period will make some different choices. I think in terms of cost, it's only related to not having the stock in your DCs earlier.

Can we check that the lower margin in FY '26 versus the underlying '25 margin isn't a reflection of lower operating leverage expectations over the medium term? Do you still see margins expanding through the cycle? And the same question for like-for-like, do you still expect mid-single to high single-digit like-for-like over the medium term? Or is a lower like-for-like the sustainable level?

So to start with the second question. So indeed, we have given this mid- to high single-digit guidance for a multiyear period. If I remember correctly, this was 2024 until '26 -- '23 until '26. But we also always said that the difference between mid and high is also related to the level of inflation. So as we see it today, the guidance that I gave 4% to 5% is at the current level of inflation. When it comes to operating leverage, I will repeat my answer on one of the questions a moment ago. So in the guidance of this year is a positive from operating leverage, but there's also the impact of lowering prices and more promotions, which is a negative on the gross margin. And whether this will be repeating in later years, I think that is something that we will consider when looking at next year.

And then some questions on the U.S. Given the longer payback profile of the U.S. business, do you plan to disclose its investments and results separately to help investors better understand the near-term drag versus the longer-term opportunity?

At a certain point, but that's not going to be early. Obviously, we will provide segment reporting, but that's certainly not going to be the case in the early years.

And again, a question on the U.S. Looking at the cost per store in the U.S. of 100 stores for EUR 350 million, EUR 400 million compared to the cost of opening a new European store. Can you just explain why you believe why this is a better use of capital than just accelerated the European rollout?

Yes. So the amount I gave in my update around the U.S. is not only related to stores. So this is going to be the full investment between 2026 and 2030 in building up the organization in the U.S., which in a different continent is going to require a different approach. And that means that we're talking about stores, we're talking about the organization. We're talking about building up your stock in a different way and also putting a DC in place. So you cannot just take that full amount and then calculate it back to 100 stores.

I think there's a very interesting comparison with Switzerland where expenses are much higher across the board in Switzerland. Disposable income is much higher across the board in Switzerland. And it's similar to the U.S. in that regard. So you have both sides. You have benefit on one side and negative on the other. But the equation looks very attractive as long as we get traction on our stores.

And this is a question about the current uncertainty. In a scenario where recent events in the Middle East to drive a renewed inflationary backdrop in Europe, what would be the right framework for thinking about the impact on the consumer, particularly versus the experience that Action had in 2022 and '23 during the Ukraine-driven inflation shock?

Isn't it fair to say that most retailers like a bit of inflation?

Well, if we just look historically to higher inflation periods, we always have benefited of those periods. So that is fair to say.

I would say that based on the experience, we know that our format is resilient, and we can operate under different economic circumstances. Generally speaking, if a customer has less to spend, that is a negative for everybody if they spend less, but it's also a positive for us because of customers looking for better value alternatives. And as I say, if you look at past experience, that has always worked out positive for our results.

Again, another question on the U.S. Could you talk a little more about the competitive set and landscape in the states you will open in the U.S., North Carolina, South Carolina and Georgia?

Can I talk more about?

The competitive situation, the competitive landscape?

Well, we, of course, also have a look at the competitive landscape, but I do not want to talk too much about it as the market study really indicated that the Action concept is quite unique in terms of what we're offering. So we really believe that we're bringing something different with our 14 categories, our changing assortment, our low-priced items, but also our good quality products.

Then we had another question on whether you will always focus on organic growth or also open to M&A.

Until now, if you just look to what Action has done in the past and the potential we still have, then I think it is very much focusing on organic growth.

Then we have a question on valuation. What would be the factors that would cause you to review the valuation formula for Action? It has been 18.5x for a number of years. If like-for-like growth remains lower than in recent past, would that be a driver?

I think on valuation, we have a tried and tested valuation policy at 3i Group. You've heard about Action's absolute performance. We look at that against the competition. So we assess the relative performance and we look at the valuations in the marketplace. So our independent valuation committee will go through its usual process, and that will be part of our 3i annual results in May.

I think this is probably all we have time for.

Want to do one last question? Or is that it?

That's it.

That's it. Okay. Let me just say thank you, everyone. That concludes the Action Capital Markets seminar for the day. We appreciate your attention. Have a good day. Bye-bye.

Good day and thank you for standing by. Welcome to the 3i Group plc Half Year Results Presentation Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand over to the Chief Executive of 3i Group plc Simon Borrows, to open the presentation. Please go ahead.

Good morning. Welcome to 3i's interim results presentation. This was another good half for 3i. We delivered a total return of 13% and that gives us a net asset value per share at the end of September of GBP 28.57 compared to GBP 22.61 at the interims last year. That's after the payment of 42.5p per share second dividend and a 78p per share gain on foreign exchange translation.

We ended the half with a gross investment return of 14% from private equity and 9% from infrastructure. Private equity delivered another good return with 98% of the portfolio by value, growing earnings in the 12 months to the end of June 2025. Action continued to deliver a very good performance, and we saw good growth from the broader consumer portfolio. We secured 2 good realizations in the first half as well as a significant capital restructuring and distribution from Action in October.

Our private equity portfolio is defensively positioned, and is generally trading resiliently. The challenges we see for a limited number of assets are reflected in their valuations. We remain cautious about the general macro environment and continue to be careful in evaluating new investment opportunities. Earnings growth across our top 20 private equity portfolio has been good. Companies making up some 86% of the portfolio value have been growing earnings by more than 10% over the last 12 months.

We have only 4, mostly smaller companies where earnings have declined over this period. We saw earnings momentum drive positive portfolio value moves in the half, and there were no notable write-downs in this period. Action has continued to expand and grow. In the first 9 months of the year, net sales were up 17.4% and operating EBITDA up 16.3% to GBP 1.563 billion. Like-for-like sales to the end of September were up 6.3%. Once again, the volume of transactions has been the prime driver of like-for-like growth across Actions estate. LTM operating profit at the end of P9 grew to EUR 2.3 billion.

P10 was a challenging month. That's due in part to last year's very high like-for-like growth. And perhaps this year's unusually mild and very un-Christmasy weather. Net sales to the end of October stood at EUR 12.54 billion, year-to-date like-for-likes to the end of P10 were 5.7%, reflecting the high growth hurdle from last year and the continuing softening consumer environment in France, in particular, Upturn including last week, we've added 272 new stores. We're now on track to add approximately 380 new stores by the end of the year. That will be a 13% increase in store numbers over the calendar year.

We now have 180 stores in Italy and 90 stores in Spain as well as 8 in Switzerland and 5 in Romania. These 2 new countries have started very well. We do believe Action's like-for-like sales of 5.7% are well ahead of many European retailers, a number of whom are experiencing negative nonfood like-for-likes. And that performance by action is very impressive when you set it against Actions cumulative 56% growth in like-for-likes. Over the previous 4 years, Action's low prices and mix of necessities and surprising products continues to attract a growing volume of transactions in all 14 countries where we operate. The French like-for-likes are positive to the end of P10, but they are some way below the rest of the group.

France accounts for about 1/3 of like-for-like sales. That means that the non-French network is delivering like-for-likes of almost 8%. So France is a challenge, but we are well set for a big sales season to come with a strong Christmas assortment, good availability from the supply chain and some very competitive prices.

3i acquired a further 2.2% stake in Action in September from GIC. We settled that transaction by the issuance of 19.9 million shares and took our holding up to 60% of Action at the end of the first half. Action completed another financing in October, raising EUR 1.6 billion in the U.S. and European debt markets. Once again, demand for Actions debt was strong. Over 2/3 of that new debt was fixed at an all-in euro cost of under 4.6%, and pro forma leverage stood at 3x at the end of October.

Action also took the opportunity to undertake EUR 3.1 billion of leverage-neutral repricing and extension of part of its current debt package, that delivered a further interest cost savings of EUR 14 million on top of the EUR 33 million we've achieved previously. We used GBP 755 million of our GBP 944 million distribution to increase our stake in Action further to 62.3%. That left us with net proceeds of GBP 189 million from the share redemption. And I'd like to end this section on Action by commenting on Action's March CMD guidance.

Firstly, this year's store opening program is going well. And as I said a minute ago, we now expect to open approximately 380 new stores. That's an increase over the March guidance we gave you. It is also worth highlighting that trading from these new stores, which are not in the like-for-like numbers has been ahead of our expectations so far this year. On like-for-likes, while most countries in our store network are broadly in line or ahead of plan, the market in France, our largest store network is clearly challenging. We've seen a meaningful step down since the second week in September, which continued through P10.

Food inflation is very challenging for those on low and average incomes, and the savings rate is at an all-time high in France, reflecting those with more cash having concerns with the political situation. So there is a risk that France pulls us below the 6.1% like-for-like guidance for the year. But frankly, it's too early to tell. On EBITDA margin, the sales mix is supportive. We've had good higher-margin category performance over the first 3 quarters and good trading from new stores. But the final outcome as with like-for-likes will be determined by trading in the last period given its very high level of sales and very high level of margin.

Okay, I'd now like to move on to Royal Sanders, our second long-term hold asset. Royal Sanders is having another strong trading year. They've delivered good organic growth and excellent cash flow so far this year. Our private equity portfolio, ex Action and Royal Sanders was valued at GBP 4.7 billion at the end of September. The portfolio is invested in broadly equal parts across our 4 sectors. And as I said earlier, we're seeing good overall momentum in the private equity portfolio despite anemic growth in Europe and the challenges of the U.S. tariff policy. We certainly have more than our fair share of companies which are still able to grow in this tricky environment.

And we secured 2 good realizations with healthy uplifts over their marks and returns well in excess of our 2x target. The Infra team is also producing a good performance with some excellent returns from their portfolio and a good level of fee income. On that note, I'll hand over to James who can fill you in on more detail.

