AO World Stock

Okay. Good morning, everyone, and a warm welcome to those of you here with us today and to those watching online later. So thanks for making the time. I know many of you will have been to -- been on results calls all week, so we will aim to make this one worth your time.

So I'm here with John Roberts, our Founder and Chief Exec. And between us, we're going to take you through what it means and where we go from here. So a quick word on structure. I'm going to take you through the financial and operational performance, the numbers and the story behind them. John is then going to pick up strategy, our customers, our markets and the moats we've been building. And we'll finish, as always, with questions and answers.

A year of delivery is the headline. So let me take you through it. So FY '26 was a year of delivery. We did what we said we'd do, and we did it through a tougher cost backdrop than any of us were planning for at the start of the year. The headlines are revenue was GBP 1.27 billion, up 11.4%. Adjusted profit before tax was GBP 50.5 million, up 16% at the top end of the GBP 40 million to GBP 50 million range we gave you last June.

Free cash flow was GBP 66.4 million, over 2.5x last year. We ended the year with over GBP 200 million of available liquidity, made up of a cash balance of GBP 81 million and an undrawn RCF of GBP 120 million. All of this resulted in a net funds position of GBP 16.4 million, having started the year with net debt of GBP 35.9 million. Profit is growing faster than revenue. Cash is growing faster than profit, and the balance sheet has never been stronger.

The flywheel that John has talked about previously and we'll return to later is doing what he said it would do. So I think it's worth me starting by walking back through the commitments we made last June. We told you to expect GBP 40 million to GBP 50 million of profit before tax, and we've delivered GBP 50.5 million. We told you we'd convert that profit to cash. We have GBP 66.4 million of free cash flow. We told you we'd absorb about GBP 8.5 million of group costs from the April changes to National Insurance and the national minimum wage, and we have.

We told you we'd fix or close mobile, and we fixed it. It's now contributing profitably to the group. And we told you Magpie would integrate and turn profitable. It has. 18 months on, it's on an exit run rate of profitability. There were no adjusting items in the year, so reported PBT is equal to adjusted PBT at GBP 50.5 million. Basic earnings per share was 6.36p compared to 1.7p reported last year or 5.7p on an adjusted basis.

So broadly, we said we wanted to be reassuringly boring, and we have been. So on to the revenue lines. As I said earlier, group revenue was GBP 1.27 billion, up 11.4%, and that breaks down as follows: B2C retail revenue was GBP 911 million, up 9.5%, and that growth is share driven. Our share of the MDA market grew by 6.8% to 17.1% of total market, with share growing faster in SDA and AV categories.

About 720,000 new customers chose us in the year, taking our customer base to 13.3 million. B2B revenue was down 11.9% to GBP 103 million, and that's the annualization of the deliberate exit from the low-margin kitchen furniture work that we started in FY '25, and that reset is now materially complete.

Mobile revenue was down 18.4% to GBP 77 million, which is the output of the pivot to mobile profitability, and I'll come to that on the next slide. Recommerce was GBP 119.5 million and up 180%, which is obviously the effect of the full year of Magpie consolidation versus the part year last time. Third-party logistics grew 9.2% to GBP 33.3 million, where we leverage our existing network. And recycling grew by 6.8% to GBP 22.7 million with volumes up, and this was partially offset by lower commodity prices, particularly on steel as we flagged at H1, and hasn't recovered in H2 as we'd expected.

Okay. So moving on to gross profit. We delivered GBP 316.1 million, which was up 14.5%, growing faster than revenue at a 25% margin, and this was up 0.7 percentage points on last year. There are 3 things to call out as to how we get from FY '25 to FY '26. The single biggest contributor was the pivot to profit in mobile. The second was the full year inclusion of Magpie at a higher margin mix than the rest of the business.

And third was the core retail gross margin was slightly up, which helps offset the lower average selling prices we saw across the year. And this was a combination of market dynamics and us sharing economics in the form of great prices with our member base. And we'd expect to see more of this into the future as we continue with our principle of scaled economies shared. We saw some partial offsets in labor inflation in logistics and the lower commodity prices in recycling that I just mentioned.

On mobile specifically, and I'll keep this brief because John will cover it later in his section, it's important to know it's now a turnaround story rather than a problem story. Revenue is down by GBP 17 million by design, but the business is now contributing profitably to the group. At H1, I said margin was lumpy and bumpy. H2 has been materially cleaner. Our focus is now on concluding longer-term agreements with the networks to give us economic certainty into FY '27 and beyond.

But as we look to the future, particularly on Switch24 and the MVNO, Switch24 launched in H2. We had some iPhone constraints, supply constraints, which affected the period, and we still have work to do to simplify the customer messaging. We have soft launched our own MVNO, AO Mobile, and look forward to gradually releasing it to more customers, and John will take us through how we see that developing.

So on to the cost base. Advertising and marketing was GBP 53.5 million, up GBP 9.1 million on the year. About GBP 3.5 million of that is the full year effect of Magpie, about GBP 1 million of that increase is brand expenditure. The biggest piece, GBP 8.4 million is PPC on ao.com, where we leaned harder into direct customer acquisition when the customer -- when the unit economics justified it.

And this was partially offset by about GBP 4 million of reduction in mobile, where we pulled back from those unprofitable connections. Warehousing was GBP 75.1 million, up GBP 13.1 million year-on-year. GBP 7.3 million of that is Magpie, the rest is volume and labor cost increases. About 30% of the warehouse cost is infrastructure, about 70% is labor, which is where the government-driven inflation lands the hardest.

Other admin costs were up about -- sorry, were GBP 138.2 million, up GBP 12.5 million. About GBP 11 million of that is the full year impact of Magpie. The rest is labor inflation, which in total was about GBP 8.5 million of group costs from the April changes to National Insurance and the national minimum wage as well as continued investment in our ERP program, significantly offset by offshoring and rightsizing.

We absorbed that and still delivered at the top end of the range. On the self-help side, our offshoring program saved about GBP 2 million in the year, which is about GBP 4 million on an annualized basis. That lower in-year figure reflects phasing and the necessary dual running costs whilst we were learning. We've now got about 150 colleagues based in South Africa, and we expect the majority of our customer engagement operations to be overseas by the end of FY '27.

We've also reengineered warehouse shift patterns, team structures and our returns operation, and we'll come on to robotics on the next slide. But I'll repeat something I said at H1 because it's worth repeating, we will never take a cost saving that compromises our service standards. Our Trustpilot rating of 4.9 out of 5 across over 1 million reviews is not something we would ever trade for short-term margin.

Our operational foundations matter for what comes next. So let me give you a bit of operational color because some of this isn't in the headline numbers. Logistics first. We have about 2 million square feet of warehousing for products and about 17 last mile home delivery depots. The fleet includes about 800 delivery trucks and a national network of about 260 primary logistics trailers, which enables the miracle of 4.9 out of 5 on 1 million Trustpilot reviews on a national next-day, 7-day-a-week delivery operation.

We added 160 new delivery vehicles in the year, including 10 electric vans. We'll replace about 360 more vehicles in FY '27, and that will be on hire purchase. The longer-term direction for our trunking fleet is unclear as the economic and operational reliability of new lower carbon technology develops. On hedging, for cost certainty into FY '27, we've got about 80% of our expected fuel usage hedged through to March '27 and substantially all of our electricity for the group fixed through to October '27.

On robotics, during the year, we carried out a small-scale exploratory trial, and we will expand this in FY '27 to include testing in a live operational setting. John will pick up the broader strategic context on this in his section. On our ERP program, we spent GBP 3.8 million in the year against GBP 2 million in the previous financial year, and we expect that to be near GBP 7 million in FY '27.

The second phase of our program, which is the replacement of our warehouse management system, is expected to complete during FY '28. We've also replaced our contact center platform, which didn't go as smoothly as we'd hoped, but it is now in, and we look forward to building AI solutions on top of it that will improve customer experience and in time, lower costs.

In recycling, we processed 1.6 million major domestic appliances at our Telford facility in the year, up from 1.17 million last year. And that takes us to 10 million products recycled since we opened the facility in 2016. Now this is the slide I'm most pleased to talk about. Free cash flow was GBP 66.4 million compared to GBP 26.3 million last year. Cash flow from operating activities of GBP 95.7 million, up from GBP 58 million. Now there's a timing piece to walk through on working capital. Net working capital was GBP 46.8 million compared to GBP 66.6 million last year, and so that's an improvement of about GBP 20 million.

At H1, I flagged we had about GBP 39 million of timing inflow, which we expected to largely reverse in H2. It has, broadly, and the underlying year-on-year improvement is real, not a timing artifact. Inventory days came down from 47 to 40. Within that, we deliberately reduced mobile inventory by about GBP 14 million as part of our pivot. And we increased core retail inventory by about GBP 13 million to support range expansion and availability.

So growth gives us about half of the reduction with the other half coming from phasing around the stock days calculation in the different business units. But importantly, it's a tighter overall position with the right shape underneath it. Receivables were up GBP 6.5 million, and we ended the year with cash of GBP 81.3 million. Total available liquidity of GBP 201 million, and this was supported by our GBP 120 million revolving credit facility, which remains fully undrawn and is in place until October 2028.

As I said at the start, we started the year with net debt of GBP 35.9 million, and we ended it with net funds of GBP 16.4 million, a GBP 52 million swing in a single year on top of the GBP 10 million buyback and EBT purchase of GBP 4.2 million. CapEx in the year was GBP 6 million against GBP 8.9 million last year, and this was mainly in our recycling facility. It included the additional purchase of land that we've previously been leasing.

