Grafton Group Stock

Good morning, everyone. Welcome to the Grafton Group plc Half Year Results. A quick agenda. I will start with some operational highlights before our CFO, David Arnold, will go through the financial details. And afterwards, you will have me again talking a little bit about strategy and outlook for the remainder of the year.

The performance in the first half was, I would call, very solid. We had revenue growth of 6.7%, adjusted operating profit increase of 8.2% and a growth of our adjusted earnings per share of 10.8%. As you will have noted this morning, we increased the interim dividend by 2.3% and reconfirm our full year operating profit guidance between GBP 190 million and GBP 200 million.

In terms of development activities in the first half of the year, we completed 2 acquisitions in Europe's faster-growing markets in Ireland, where we acquired Cygnum and in Iberia in Spain, where we acquired Mercaluz. And both of those acquisitions have started well in our ownership and are trading strongly year-to-date. We also invested into new branches on a group-wide basis, especially in Iberia and also in Ireland and we maintain a strong balance sheet to have sufficient firepower to deploy capital as the opportunities arise. I will now hand over to David to go through the financials.

Thank you, Eric, and good morning, everyone. As Eric has already covered some of the key financial KPIs from our first half performance, I'll now dive straight into the income statement in a bit more detail. Revenue of GBP 1.34 billion was 6.7% higher than last year. Strong execution across the group enabled us to deliver a resilient adjusted operating margin before property profits of 7.4%, up 10 basis points year-on-year despite ongoing competitive pressures in several of our markets.

This reflects a continued focus on margin management across the group and proactively addressing our cost base to mitigate the ongoing inflationary environment on operating costs. We've seen no material disruption from developments in the Middle East as we continue to manage supply chain risks proactively, maintaining strong product availability while effective supplier engagement and pricing actions have helped protect margins. It's pleasing to report that we saw strong profit growth in the first half with the group's adjusted operating profit of GBP 98.5 million, up 8.2% compared to prior year.

Net finance costs were GBP 5.5 million, GBP 1.4 million higher than last year, largely due to reduced interest income on our cash deposits and lower cash balances following the acquisitions and share buybacks that was partly offset by favorable foreign exchange movements. In the full year, we currently expect a finance charge of GBP 15 million to GBP 16 million.

The effective tax rate was 19.8%, 30 basis points higher than last year and is our assumed rate for the full year. This slightly higher rate reflects the increasing contribution from Spain, where the corporate tax rate is 25%. We're pleased to report an increase in adjusted earnings per share of 10.8% to 39.4p, which is consistent with our targets set out in our recent Capital Markets event and reflects the impact of operational improvements, organic growth and capital deployment into acquisitions and share buybacks.

Looking at the first half revenue increase to GBP 1.3 billion, we delivered an increase of GBP 8 million in organic revenue, and I'll cover that in more detail on the next slide. Acquisitions were the main driver of sales growth in the first half, contributing GBP 56 million of incremental revenue. This reflected the inclusion of the seasonally important May and June trading period at Mercaluz, a full second quarter of trading from Cygnum and the incremental contribution from HSS Hire Ireland, which was acquired at the end of March 2025.

The divestment of the small MFP plastic pipe business in the Republic of Ireland at the end of May 2025 reduced revenue by GBP 3 million. And finally, the strengthening of the euro against sterling accounted for an exchange gain of GBP 23 million in the first half. This slide analyzes the net increase of GBP 8 million in organic revenue. In general, I would note that we saw an uptick in product price inflation in the second quarter as pricing actions implemented in response to the conflict in the Middle East flowed through the P&L. Our diversified portfolio supported a resilient first half as strong performances in the Island of Ireland and Iberia more than offset the decline in Great Britain.

The Island of Ireland segment delivered organic revenue growth of GBP 19 million, largely attributable to a strong performance in Chadwicks. Against the backdrop of persistently challenging market conditions throughout the first half, organic revenue in Great Britain declined by GBP 19 million year-on-year. Revenue in Northern Europe increased by GBP 2 million on a like-for-like basis, driven largely by an improved performance in Finland.