Thank you, Simon, and good morning, everyone. Our total return on equity for the half year was 13%. Again, that demonstrates the ability embedded in our portfolio to deliver consistent compounding returns year after year. You can see the details here. The increase in NAV was principally driven by value growth of 250p per share.

During the half, foreign exchange movements were positive, driven by the depreciation of the pound against the euro. That gave us a positive contribution of 78p the dividend payment in the half-reduced NAV by 43p. That meant we closed the half with an NAV per share of GBP 28.57. You can see the components of the 250p per share or GBP 2.5 billion of value growth here.

As Simon said, Action continued its growth trajectory with the contribution of GBP 2.1 billion in the half. The PE performance increases of GBP 219 million, significantly outweighed the performance decreases of GBP 43 million. And that was despite a challenging macroeconomic background in many of our core markets. Royal Sanders and Audley were the standout contributors to the GBP 219 million increase. There were no material detractors in the half. As part of the valuation process, we took 4 multiples down, but the combined impact was relatively modest to GBP 24 million.

The quoted investment portfolio had a good half. with a positive contribution of GBP 139 million. That came from the combination of increases in both the 3iN and Basic-Fit share prices. The uplift to imminent sale of GBP 25 million relates to the premium we received on the sale of MAIT. The portfolio ended the period with a value of GBP 29.3 billion. We continue to apply our valuation process consistently and markets have been broadly supportive over the period.

So starting with Action, we continue to value Action on a post-discount multiple of 18.5x LTM run rate EBITDA of EUR 2.5 billion. As at 30th of September, that gave us an enterprise value for Action of EUR 46.9 billion. The value on the 3i balance sheet, which takes into account our increased shareholding level, as of 30th of September of 60% was GBP 21.5 billion. If we look back a year to September 2024, when Action was valued as an EV of EUR 38.2 billion and compare that EV to the outturn for the LTM run rate EBITDA this September, you arrive at a forward multiple of 15.1x.

These are then the multiples we consider when comparing action to the peer group. These are the usual 2 charts we present this time covering the period from September 2024 to September 2025. Whilst there have been some movements within the peer group. We continue to see that the average multiple is stable. So we remain comfortable that Action with its strong operational KPIs should trade at a premium to the average. The other important point to note is that there have been 2 third-party trades in Action's equity since our last year-end, one in September with GIC and one in October with a broader group of LPs.

In that second case, there were both buyers and sellers among the LP group. Both transactions were completed at valuations corresponding to the -- to Actions June NAV, which reflected the 18.5% multiple we use today. Let's now have a look at the valuation multiples of the rest of the portfolio compared to the peer sets. This chart shows the valuation multiples for our PE assets in dark blue and the average of the multiples from the relevant valuation peer sets in light blue. The red arrows highlight assets for which the multiple was actually reduced in the half. In each case, these decreases reflect company or market-specific factors in combination with an assessment of proximity to exit. The weighted average multiple ex-Action is 13.1x, which for a portfolio aiming to double value over a 4- to 6-year time period, we think is fair.

During the period, we secured the sale of MPM and MAIT, those transactions reinforce the integrity of our valuation policy. We gave the detail behind these transactions at the recent CMD presentation, so I won't go over that again. It is, however, worth noting that both assets were sold at good premiums that opening book values. In MPM case has commanded an 18% premium and to MAIT a 34% premium. Whilst this has been a consistent feature of nearly all 3i exits over time, I think it is particularly impressive when you consider that these transactions were executed against what remains a alleging environment for exits.

So turning back to the business line performance for the half year. Our private equity portfolio generated a gross investment return of 14% for the half. The gross investment return was GBP 3.2 billion. Of that GBP 3.2 billion, GBP 805 million was the positive impact of FX. The cash realization of GBP 391 million was mainly from the sale of MPM. Investment of GBP 732 million included our purchase of an additional 2.2% of Action in the period. The overall PE portfolio value ended the period at GBP 27.1 billion.

In terms of the leverage position, we show that on the next slide. As of 30th of September, there was very little change from the position of the full year. For completeness, I've added a couple of extra bars setting out the pro forma leverage position, including the action refinancing, which took place in October. The maturity profile continues to be very well managed. I'd also like to remind you of our overall approach to leverage across the portfolio. Our debt team covered this in detail a couple of years ago in the PE CMD in September 2023. We favor a prudent approach to leverage assessed on a company-by-company basis.

Action remains one of the largest names in the syndicated leveraged loan market in Europe, and today, Action now has a meaningful presence in the low market in the U.S. Its debt is well syndicated with over 150 leveraged loan investors. For the PE portfolio, ex Action, we value a diverse mix of lender types, but we're always focused on simple senior-only financing structures with over 2/3 of overall lending provided by relationship banks. Just to be clear, today, we have no external subordinated debt or unitranche lending in the portfolio.

So on to Infrastructure. It was a better result for the Infrastructure segment in the period. That improvement was largely driven by the performance of the 3iN share price, which increased by 14% over the period. The underlying 3iN Infrastructure portfolio as a whole is doing well, and TCR is a standout performer. Despite some continued weakness in the freight market, Scandlines also continued to deliver a robust performance. Including Scandlines, our infrastructure portfolio is valued at GBP 2.2 billion, and it produces a very useful cash income contribution, as you can see on the next slide.

Overall cash income totaled GBP 87 million, and we ended the period with a small GBP 12 million cash operating loss. Our expectation remains for a cash operating profit for the year. So now let's take a look at the balance sheet. The group's approach remains one of conservative capital management with net debt of GBP 772 million and gearing of 3%. We remain well within our trend lines. A slightly larger RCF gives us liquidity of over GBP 1.6 billion at the end of the period. As of 11th of November 2025, the group's cash balance was GBP 777 million.

Before we leave the balance sheet completely, I thought I'd give you a quick update on the net exposure by currency and the hedging position. In the 6 months to September 2025, we experienced a currency tailwind of GBP 802 million. That principally reflects the 4% depreciation of sterling against the euro during the period. Hedging has reduced this gain by GBP 31 million, resulting in a net gain after hedging of GBP 771 million in the half. That GBP 771 million compares to a net currency loss of GBP 466 million in the same period last year. As you know, sterling has continued to weaken. And you can see the updated sensitivities net of our hedging program at the bottom of the slide in the banner.

So finally, let's turn to the dividend. Here, you can see our dividend policy. In line with that policy, we will pay our first FY '26 dividend of 36.5p per share in early January. That 36.5p per share, is half of last year's full year dividend total. Now before we get into Q&A, I will hand back to Simon.

Thank you, James. As I said right at the start, this was another good first half for 3i, and we're expecting a second half of more good progress. Action and Royal Sanders are 2 long-term hold investments are both trading well, and they remain focused on their long-term growth plans. Actions expansion is ahead of plan this year and most retailers I know would give their eyeteeth for 5.7% like-for-likes in these markets.

Let me put the very recent like-for-like numbers in some perspective on this next slide. We've seen very strong like-for-like over the last 4 years. This is a compounding measure and results like that are bound to moderate as Action store base grows. Nonetheless, we remain convinced a strong retailer should be capable of compounding like-for-likes at 5% over time in a low inflation environment. But as you can see here, the like-for-like performance has been completely eclipsed by new store growth at Action. In fact, we estimate the net store growth will amount to 13% this year.

This is the largest driver of Action's growth and is likely to remain that way for many years to come. While like-for-likes are a good measure of the health or pulse of a retailer, are you winning share? The ability to roll out a format unchanged across multiple countries is the holy grail of retail. And that's the real power of the Action format who successfully opened in 14 countries to date. Ultimately, the ability to do that supports decades of substantial growth as ALDI, Lidl and IKEA have demonstrated over the last 50 years.

So when we model Action's development over time, we use these basic assumptions. 10% store growth per year, 5% like-for-likes, high free cash conversion and a nudge to the EBITDA margin every so often. These 4 elements are all you need to confirm the enormous potential of Action. Action's extraordinary growth over the last 5 years has been a key contributor to 3i's compounding returns. And we are confident that Action will continue to support strong returns for 3i as a result of its customer focus, white space potential and remarkable store payback periods.

With that, we will now close the presentation, and we'll open the lines for questions. Thank you.

[Operator Instructions] We will now take the first question from the line of Manjari Dhar from RBC.

I just have 3, all on Action, if I may. My first question is just on the seasonal performance. I suppose, given the softer seasonal start you've seen I just wondered about how you're thinking about the ability to sell through seasonal ranges for the remainder of this period and how you feel about the likelihood that Action might have to clear some of that product at lower margins later on?

And then my second and third question are both on France. So I just wondered if you could give some color on margin mix by country and maybe how the French margins compared to group average? And then finally, I just wondered, given the challenging backdrop of France and the fact that France is such a significant part of Action's sales exposure, does that change the way that the Action thinks about distribution of future store openings near term or sort of do you think that maybe you might shift those openings away from France now?

Thanks, Manjari. I think on the seasonal performance, I mean it when I say it's simply too early to tell. We really can't tell how much people are holding back from these more seasonal Christmas categories because they've literally got no money or because it's the weather or because it's something else. But these -- you often get Christmases where trading can be pretty back-end loaded. So we need to wait and see, frankly. In terms of seasonal write-downs, we have a very modest history of this. We've got a great set of products for Christmas, and I would be surprised if it means anything significant in terms of seasonal write-downs. .

In terms of the France margin mix, it sort of reflects a lot of features. There is a good level of FMCG purchasing that goes on in France, which takes the margin in one particular direction. But we have some of our -- many of our biggest, highest volume stores in France, which trade at very strong margins given the sales leverage and sales densities those stores achieve. And they're almost unmatched anywhere else. But we do see more of those sorts of store contributions cropping up in some other urban centers in other countries, as well as in the Swiss stores, which are very much ahead of that. So it's a curious mix, France, but the margin is still a very healthy margin in terms of store EBITDAs, et cetera.