Asset finance lease additions were GBP 22.3 million, and that was principally the vehicle refresh I spoke about. So if you look at our total investment in operational capacity, CapEx plus lease funded, it's higher than the headline CapEx number suggests. Now the balance sheet position is what enables the next conversation. I want to be explicit about how we think about capital allocation because we now have a business that generates real cash and how we deploy that matters.

We have a simple framework with 3 priorities in order. First, the balance sheet. We want it to be strong, resilient and flexible. We don't manage to a fixed leverage target, and we're comfortable moving between net funds and modest net debt depending on the investment needs and the cycle. What we won't do is trade liquidity for short-term optionality. We want enough headroom to trade confidently through whatever the cycle throws at us.

Second, investment in the business, but only where the returns justify it. Every meaningful project is assessed against our cost of capital with disciplined criteria around payback and strategic fit, logistics, technology and infrastructure. On a case-by-case basis, we'll review M&A opportunities where it's consistent with the strategy and enhances our capabilities. If a project doesn't clear the bar, we won't do it.

And then third, returning surplus capital to our shareholders, where we generate cash above what the balance sheet needs and what the business can sensibly deploy, that capital goes back. Our preference is share buybacks where they represent an attractive return relative to our cost of capital and special dividends where appropriate. The aim is to be consistent and flexible, not rigid or formulaic. We completed our first ever share buyback in the year, GBP 10 million, which equates to about 10 million shares. And we also funded the EBT with GBP 4.2 million to satisfy share schemes.

And reflecting our strong cash generation in FY '26 and the discipline of the framework I've just described, we have today announced an intention of a further GBP 20 million of returns to shareholders, a special dividend of GBP 10 million and a new GBP 10 million share buyback, both to commence following the circulation of the annual report. Both of the natural output of the framework. We've got a balance sheet that is strongest ever, an investment program, including potential M&A that we're funding comfortably from operating cash and surplus cash generation returned to shareholders.

Looking forward, the external environment remains uncertain. Geopolitical pressures continue. Inflation and input costs and on the consumer haven't gone away and consequently, consumer confidence is subdued. Our guidance for FY '27 is for profit before tax to be in line with current market consensus and with continued progress towards our medium-term 5% PBT margin target. The things that we've got working for us in FY '27, we expect to continue to gain share in core retail.

We'll have a full year of mobile profitability, a full year of Magpie profitability and more synergies to pursue and offshore savings annualizing to about GBP 4 million on a run rate basis. But the costs we're absorbing, we've got further inflationary pressure on labor -- from labor, stepped up investment in our ERP program, the fleet refresh and the short-term cost of robotics trials.

We're committed to the principle of scaled economies shared. And so on the journey to our 5% PBT target, some of the efficiency gains we deliver will necessarily be shared on route with our customers. And we're expanding our membership promise such that now our members always pay less. John will talk more about this later. But for now, we know the cost will be at least 20 bps of gross margin.

On a combined basis across capital expenditure and asset financing, we expect to invest about GBP 29 million in FY '27, with GBP 7 million of this being traditional CapEx across recycling and technology, including robotics and infrastructure and a further GBP 22 million being the refresh of over 360 vehicles in our logistics business, and that will be done by our asset finance.

One last point. Our effective tax rate for the year was 28.9% against the U.K. corporation tax rate of 25%. And the gap is driven by the IFRS 2 share-based payment add-back where we don't get corresponding corporation tax deduction. We've assessed our exposure under Pillar 2 and don't expect any material impact. Cash tax in FY '27 will reflect normal U.K. corporation tax rates.

And so that's the numerical picture, a year of delivery against tougher conditions than we were planning for, a balance sheet in its strongest position ever, a framework for returning capital that we're now actively using and an outlook that keeps us on our path to our medium-term margin target.

I'll hand over to John now to talk about turning that delivery into something more, the strategy, the customer, the moats and the runway in front of us.

Well, I think it's fair to say the numbers speak for themselves. So what I'll do now is step back from the numbers and talk about what they actually mean and where we're heading because profit doesn't happen by accident. Revenue growth at this level doesn't happen by accident and a Trustpilot rating of 4.9 out of 5 across 1 million reviews certainly doesn't happen by accident or quickly.

And what you've just heard from Mark is the output. I'm going to share with you more of the inputs and the engine that we continue to build. For the last few years, I've been telling you that our model is working and gaining momentum. Today, I'm going to take you through just how deep the roots of that model now go and why I believe that the best of AO is yet to come. Our strategy is built on a simple idea, scale economies shared.

We use our structural cost advantages to offer customers better value. Better value builds loyalty. Loyalty builds scale. Scale strengthens our cost position and around it goes. We've talked about this flywheel at the last set of results and likely, and I'll continue to talk about it probably for about the next 2 decades. Over the last 12 months, our revenue crossed GBP 1.2 billion and profit before tax was over GBP 50 million. And in our main retail business, we grew share.

Critically, though, profit grew faster than revenue, and that is the flywheel working. That is operating leverage, and that is exactly what the model was designed to do. None of this is luck, it is the compounding result of decisions we've been making consistently for years. Some of those decisions are uncomfortable. Some of them are expensive, and most of them took longer than we expected to. But that's how moats get built.

The first moat is customer trust. We now have over 1 million Trustpilot reviews at 4.9 out of 5. That is a world first. And when you think it's in a category where we step over customers' thresholds. We take away their old appliances. We install new ones, often within hours of the washing machine breaking down. That rating really is simply extraordinary. And it matters strategically, not just reputationally because if AI-driven shopping is increasingly informed by trusted signals, and that's certainly what we're seeing, then being Britain's most trusted electrical retailer is a very good place to start that AI revolution.

The second moat is operational excellence. Running a two-man home delivery network servicing every U.K. post code 7 days a week is genuinely hard. The graveyard is full of businesses that have tried and failed. We do it at the highest quality standard in the world, and we do it as the lowest cost operator, and we do that while still growing. That combination of world-class service at lowest cost is not a coincidence. It's a culture.

And culture, as we all know, takes years to build and it is almost impossible to copy. The third moat is brand relationships. Getting global brands to supply us directly on terms that enable us to compete has taken years, in some cases, over a decade. I certainly know I've invested a lot of my liver in the process. And those relationships are now deep and reciprocal. Those brands trust us with their premium products because we look after their customers properly, and we add value to their brands.

And in reality, there are only a few retailers in the U.K. that hold these relationships at scale. Three years ago, we launched AO membership. I was clear at the time that it wasn't a quick fix. I said it would take time. I said it would be uncertain, and I said it would take patience. I was right, and I'm very glad that we applied our normal long-term lens. Today, every key membership metric continues to improve. Members transact more frequently, and they give us a greater share of their electrical spend.

They cost less to retain than they did to acquire. And they're increasingly buying across categories, not just major domestic appliances. And that last point is important. When a member buys their washing machine from us and then their laptop and then their phone, that is scaled economy shared working exactly as it was designed. We get more of their wallet, they get more of our value, so everybody wins. Membership is not a loyalty scheme that's just been bolted on to a retail business. It's the architecture of what AO is becoming, and I've never been more convinced that we're on the right track.

And I know you would all love to see all the data under that on it. But we continue to believe that the value that we're building is very commercially sensitive. And so for now, you will see that and continue to see that in growth, profit and cash. 18 months ago, we welcomed musicMagpie to the AO family, and we're really pleased with progress. We've taken a business together with the team there that at a PBT level was losing a run rate of GBP 6 million per year and is now run rate profitable on an annualized basis.

That's not because all the systems just plugged in together perfectly on day 1, they rarely do, but it was because the cultures fitted. And culture, as I said earlier, is the really hard bit. One key thing we've been able to do is launch a partnership with Timpson, and that lets customers trade in tech for instant cash at over 1,300 locations across the high street. That is genuinely new and real convenience that's transformative for Magpie. But the bigger opportunity is what the capability we bought unlocks for the broader AO ecosystem.

Trading reduces the effective cost of a new purchase. Lower effective cost drives higher conversion. Higher conversion drives greater frequency and greater frequency deepens membership value. It's another flywheel within a flywheel, and it really is only just getting started. So it is material upside for us for the future for both Magpie and the AO retail business.

Mobile has been a tough chapter for us, and I've been clear about that over the last few years. The postpaid market has contracted. Consumer behavior has shifted and the economics of bundled contracts have been under real pressure. We face that reality though, early. We work closely with our network partners in O2, Three and Vodafone to either reshape the category into something that works for everyone or close it in an orderly way.

And I'm pleased to tell you that that focus and creativity on all sides has delivered a meaningful improvement. And the mobile business entered the new financial year now profitable. And if that changes, we'll be pragmatic. We'll exit without drama or any material cost. And I think that is AO doing what we do best, seeing things clearly and acting decisively. But the more exciting part of the mobile story is what we're building, not what we fixed.

Switch24 and AO Mobile are big pieces of the strategic jigsaw falling into place. Switch24 is genuinely great value for customers. You pay for the depreciation of the handset and nothing else, and you get a new phone every 24 months, and I am absolutely delighted with the proposition. However, we have to be honest that it hasn't landed quite yet the way that we expected it to. The reason, when we look back at it, is quite straightforward.

Customers weren't actively searching for it in Switch24 within the mobile category, and they're still not. The proposition, though, is compelling once you understand it, but the customer journey at launch was more complex than it needed to be. So we're working hard within the constraints that we have with the FCA regulations to simplify the experience. And as Da Vinci said, simplicity is the ultimate sophistication. And right now, we're not quite sophisticated enough.