Organic growth of GBP 6 million in Iberia was driven by Salvador Escoda only since Mercaluz was acquired in the first half. The Salvador Escoda performance reflected its continuing positive growth trajectory since we first entered the Spanish market. And finally, branch openings and closures had a small negative impact on revenue, and that will reverse in the full year. Turning to the movement in adjusted operating profit. I'll look at the performance of the like-for-like business in a moment. The major component of the increase in group operating profit to GBP 98.5 million was the GBP 10.4 million of profit attributable to acquisitions, led by Mercaluz with GBP 6.5 million.

Looking at the GBP 4 million reduction in adjusted operating profit in our like-for-like business, you can see that all operating segments except Great Britain reported an increase in adjusted operating profit. Disappointingly, the profit growth we achieved in Great Britain during 2025 was not sustained into the first half of 2026 with U.K. private RMI and new build markets both weakening further and all our business units exposed to the U.K. reporting lower profits year-on-year.

Moving on to look at each segment now in a little bit more detail. Once again, we saw a good performance from our Island of Ireland segment in the first half. Revenue of GBP 579.4 million increased by 7.5% on a constant currency basis. Like-for-like revenue grew by 3.4% in the first half, led by strong trading in Chadwicks and modest growth in Woodie's against tough comparatives. After a relatively slow start to the year, trading strengthened during the second quarter as construction activity increased and the weather improved markedly.

Our businesses on the Island of Ireland delivered strong profit growth in the first half with adjusted operating profit of GBP 60.6 million, up 7.3% on a constant currency basis. This performance was underpinned by a strong performance in underlying trading in Chadwicks in addition to the incremental contributions from the HSS Hire Ireland and Cygnum acquisitions. Trading in MacBlair in Northern Ireland followed a similar pattern to our GB segment with the overall environment remaining challenging.

The integration of Cygnum is well on track, and we've been pleased with the business' performance since its acquisition on the 31st of March. First half sales increased by 18.3% on a pro forma basis compared with the prior year, driven by additional production capacity that was brought on stream shortly before the acquisition completed. Cygnum enhances our exposure to the growing Irish new build housing market, and Eric will speak in a little bit more detail about the strategic rationale for the acquisition a little later.

We continue to strengthen our market-leading position on the Island of Ireland. This included the opening of a new Woodie's store in Ennis, County Clare in June and a new Chadwicks specialist hub in Ravenhill, Belfast in July. Bringing together The Panelling Center and Sitetech in a single location, the hub demonstrates the Grafton Way in practice, showcasing how our businesses work together across the Island of Ireland to improve our proposition for customers.

Moving next to Great Britain. It's fair to say that we were disappointed with the first half results after positive progress last year. Market conditions remain very challenging with new build housing activity and discretionary home improvement projects constrained by affordability pressures and weak consumer and business confidence levels. Revenue in Great Britain was GBP 367.2 million in the first half, down 5.1% year-on-year, with average daily like-for-like revenue declining by the same amount.

All our GB businesses reported declines in like-for-like revenue during the period. Despite lower market volumes and continued competitive pressure, we were pleased to deliver a slight improvement in gross margin in the first half, and this reflects the strong execution of our teams and disciplined pricing across our businesses. Notwithstanding inflationary pressure on costs, especially with respect to labor and property, overheads were tightly controlled with the increase in like-for-like overheads contained to approximately 1%, well below general inflation levels.

Nevertheless, despite tight cost control, adjusted operating profit of GBP 17.5 million declined by almost 30% as lower volumes weighed on operating leverage. In Northern Europe, market conditions remained subdued in the Netherlands, where the expected recovery has been slower to materialize, resulting in slightly lower volumes compared to prior year. In contrast, Finland showed more encouraging signs of early recovery, supported by improving consumer spending, exports and business investment.

Revenue of GBP 244.2 million increased by 0.7% on a constant currency basis. Average daily like-for-like sales grew by 0.8% in the first half, driven primarily by growth in Finland, where an improvement in trading conditions and targeted management actions supported trading. Adjusted operating profit increased to GBP 16.3 million in the first half with the adjusted operating profit margin unchanged at 6.7%. Higher profitability in Finland more than offset a modest reduction in profits in the Netherlands.

We continue to make good progress in the Netherlands in the execution of their multiyear improvement program. A key milestone was achieved in the period with our end-to-end purchasing and finance processes now successfully operating on their new ERP platform. We continue to be very encouraged by the performances of our businesses in Iberia and the broader opportunities in this market. Revenue of GBP 145.1 million increased by 35.5% on a constant currency basis. Average daily like-for-like sales grew by 6.6% in Salvador Escoda, supported by strong market demand and record first half temperatures in Spain with robust commercial execution across its air conditioning, refrigeration and ventilation product categories.