In terms of the store expansion, we were still set on opening 1,200 stores in France. It's a remarkable business for us, and we believe it will continue to be so. we are still, in our view, taking share even at the current like-for-like level. And we've been voted France's favorite retailer for the last 3 years on the trot, so the customers clearly like us.

We will now take the next question from the line of Haley Tam from UBS.

Could I ask one on Action or a couple of Action, please? So to start with, just to clarify on the like-for-like slowdown in October, which was clearly focused in France. Can we just confirm whether like-for-like was negative in France in October and perhaps help us to understand what the particular challenge was for you in France? Because I think we've heard from some other retailers that consumer confidence and political uncertainty clearly had an impact on higher value spend, but there's been more resilience in staples. So just trying to understand why your experiences differed.

Second question, just in terms of the increased stake in Action, which is now 62% approximately. Could you give us any update on the split of the remaining 38% in terms of what portion might be LPs versus other GPs and how long on average or the spread of duration of investment that there is in the other 38%. And then if I can just ask a final question actually. In terms of very clear comments you've given about 2025 on Slide 13. Thank you. And Simon as well, thank you for your longer-term comments towards the end of the call. I just want to clarify, again, then, therefore, there is no change in your medium-term ambitions for Action.

Thanks, Haley. Let me talk about our French like-for-likes in October. They were indeed negative, and that's why the group was at a low single-digit positive number. As I said, they are about 1/3 of the like-for-like sales basket of stores. I think the 2 previous P10s in France have both been 13% and 13%. So these were very significant sales levels to be on top of and unlike previous October, we saw very little buying of the seasonal products focused on Christmas.

So they had really quite a lean year, and that's made all the difference. We haven't seen as big a difference in other categories. But that's where we really saw the difference. And having seen lighter baskets at certain periods of the month prepay checks and things like that in prior months, as we've talked about before, we saw lighter baskets in all weeks in France. So that was another defining moment. And we've seen that since the second week in September. So they are the reasons for that, I would say. Our knowledge is that some of the domestic discounters have got very significant negative like-for-likes throughout the year. and some of the supermarkets despite food inflation have negative like-for-likes as well.

So we don't think this is necessarily at odds with what's going on in the rest of the market. In terms of the stake, so the other 38%, broadly speaking, 13% is held by Hellman & Friedman and the balance by the LPs with some smaller stakes held by management. And then the last question was our ambition, et cetera. There's no change to the ambition at all. The white space ambition is as big as it's ever been and is only likely to get bigger over time, the more we see how strongly the stores are received in new markets.

Our next question comes from the line of Gregory Simpson from BNP Paribas.

Again, a few questions on Action from my side. Firstly, on the 380 new store target, can you give some color about how this is mixing by country, Spain, Italy versus Eastern Europe? Second question is on gross margin. It was just over 40% last year. How has that trended this year? And can you give some color on what you're seeing in the supply chain in terms of pricing from China and outlook into next year? And then finally, just any update on Action U.S. thought process, time line?

Thanks, Gregory. The 380 new store target, I -- the country which is having the most new stores opened is Italy, there's a good number of new stores in Southern Europe generally. There are a good number opening in Poland, in Germany and in France, so it's the usual crowd. It's the 5 big markets and then there's a consistent number of other stores occurring in the smaller markets as well. But the big opening number, along with our new DC is in Italy this year, which is trading very strongly indeed.

Gross margin is slightly above 40.0%, it's slightly higher than that because we have actually had very good category sales in the higher-margin categories this year. So that has moved that across a bit. In terms of pricing from China, we've bought very well this year, in particular, relative to previous years, but that stock is going to be coming into the stores next year rather than this year. And we've got nothing to add to Action in U.S., but I know management is going to speak about that at the CMD in March.

We will now take the next question from the line of Andrew Lowe from Citi.

Just stepping away from France. It's been about 3 months, I think, since Lidl opened its non-food, sort of Home & Living store, sort of test concept in South Germany. I wondered if you could talk a little bit about that and sort of what you've seen in terms of any change of consumer behavior around those stores and just what you think they may be doing there, trying to defend against you guys. And then the sort of second question is just a clarification. I know that you said that we need to wait until March to hear more on the U.S. But could you just clarify, do you have any employees in the U.S. at the moment? That would be great.

Sure. Thanks, Andrew. I mean on the Lidl store, we're obviously aware it's opened. We've visited it. It is reflecting much of the private label categories, if you like, it is only 1 store. We obviously have over 600 in Germany. So I don't know whether they're going to continue to roll it out. It's really not clear to us. So I can't really add any great insights to it. But I don't think it raises any major issues for us at the moment.

I'm pretty sure that we have employees in the U.S. carrying out our research. As you know, we're doing a research project there. And we're sort of -- we're dipping into various pools of capability when we assess the market. So there will be a range of people that are working on that project.

Great. That's really helpful. And then just maybe on that latter point, just to clarify. So there are sort of employees rather than like consultants that you might be using?

Yes. But whether they've got their house there at the moment or anything like that, I don't have that detail, Andrew, but we certainly have people on the ground consistently doing some work on the market, as we would in any new market. .

Our next question comes from the line of Jeremy Kincaid from Van Lanschot Kempen.

I just have one more on France. Obviously, France has gone through political unrest in the past. And maybe 2018 or 2019, is a nice parallel with the yellow vest movement. So I was just wondering if you could share what's the like-for-like sales growth for Action was like during that period? Is the current political situation worse or not quite as bad as that? And the second part is how long does it usually take for your like-for-like sales to improve when the political situation stabilizes?

Jeremy. We certainly had difficulties during the yellow vest periods. And in some ways, logistically, it was more of a challenge because we had a number of our DCs barricaded and we were not able to supply stores. So in individual regions, we saw a very material drop off in sales as a result of that set of disturbances that lasted for several months. So -- and we saw a little bit of that in September with some of the general strikes that were called. I would say this is slightly different. This is clearly a -- we're seeing a ratchet up of a problem that's been in France for some time.

We talked about this going back some months, which is people there are very highly taxed at all levels, and they don't have much spending money. And it is affecting a large part of the population. And when you put high food inflation into that mix and high services inflation and various other things. I think it is leading to people being careful. Now how quickly that's turned around because of a different government or a different leader? Who knows. But it's still a very big market for us. We sort of represent the market now with 900 stores, and we believe it will come back.

We've seen this sort of thing before. We had similar instance of this in the late teens where we had some very low like-for-like periods. So it's nothing that you don't encounter from time to time in retail, and we'll just grind our way through it, and I'm sure we'll come out a bit at some point. But when that will be, I'm not sure.

Our next question comes from the line of Christopher Brown from JPMorgan.

Yes, just a couple of quick questions. So in France, just wondering whether the new stores there that you've opened over the last 12 months or so, were they faring any better in terms of like-for-likes?

Yes. As we said, the general category of store openings has been very positive. I don't -- we've opened about, I would say, getting on for 40 stores in France to date. I don't have the detail of that. I've only seen the aggregated numbers, Chris.

Okay. And just moving on away from Action on to realizations. I mean a lot of your private equity competitors are talking up the sort of realization environment. And clearly, you've had a couple of really good realizations. Can you say a little bit more about what might be in the pipeline on realization front over the next 12 months or so?

Yes. I mean, we would certainly expect to be bringing some other companies to the market on sort of 12-month time scale. I think in terms of the broader environment, I don't know which markets people are talking out. But it has still been a generally very quiet and bitty period for realizations, particularly in Europe. There have been some mega deals done in various places, which maybe skew some of the statistics. But in general, it's pretty subdued.

I think the banks are receiving more mandates towards the end of this year for stuff to happen next year, and some of them have received stuff from us. So there is going to be a pickup I would expect, but I think it's much more about next year than about this year in reality.

Thank you. We have no further questions on the line. So I will now hand over to Silvia Santoro, 3i Group Investor Relations Director to address any questions submitted online via the webcast page.

And first of all, there's a question on a clarification on France. Could any of the weakness be attributable to maturity? And can you evidence that perhaps with performance in other mature markets?

The best comparison to make is with the Netherlands, where the store estate really dates back to the early 1990s. And we're seeing very good like-for-likes there this year in line with -- broadly in line with the group average, I would suggest. So we don't believe age is the issue. We believe it's to do with the macro in France.

And another question is what needs to happen over the next few months for you to hit your like-for-like guidance? And how would that compare to prior years?

I haven't done the detailed math. But if we were around budget or slightly better, we'd be pretty much in line with guidance. So we're not looking at anything truly exceptional, but there does need to be a focus on some Christmas purchasing in France, in particular, to turn this around.

The next question is, can we extrapolate the improved store growth for March 2026 into March 2027, i.e., can you grow store openings by another 30 stores to open 410 stores. I think they mean probably calendar year '26.

I think I don't want to steal anyone else's thunder, but the intention is obviously to open more stores next year on top of this year's number. And that doesn't sound completely crazy to me, but I'll leave that for the management to talk about.

Can you provide any update on the trading seen so far in November?

We don't have -- we're not giving out that update. P10 is pretty, pretty darn recent. So we're not going to go further than we've gone already.

Can you expand on the traction you are seeing in Switzerland and Romania?

Yes. I mean in Switzerland, where we now have 8 stores, we're seeing very high sales per store. So it looks very encouraging and perhaps reflects how expensive that market is and how attractive Actions prices are in that market? And in Romania, likewise, we now have a couple of stores and people have been buying way ahead of our expectations in those stores.

How much more of Action is there to buy? And over what time period might you be able to buy it?