At the same time, we underestimated how important the airtime offering would be alongside the handset. The share of people whose main mobile plan is SIM-only has grown from 35% to 42%. Handset-only sales, meanwhile, even of the latest flagship devices represent only about 46% of the total of mobile transactions. And the latest model handset, handset-only sales naturally skewed towards a very specific customer, which is affluent early adopters who are already more predisposed to buy outright.

So that's not mass market. And the handset-only market is, to a significant degree, stagnant. These days, people need a genuinely compelling reason to change their phone. Without airtime alongside, Switch24 wasn't giving enough people that reason. AO Mobile changes that, we think, entirely. When we put the airtime and the handset together, AO Mobile with Switch24, we create the combined value that we'd always intended. So GBP 29 a month for the latest iPhone 17 with effectively an all-you-can-eat SIM is truly market-leading and compelling.

For context in that, the cheapest unlimited SIM on EE, for example, is currently GBP 35 a month, and that doesn't include a phone. Given that there are 3 SIMs per U.K. household, the saving for AO members is huge. And they're also then well placed to embrace the latest tech and the AI revolution by having the latest tech in their hands. So with constant media reports about the cost of living, the Strait of Hormuz, rising interest rates and energy costs with energy costs estimated to rise by about GBP 220 per year, I think this is another brilliant example of AO engineering our scale economies to share with our members at a time when they need it most.

I think it will make a real difference to people. And I believe the current model of buying the latest technology outright through your mobile phone bill will soon look as outdated today as blockbuster video does. We're early though, and we know that, but I would far rather be early and course correct on this one than be late and playing catch-up. A customer who takes Switch24 and joins AO Mobile is, in my view, a member for life. We will give them the lowest price forever on their mobile and in return, they give us their share of wallet on everything else.

That is the stickiest, most valuable customer relationship that we will have ever built. And so I'll make you a GBP 1 bet because you all know how much I like my GBP 1 bet that when we look back in 5 to 10 years, this will be how people access the latest tech in exactly the same way that PCP transformed how 80% of people now finance new car purchases.

Now let me turn to the external environment and to what we're doing about it. You all know that we have a government that does not understand or value business, and most disappointingly makes no effort to understand or appreciate the value that great businesses generate. They're unwilling to tackle any of the difficult decisions of the day, preferring to steer us as a nation into dependence and unaffordable benefits in exchange for voting for that paymaster. And the result of this is basically higher costs at every turn for businesses.

National minimum wage and employer national insurance rises increased costs on businesses and the recent labor market changes reduce the flexibility that businesses have historically relied upon. We're not immune to that as pretty much no businesses. But here is what I know. At exactly the moment that costs are rising, the capability of AI, automation and robotics is accelerating. And the cost of that technology is falling.

So we're taking a parallel approach. On one track, we're capturing the immediate productivity and efficiency wins that AI can deliver today, as you would expect us to. We have multiple AI projects impacting the business now in flight, from the simple rollout of Copilot to our knowledge workers to building on the capabilities of the new telephony system that Mark mentioned and the number of customer-facing innovations that will improve their journey through our website.

Over time, there will be clear cost savings by using AI to automate repetitive tasks that don't add value. But personally, I'm much more excited about how it can revolutionize customer experience and amplify growth opportunities, of which we have many. On the other track, we are reimagining the whole business from first principles with AI at its core. What does AO look like if we were to build it again from scratch today? And that's the question that we're asking ourselves.

I won't pretend to have all the answers yet because nobody does. The pace of change in AI is such that certainty is the wrong ambition. We have always been comfortable with saying, I don't know, while still moving ahead at AO speed. What I can tell you concretely is that our offshoring program in South Africa is delivering. Around 150 roles have now moved there. And it took time to get it right, to recruit, to train people and critically to embed the AO culture.

Mark has already made this point, but it bears repeating for absolute clarity. We will never ever take a cost saving that compromises our service standards. But we're now out of the learning phase and into business as usual. And the cost base is materially lower. The service quality is excellent and the flexibility we have gained is significant. And then there's robotics. And I'm really excited about what this can do for our business.

In the same way that AI is going through inflection points, cars are probably one of the most advanced of the physical applications of that. And whilst clearly, as ever in the U.K., we'll miss pretty much every opportunity possible to be an early adopter of this stuff. When you look at Waymo self-driving cars are now a pretty normal and ubiquitous form of travel in many states across America. Driving along road safely at 50 miles an hour, dealing with dynamic real-world eventualities, making critical life-saving decisions in real time on their own without human intervention.

In 2022, AI had an event horizon with the launch of OpenAI's ChatGPT-3. In the last few weeks, NVIDIA has launched Cosmos 3, which I believe will be for robotics what ChatGPT-3 did for large language models. And when people hear warehouse automation, they often think of something like this. And yes, that's a phenomenal piece of engineering, but it's not what we're doing. It's not right for our business, our product range or our model. So what we're doing is something much more like this.

This is much more flexible, relatively low CapEx, software-driven solution that has application across multiple formats and for many of our product types. It's going to be built to work with our operation, not to replace it with something entirely new. And as Mark mentioned earlier, we've been testing this for a while now, and we have seen capability improve and costs reduce. Cosmos 3 should turbocharge both capability up and cost down over the next few years to create ever more scaled economies to share with our customers.

So to conclude, last year was genuinely one to be proud of. Sales over GBP 1.2 billion, profit over GBP 50 million, market share growing. Our balance sheet is its strongest ever and over 1 million reviews at 4.9 out of 5. The business is now generating real cash, which gives us optionality to invest, to grow and to return surplus capital. Underneath all of this is a flywheel that is working, accelerating and compounding.

We have meaningful moats, a membership model that is coming of age, a recommerce business that is run rate profitable and full of potential, a mobile proposition that is finally genuinely exciting and an AI strategy that is grounded, moving at pace and realistic, not hype. None of this happened quickly and none of it happened by accident. Building something that lasts, something that competitors can't easily replicate takes time, investment and patience. And I've said that before, and I inevitably will say it again.

I have never been more confident that we have the right strategy. And I am deeply grateful, as I always am, to every AO, every trading partner, every customer and every one of you for being part of this journey. So thank you. Before we move to questions on housekeeping, if you can take the microphone as normal and before asking a question, state name and organization so that anyone is watching online can hear clearly. Andy, you'd like to go first?

Yes.

We always start with you.

9:15 it was supposed to be. It is 9:45 now. No, I'm delivery.

Andy is having a delivery.

I have got delivery from AO coming today, actually. It's going to be 15 more minutes, so I can start complaining then or not, hopefully. So a whole bunch of moving parts in the P&L in the year ahead, not to go over all of the things that you flagged there, but inflation, ERP trading down and the non-fixed element of fuel on one side, the offshoring annualization, mobile profit, Magpie profit on the other side of things. There's a whole load of moving parts there. It sort of feels like they broadly net off-ish this year such that the underlying growth that consensus implies is sort of underlying-ish.

So I guess 2 questions really coming from that. One, well, we've already confirmed that they sort of broadly net off this year. But not -- those factors aren't always going to net off, are they? I mean, how do you think about managing profit growth over -- on a year-to-year basis when you're doing GBP 1 billion and whatever of revenue and you're trying to land it within a few million quid. How do you feel about that? And are we going to have years where it's a bit more volatile, say, in terms of delivery? I guess that's my first question.

Yes. I mean, look, so I mean, you're right that broadly all that stuff nets off and the growth then delivers the underlying profit growth that sort of the market is expecting. I think there will be things like the investment in our ERP program, and that is a mix of revenue cost and there will be a little bit of that's capitalized as well. So there will be things that we do over time that, that means some of that profit number might move a little bit, and we'll happily talk to you about that in advance and try and get you to sort of understand the journey that we're on.

But we've set ourselves a medium-term target of 5%. We're going to continue to progress towards that. And as we grow the business, we should get closer and closer to that 5% and then on to our longer-term target that we set out after that. And so the direction of travel will be that way. Some years we will have some lumps and bumps in it, and we'll try and give you the visibility. But we do expect that growth continues to drive an increase in our profit growth.

Andy, I would add to that as well that if you sort of think back to 2022 coming out of COVID and our pivot to profit, what we would -- what we did then was when we look on to the horizon, it was fix or close anything that isn't making money or generating cash. So that was that program. And then when you look at our strategic house, if you like, and the flywheel, it was bring all the pieces of that jigsaw together.

And so that's all done. So there isn't any -- we have no problem areas of the business. We have no turnarounds. We have nothing to fix. So this is now about head down and drive. And we've got loads of, as I said before, flywheels within flywheels and growth opportunities and things that we've not done. We've got huge recommerce opportunities that we've not plugged into ao.com yet. What will it do? I don't know because we've not plugged it in yet.

But there's loads of initiatives across the business to drive growth. And at the same time, there's loads of initiatives to take cost out. So it isn't one big silver bullet. There's loads of contributors that will make that happen. But the biggest thing for me is the strategic jigsaw is in place and the stickiness of that just keeps driving the flywheel.

Great stuff. The capital return, GBP 20 million additional, good to see that. 50-50 between special and buyback. Interested as to how you came to that, why you're not doing all buyback as an example.

Yes. I mean -- so I think there's 2 things there is that the different returns appeal to different categories of shareholders. And so we think it is important to address both of those. And the other one on why not just all buyback as a default. The reality is that our last GBP 10 million buyback probably took about 9 months to deliver. And so we wanted to return 20, not 10.