A key highlight during the period was the completion of our second acquisition in Iberia, Mercaluz at the end of April. Like Salvador Escoda, it's primarily serving the professional HVAC installer market and represents another important step in strengthening our position in the region. We've been pleased with the integration process to date and very encouraged by its early trading performance with average daily like-for-like sales up 6.7% on a pro forma basis across May and June, and Eric will discuss Mercaluz in more detail shortly.

Our Iberia segment delivered an adjusted operating profit of GBP 14.1 million, representing an adjusted operating profit margin of 9.7%. The strong year-on-year increase on both profits and margin was largely attributable to Mercaluz, which joined the group just before the start of two of its most important seasonal trading months. Grafton continues to support local management teams in driving organic growth. Salvador Escoda opened 5 branches in the first half, and Mercaluz opened a further branch following completion of its acquisition.

Having successfully supported Salvador Escoda's accelerated expansion plans following integration, we expect to provide similar support to Mercaluz. We continue to assess further growth opportunities in the attractive Iberian market with a strong pipeline of both organic and inorganic development. Now this slide analyzes our cash flow in the first half. And as you can see, the group generated GBP 70.7 million in free cash flow, and that represents a 72% conversion of adjusted operating profit into cash, building upon the group's strong cash flow generation credentials.

Working capital management remains a key focus for the group, and we invested GBP 22 million in net working capital during the first half, reflecting product price inflation and inventory actions taken in response to developments in the Middle East. We've always said that we believe it is essential to continue to reinvest into our businesses to maintain their competitive edge even during times of market weakness, and we invested a net GBP 23 million into replacement and development CapEx in the first half.

Where do we use that free cash flow and that strength of our balance sheet? Well, the major element went into acquisitions, but we also returned a net GBP 75.5 million to shareholders through dividends and buybacks. You will have seen from today's results announcement that we proposed to increase the interim dividend by 2% to 11p per share. And consistent with the targets which we set out at our Capital Markets event, it remains our intention to restore dividend cover more firmly within the 2x to 3x dividend cover range as we move forward.

Share buybacks of GBP 25.6 million were executed in the first half out of a total figure announced in the current year of GBP 50 million. Grafton's cash-generative nature, together with its strong balance sheet, continues to support both shareholder returns and provide significant firepower for the group to capitalize on organic and inorganic development opportunities. At the end of June, our net debt was GBP 315 million, representing lease adjusted net debt to EBITDA of just under 1x.

And turning to the balance sheet, a key point to note is that the acquisitions accounted for GBP 34 million of the GBP 53 million increase in net working capital since the end of 2025. Adjusted return on capital employed was 10.7% in the first half. That was down 20 basis points on last year, and that's very much a function of our recent capital deployment into acquisitions. This level of return on capital employed is still around 2 percentage points higher than our estimated weighted average cost of capital. Capital turn was constant at 1.4x.

Finally, just to note, before I hand back to Eric, I have included some technical guidance for the full year, which you may find helpful in the appendices. Eric?

Thank you, David. So a few words about strategy and outlook. I will share a few slides, which I went through in detail at our very recent Capital Markets event, so I will not dwell on them. But the strategy remains unchanged. We provide our trade customers in Europe with construction-related products and solutions. That's what we do. We drive growth through long-term organic growth in markets where there are underlying structural growth drivers and supplement that via acquisitions and execute all of that in our federated operating model where we combine the best of 2 worlds, which means good controls, processes, best practice and technology through the group whilst having local accountability in execution and customer proximity.

And all of that is what we call the Grafton way. I talk about the long-term growth drivers. Key is how we select markets, again, aside from the Capital Markets event, we select regions and countries which have underlying structural growth drivers. We are well aware. This is a cyclical industry. But in the long run, we select markets where the growth drivers are there. Then in each market, we look at which verticals do we believe we can deliver the returns, the profitabilities, drive consolidation and growth and enhance the businesses through our shared knowledge across the group, exactly what we do in Spain.

And the outcome of that is that in every single market where we operate in, we have strong management teams running differentiated models with trusted local brands. We have local scale and the necessary customer centricity, which allows us to deliver industry average -- above industry average returns, ROCE and cash generation throughout the cycle. Our federated operating model, again, just a little illustration.