Well, we don't own 38%, so that might be one number out there. But we only get opportunities now and then to buy more equity we have an ongoing appetite to do that, and we have the resources to do that. So we will take advantage of it. But it's very hard to predict when others will want or will need to realize their position in Action.

Are you taking any specific measure in France to improve like-for-like or do you think it's entirely macro related and nothing needs to be done?

I think we're making sure that the availability is very good that the whole supply chain is working in a very slick manner, and we are rechecking all our pricing to make sure they're as sharp and as competitive as possible. So we're doing all the things that you would expect as we move into our biggest sales season of the year. And it's really the next 6 or 7 weeks, which really makes the outcome or not in that market given the year we've had to date.

What gives you conviction in the 5% like-for-like in the medium term? Can you give color in terms of the different levers, example, basket size, frequency, geographies, et cetera?

We've studied other great retailers and some of those retailers that sit above us in the valuation charts have decade runs of like-for-likes, which are in excess of 5%. So we've made a study of that, and we feel confident that we can emulate what those people have achieved over a very long-time scales.

Can you share some color on the EBITDA multiple at which the additional action shares were published -- were purchased from GIC and other LPs?

As James said, it was purchased at the June valuation.

Please, can you talk about how you think about allocating capital to Action versus investing in existing portfolio or new assets?

We are not short of capital. So we look at new investments and we look at investments into situations where we already have an ownership position and Action is one of those positions. They always have the benefit of us having a deep and real understanding of the performance under our ownership. So they are pretty straightforward judgments to make.

And as I said before, we see very long-term compounding coming out of Action, and that is a particular attraction that you find particularly difficult to find. So that is always near the top of our priority list.

On the U.S., could you give a general comment on how you view the competitive landscape, especially against stores like Walmart, Amazon, Costco, that are very entrenched and dynamic?

I mean it's a very competitive place. It has, by comparison with France, at the moment, it has very high levels of disposable income. So shopping dollars are much, much bigger. There are all sorts of formats there, but there are no formats quite like Action, interestingly enough, Dollar stores are quite distinct from Action. Costco is obviously very distinct from Action. Walmart is very distinct from Action. So there are some very strong businesses there. There are some less strong businesses there, but there's actually nothing there that's quite like Action.

You have spoken to your relative performance versus strange supermarkets. The Carrefour traded broadly in line with your recent like-for-like performance in France. Should we now think about the French business trading in line with the market from here?

I don't think we trade like supermarkets. I think supermarkets have been beneficiaries of inflation. Broadly, our store is slightly cheaper this year overall than it was previously. So we don't really benefit from inflation in that way, and we have some much higher margin categories than many of the food categories in our stores. So I would expect us to be able to trade above the supermarkets, but I'm not sure when this persistent food inflation is really going to come to an end. I guess people have to eat first, and that's something that's affecting the French market.

There don't seem to be any further questions from the webcast. Operator, back to you.

There are no further questions on the telephone line. Please continue.

Okay. Well, let me just wrap up. We appreciate the interest, and we appreciate all the questions. Thank you for joining today. Have a good day. .

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. [Operator Instructions] Welcome to the 3i Group plc Capital Markets Seminar. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to the CEO of 3i Group, Simon Borrows, to open the presentation. Please go ahead.

Good morning, and welcome to our 3i Capital Markets Seminar. I'm Simon Borrows, Chief Executive of 3i. I'm joined today by James Hatchley, our Group Finance Director; and Silvia Santoro, our Investor Relations Director. I'm also joined by two of our Private Equity team, who I will introduce shortly.

The main purpose for this Capital Markets Day is to tell you about two of our recent Private Equity investments, WaterWipes and OMS and more about our recent disposals of MPM and MAIT. The agenda for today is set out on this slide. There will be an opportunity to ask questions at the end of each session as well as for more general Q&A, at the end. But before that, I intend to give you a brief update on the 3i portfolio.

We've completed our September semiannual portfolio company reviews for Private Equity and Infrastructure. Both portfolios are performing resiliently against subdued macroeconomic environment.

Action continues to generate strong sales and EBITDA growth. Year-to-date sales at 21st September 2025 of EUR 10.9 billion are 18% ahead of the same period last year. Like-for-like sales growth over the same period was 6.5%. Like-for-like stood at 6.8% at the end of August, driven by transaction growth in all countries. Weaker overall consumer spending in France and Germany has been a feature of year-to-date performance, with recent general strikes and unrest in France causing the reduction of like-for-like to 6.5% for the group.

Performance has benefited from good seasonal sales and strong trading from new and recently opened stores. And we expect operating EBITDA for the 12 months to the end of P9 2025 to be circa EUR 2.295 billion compared to EUR 1.894 billion at the end of September '24, an increase of 21%. The LTM P9 2025 operating EBITDA figure is after a one-off expense of EUR 26 million related principally to a payment to eligible Action employees in June 2025 to mark Action's 3000th store opening.

Cash generation has continued to be strong with cash balances at 21 September '25 at EUR 758 million. Action has now added 207 net new stores in the year-to-date and remains on track to deliver or exceed 370 net new stores in 2025. New openings this year include the first 7 stores in Switzerland and the first store in Romania in Pitesti, which opened yesterday.

Royal Sanders continues to perform well, and the broader Private Equity portfolio is showing improving momentum. Since the publication of our Q1 performance update at the end of July, we announced the sale of MAIT, one of our PE portfolio companies, to a fund advised by DBAG. Total gross proceeds to 3i for this sale were estimated to be about GBP 143 million, which represents a 30% uplift to the 31 March valuation of MAIT and results in a 2.7x multiple of invested capital and 27% IRR. We've also announced today that we have bought a further 2.2% equity interest in Action in exchange for 3i shares. This is consistent with our strategy of continuing to increase our exposure to Action when the opportunity arises.

Okay. On to today's presentations. First up is Rupert Howard, who heads our London PE team. He is part of our consumer and retail team and has been at 3i for 7 years. Rupert will be talking about the recent sale of MPM and our new investment in WaterWipes. Next will be Peter Wirtz, who is the overall Head of our PE team and based in Frankfurt. Peter will talk about the recent sale of MAIT and our latest investment in the testing sector, OMS.

I'll now hand over to Rupert. Thank you.

Thank you, Simon. Good morning, everyone. I'm delighted to join you today to talk through the successful exit of MPM and introduce our most recent consumer investment, WaterWipes. As Simon said, I'm Rupert Howard, I head the U.K. Private Equity team here at 3i, having been with the firm for 7 years. Prior to that, I spent 13 years at Rothschild, also in consumer, retail and leisure M&A.

Consumer has long been a core sector for 3i. Over the last 2 years, we've deployed around EUR 1.7 billion into the sector. Today, over 80% of our Private Equity portfolio by value sits in consumer. And I'm sure you're all familiar with these names that sit across branded products, private label, e-commerce, retail and travel. It's a sector we understand deeply and continue to invest behind.

3i has been investing in U.K. growth businesses for more than 80 years. We have a team of 14 PE investment and banking professionals based in London. Today, the U.K. portfolio includes WaterWipes, which we acquired earlier this year; Audley, our tailor-made travel provider; AESSEAL, our specialist seals and support business; and THOR, a manufacturer of specialty chemicals. Previous successful investments and exits from the U.K. team include MPM, MKM, Aspen and Mayborn, all of which delivered 3x plus returns.

So now let's turn to MPM. MPM is an international leader in branded premium natural pet food, focused particularly on cats. It owns the Applaws and Reveal brands. Reveal is known as Encore outside the U.S. Its proposition is distinct. All products are clean label and human grade. They're entirely natural with limited ingredients, and the business benefits from a fully outsourced manufacturing model with its wet food being made in Thailand and dry food being made more locally. The cat-first proposition is important. 90% of MPM sales are cat related, and it's a market that's often ignored in favor of dogs.

We first identified MPM in 2017 and acquired it in late 2020, investing around GBP 125 million in the secondary buyout from ECI alongside the existing management team who rolled significantly. Talking about the team. When we invested in 2020, it was in the depths of the COVID pandemic, and the relationship that we have built and our confidence in Julian, the CEO; James, the COO; and Dave, the CFO, enabled us to push on with the transaction as we had high conviction in the quality of the business and the team that we were investing behind. We complemented the Board with the appointment of Tim Whiting as Non-Exec and Chairman.

The business had scaled to a point, but we had ambitions to scale it further, and we're aware that it required upweighting in certain areas, notably bringing in the Head of the U.S. business, Kim, and in marketing with a new CMO in the form of Sam. The impact of those hires will become clear as we progress through this presentation.

The global premium cat food market is large, growing and resilient. When we entered, growth was running at about a 7% CAGR. This accelerated to 11% during our whole period and forecasts now show, it's growing about 6% going forward. So what's driving this growth behind cat? Well, pet ownership is rising, especially among younger urban consumers, and this trend is even more pronounced with cats. Delayed family formation drives more pet ownership. Cats, those of you who've got them, are lower maintenance than dogs, and they live longer, approximately 15 years. Critically, cats' behavior and dietary needs are globally consistent, which makes this a truly international play.

Our investment thesis, which some of you may remember, I took you through in September 2021, was built around four clear pillars: the core, building on the already strong foundations; U.S., growing in the world's largest pet food market; online, the fastest-growing channel; and brand, migrating the business towards becoming a more consumer-focused branded business. So let's go through those in a little bit more detail.

As I said, MPM's products are visibly differentiated. Typically, there are just three ingredients, for example, flake chicken or tuna, broth and rice. And this is very different from what else there is in the market, which is usually pack full of preservatives and sweeteners to increase shelf life and palatability.