That makes perfect sense, point. And then the last one -- sorry, left the most boring one till last, I'm afraid. GBP 22 million on the vehicle refresh in the year ahead. Can you just sort of help us how that's going to play through the -- well, we sort of know on the balance sheet, but how it's going to play through balance sheet and P&L?

Yes. I mean, so P&L, there won't be a big impact. So it's replacing -- it's all replacing existing vehicles. So the cost of vehicles has probably gone up slightly. So the run rate of the cost will go up slightly, but it's nothing that...

Won't have any impact on the interest line.

No. And effectively, they will all be done on asset finance. So it doesn't go -- actually go through the CapEx line, but it is on the sort of the IFRS 16 piece.

John.

John Stevenson from Peel Hunt. A couple of questions as well, please. Just start on credit-enabled sales. You've quoted the credit penetration. Can you talk about how that's grown over the last couple of years, what the blocks are, I guess, and to what extent your credit customers are converting into kind of 5-star members because they seem like an obvious kind of conversion place.

Secondly, just picking up on Andy's point on the cash, you -- I mean, in my model, you're going to be over GBP 200 million of net cash in a couple of years' time, 3 years' time. There's potentially a lot more coming out. I mean do you see anything from a capital point of view that would stop that happening? It feels like the cash returns are going to become more meaningful...

I'll answer the second question first, if you like. Yes. So I mean, no, so I think in terms of the profile of the cash generation, I don't see anything that sort of makes a big change to that. We've talked about our allocation policy that we've got to keep -- make sure the balance sheet is strong, that we will consider internal investment projects and M&A. We might do a little bit more of that. But in terms of the big macro piece on the fundamental assumption on the cash flows, then no, I think we probably broadly agree with you, which is why we sort of set out the allocation framework today.

And as far as the AO Finance is concerned, you won't be surprised to know that I'm not going to give you the number of how many of them are members, but they are very good. They're some of our best loyal customers, and incredibly cost-effective to market to. We have now over GBP 1 billion of available to spend in their accounts. And -- but it's just very much business as usual. There's no great step change. It is just a progression along the way.

Okay. And last one, just on the automation piece. You're starting testing. You've got, I think GBP 40 million, GBP 50 million of kind of overall sort of warehouse costs. How do you -- I mean, whether it's just keeping that down as you scale or whichever way you sort of think about it, how quickly do you think you can start to have an impact?

So we don't know. So -- but the direction of travel is firmly towards robots moving things around rather than people moving things around. It's just as simple as that. Cost walk into businesses on legs, those legs are getting more expensive and less flexible. The tech is getting better and the cost of it is getting cheaper.

And that inflection we've reached that inflection point. So that is firmly the direction of travel. It wouldn't surprise me in the short term if that's more of a cost actually than a saving as we learn how to scale that. But it's just uncertain at the minute. But there's nothing massive or material in it. It's much more of a direction of travel.

Caroline Gulliver from Equity Development. I just wanted to pick up on something you just mentioned around your customer data lake effectively. Now you've got your Five-Star membership, you're obviously collecting quite a lot of good data and in particular, that cross purchase from the washing machine to the TV, et cetera, to the computer and mobile.

When you're looking at your marketing, how much personalized marketing are you doing now? And how are you seeing that sort of people buying at what point in the journey do they start to buy other categories? And could you just think back to the fact that you talked about SDA and audiovisual growing faster than MDA. What's particularly doing well? Have you seen a pickup in TVs ahead of the World Cup, that kind of thing? Are there any particular categories you would call out where you feel like you're particularly winning share?

Well, so I've just spent an hour doing press calls talking about TVs and the World Cup. So yes, TV sales, you won't be surprised to know in May, because there's a World Cup. But again, it's not big news. I wouldn't want to get distracted on that. On your question on personalization and the phrase of data lake, data lake is a phrase that I hear a lot and how AI is going to be able to drive everything that goes with it.

If I were to score us out of 10 on how good are we at personalization at the minute, I would score us at probably a 2 or 3 out of 10. So on the one side, that's not great. On the other side, that's a ton of opportunity. And yes, we've got the data, and we are getting to the final stages of what has been a very long project to be able to harness all that data. But frankly, it's an education process. We are very well known for major domestic appliances. We are increasingly known for TVs.

And so that is just a time and education piece with our members. We -- in the non-MDA category, this is true across all categories, but particularly in non-MDA categories, we massively over-index our share in our member base. So when we look at the multiple category purchases is materially higher in our member base, and it wouldn't surprise you to know that. So overall, it is just firmly direction of travel. But I always say the dirty secret about our business is that nobody wakes up in the morning thinking the way they buy electricals is a problem.

And they go from 0 on caring about it when something breaks suddenly go instantly to 100. And I don't know what you're having delivered today, Andy.

Microwave oven.

Okay. So not that serious, but actually. If your fridge breaks or if your phone breaks and you go from 0 to 100 on the care scale really quickly, then we fix that for you very quickly and brilliantly, and you forget about it very quickly and you get on with your life. So in a low-frequency category, it takes time to educate people. And we're on that journey.

And everything is working and every metric is getting better. But if we went and spent GBP 50 million on TV advertising, I'm not sure how much -- it would certainly be a terrible return on investment, and I'm not sure how much it would accelerate it.

And then just one quick question on offshoring. You mentioned the annualization impact. But just in terms of obviously, 150 people in South Africa or in Africa. Is there more opportunities to do more of that?

For sure. As Mark said, that's where we're recruiting.

Yes, we will continue doing it this year, and we are recruiting exclusively in our contact centers in South Africa at the moment, not in the U.K.

David Hughes at Shore Capital. A couple of questions from me, please. Firstly, on the gross margin, obviously, that progression was a big driver of the improved profitability. Is that mostly coming from better profitability, mobile and musicMagpie, or are you also seeing gross margin improvement in the core business and kind of what's supporting that?

Yes. So most of that change is Magpie and mobile. There is a small improvement in the retail business that's effectively offsetting a slight decrease in average selling prices. So that's broadly the delta, but most of the improvement is Magpie and Mobile.

And then secondly, you called out the GBP 1 million in brand marketing. Are you seeing kind of improved brand awareness, improved kind of brand consideration on the back of that? Have you got anything you can share in terms of metrics or just at least directionally?

Yes, the unprompted brand consideration continues to improve. And we're investing in interesting and different things. So for example, we now sponsor over 1,000 grassroots sports teams. And we spend about GBP 500, so about GBP 0.5 million that we spend on that, which is difficult to measure overall, but we believe it plays to our brand. We're the biggest buyer of teddy bears in the country and continue to be, and it continues to resonate.

And the only metric that we have for that on brand consideration is that wherever bear is mentioned in a review, we have 100% five out of five rating. Other than that, I just think it speaks to the brand. And one of the things I actually love as a metric on it is just quite how many of them are traded on eBay. It's bunkers. It's probably our driver selling most of them. But the fact that people are buying them is incredible.

So we're not looking to just go and do brand spend on traditional TV advertising and those routes. We'll try and get good bang for our buck, and we're quite willing to be a bit brave and quirky about how we do that, all the brand metrics continue to improve.

Bruce from Lancaster. I'm interested when you get weaker consumers or surges of inflation and deflation, the changes within electricals markets are often very subtle in terms of consumers buying to a budget or lowering that budget. And on top of that, we've got the presence of cheaper goods from China. Could you just talk us through how that's affecting the business, if at all, how competition is reacting to protect profits on lower ticket prices, et cetera?

Yes. I don't think we've seen anything massive or material on that. And when you talk about cheaper Chinese goods, I'm not necessarily sure that actually plays. If you look at brands like Haier, it's been launched, it's had amazing success and it's -- but it's in a much more of a premium price point. If you look at Beko and Indesit, as brands would be now 40% of laundry share, and they're not Chinese-made. So if you look at Hisense on TVs, it's a reasonably premium product.

So we've got a bit of price deflation that is self-inflicted because of the value that we're delivering through the membership program. But other than that, sort of nothing to see here really, I think, would be my -- unless you've got anything on that.

Yes. I mean we've probably seen a tiny bit of shift in refrigeration from sort of Korean manufacturers to Chinese manufacturers and there is a bit of a price point difference there. But yes, I think broadly, as John said, it's -- we've seen a small bit of price deflation, and it's a combination of a little bit of shift, but nothing significant and the continued savings we pass on to the member base.

And if I think about -- to the point on the competitive landscape, I would expect -- we've seen significant cost pressures. And some of our bigger competitors and particularly store-based competitors will have had materially more cost pressures into their business than we've had. So electricals is not high margin. I think we're probably now the most profitable global electrical retailer at scale. And so the gist is -- it's not in there for people to be taking huge chunks out of everything...

I think Andrew's got one more.

I've got a reload. First of all, Joybuy, how are you seeing them? Any view on what they're doing and what they could do? First one. And then second one, particularly when you were talking, John, you can really get the sense of how important you think membership and the stickiness that PCP and MVNO is going to sort of bring to the business and to the customer base.

How would you be feeling if you -- and how would you be looking at revenue growth going forward if you were sitting here and hadn't started membership 3 years ago? Would we be looking at a 3% to 5% growth business? Would we be -- just interested as to how you think the business would be looking if you hadn't done all that work and kicked it off 3 years ago. Those are my two. Sorry.

Well, so by definition of how committed we are to membership and everything that we're building around it, it's not three -- and for me, it's not a 3-year journey. So the foundations of that journey were sort of set in 2017 when I went and spent all the time with the team at Amazon and the team at Costco. And I sort of think about the business as when the sort of the intersection of Amazon from a sort of Prime Costco membership model, and Ryanair.