The outcome is really the most important thing is on the bottom of the slide. Agile, customer-focused businesses, empowered and engaged colleagues delivering the returns we expect. And from a structural point of view, as a group, we have the structures in place to make sure that best practices are leveraged, IT solutions are leveraged, procurement benefits are taken where it makes sense and the capital allocation is stringently controlled by the group. So that's a model which has worked very well for us over time, and we continue to execute.

David mentioned briefly Mercaluz. Mercaluz is a Spanish company, leader in HVAC, predominantly air conditioning, very complementary to Salvador Escoda. It's a different model. Salvador Escoda offers 40,000-plus SKUs, AC, ventilation, refrigeration, a one-stop shop for the installer with branches and the network of branches. Mercaluz has their branches are like small distribution centers. They deliver to the installers. They have a narrow range, about 8,000 SKUs, very much focused on the own brand, which is Johnson, Johnson Air Conditioning and other products. So 75% of the sales are own branded product, hence, a very, very strong margin, which can be achieved.

There is a rapid expansion underway. We have now 20 locations in Spain. 9 locations were opened in the last 18 months. Whilst we were in contact with them and talked about acquiring the business, integration progressing really, really well. The local management team remains in place. So the 2 former owners continue to run the business with all the appropriate incentive structures you would expect so that our incentives are aligned to successfully continue to grow the business and have the next phase of accelerated growth in a strong market.

Our other acquisition was Cygnum in the Republic of Ireland, a leading supplier of made-to-order off-site timber frame solutions. That's a product expansion for Chadwicks. It's a business where it is our first MMC business, so modern methods of construction. This is a growing element, especially in scheme housing, low-rise scheme housing, where in the first half, 66% of new scheme housing commencements had timber frames.

We have synergies with Chadwicks in 2 ways. One, we are the largest buyer with the Chadwicks Group of materials like insulation and so on -- and timber, which is needed to do those timber frames. So there is a product and procurement synergy, but also in addition to the customers which Cygnum already has, there is now access to the customers which Chadwicks has to provide the timber frame solutions. Again, integration progressed very well and trading is in line with where we expected it to be.

At the Capital Markets event, we were clear about our ambition of GBP 850 million plus free cash flow cumulatively until the end of 2030, an EPS CAGR greater than 10% and in normalized market, a ROCE, which is 13% or more by 2030. So we are tracking well to achieve that. We had a free cash flow in the first half, as David mentioned, of just shy of GBP 71 million and adjusted EPS growth just shy of 11% and a ROCE of 10.7%, and that with 2 markets which are not at all pumping on all cylinders, namely Northern Europe and in particular, GB.

Which nicely brings me to the current trading and the average daily like-for-like sales, as you can see in the first half, but also in the most recent weeks up until the 23rd of August, the Island of Ireland performing well and strong and the same can be said for Iberia, our 2 strong growing markets. Northern Europe with a little bit of growth, but not fantastic and still a challenge in GB, which is, in my eyes, significant upside potential once we can have the positive effect of the operating leverage, which we have in our GB businesses.

In terms of H2 outlook, we have a positive Republic of Ireland construction outlook for the second half. So we expect to continue to perform strongly in the Republic of Ireland. In terms of Northern Ireland with our MacBlair business, we expect no significant uplift in the second half as from a macro point of view, this is more aligned to our GB businesses. In Great Britain, we expect the second half market conditions to remain unchanged compared to the first half. So we expect it to continue to be challenging. And of course, the Autumn Budget will be key in shaping consumer confidence going forward. So we will see what the outcome will be.

In terms of Northern Europe, the Dutch market conditions are expected to be similar to the first half. And in Finland, we expect that the gradual recovery, which has started will continue in the second half of the year. In Spain, we expect continued strong growth as Spain remains one of the fastest-growing large economies in Europe.

In summary, a resilient performance in the first half. The acquisitions are performing well, are in line with our expectation. Integration is going well. So that's always important that the teams gel with the teams we already have. So that is all going well.

We continue to execute our strategy, drive long-term organic growth, supplemented with value-enhancing acquisitions, and we reaffirm full year guidance for the operating profit for the full year and remain on track to deliver our 2030 targets. Any questions?