We've backed two brands with distinct but complementary identities. Applaws which was born in the specialist channel, a playful, fun, natural proposition, generally appealing to families and slightly older shoppers; and Reveal, born in grocery, which stands for connection, warmth, the satisfaction you get from feeding your pet, generally appealing to a younger consumer. Indeed, under our ownership, these brands have attracted quite different consumers and are now sold alongside each other in stores and online, for example, in PetSmart, driving higher basket value to our retail customers. Together, these brands double the addressable white space. But it's also worth flagging that in core, we're referring to some of the business enablers, such as the strong management team, the great market position, strong customer relationships and a dynamic disruptive culture.

Turning to the U.S., which at entry was about 14% of sales. Today, it's over 40%, having grown more than 6x. And that growth came from a number of factors. I mentioned the hiring of a U.S. CEO, but we also built a 30-plus person team in the U.S. We invested ahead of the curve. We took some calculated inventory positions to support future listings, which were particularly beneficial in the face of the shipping and logistics dislocation that impacted the market. We were able to take advantage of competitor out of stocks and the continued support from the retailers for our brands. And finally, product innovation, including the recent launch of [ Vitality ], which is a complete product range, with added natural nutrients, addressing a new space in the market for MPM. As a result, MPM now has a strong presence in specialists like PetSmart and Petco, in grocery, Kroger and Walmart and online such as Chewy.

So as I said, online was the third core pillar and a big growth lever for us. At investment, our largest customer was Zooplus in Europe, the specialist online pet retailer. We saw the opportunity to expand into Chewy in the U.S., a business many times larger than Zooplus. Today, U.S. online sales have grown 10x and account for almost half of MPM's entire business in the U.S. A key enabler for this was that we built a digital-first strategy around the right assortment, strong availability, targeted content and full-channel integration.

In 2024, we completed a major rebrand of Applaws, giving the brand a more modern and unified look across the channels, a clearer emphasis on its natural and tasty credentials and a flexible identity to support that innovation. This brand work that you see on the slide was instrumental in increasing customer appeal, shelf presence and allowing that harmonization across channels, both online and offline.

And this slide shows how the valuation of our investment developed over the years. It follows a fairly typical path with investment in the team and the business in the early years leading to moderate growth, which accelerated towards the end of the whole period as the benefits of these investments came through. And our exit at around GBP 400 million was at a GBP 60 million premium to our March '25 valuation.

So our investment thesis that I just outlined was validated in June 2025 when we announced the sale of MPM to Partners Group, which subsequently completed earlier this month. The headline results of GBP 400 million gross proceeds to 3i, a 3.2x money multiple at a 29% IRR. We ran a disciplined and well-prepared process with interest from both strategic and Private Equity parties and from all corners of the globe.

Our exit was aided by the business consistently outperforming. And even when Liberation Day disrupted bids just after round 1, we kept momentum and reengaged constructively with selected parties. MPM is a great example of our investment strategy of backing world-class winning companies that benefit from structural trends and delivering strong international execution through a partnership between 3i and the management team.

So now let's turn to WaterWipes, our latest consumer investment. We acquired the business in January 2025, but it is one that we have tracked for a long time, and many of us here at 3i are loyal customers. We invested EUR 145 million in a limited process. And importantly, we are delighted that the Founder, Edward McCloskey, has retained a significant minority stake, partnering with us on the next stage of the journey.

WaterWipes has a genuinely inspirational founder story with Edward setting the business up in 2008 because he couldn't find a product in the market that was clear of nasty chemicals that contributed to his daughter's nappy rash. Fast forward to today and WaterWipes is a leading premium natural wet wipe brand. It's a clean label product, 99.9% pure water with just a drop of seed extract. Its products are accredited by global dermatological bodies. And the business is omnichannel and diversified internationally with over 50% of the revenue coming from the U.S.

I mentioned a limited process. What we mean by that is that Edward deliberately set up the process to be narrow, with a huge focus on finding the right partner for his business. This played to our strength as we have significant experience partnering with founders across 3i, and we were able to demonstrate how we could add value to WaterWipes, for example, by drawing some of the clear parallels with the success of our investment in MPM.

The global wet wipes market is huge. It's worth about EUR 13 billion and is growing mid-single digits. In addition, the market tailwinds include a consumer that is focused on natural skin-safe products, which is even more pronounced at the newborn or baby end of the market, a clear premiumization trend, an established omnichannel presence. It's very important to both bricks-and-mortar and online retailers. And it's a sector that is dominated by a few CPG companies and private label, providing a genuine role and high retailer appetite for challenger brands. Wipes have many uses and presents an opportunity to move beyond core baby into adjacent occasions and categories.

WaterWipes sits across a number of subsectors that we have specific domain expertise in. Personal care, through our investments in Havea, which actually has its own wipes product and Royal Sanders, premium brands such as Mepal and MPM. [ Juvenile and Children ], our historic success with Mayborn and our experience with Konges Slojd, our premium lifestyle brand. And we're able to leverage our experience and our network across all of these categories to underpin our investment decision and deliver on our thesis.

There are a number of attractive attributes that beyond our portfolio experience that I touched on, gave us confidence that 3i was the right investor for WaterWipes. The business is Irish headquartered with the majority of its revenue coming from international and clearly sits at the premium end of the market. There are attractive market tailwinds that we just discussed and a sector and model that we understood from a number of different angles.

People is always a critical part of the assessment. And not only do we have a strong management team in place, with a great entrepreneurial culture, but we have that continuity with Edward investing alongside us. That culture is underpinned by purpose, with consumers trusting WaterWipes with their newborn's skin. Moreover, sustainability is not a buzzword, but is at the core of WaterWipes products, which are entirely natural and plastic-free. And clearly, a strong financial profile is important for us, with WaterWipes delivering consistent top line growth at attractive margins and cash conversion.

So there were five attributes in particular that we wanted to dive into. The first being the differentiated product and IP, the proprietary seven-stage purification process. The brand and consumer loyalty, #1 in premium in the U.K. and U.S. and leading accreditations. International and omnichannel. It's well diversified with strong growth levers. A strong financial profile. And sector interest, this is an active M&A environment in personal care.

The WaterWipes' formulation was developed by Edward back in 2008 and is based on 99.9% purified water, with only natural fruit seed extract added. This means that there are no preservatives, surfactants or emulsifiers in our products. And this is clinically proven to reduce skin reactions and preserve the skin microbiome, a big differentiator, particularly with sensitive skin and even as far as neonatal care. Unlike our competitor products, going back to the founding principles, WaterWipes do not cause any irritation to the skin. It does not upset the pH balance of the skin and nor does it leave behind any nasty chemicals after use. This unique and versatile formulation is proudly manufactured in WaterWipes' own facility in Drogheda in Ireland.

And WaterWipes has already achieved strong market positions. I referred to the #1 positions in the premium space in the U.K. and Ireland, France and the U.S. Brand loyalty is extremely high. 98% of physicians would recommend the product. NPS scores are also industry-leading across consumers and professionals. And I'm sure that many of you on this call are or have been customers. Finally, there's very strong consumer ranking on Amazon, which is a key partner for the business.

And hopefully, on this slide, you can see that the business is well diversified across both geography and channel. As I mentioned, the U.S. is broadly half the business, but there are strong positions in the U.K., Europe and the Middle East. This is the benefits of a globally applicable product. Everyone has babies and everyone with babies needs wipes. And channel-wise, it's well balanced across retailers, online distributors and pharmacy. And this gives resilience and a platform for growth across a genuinely blue-chip international customer base.

I mentioned earlier the impressive financial performance, but this chart demonstrates it in a bit more clearly. Since 2017, WaterWipes has delivered a greater than 20% CAGR before that, even higher, with strong top line growth across all markets, high gross margins, robust EBITDA and cash generations. And net sales in 2024 were around EUR 200 million.

Lastly, personal care remains an active M&A category with a full range of transactions such as strategic exits like Dr. Squatch, PE to trade deals and healthy valuations, especially for premium branded assets. This gives us confidence that when we do come to exit, there will be multiple avenues to take.

Our investment thesis is based on four pillars. The observant of you will note that these are very similar to what we executed at MPM. Firstly, around the core and new product development, continuously working to improve the product. Indeed, a new improved 2x stronger and thicker wipe is rolling out in stores as we speak. International, we'll continue to expand internationally, deepen our presence in the U.S. and Europe and unlock white space where we undertrade.

In terms of channel, we have ambitions to grow in club, convenience and pharmacy, all of which are developed wipe channels, but where we have a more limited presence to date relative to others. And category. While WaterWipes today is predominantly a baby product, there is significant opportunity beyond baby, towards broader life stages such as toddler, adults, senior care and even convenience with our on-the-go product.

As you've been listening to this, you will have, hopefully, seen that there is significant read across between what we have done with MPM and what we intend to do with WaterWipes, which goes well beyond the simple four-stage investment thesis. The playbook might be familiar, but it is also effective. Both MPM and WaterWipes address large global markets. They benefit from global trends towards premium and natural segments. They compete against large incumbents as the clear challenger brands.

The brands both have very strong consumer advocacy and a loyal base of passionate customers. They both leverage natural clean label, limited ingredient positioning, putting sustainability at the heart of their proposition to further differentiate from their competitors and have multiple avenues for growth across the U.S., online and product innovation.

The first few years of -- sorry, the first year of a new investment is always busy as we seek to tackle a number of areas. Our key priorities in year 1 include. Strategy, aligning on the markets, channels and products. NPD, driving product innovation and enabling that strategy. From a marketing perspective, building digital and in-store awareness. From an operations perspective, ensuring supply chain flexibility and delivering that renovated wipe that is 2x stronger than the previous iteration. From a people perspective, we're bolstering the leadership and building governance. And like MPM, we're delighted that we have been able to attract quality talent to the team to help deliver on our ambitions. Finance and IT, we're leveraging our expertise in banking and hedging as well as ensuring ERP optimization. And while sustainability is already at the core of the WaterWipes proposition, we are ensuring that we build on that already strong ESG credential.