I always think about as a lowest cost operator. And then it's right. So if that's the strategy that we set out in '17, '18, there's some big pieces of that jigsaw to put in place. And so it's been a long journey and an uncertain journey. And what we're now seeing is we've got real clarity on it, and we can see the data. When we launched it, everyone said we were crazy. You must be mad. Nobody will pay GBP 39 a year to join an electrical retailer membership scheme, you fruitcake.

And that's normally when we know we're on the right track when people are saying stuff like that. And we've done our homework. It wasn't an accident of how -- we've been incredibly thoughtful about how we've gone through it. But the problem is, the I don't know' answer, doesn't work very well, does it? But when people say, well, how long will it take you to get the recommerce engine to be able to do all this? I don't know.

And so we've had years of I don't know. And we're now coming out of that, and we can see all the data. We can see all the visibility of it. And so we're just delighted that we did it. I'm not particularly bothered about pondering what would have happened if we hadn't. But I think it makes the business incredibly more resilient, customers more loyal, and deeper, wider moats. In terms of Joybuy, well, I think it's a bold strategy to set out to out-Amazon, Amazon in the U.K.

And so let's applaud them for being bold. And I think the U.K. grocery market would be generally recognized as quite competitive with pretty meaningful infrastructures around the key retailers in that space to deliver that. So I think that will be quite difficult to go and disrupt. So I think it's a big ask for Joybuy to go and do it. But look, they're very committed to it. They're very clear about that.

And I'd bring you back to the graveyard that's full of 2-man home delivery businesses. What we do is very, very difficult. We're at, by far, the most difficult end of what they're trying to do. And that gives us inherent protection. So clearly, we've got a watching brief on what is happening. And what we're hearing is a lot of noise. What we're seeing at the minute is not a lot, but there's no way we would be arrogant enough to think that they're not going to grow that into being a serious competitor. So -- but we're not seeing any impact from it at the minute.

Just on chip pricing, just interested to see what you're seeing in terms of incoming inflation -- product inflation and anything it might do in terms of supply?

Yes. So we are seeing that in categories like gaming, particularly, which ironically has been quite helpful in the Magpie business. So -- but across the rest of the piece, nothing that is yet materially affecting stuff, but it is being flagged by brands that it is a possible driver of inflation over the next 12 months. But to what extent we'll see as we get into it.

But I'm pretty relaxed about that in the context of it will affect us and all our competitors in an equal way. There's no competitive advantage or threat in that. Normally, in the same way that, if oil goes up, and I know we're hedged, but it affects everyone. If the shipping cost rises, it affects everyone.

And on that, would you see trade-in capability on the ao.com website for gaming this year?

I hope so. It's one -- it's something that we really want to get in. But from a tech point of view, we've got a whole long list of priorities. And so we have to stack that up against what capacity we've got. We can't do everything that we want to do.

But fundamentally, getting trading and recommerce onto the dot-com platform, will be a material win for us, we think, and selling recommerce product, not just on the Magpie website, on the ao.com website as well. But there are more complexities than you might think in the background on fulfillment and everything that goes with it.

Okay. So thanks very much. It has been a year to be proud of. And as Mark said, the one message that I would like people to take away is that we've done what we said we would do. Thank you.

Okay. Good morning. So today, we're going to do things a little bit differently. Given there are no surprises in our first half numbers, I'm going to focus most of my time today on the strategy of where we're going rather than where we've been. Mark is going to run through these in more details later, but the headlines as far as numbers are concerned, are as follows. Group sales in the first half are GBP 586 million, which on a like-for-like B2C basis is an increase of 12% and total business increase of 14%.

Corresponding profit with this performance for the first half is a PBT of GBP 18 million, which is an increase of 10.4% despite the government's best efforts to constrain growth and add costs, which for us was about GBP 4 million in the period. We've ended the period with GBP 57 million of free cash flow and about GBP 200 million of available liquidity. This highly positive position has enabled us also to commence a GBP 10 million share buyback. And this has all been delivered whilst maintaining our globally leading Trustpilot score of 4.9 out of 5 on over 850,000 reviews. One could say that the first half of this year continues our theme of being reassuringly boring.

Looking forward, you won't be surprised that we expect to be a growth business. And today, we upgrade our profit guidance to be around the top end of our recently narrowed range of GBP 45 million to GBP 50 million of profit before tax.

Operationally, the business is in the best shape it's ever been in. And the strategy that we set out in June, which is summarized by the animation that we shared, is all going to plan, and we are better joined up than ever. That's why my big message today is quite simply, we're doing what we're committed to do. Our strategy is working, and we'll continue to deliver against that.

For anyone that hasn't seen the strategy animation, it's on our investor website, and it is essential viewing if you really want to understand our direction of travel. This image is the conclusion of the animation, and I believe that this strategy will serve us well for a long time, and it's one that we can continue to obsessively invest in. In the interest of expediency today, let's take our brilliant retail basics for granted, and let's assume that our high-performance culture that serves customers brilliantly and makes us the most trusted electrical retailer in the U.K. is in good health because it is.

As an output from the strategy animation, we've been asked several questions repeatedly. So I wanted to use this time now to answer these head on because they'll help to inform how you think about our future performance.

So let's start with membership. Now I know how unhelpful it is that we haven't given you all the commercially sensitive building blocks so far. And for this, I am genuinely sorry, and we know how unhelpful it is, but they do continue to be exactly that, which is commercially sensitive. So we don't plan to change our approach. But what I can tell you is that membership is central to our flywheel, as you see in the animation. Member numbers are higher than ever. Share of wallet continues to improve, as do member retention rates. You can see all this as an output in our sales and profit numbers as we continue to grow share.

The compounding effect of all of this means that I am delighted with the progress of our membership offer. At full year, we still have 2 big pieces of the sticky chicken jigsaw to launch. So I'm delighted to say that yesterday, we launched the first of these, which is Switch 24 on Apple iPhone handsets, which is referred to in the animation as PCP mobile. This means that members can now get an iPhone 17 from only GBP 17 a month and have it upgraded every 2 years to the latest model. It is a first for the U.K. market.

I'll say that again because you probably didn't think you heard it right. An iPhone 17 from only GBP 17 a month. Clearly, it's only been live for a short time, but it has been a 5-year journey of investing in it and inventing the capability to deliver it. And I genuinely expect this to now forever change how mobiles are bought in the U.K.

To confirm, we're also on track to deliver the second big piece, our MVNO, AO mobile from around the end of the financial year. That will then complete all the key pieces of the strategic flywheel that we've been building, which we can then drive for a long time to come.

So what's the latest with mobile? One of the biggest misunderstood areas in the business is that of mobile networks, their corresponding economics and their strategic impact. So please indulge me while I go into more detail than I usually would. This has been a turbulent journey for us as a business and a very unpredictable one.

The mobile category is one of the most important to our customers with one of the highest frequencies of renewal. So we have invested a lot in it. To make it a success, we've had to reimagine and reengineer how the whole thing works. We must be clear, though, about what drives our flywheel and what doesn't, what we're prepared to commit to and what we're not. But first, it's important to understand a few things on how the mobile market actually works. So I'm going to do this at a very high level, but I'm very happy to take questions at the end if there's any appetite that's left.

In what I think of as the old world, you used to go to Carphone warehouse, Phones 4U or a network shop and choose a handset with a contract and then pay a monthly amount for 1 or 2 years. At the end, you owned your handset, albeit it was pretty worthless and could upgrade to the latest model. Over time, handsets have become more expensive and tech less transformational. So refresh cycles have elongated and the term of contracts have introduced to -- the term of contracts have increased to maybe 3 or even 4 years in some cases to keep the corresponding monthly cost of the handset affordable. There's actually been relatively little innovation in how you buy mobiles beyond lengthening the term of the contract.

In parallel, networks and handsets have become increasingly unbundled and SIM-only has grown and mobile virtual network operators have taken increasing share. There's also been consolidation across the networks with now only 3 primary mobile network operators in O2, Vodafone, Three (3) and EE.

In super simple macro terms, those mobile network operators are highly geared businesses. So incremental customers are incredibly important to them. In the indirect space, the networks would agree minimum targets with retailers, including severe financial penalties for missing those targets. These targets grew each year irrespective of the aforementioned change in market dynamics. So gradually, that indirect channel has nearly ceased to exist as one retailer after another has either gone bust or closed.

So we've worked really hard in partnership with the networks over the last 12 months, particularly to build an agreement structure that is mutually beneficial. Profitable or not, it does not drive our membership flywheel. So it is simply a tactical commercial opportunity that currently makes sense for us and the networks. If at some point that were to change, we would close our postpaid business, which following the reengineering that we've done this year would have no material cost impact for us as a business.

Our own plans for AO Mobile, the MVNO, do drive our flywheel. It is strategically very important to us, and it is exclusively focused on sharing scale economics with our members. We've worked very hard to engineer as much of the cost out of the supply chain to bring the best possible value for our members, just as we have with the Switch24 offer.

Economically, our starting premise for our membership mobile offering is that it will not lose money, but it will drive our flywheel, share of wallet and become another reason to renew membership. We'll only know whether it will make money once we understand the dynamics of the base that we're going to grow. So there is potential for lots of upside, but please think of that upside as more budget for chicken to give back to members.

Priorities 1, 2 and 3 for our membership mobile offer is value for members, more chicken in the chicken soup. The more handsets we have on Switch24, the more hair dryers we will sell. The more SIM cards we sell on the MVNO, the more stoves we will sell. And the easier we make it for members to buy all this on finance, the more fridges we will sell.