Excellent. So just on the questions front, we have some microphones that will come around. If for the benefit of the tape, you could state your name and your rank and serial number, that would be great. I certainly have a selective memory. So if you ask me too many questions at once, I'll select not to answer them. So if you could do them one at a time, and I'll give you the answer, that will be even better. So we'll start with Will. You have the mic.

Will Jones, Rothschild & Co Redburn. A couple, please. The first around pricing. Perhaps you could just walk us through how that's evolved in the top line as we've gone from, say, Q1 through to the early part of Q3? And maybe within that, just how commodities are faring relative to normal finished products?

Yes. So actually, the year started from an inflationary perspective in a very benign way. If I was to look across the group, Q1 inflation was very modest indeed, pretty flat actually. And then we started to see it pick up as we got towards the end of the second quarter. I would say across the businesses, the more material impacts have been around the heavy building products in GB and in Ireland.

If you look at the Spanish businesses, indeed, if you were to look at Woodie's, a lot of the products which they are buying in, they would have bought in some way in advance. So they haven't really been as impacted by product price inflation at this point. That's more likely to be a feature as we move into 2027 for those businesses in particular.

But if you look at the likes of Chadwicks and the GB distribution businesses, I think what we saw was inflation in the second quarter, we were more in the 3% to 4% camp. And as we exited, I would say we were more around that 4%. And now the huge amount of volatility, as we know, in markets more generally. What is the outlook for the second half? I think probably on the heavy building materials side, probably is probably closer to the 4%, I would say, than the 3%.

I think that's where the bigger pressure that we see comes through for those other businesses, I think it's about next year. And next year, we're probably likely to see a higher rate of inflation for those businesses than we saw this year where it's been running at sort of that 1% to 2% level.

Was there anything to note in timber and steel where it's relevant?

I wouldn't say there's anything particular to call out there. I mean they've been -- steel has been relatively volatile. And of course, we have to concern ourselves with things like CBAM as well these days and the impact of that.

And second one was just maybe unpicking some of the moving parts around gross margin. Firstly, whether there's been any kind of one-off assistance from that sequential price inflation through recent months? And then maybe just exploring where you're seeing the competitive tension and any of those self-help levers that I think Finland, you called out is one, for example, but anything to explore on gross margin?

Well, if I sort of pick up the gross margin and perhaps Eric picks up sort of competitive elements around the market and self-help. I mean on gross margin, I would say, no, there hasn't been no sort of specific one-off elements of that. It's just a function of an awful lot of work that we've been doing at the branch level in terms of pricing, in terms of being quick to pass through any of the extra price increases that we've got. I mean, a lot of work around selective promotional activity.

And I think continuing that theme that we had and talked about last year really, which in GB -- in the GB context, which is we saw no benefit in being very aggressive on price because we just didn't see that the market would give the volume uplift to compensate for that. So yes, I think we continue to be quite tactical. We'll be very responsive. GB had a good performance on gross margin as we talked about in the first half. Overall for the group, we were pleased with where the gross margin landed.

I think in terms of competitive environment in each market is, as you would expect, given the circumstances of the market, the toughest market, I would say, at the moment is GB where volumes are really low. And with low volumes, you will have the same amount of players fighting for lower volumes, which normally gives extra competitive pressure.

But as David said, we are not really driving the businesses per se on gaining market share and achieving less gross profit than maintaining market share and achieving more gross profit, right? So we work closely with the businesses in each market, but we certainly have no irrational competitive behavior in any of the markets.

Shane Carberry, Goodbody. The first one, just a follow-up maybe on Cygnum and given how constructive the new build background is in Ireland, probably right out to 2030, just trying to get an idea of where you think that business could go over the medium term? And when we think about it scaling from here, is it additional manufacturing facilities? I know it's just been ramped up from a manufacturing perspective. Or is it plugging into the Chadwicks model? Just how we should think about the growth from here over the medium term?

Well, in the medium term, I would say we have sufficient capacity in the existing setup after the capacity expansion to significantly grow the business, right? But of course, if the business will grow successfully and at some stage, we need to expand capacity, well, that's what we will do, right? So like in any of the businesses. But in the medium term, we certainly have no capacity constraint to significantly grow the business over time.

And then the second one, I guess, is just around the 2030 targets and the EPS target. I mean already, you're coming in slightly ahead of kind of circa 11% relative to the 10% CAGR. What does that do for your confidence level when you think about the fact that some of the markets, as you mentioned, are quite subdued within that mix. It might have been easy to think some of that CAGR would have been back-end weighted maybe.