We're hugely excited about what lies ahead for WaterWipes. It's a great brand, a strong team and a market full of potential. It sits across a number of subsectors where we have deep expertise and shares a number of attributes with MPM, which has been a very successful investment for us.

Thank you for your time, and I'm happy to take any questions.

[Operator Instructions] Please stand by while we compile the Q&A roster. Thank you. We are now going to take our first question. And the questions come from the line of Gregory Simpson from BNP Paribas Exane.

Two from my side. The first is for both MPM and WaterWipes. The U.S. is a meaningful part of the story. Can you maybe talk through what you've seen so far in terms of the impact of the U.S. tariffs around consumer businesses? Is it causing a lot of uncertainty in terms of your forward planning? Did it weigh on the MPM sale process and so on?

And then the second question is, MPM was sold to another private equity firm who presumably think they can get a lot more growth out of the business. Could you maybe frame the decision to exit now versus maybe keeping it as more of a longer-term compounder like you're doing with Royal Sanders?

Yes, sure. I'll take tariffs. And Simon, do you want to take...

Yes, I can.

So yes, look, clearly, the U.S. tariffs are something that we've had to deal with from both an MPM perspective and a WaterWipes perspective. Liberation Day itself caused us to pause the process, as I referred to earlier, just while the market digested the impact of, particularly, the Thailand tariffs. However, I think that the market was pretty quick to understand the implications, which are more applicable to the entire sector than necessarily the individual businesses. And there are a number of parties who are able to price that and move forward with the transaction.

From a WaterWipes perspective, yes, the business is exposed to the 15% tariffs placed on the EU. But our view is that, that is manageable within the pricing and the cost infrastructure in the business.

Thanks, Rupert. Yes, let me pick up on the exit long-term hold decision. I think you have to remember that the majority of our investments will be on the normal private equity cycle of holding for 5 or 6 years and then selling at that point. In this particular case, we didn't focus on it as a long-term hold candidate, not because of the quality of the business, but simply that it was a long way from reaching our EUR 100 million EBITDA threshold, which we have to have for those businesses to move across.

We are now going to proceed with the next question. The next questions come from the line of Manjari Dhar from RBC.

Just two questions from me, if I may. The first question is on the overall portfolio exposure to the consumer sector. I appreciate that, that Action will be a good chunk of that. But maybe ex Action, how do you see the exposure to consumer evolving going forward? And then secondly, just a question on WaterWipes. I appreciate that, that has significant exposure to the U.S. I suppose the question is, do you think that there's material more growth opportunity in that market now? Or would you be focusing growth maybe elsewhere?

Why don't you take the second first, and I'll do the [ first ].

Yes, we see huge opportunity in the U.S. I think if you look at the scale of the market and the size of the business as it is today, while it is a large business, it is still relatively small compared to some of the larger FMCG businesses out there. I referenced in the presentation some of the beyond baby opportunity that we see. That gives us more than enough conviction that if we were to get any meaningful scale in any of those categories, the business would be significantly larger than it is today. So in short, we are very bullish on the U.S. opportunity.

Thanks, Rupert. On the weight of the consumer sector, when I first joined 3i in 2011, I did quite a bit of research on the nature of the portfolio going back over a decade in order to define what sectors we would use going forward. And it was very clear from that analysis that consumer had been the largest sector in the group for quite some time, and it will continue to be. It's obviously somewhat overweight because of the great success of a number of our consumer companies pointing to Action, Royal Sanders in particular. But as you know, we have permanent capital, and we will run our winners, and we do expect a consistent number of winners to come out of the consumer portfolio.

I am showing no further questions. So I will now hand over to Silvia Santoro, 3i's Group Investor Relations Director, to address the written questions submitted via the webcast page.

So the first question is from William Woods at Bernstein. He says, you have given two good examples of FMCG investments. However, in the wider space, many FMCG challenger brands have failed to reach sustainable scale. What do you think are the hallmarks of MPM and WaterWipes that make them different to other FMCG challengers that have failed in the space?

I would like to think that I may have set out a few answers to that as we've been through it. But I think in particular, these businesses, both appeal to globally applicable markets. So the pets or babies, everyone has them, it gives you real runway and potential to expand, not in a single market, and therefore, you have portfolio diversification and more avenues for growth than if you were operating in a single market.

I think challenger brand is a term that is often loosely thrown around. A challenger brand can be a small start-up with EUR 1 million of capital. These brands have proven that they are, while challengers compared to, say, a P&G, they are of scale. They have a proposition that works. They deliver a consumer benefit, and they deliver a rate of sale to their customers, whether that's online or offline, that is additive to the proposition that they're offering.

Thank you, Rupert. We have another question from Ashton Olds at the Rothschild, Redburn. He says, are you able to give some insight as to how exits can be managed when you are partnering with a founder who is selective about their investment partner?

How exits are managed when you...

When you're partnering with a founder who is selective about their investment partner?

Hopefully, they like you. No, I think it gives an opportunity for you to leverage the experience you already have within your portfolio to give them real comfort that you go beyond the "We're really great and you should partner with us." We were able, with Edward in particular, to demonstrate, as I hopefully showed in the slides, across Havea, how we understood the space, how we have grown the consumer brand in a similar category in France and materially added value to it. With pet food, how we've taken a business that was predominantly European into the U.S. and scaled it. So it's all about differentiating your proposition and what value you are going to bring so that founder is comfortable partnering with you.

Yes. I would just add that we -- in order to have a co-investor like a founder in a business, we have to have an agreement on the way forward. The agreement around this is that we were looking at it as a normal private equity investment, but with a very responsible mindset. And if it meets our criteria, we would then consider whether it should join the long-term hold bucket at 3i because we will run our winners. So we have that understanding.

A further question from [ Robert Platt ]. You mentioned the own Ireland manufacturing site for WaterWipes. What's the CapEx needed for WaterWipes going forward with the growth you plan and capacity they have currently? And also, what's to stop larger competitors developing their own water-only pure brand?

So from a CapEx perspective, clearly, that was a core part of our diligence and the business, and the site is very well invested. There is no need for material CapEx to deliver on our investment case. Clearly, if the business outperforms and grows further, then we'll need to put in the CapEx to support that growth, but that will be a decision to be made further down the line.

In terms of competitors copying it, again, as you can imagine, that was a pretty core focus of our investment decision. The simple answer is, they've tried and failed many times. The more detailed answer, as I hopefully set out, is that there is a very differentiated and frankly, very clever process that is used to enable the product to be so different to anything else on the market.

Great. There is another from Jeremy Kincaid at Van Lanschot Kempen. You said you were looking to expand use cases and the occasion for the wipes. What are the biggest opportunities there? And how do they compare to the existing baby-related occasions?

So I've talked about the opportunity to expand beyond baby. All-life stages ultimately are addressable by wipes as a proposition. So whether that is extending from baby into toddler who are still messy, that's where we have a small part of our business. Through to senior care, which is a massively growing category, particularly in the U.S., where we already have a small proposition.

And then between the two of those, there is the adult and the convenient product. And in that case, for us, it's all about making people aware, not just us growing into an existing market, but actually growing the market itself as we show people where and why you can be using the WaterWipes product. So roundabout answer, but any of those avenues could be of significant scale and could be larger than baby if we execute.

Thank you, Rupert. It looks like we have no further questions, so we can move on to Peter's presentation.

Thank you very much, Silvia. Good morning also from my side and a brief introduction. My name is Peter Wirtz, as Simon already mentioned, and I'm heading 3i's PE business. In 1 week, I have been with 3i with -- for 27 years, 1st of October, and I've been based in Frankfurt since then.

I have been co-heading the German business for 10 years before taking over the leadership of our private equity business internationally in 2019. I'm also a member of the Investment Committee and the Executive Committee. Besides these tasks, I am still getting involved in transactions supporting deal teams to originate and execute deals, particularly in Germany. And I'm currently sitting on five boards of our portfolio companies, one of which is OMS, which I'm going to talk about.

Brief look at Germany. So we have been in Germany on the ground for more than 30 years now. So we have been pioneering Private Equity also in this market like in other European markets. And we are a recognized brand name in Germany with a broad and deep network as a result. We are currently 12 investment professionals and 2 of our sector heads are based in Frankfurt, Andre Perwas, heading the software and service sector; and Malte Fehn, who recently joined us from DBAG, a German competitor, who heads our industrial sector.

On the slide, you can see our current portfolio and the selection of investments we made over the years in the German market. And on the current portfolio, I'm going to talk about two of our companies: one, OMS, that we just bought; and the other one is MAIT, that we just sold.

Before I come to the companies themselves, I just -- have a quick look at our approach in the software and services sector. We focus on three subsectors. One is the tech-enabled services where OMS is placed. And I'm going to talk about what tech-enabled means later in the presentation. So I think OMS will give a lot of color on what we actually mean by that.

Then we have mature software. And there we have a German asset xSuite, which is a leading accounts payable process automation specialist focused on the SAP ecosystem. And then we have IT services where MAIT sits and two other French investment, Constellation and Evernex, which I believe was introduced last year at this occasion.

Okay. Let's have a look at MAIT. So what is MAIT? What is MAIT doing? MAIT is a German IT service provider with a focus on the manufacturing Mittelstands, where it generates 80% of its net revenues. They do this as a partner -- they are a trusted partner for their customers and support them on their digitalization journey. And they do this as a partner for four core software vendors, which you see there. It's Siemens, Abas, PTC and Comarch. Siemens and PTC are both in the PLM area, and PLM stands for product life cycle management. And the purpose of PLM is to establish a data foundation or -- you could say, a single source of truth, to track the product across its life cycle and hereby connecting all departments within a manufacturing business. And the other part is ERP. For many of its customers, MAIT has been a partner for over 10 years, and this underpins the quality that MAIT delivers to its customers and the ability to grow together with them.