Our objective is always increasing total share of the electricals wallet from our members and to have them delighted to renew each year. This section of our mobile business is totally within our control. It does drive our flywheel, and we are very excited about its future. So the 2 entities operate completely separately and independently. But clearly, we do get some group synergies on the back-end elements and some of the purchasing.

Another question we get asked a lot is why AO bought music Magpie. Music Magpie has been a very valuable, but also misunderstood addition to the group. So hopefully, I can clear that up now. I've just told you about the transformational iPhone 17 from GBP 17 a month. And the capabilities of Magpie are absolutely fundamental to have in-house to deliver that level of value to our members. The Switch24 model is about the customer paying for the handset depreciation rather than its full value. So maximizing the residual value as we're able to do with Magpie's capabilities enables us to deliver this outstanding proposition for our members.

In turn, this will also make it incredibly difficult for our competitors to break customers out of their 2-year renewal cycle, which keeps them as members and means we get their share of wallet right across the full electricals range.

So what did we buy in Magpie? We bought one of the leading e-commerce companies in the U.K., which incidentally just won the Lifetime Achievement Award from eBay as the most successful eBay seller ever. That's quite a capability and knowledge base to buy. The business was losing GBP 6 million a year at PBT level when we bought it. And in less than a year, it is now run rate profitable at PBT level. We paid GBP 10 million for the equity and a further GBP 22 million to pay off the debt and transaction fees.

The business was about GBP 100 million of sales, including GBP 35 million of legacy trading media like DVDs, CDs, et cetera. And we still trade just under 1 million of these units every single month. For clarity, this area is profitable, and it is an important part of the Magpie model, but it is not our focus for sales or profit growth. Our focus is tech trading, and that part of Magpie that the team have been learning and building for the last 13 years. And they are one of the biggest buyers of secondhand tech in the U.K.

As a result, they have vast experience in this market and understand the dynamics and the nuances deeply. This is the capability that we chose to buy rather than build. And I think we got incredible value, speed, and it's also a perfect cultural fit. We have yet to fully realize the opportunity of integrating the Magpie capability across the group, but this is all more upside for the next year or 2. Priority 1 was getting to profitability and enabling our Switch24 offer that we've talked about today.

Another question we get asked is, what's AO's structural difference that's going to enable us to make 7% PBT in the medium term, which is significantly higher than our industry peers. So in other words, is the AO margin target achievable and sustainable? As you'll see from our profit guidance for the full year, the business is currently performing at about 4% PBT. Our medium-term plan is to get that margin to around 7% and to invest everything over this into more fuel for the flywheel for customers.

I thought it was worth setting out quite how achievable that goal is by highlighting just 2 key areas. First, our central overhead is very well invested and leverages with growth. It currently stands at about 11% of sales, and we believe that around GBP 2.5 billion of sales, this drops to about 7% to 8%. This is within our control to deliver with cost discipline and growth leverage.

Secondly, it costs us around 9% to generate, process and deliver an order. And we have a clear path over the next few years to reduce this to around 6% through AI and automation as well as leveraging our sales mix into our growing member base. Critically, this is not about leveraging scale into our trading partners. There will be other opportunities as well. But for simplicity, we can see 6% to 7% of extra PBT from simple self-help and growth through driving our flywheel.

This creates significant structural competitive advantage, delivering 7% PBT that converts to cash while also making meaningful investments in ever deeper, wider moats. It won't happen overnight, and our commitment to the principle of shared scale economics means we will give back about half the incremental margin that we create back to members in one form more of price discount, added value or service on that journey to 7%.

And naturally, none of it will be a straight line, and we don't live in a vacuum. But relative to our major competitors, in our opinion, we have the lowest overall cost base, the biggest opportunity for growth and the clearest right to win.

We're also asked what happens to AO should consumer sentiment change? Well, look, clearly, if the consumer were to be feeling upbeat, affluent and positive, that were to ever happen, all votes would rise. So obviously, we would be a big beneficiary of that. However, we've always thought that Noah was right to build the ark before the rain came. And so our planning is around our resilience in a down market. We've lived through a few recessions and roller coaster rides over the last 25 years. And what has proven each time is that our business normally grows through them.

The reasons for this are as follows: First, the vast majority of what we sell is as essential to customers' daily lives as it is unappreciated. You don't think about it every day, but you rely on all the key things we sell for the vast majority of our customer base. It is a question of priority of spend, not necessarily ability to spend. If your fridge freezer at home breaks, you will replace it. You won't ponder whether to do it for 4 months. If your phone stops working, it's like having your arm cut off. If the TV in your lounge stops entertaining you, you will buy another. You might sacrifice a meal out or the outfit that might have gone with it, but few people will live for long, let alone stay married without the key products that we sell them.

What people do seek out though is better value for their spend. And this is where we tend to benefit because our service is better and faster. Our prices are at least competitive or if you remember, cheaper, and we have the most trusted brand in electrical retail. You don't build any of that through cost cutting in a downturn. We already have it, and it's incredibly well invested. In my opinion, it's not necessarily about macro sentiment, but who is going to win within each category and what is their right to win. Not all electrical retailers have built the same. And overall, the market is huge.

Given the pace and scale of change of AI development, a number of people have asked, how will it impact online retail more broadly and AO more specifically if or when AI is making the decisions on what to present to customers. Added to this is the question of how far the service that Agentic AI might offer from products and retailer selection as a shopping assistant through to transaction and who gets commoditized or marginalized through the process as a result. But this is where our depth of long-term belief and investment in the fundamentals of the business and its service really matter. And it's difficult and it's complex, and it will pay dividends.

When AI is giving advice, it bases its recommendation as a formula on who is the best price, where we are, who offers the best service or we're the most trusted electrical retail with the greatest scale of reviews on Trustpilot and how quickly can it be delivered? Well, we win there, too. Our membership program also provides an inherent hedge to this, given that whilst we can serve the member pricing into the AI algorithm, our members also get the best experience when they're logged in. And members are already invested in AO as their destination for electrical purchases. And this is, of course, the defense argument.

Clearly, the opportunity is enormous as more of these facts are surfaced more effectively to customers and potential customers where maybe for legacy brand reasons, we might not have been top of mind. So we actually see huge potential upside, and we expect this form of shopping to simply amplify the truth to more people, which will accelerate the fate of winners and losers. It's a classic story for us of heads, we win big and tails, we don't really lose.

So in summary, there are a lot of reasons to be cheerful. And hopefully, what you've heard today so far gives you more confidence that we are in control of our own destiny and have the right strategy. It's 5 years since the massive COVID sales spike, and we're now getting into the replacement cycle as well for products that are being used more than ever given the work-from-home trend. We have an incredibly exciting runway of new things to deliver for customers, some of which you've heard about today, and we have real clarity in our plan.

So to conclude, I'll go back to where I started. Our strategy and model are working, delivering double-digit growth and strong profitability, all the while driving further efficiencies from our cost base while maintaining record service levels to customers. Therefore, our plan from here is to keep doing what we've been doing. It might all sound straightforward, but none of it happens by accident.

So I'd like to thank everyone involved with AO, our people, our suppliers, our trading partners, our investors and most importantly, our customers. It makes me really proud to share these record results with you. So thanks for your time today.

I'll now hand over to Mark to run through the first half, and I'll see you back for questions at the end. Thank you.

Good morning, everyone. So John has given you the headlines and talked us through our strategic progress. So I'll paint a bit more color on the numbers and some of the operational detail behind them, and then I'll explain the outlook for the rest of the year. We'll then take questions at the end.

So we performed well over the first half. Group revenue numbers now include Magpie, which we obviously see the benefit of in H1 and more than offset some of the deliberate reductions on mobile and B2B. And so overall, for the group, we're up 14.4%.

In our main retail business, despite the consumer sentiment challenges, market data shows the electrical market has grown year-on-year. The MDA market grew about 2% in value terms, although that volume growth is slightly more than that. But we've seen customers trading down and a bit of a reduction in average selling prices, which we think is a market-wide mix issue.

We continue to delight customers, attracting more members and have delivered B2C revenue growth of 12%. The membership program continues to be a key differentiator, driving increased share of wallet with increasing renewal rates and the base continues to grow. Winning market share across all our key categories, MDA, SDA and audiovisual, and we're doing it by focusing on the fundamentals. We've expanded our product catalog by over 10% since the year-end, now offering more than 10,000 SKUs across all categories.

Our proposition from product availability, finance payment options, product protection plans, great delivery and installation and membership benefits has never been stronger. Underpinning all of this is a brilliant customer service, which will always be a cornerstone of our business.

As I mentioned in our update this time last year, we implemented minimum margin requirements across our B2B business, resulting in the removal of sales that required costly complex solutions, and this included kitchen furniture manufacturers. The revenue decline in this channel reflects the annualization of those strategic decisions taken in FY '25. And as such, I don't expect the decline in sales in B2B to be as large in H2.

As John has spoken about, the transformation we've undertaken in our postpaid mobile business has materially changed the profitability performance. Part of the changes we've made is to focus on a smaller, more profitable segment of customers and so network commission revenues have declined.

Recommerce revenue in the prior year represents the sale of reconditioned MDA products, sourced from our own ecosystem, but the current period now sees the addition of the Magpie business. And whilst this year has seen the integration of Magpie into the wider group, there's still considerable opportunity ahead, and the first of this will be supporting the back end of the Switch24 product, which John spoke about earlier, but there will be more to come too.

Gross margin percentage is up year-on-year. The majority of this is the mix of Magpie sales, but margins have increased slightly in the main retail business, too, and this offsets the average selling price reduction that I mentioned earlier. We've now completed the transformation of mobile. Margin was lumpy and bumpy through H1, but we expect to see a much improved position in the second half.