What excited us about MAIT was, first, the resilience of the business, the strong downside protection. I'm going to talk about this in more detail. And then the strong track record in buy and build. We continue this story with 14 add-ons acquisition in only 4 years during our ownership. Again, I'm going to talk about this in a bit more detail.

How did we find or how did we source MAIT? A partner in our -- in the Frankfurt office, Michael Specht, who focuses on services and software, identified MAIT in 2020 as part of the subsector work on IT services. which has since become a core pillar of the software and services sector strategy. We then bought the company in a fully proprietary and bilateral process, leveraging our strong network in Germany to a small-cap investor, [ Finders ], investing GBP 53 million in September 2021. Since then, we have worked hand in glove with existing management around CEO, Stefan Niehusmann; and the COO, Axel Schmid, to scale the business.

Let's have a look at the investment thesis that we invested on. I touched on the first point, strong downside protection as a foundation. MAIT has proven to be a very stable business even in tough economic climate. And this is due to the solution itself, sells and implements that are truly core to the operations and mission-critical for their clients. So this is not something you can switch on and off.

So there's very little churn, and the churn is less than 2% per year. So a very stable customer base. And the customer base itself is also very broad and diverse with over 7,000 clients, so no big client risk -- or not one client making a lot of your sales. Finally, its solutions are typical sold as a subscription, leading to a share of 50-plus of contractually secured revenues.

Then the growth of its core market in PLM and ERP. This is driven by megatrends as mid-market manufacturing clients or any clients or any company needs to move to the digitalization and needs to move to cloud solution. And therefore, the applications are becoming more and more complex, and they are looking for experts to outsource their IT services, and the market as such is growing as a result of that. The third pillar, M&A. I will touch on this on the next slide.

And then finally, DACH expansion. We saw the potential for geographic expansion from a German-centric business to a true DACH organization by building structures, processes and teams in Austria and Switzerland. and creating a more international group, first focused on DACH. And in 2024, we also paved the way for further international growth with the first small add-on in the Benelux.

Now as I said, let's have a look at the M&A agenda. Over the 4 years, we have completed 14 add-ons with MAIT, and there's a clear strategic rationale for M&A in the market. The smaller players lack the depth and breadth of offering that is required by the software vendors and the customers. The solutions are getting more and more complex, and the smaller companies can't cope with that increased complexity. So smaller founder-led partners often saw MAIT as a natural next step of growth and a good home for their business.

We have acquired across MAIT's portfolios of vendors but especially strengthens the strategic PLM side of the business. As you can see -- you can see the most of the clicks at Siemens. Each of these acquisitions were sourced bilaterally outside of sale processes and importantly, they were tightly integrated because buying a business is not that tough. It's more the integration to have it properly integrated, which is the hard part of it. And our team helped particularly with the M&A, the financing and the integration of these companies.

And that strategy delivered, as you can see, from GBP 53 million value in September '21 to GBP 143 million at exit, delivering a 27% IRR and a 2.7x money multiple. Talking about the exit. Throughout our investment, MAIT received strong interest from investors that valued its stability, downside protection, M&A track record and its clear strategic focus on the manufacturing industry.

We have started to thoroughly prepare the exit already a year before. This is what we do with all our investments. We start early on to make the companies that we own exit-ready, that they have all the data available that will allow us to run efficient and good processes. We had initially targeted a post-summer process with the start in September 2025, so now. However, after early informal meetings between management and potential investors, we noted very strong interest in MAIT.

And over the summer, DBAG, who we know well, then stepped forward with an accelerated preempt, and this provided a high level of transaction uncertainty at an attractive valuation. So the transaction was then signed on the 29th of August and delivered, as I said, 2.7x money multiple and a 27% IRR. We now expect completion of the transaction in Q 2025 after approval of the German and Austrian merger control authorities. So this is our story on MAIT, and you see a quote from Stefan Niehusmann, who's -- on the right-hand side. I think bringing it together, I think it's a good summary of our journey with that management team.

We then turn to our latest investment, OMS. OMS, what does OMS do? OMS is a testing business for electrical safety equipment, portable and fixed equipment. So on the right-hand side, you see the portable appliances -- sorry, portable appliances, PAT, which is basically everything in an office that has a cable and needs to be checked for safety on a regular basis. And that is 70% to 75% of the business today. And then you have the bigger machinery installations and machinery, which is called I&M, which stands for 25% to 30% of the business.

As I said, these needs to be regularly checked, and OMS is the service provider who is doing these checks. The company has 700 -- more than 700 employee service staff who are executing these checks across 43 locations in the DACH region, serving more than 7,000 customers. It's the best operator in the market, we believe, because of its proprietary software platform, and I'm going to talk about that platform called Inspektra later in the presentation. It's a key differentiator for us in the market, making the business more efficient and more profitable than anyone else in the market.

We have been following that company for many years. We first identified it in 2019. It is a primary buyout that we bought in a bilateral and proprietary process. which I think is very important for us, not only -- I mean, we always pay good valuations or fair valuations, but bilateral process allows you to get closer to the business to execute a much better due diligence than what you can do in a process. We invested roughly GBP 100 million. And again, you probably can see a bit of a pattern here, significant reinvestment of the sellers and the founders, announced it in January '25 and completed it in February '25.

This is actually a growth pattern we really like. So this is from 2016 to 2024. It's a compounding business. It's a consistent growth that you see. There are no big jumps up and down, but a very constant continuous growth pattern between '16 and '24, you can see more than 40%, we're looking at revenues here. And on the lower side, you can see the number of sites that the company operates from 2 in 2016 to 43 in 2024. So this is a very nice growth trajectory that we, of course, found very appealing and attractive.

What about the other attractions for us? So first of all, the market. OMS service fundamentally backed -- services are fundamentally backed by EU regulation, transferred into national law. So these tests that OMS does are compulsory. They are relatively low cost for its customers, but severe consequences in case of noncompliance. So if an MD of a company who has an accident in evolving electrical equipment, if he hasn't done the test, he's personal liable. So there are -- the cost of noncompliance can be very high. Loss of insurance, personal liability, risk for management.

Then the second key attraction is scale. OMS is the clear market leader. We have 5% to 10% market share in DACH in a highly fragmented market. And why this matters, I'm going to talk about in a minute. It has a density with over 40 branches with close proximity and high project efficiency.

I'm going to talk about the software in a second, but this is a key differentiator that we see, highly data KPI-driven testing processes enabled by the Inspektra software. A strong experienced management team that built the business over the last years. And finally, a very strong financial profiles with reoccurring revenues and revenue visibility. The backlog of typically -- are typically multiple months from both new and repeat business, which allows the business to optimize service staff hiring and project staffing.

Let's have a look at the underlying market. In 2024, the market in DACH, so was roughly [ EUR 900 million ]. It's the EUR 0.7 billion plus Austria and Switzerland. So it is a sizable market, and it's made up of machinery installed and portable testing. And we expect a CAGR over the next 6 years of 9% to EUR 1.2 billion. So it's a sizable, big enough market for us, and the market is driven by two factors. First of all, the inspection penetration rate, increasing from 37% in 2018 to 67% in 2030. So more people or more companies testing as a result of increased awareness. And the piece of outsourced share of testing growing from 53% in '28 to 67% in 2030. So this is driving the market. We expect good market tailwinds for the foreseeable future.

We now come then to the density model or the geographic coverage of our business. And this is one of the differentiated factors. No one else has this network of branches. Why is it important? It drives productivity as it reduces driving times. The testers or the service staff travel from the various locations to their customers. The more density or the more sites you have, the closer -- the shorter the routes will be, the more efficient they can be. It's also the proximity of local leadership to service staff for management and coaching is also important. And then finally, your customers like to have you close by. So if you have a branch in their regional area, that helps in the selling process.

Now the second one is our software, which we call the Inspektra platform. This has been developed over several years and is supported by a large in-house software development team, a key differentiator for us. No one else has this kind of platform or this kind of proprietary tech. And OMS derives significant advantages from it both for internally but also for its customers. And the internal benefits are that Inspektra fully digitize OMS testing processes, and it enables highly data-driven operations. So project leaders can live track testing performance, how quick someone tests, how many tests in an hour and so on and allowing for early interventions and rapid problem solving.

And we have seen this in the numbers. In the “PAT segment, the launch of a testing app that the company uses in 2022 delivered a substantial productivity gain in the testing as previously manual steps were automated. We have seen this clearly in the numbers when we did our due diligence. And these learnings can be leveraged to further optimize and digitize processes around other segments. So the focus so far was on PAT, where we have 75% of our sales, and we are now rolling it out to I&M, currently 25% to make comparable productivity gains.

In terms of the customer-facing benefits, this is a cloud-based portal software that acts as a one-stop shop, enabling customers to access testing data, review outcomes and actively manage assets, for example, to track and resolve defective devices after inspection.

And beyond the core segments, OMS also offers additional services through INSPEKTRA, such as self-testing and home office testing. All these features are highly valued by customers and enhanced stickiness, and this is what we mean with tech-enabled services.

And the next slide brings those two differentiating factors together the density that we have and the software-enabled services. On the left-hand side, you see the travel time per project that from 2021 to the last 12 months declined. At the same time, the testing efficiency, so that measured in a real speed number of tests per FTEs increased. And that has an impact on the productivity and output per FTE.