In our recycling operation, metal prices have been under pressure, particularly steel, which has acted to reduce overall gross margin. And based on future -- on current future prices, we don't expect to see a recovery in H2. We've increased marketing spend as a percentage year-on-year. This was the dynamic of the addition of Magpie, the AO at Home brochure and more acquisition costs where product unit economics now allow us to push harder in some of these channels. This is offset by an improvement in mobile where we focused on those fewer, more profitable sales. There's been an GBP 8 million increase in warehouse costs. And while some of this is the Magpie operation, the big challenge has been the government-driven inflation in labor costs.

We've also made good progress in addressing the debt in our technology stack and modernizing our infrastructure. This period saw about GBP 2 million invested in our warehouse management system as part of the broader ongoing modular ERP implementation. We've also successfully rolled out a new telephony platform, which offers the latest functionality and enables AI-driven features that will drive further efficiency and service improvements in the year ahead. These investments are essential to future-proofing operations, and they'll continue as we go through the year.

We've made strong progress in our offshoring program. We now have over 130 colleagues based in South Africa. And so far, we've been pleased with the results. To be clear, though, we will never take a cost saving in return for an inferior service that might jeopardize our 4.9 out of 5 Trustpilot rating and position as the U.K.'s most trusted electrical retailer.

This initiative will deliver medium-term improved profitability and is also helping us to build our capability in managing offshore roles more generally. Whilst we have learned that it is not easy or simple to replicate our quality of culture and it is definitely not a straight line to get there, it is possible. And it gives me encouragement that we have solutions to any anti-business developments that the government might take.

To summarize, the impact of all this, underlying profit margin has fallen slightly year-on-year from 3.3% to 3.1%. And this is broadly due in equal measure to the government-driven employment cost increases and the inclusion of Magpie in the overall numbers with slight increases in advertising being offset elsewhere in the the P&L.

So we ended the period with GBP 200 million of available liquidity, up from GBP 147 million at the year-end, and that's as a result of the strong operating performance, but also some working capital wins. We saw a slight reduction in inventories with an increase in the core retail business as we expect -- as we expand our range and availability, offset by a reduction in mobile as part of our pivot.

A working capital inflow of about GBP 39 million comes from a timing quirk of stock receipts and retail sales in August and September, and we do anticipate that a significant part of that will reverse into H2. Given the group's strong cash generation and the Board's ongoing confidence in future performance, we commenced our first ever share buyback program. During the period, we purchased about 1 million shares, and we expect to spend a further about GBP 9 million in the second half.

During the period, we also funded the EBT with GBP 4 million to purchase shares to satisfy incentive schemes. As we noted at the year-end, we have moved from financing vehicles from traditional operating leases to purchasing vehicles using asset finance. We acquired about GBP 13 million of assets in the period, of which GBP 11 million related to vehicles funded in this way, hence, increasing net debt with a further GBP 2 million of cash CapEx in recycling and technology.

CapEx in H2 will be about GBP 6 million with the vast majority of it being the purchase of logistics vehicles, along with a bit more investment in our recycling plant, and we expect to put asset financing in place for the expenditure. As we look forward to the second half of the year, we expect recent levels of consumer confidence will not get worse and that the reduction in average selling prices have now evened out.

We also think that metal futures -- based on metal futures, sorry, that commodity pricing will remain at current levels, but there is some opportunity here if they do improve. Delighting our customers has its foundations in being thoroughly efficient for them, getting things right first time. This mentality helps us as we obsess about keeping costs as low as possible, which we'll continue to progress with, whether that be in tech investment, automation, AI or offshoring where appropriate. But I repeat my earlier point that cost savings will only be delivered where the customer service is in line with our position as the U.K.'s most trusted electricals retailer.

Driving our membership base will always be a key part of our growth, and we're excited about the recently launched Switch24 product and our own virtual mobile network proposition, which will follow at the end of the year. Both of these will create more value for our members, more chicken in the chicken soup, you might say.

The government will announce its budget tomorrow, and we are hopeful that it's not materially to the detriment of the wider economy. I do say we're hopeful and the consumer specifically. But if it is, the built-in resilience of our core categories should see us right.

And as John has said, we now expect the result of all of this to land us around the top end of our previously narrowed guidance of GBP 45 million to GBP 50 million with full year free cash flow of about GBP 50 million. We continue to make progress towards our target of 7% PBT with a business and a balance sheet in good shape.

And so with that, we'll now take questions. As a point of housekeeping, please can take the microphone and state your name and organization so that anyone watching can hear. who'd like to go first, and John has already got his hand up.

John Stevenson at Peel Hunt. I appreciate, obviously, you don't want to dive into the KPIs on membership, but maybe try a different approach this time. A couple of areas would be quite interesting to hear more about. One is maybe if you could talk about the performance of some of the worst performing categories traditionally and how that's changed now you've got membership and now you've got obviously the range increase as well.

And secondly, maybe I don't know if you're willing to talk about the level of OEM support you see these days for sort of deals and events and if you're able to do more stuff now membership is increasing in its capability.

So beautifully crafted, John, but we still view it as commercially sensitive. I think the best way to answer both of those questions is that if you think about the categories, our total market share is a function more in our member base than it is in our nonmember base and particularly in newer categories, where we have the biggest opportunities for growth.

So if you think we're just under 20% total market share in MDA, we will be single-digit market share and low single digit in most of the other categories. But in our member mix, some of those are now in double-digit shares. So that's just very illustrative of the direction of travel of the more members you get, that's representative of the share that you get and the flywheel continues to fly.

From an OEM perspective, what the -- what we're able to do with the value that we deliver for members is to polarize and focus more sales into the offers because naturally, they are better value for members. So we're able to invest some of our margin into it. And at times, the OEMs want to invest some of their margin into it. So it isn't a case that the OEMs are paying for all the discounts. We are funding some of the -- quite a lot of the margin into those as well. But as you focus more sales into a smaller range and polarization in the SKUs, you get -- we engineer the supply chain to get savings out of that, that we then keep giving back that value to members.

And so brands unquestionably see the value of that as we're able to make more and more decisions around -- and it's similar to Black Friday, where we will have the Black Friday deals, where you've sort of got that for the brands going all day, every day, if you like. And so we have promotional calendars that we now build with the brands, and you'll see that in the offers that we have on site.

And just -- sorry, just on the music Magpie, when do you think those capabilities will come into the website, the main website?

Over the next couple of years.

Caroline Gulliver from Equity Development. A couple of questions on marketing, please. First of all, can you give us any color on the marketing campaign for Switch24?

And secondly, as we come into sort of peak trading, are you happy with sort of awareness of the cross-sell opportunity sort of in terms of people buying into more discretionary products, are you happy with where brand awareness is on the full offer that's available at AO now?

Yes. So that's a continued journey. So Mark talked about the investment in the brochure. The brochure is about education of we sell more categories than white goods, and we just see that continuing to progress. You really are only thinking about it when you're in market. So it is an always-on drip, drip, educational process with customers. There's no step change like Switch moment that I expect with that. I think it's just a continued progression.

As far as marketing investment with Switch24, we don't have any great plans for a big marketing investment into it. I think the scale of the value in that offer is deafening. I mean it is an iPhone 17 for GBP 17 a month. I mean if you go on the Apple website, that's GBP 33, GBP 34 a month. So in our experience, when you put such a sensational offer out into the market, people will talk about it, and we think customers will do the marketing for us.

Actually, just on that, -- how confident are you you have enough stocks to satisfy demand?

Stock is always a challenge on Apple products, but we're working really closely with Apple on that. And we would expect stock to be a challenge.

I had a second question just on cash. You're generating a lot of cash, particularly going forward. You've obviously announced the first GBP 10 million share buyback. Do you have any other plans? You've got a lot of liquidity, as you mentioned in the presentation.

I'll defer to Mark on that. In the last 25 years, what to do with cash has never been a major strategy for me.

Yes. So I mean, we've obviously still been on a journey of strengthening the balance sheet to see us through whatever might sort of come at us. And I think we're still in the process of that. We are about halfway through our GBP 10 million buyback as of today. And so we expect this to continue into the new year, and we'll see how things go and update in due course. But I think we've sort of set the direction of travel for what we might do some without cash.

Andy Wade at Jefferies. First one, just in terms of your sort of strategic overview piece, obviously, we saw the video previously. Just interested because you've talked a few occasions about how things are never quite a straight line. Has there been any sort of nuance or change around there? Any areas within that where you sort of just changed slightly your perspective on it? Is there any nuance in that? Or is it just development along the way? You're launching Switch24, you're launching A MVNO and so on?

So -- it is a big -- yesterday was a big day on that going live. And we can only deliver an iPhone 17, at GBP 17 because we bought Magpie and we have that capability in-house. That was a multiyear journey that was a very inexact science on exactly when we were going to do it, how we were going to do it. And so we've now delivered on that. And the last piece of the jigsaw is our MVNO. After that, we see all the pieces on the board and the strategy is super clear, and then it is just drive it as hard as we can and keep reinvesting that back in the flywheel.

And then the second one, you referred to it in the statement around the ASP decline because of shift in consumer choice towards the sort of lower-priced Chinese models or Chinese manufacturers. I'm interested in digging into that a little bit more. Presumably, that's hurting everyone, not just you, wasn't, first of all.

Secondly, is there a bit of risk around this in the sense that you talked to the potential COVID tailwind coming through now. This should be a really good bit of the cycle, but it's kind of only an okay bit of the cycle because we're seeing that trading down. Is that going to be an enduring feature that when the market gets a bit tougher, we're still seeing the trading down. I'm just interested as to how you're thinking about that and how it plays out through the industry.

Yes. I mean I think it's worth saying it's a pretty small reduction in ASPs in the overall mix, but it's noticeable, but it's small. And it does reflect, as you sort of surmise a shift in sort of brand mix, particularly. And so we've seen some manufacturers being a bit stronger and sort of some of the legacy manufacturers being a little bit weaker at sort of different price points. But I think it reflects where the market is. We don't know what it means for replacement cycles. Do they get shorter? Is it an inferior quality product and does it have a shorter life? We have no idea, right? But the -- I don't think it's sort of a big thing, but it is when you're sort of looking at the -- what percentage of that is your percentage gain or loss in revenues in the period, actually, it is a sensible number compared to that, but not in the overall mix.

It's not unhelpful from a margin perspective?

That's correct. And so when we've seen that slight reduction in ASPs, we have seen an offsetting slight improvement in gross margins. And so the cash margins per box is pretty similar.

And I think it's important to say on a relative basis, we don't operate in a vacuum. This will be the same for all our competitors. And when you've got the structurally -- the structural cost advantage of having the lowest cost operating model, actually, it's not bad news for us.

Yes, certainly seems to be affecting at least one of your competitors more than you. And the other final one for me was, obviously, you've got your 7% PBT margin target. But again, sort of interested how some of the newer elements, so Switch24, AO, MVNO because you've sort of talked to the MVNO in particular, as being sort of we don't know whether it's going to be contributive or not, but it's going to be revenue associated with it. So you're going to be to get to that 7% PBT, you've got a bit of a headwind from categories that are going to contribute revenue, but not a lot of profit potentially. So I guess that's even more positive about the core business. Is that how I should be thinking about it?

Well, you should definitely think about it positively. And what I was flagging is I don't know. MVNO might be a tailwind. We don't know. Switch24 might be a real tailwind. We don't know. It went live yesterday. So when you've got a proposition of that strength on a product that is so fundamentally important to pretty much everybody in the country, what will it do? I don't know. Caroline talked about stock availability. I don't know. What forecast do you put in? We were having these conversations yesterday with the Board. I don't know. So we've made our best guess internally of what we're going to do, but we'll be able to answer those questions in the coming months as we go. But as ever, I'd back ourselves to trade our way through that.

And what I wanted to flag is that we're not running any of this as a loss leader, we're looking at it very much as more chicken in the chicken soup with reinvention and reimagination of how to buy the category. Exactly what the dynamics will be, exactly what the product mix will be, exactly what all the take-up rates, exactly what all the usages will be, I'll tell you over time. But we -- I don't really -- I'm not thinking of that as a big headwind.

I'm sorry, I appreciate I've asked way too many now, but this is directly linked to all just came to me during it. And good time to handle someone else I think. I'll ask you later, but I remember.

Bruce...

Bruce at Lancaster. On circling around that, can I ask 2 sequentially? The first one is very simple is when your customers choose to trade down to these newer sort of non-legacy brands, does your pound profit change as a result of that? Do you care? Obviously, your revenue is going to be a little bit lower?

Yes. So broadly at the bottom line, the cash profit is pretty similar.

And one of the remarkable things about such a highly competitive industry is retail in its broadest sense is whenever there's an externally administered shock, be it government inflation or FX, is the industry tend to react rationally and pass through. Is that in your words, a sort of sense of what the response has been? Can you just give us a thumbnail sketch of how you see the lie of the land competitively in your broader markets?

Yes. I mean -- so I think you're absolutely right that where you get sort of industry-wide shocks, whether it's on shipping rates, whether it's on FX, whatever they are, that actually the industry moves to reflect those changes in pricing in either direction to customers relatively efficiently and quickly. It's not an industry that's got enormous margins where you can absorb these things for a period or conversely where you can be out of line on price and that, that doesn't hurt your top line very, very quickly. And so the industry tends to move relatively quickly to reflect those changes. And I think we've probably seen over the last 12 months since the sort of the last budget that the cost increases that have sort of been forced on us have effectively been passed through to customers.

And I think, for me, it continues to play to the fact that having the structural cost advantage of being the lowest cost operator at scale on a unit basis is just a fundamental advantage that we'll keep driving home. I've said many, many times that costs walk into businesses on legs. And the government is only making those costs more and more expensive, which gives us ever more structural advantage, in my opinion.

David Hughes from Shore Capital. A couple of questions from me. Firstly, in terms of the product range that you have, obviously, a few years ago, you talked about trimming down products, getting rid of things that weren't profitable. Last year, we talked about kind of increasing the numbers and growing the range and you're saying now that actually you make cash profit kind of across the board. Where do you see that going forward? Is the range in the right place now? Or do you think there's still more to add into that?

Yes. I don't think we took out much out of the range. It was more where we were selling that. So there were sections of our B2B business, for example, where we weren't making money or we weren't making enough money or it was too much grit in the machine that we made conscious decisions to stop doing and simplify the business.

Similarly, within our mobile business, we've made conscious decisions to shrink that down rather than to stop selling specific products in those categories. So I think the range is broadly where we would want it to be. Our gap is education that we are better value for our members on the vast majority of those products. But even members that have bought TVs and washing machines from us doesn't necessarily mean that we are top of mind when we come to buy a MacBook, for example, which is to Caroline's point on how do we keep educating those customers.

And you'll see us do margin investment into kind of what I think of -- if you think about the -- I think the Costco middle aisle, if you like, the treasure trail of going into Costco, not many people at this time of year, you're going in the amount of people that are walking out with a 6-foot garden known that likes up for GBP 160 that we're planning to buy. We're doing lots of those surprise and delight type things for customers, so that we can basically educate them and put them -- put us front of mind so that when they do buy a MacBook, they think, I should check whether I've got a member deal on that product and just keep educating and keep investing in those deals for members.

And then secondly, just on kind of the market dynamics. Obviously, post COVID, there was a shift from online back to in-store. Data that I'm seeing is suggesting that, that is slowly going back with online penetration growing again. Does that kind of tally with what you're seeing? And how much do you expect that to be a tailwind going forward?

I haven't actually seen that data, but online is fundamentally a much better way to buy this category.

Yes. I mean, so we do agree with that sort of sentiment and analysis of the data, and we do expect that over the long, long term, the direction of travel continues to be increased Internet penetration in our categories.

And it's a bit to the AI point that we were making earlier of there's just more and more innovation that drives more information and more quality of confidence for people to make those purchasing decisions without having to get in a car and drive to retail...

It's Mark Power from Phoenix Asset Management. John, you talked about scaling the business in theory up to 2.5 billion run rate, let's say, and the operating leverage that will come with that. Could you talk about the capital side? What capital might need to be spent to get to that size of the business? And how much capital would have to be retained as kind of in your fortress balance sheet mindset at that size business?

Yes. I mean -- so we've traditionally been a very CapEx-light business sort of by our recycling operation, which is much smaller, but probably a little bit more capital intensive. And I guess as we go forward, we probably see ourselves bringing more vehicles into sort of our CapEx and with sort of financing leases rather than the sort of traditional higher arrangement. But the -- like putting debt in place, the sort of capital efficiency sort of stays the same.

I think the sort of the question is what might we sort of have on the horizon. I think the balance sheet being in about the right place. I think we're getting to that point now where actually the dynamic with how do we make sure that we can offer protection to creditors through sort of whatever economic trading we might come to, I think we're probably broadly at that place. And so the balance sheet is sort of there.

And as we look forward, our sort of capital requirements are as they've been historically. So we would expect to continue to drive sort of free cash flow as we go forward.

We talked about things like automation, for example. But automation in our context from a fulfillment perspective with that isn't -- I always think about -- when you talk about automation, people think sort of an Ocado warehouse and all that fixed CapEx investment. Even in that context, it's pretty low and pretty flexible. It's more QR codes on the floor and robot vacuum cleaners running around rather than massive conveyor belts and hundreds of millions that are pouring into something like that.

But we will look at how -- I've talked about it on operational efficiencies. We're currently across, I think, 7 physical sites in and around the crew area. How do we optimize that and how do we make that ever more efficient is something that we will continue to obsess about. And I've talked about it on how we get that 9% to receive and process and deliver an order down to more like 6%. But it's not -- there's no massive sort of structural step changes. And certainly, from a P&L perspective, we will do things that make sense on an ongoing basis.

I did [ retain the mic ] which is good. So we talked about sort of not knowing at the moment what the profit shape of the MVNO and Switch24 would look like. Just interested as to what the swing factors are on that. Is it largely just scale and take-up? Or I presume there's a bit around residual values and so on. Yes, just interested what the swing factors are.

Yes. I mean, so with Switch24, the dynamics are clearly much better known and sort of shaped its volume that's more uncertain. But you are correct that the swing is what is the residual that we achieve. MVNO, it sort of comes down to how much data the customers use. And until we get live in anger, our mix of that, we can model lots of market norms and everything else. But until we actually get what do our subset of customers actually consume, then the profitability swing on that can be....

Yes. And I would just add to that, Mark, that the reason that we're doing Switch24 and the MVNO isn't per se -- the biggest swing factor is what does that mean for acquiring members? What does that mean for share of wallet? Those for me are the biggest impacts, and we have no idea.

All right. Well, great. Thanks, everyone, for coming along. And if you only take one thing away today, I'm sure it will be that you can now get an iPhone 17 [ quick ].

Thanks, guys.

Thanks.