On the right-hand side, you see 2022 to LTM, the number of volumes of tests per FTE and the revenue per service FTE, both going up significantly in that period. And that you can imagine, has a significant input on our P&L and our EBITDA margin. So as the business grows, it scales very nicely also on the bottom line.

So this is how we found the business or how we came across it. So we have been following this business for many years, 6 years, but we have also known the owners for more than 10 years now. And we have a very trustful relationship with the sellers. They all know us from other transactions, and they know that we do what we say. So there was a trustful relationship with us that allowed us to get into a proprietary process. They trusted that we would deliver what we said we would.

I think what also helped is 3i's TIC expertise. Right at the beginning, I've shown you a list of companies in the TIC sector that we have owned and that we have successfully grown and exited. What always resonates with -- particularly with founders, but also with the CEOs is our permanent capital approach that we invest from our own balance sheet that we are not limited by fund periods that also resonated and also our active partnership approach that we work with our companies very intensively and help building capabilities and -- capabilities and growth.

So finally, the investment thesis overview. The first one is actually more of the same, which is always nice in an investment case if you can do something that has been proven. And there's a lot of -- there's a lot of potential in the market still. As we already pointed out, the market is growing and with increasing penetration, we can leverage our existing network that we already have and our existing software that we have.

So doing more of what we already do should contribute to good profitability growth. As I said, 75% today is PAT, 25% is IMS. I think the potential in IMS is much bigger for the company, and we are currently thinking about how we can focus and how we can tap into this market more.

Enhance operational efficiency, we constantly develop our inspector platform to get additional gains in efficiency and improve our processes further. And then lastly, selectively M&A to strengthen our core segments and potentially to push into adjacent business areas or geographies.

As you can imagine, if you acquire -- the market is highly fragmented, you are able to acquire smaller competitors where you can use your software and where you can integrate in your already existing network, that makes a lot of sense for the business.

And here's a slide that you -- that Rupert also has shown for MPM. This is almost a standard that we have in our business that we, in the first year of ownership, make sure we have every -- the basis are right that in the coming years, we are set for growth. And -- but this is what we do in the first year, we look at everything, particularly here in operations, this is a business that needs to show operational excellence. You're managing a lot of people, a lot of tests that you're doing and the more efficient you are in these operations, the better it's one of the key pillars of this business being successful.

IT, optimization of the IT architecture, as you can imagine, is key here, given how important the software is. We're helping the business with the financing. We just closed the banking or the financing of the transaction. So all these things we are focusing on. But I would say after the first -- what is it now, yes, 4, 5 or 6 months almost, I think we are on a good way. Thank you very much.

So do we have any questions for Peter now?

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Manjari Dhar, RBC.

I just had one question on OMS. I'm just curious about that. The long-standing relationship and the 6 years between when you first identified or made initial contact and the first investment. I'm just curious about that timeline and what was it that led to the investment being made in 2025 and not before? So what was the trigger point there?

That's a very good question, and we tried to buy it earlier. But as you can see, I mean, if you remember the slide with the number of sites, so they invested quite heavily in this business, but the profitability needed to come through. So they opened a lot of branches, which was not -- were not mature enough to contribute to the profitability. But you could see with every year and the branches maturing, getting more customers, how the profitability went up. And they could see this effect. So they waited basically to show better numbers and then eventually, we could buy it.

We are now going to proceed with our next question. And the next questions come from the line of Andrew Lowe from Citi.

I've got two questions. One is on OMS and the other is just a bit broader about the returns that you generated in your private equity portfolios. So on the OMS question, I noticed on Page 46 that your -- the number of sites that you've had has slowed quite a bit in the past couple of years. So just curious how sort of many sites you think kind of what's the end game? Is this just sort of small incremental growth now you've got the kind of densities up?

And then the second question, maybe it's one for Simon, but you flagged some really good IRRs, some really good money on money returns. Can you just help us maybe think about how we kind of benchmark that versus your peers? Have you got any data to sort of to say where your returns are versus your peers, be it in a quartile? Or anything you could do there would be really helpful.

I'll take the first one. Yes, I mean, it's a right observation that the growth has slowed. Probably in Germany, we have another two or three, four sites we're going to open, which doesn't mean that the growth has come to an end. It's just that we need to make these branches now more efficient. Now we have full German coverage. But these branches are -- and you can see it like the cohorts, how they grow, these branches will grow every year and gain more customers in the region. So the growth from just opening branches will slow down, but the branches itself, they're going to grow by higher penetration or penetrating the market better. Then we see potentially further openings in Switzerland and Austria. That's the answer to that question.

Thanks, Peter. I'll take the second. This is always quite difficult because comparisons and information and transparency are not of the best in this industry, as you know well. But -- if you look at us, we do it in 3-year cycles. So we have 3-year vintages.

The first vintage that we're really talking about from when I've been here is 10, 12, and then they go 3-year cycles from there. The majority of those vintages would be top quartile, we think, but not all of them. There is still question marks over whether we can attain that in a couple of them. But certainly, overall, the compounding growth that we've had from our PE portfolio is really not seen anywhere else, I would suggest.

And I'm showing no further questions. So I will now hand over to Silvia Santoro, 3i Group's Investor Relations Director, to address the written questions submitted via the webcast page.

The first question is from William Woods at Bernstein. And is it, does AI change your perspective on the opportunities and risks of investing in software and services space, either from an operational or valuation perspective?

Yes, I think that is a very broad question. I mean, yes, I think this is certainly something that our sector is evaluating on an individual basis, I would say. Really, I don't -- of course, we're following what's happening. And we look at every investment, how AI might affect it. I don't think we have an overall view on how exactly the sector will evolve, because I think there's a lot of moving parts at this point of time. But it will certainly have an impact -- has some kind of impact on the industry and what it does. That's for sure, but I can't give you a precise view on what we -- how we're looking at it. Sorry.

Thanks, Peter. Then there's a question about international expansion. I think you alluded to opportunities in Austria and Switzerland. But given that this regulation and the compliance rules are EU-wide, is there a broader opportunity as well?

There might be, yes. At this point of time, I think we see still so much potential in Germany and the DACH region that we focus on that. But as I said, it's a EU regulation and the German take it particularly serious. But at the end of the day, all other countries will have to do the same thing, and then I think we're well placed. But at this point of time, we focus on Germany. But I alluded to potential M&A outside of Germany to enter into adjacent geographies, that might be an option, because in principle, the software should also work there.

Thanks, Peter. And then we have some more detailed questions about the comparison, the cost comparison between outsourcing and doing this testing in-house for a company and the reasons for outsourcing, whether that's driven by risk mitigation or cost reasons.

I think it's both. The documentation, you have to be you need to document the work you're doing very well. And if you do it in-house, it's not always clear that this documented patient has done well. And then I think if you test these kind of equipments, I don't know, every day as your job, you're much faster and much more efficient than you're trying to read into what you have to do with your people that you have to be electrically trained to do that. So not everybody can do it.

And the final question on the size of a fine versus -- the cost of non-compliance versus just not doing.

Well, I think it can be very high. As I said, it's a personal liability if there is an accident, then you -- the General Manager or the MD is responsible for that.

I think, we are showing no further questions. So perhaps we can move on to closing remarks from Simon.

Well, thank you, Peter. I hope you found today's presentation is helpful. And we're now happy to take any final questions that people may have, which is not about the investments that we've heard about today.

[Operator Instructions] We are now going to proceed with the first question. And the questions come from the line of Manjari Dhar from RBC.

For management, this -- I could ask a question on the statement this morning. I see that you've entered an agreement with GIC to purchase some additional action equity in exchange for 3i Group shares. Is this kind of transaction something that you guys think you could do a little more of in the future? Is it something you'd explore to further increase the action stake?

Well, we have a long-standing appetite to buy more action equity, as you know. In this particular case, we were approached regarding using shares rather than using cash. We have the flexibility to do either. And -- the benefit, I suppose, of using shares for the seller is that they continue to maintain their exposure to our compounding story over the long term. And so I wouldn't be at all surprised if this happens again, and we will continue to have appetite for increasing our stake, should it do so.

We are now going to proceed with our next question. And the question comes from the line of Ashton Olds from Rothschild & Co Redburn.

Ashton, here. First question is just whether you have any more commentary you can provide around France and what you're seeing there at the moment?

And then my second question is just related to gross margin. It seems seasonal sales were quite good, which suggests that gross margins might be a little bit stronger in the period. And then obviously, as we go into next year, we might have the benefit of FX and changes at the factory gate. I suppose how are you thinking about reinvesting versus sort of maintaining gross margins going forward?

Okay. I mean, just let me say a few comments on France, but we have been reasonably detailed in the release. Context is important. So like-for-like is always a measure against the previous year. September last year was our strongest like-for-like month, and it had 3 of the top 6 like-for-like weeks in it. So this was a very high hurdle we're jumping. And that's why with the disruption we've seen since the beginning of September in France, it has pulled those like-for-likes down a little.

We're still trading very positively in France, and we're very confident about the last quarter. But the economic situation and the political situation is very difficult and that is affecting consumer sentiment and consumer confidence. There's no doubt about that.

In terms of the gross margin sales mix, you're right. Seasonal sales have been strong this year over the summer, although we would like colder weather in September, because that does help. And some of the weather last year was very favorable to sales in September. So we are seeing a nice margin increase as a result of sales mix, not as a result of us increasing any prices.

And when it comes to the future and the better buying prices that we're seeing this year, then we will be passing on the majority of that benefit to the consumers in the price of the catalog in store next year.

Thank you. I'm showing no further questions. So I will now hand over to Silvia Santoro, 3i Group's Investor Relations Director, to address the written questions submitted via the webcast page.

There are no further questions.

Okay. Great. Well, thank you to everyone. I hope you found this morning interesting, and thanks for dialing in. Have a good day.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.