Look, the way how I do it. I joined this industry in 2022. And I didn't expect -- and at that time, there were a lot of our earnings coming out of GB, right? So when I joined, I did not foresee that GB will kind of do what it will do. And I always tease David, who has spent a lifetime in the industry telling me second half next year, the recovery will start. It hasn't yet happened. So my point is you don't really know 5 years out what is happening. We certainly had a good start.

And if all the markets in a perfect world, so let's say, Ireland continues until 2030 to be strong, so does Iberia, we achieved the ambition to get GBP 1 billion in Iberia at the 7% to 10% operating margin and Northern Europe plus GB recover, happy day. I feel very confident. But what I don't know is do we have some other market which has a slowdown in 2028, 2029, right?

So I think you can only deal with it as you go along. Overall, as we explained in the Capital Markets Day, I think we have the levers necessary in our hands to achieve those targets. So I'm pretty confident we will get there. But I'm not overconfident because I don't have a magic wand to read the future. So we just have to be cautious and react to what happens.

Sorry, Flor, I think this just got in line with you.

A couple from me. Flor O’Donoghue from Davy. First one I might ask is relating to Salvador Escoda, just the network expansion. You just might give us a bit more color on the 5 new branches, where they are? Is it geographic gaps? Just broad economics around how it works in terms of opening costs, the kind of pathway to maturity and those kind of things, if that's okay?

Yes, sure. It's filling openings, right? So where we have still wide gaps where we think we will -- we'll be able to open it. It's across Spain where we opened and also on the Balearic Islands. We have a plan to open 7 this year, 5 were done in the first half, 2 more to come in line with our business plan. Opening a Salvador Escoda branch is not expensive. It's -- they are not massive branches. It's not like a Selco where you put quite a lot of capital down. So it's a relatively modest investment, and we would normally expect the business to certainly contribute after 12 months to the bottom line.

So it's sometimes earlier, right? So it's a relatively fast breakeven. And you have relatively short lease commitments as well. You take a 5-year lease, lease costs are relatively low. And so you -- if it wouldn't work, you can exit relatively painless. And if it doesn't -- if it does work, it normally moves into an extension of leases is pretty simple, or it moves into evergreen contracts.

It's slightly different to that Mercaluz model. A new Mercaluz branch tends to be a slightly higher investment because it tends to act as a distribution hub. So you need a sort of slightly bigger warehouse than you would with a Salvador branch.

Second one then just might turn to GB. Really feels like you've done everything you can in operating costs and trying to keep the business as tight and as lean as possible. Is there any thought around maybe as leases come up and the likes of Selco that you may look at kind of consolidating the estate a bit? Or will you just kind of just have to hang tough until the market turns?

It's a constant process where we look at each branch, does the branch contribute? Is it -- does it contribute to overhead if it's not otherwise in the best shape? So we look at this very, very actively. And if it makes economic sense to consolidate, we'll consolidate. If it makes economic sense to continue to trade, we'll continue to trade. I think we closed one in the last 18 months, right? We went from 75 to 74, and we will keep monitoring it.

In the long run, we still believe that there is potential for up to 90 Selcos in GB. We believe it's a very good model, but it's a model with a lot of operating leverage. And at that moment in the cycle, operating leverage isn't great, right? When the cycle turns, operating leverage is great. That's how it works, right? But we will -- if it makes economic sense to exit some sites, we will.

But you have to look at it on a site-by-site basis, how does it contribute now? Do we think -- how much more revenue do you actually need for the site to be a really good contributor again. So you have to look at it in the -- at the overall picture of each site.

And just to add to that, I mean, I think Frank Elkins covered some of this at the Capital Markets event. We've got a new centralized distribution center that will be coming on stream next year. So that's an important investment. Now inevitably, there will be an element of some double running costs for a period. But once that is operating on its own, that's a big efficiency gain for Selco as well.

It gives them more capacity for doing some own brand sourcing and that sort of thing. So that's quite an exciting efficiency improvement that by the time we get sort of '28, '29, that will be in full swing.

As you can see, we are committed to GB in the long term. And I can only stress, and we invest throughout the cycle. It will be easy to say, "No, we don't put a new DC down for Selco." But actually, it's the right thing and GB will return. It's not a question if, it's a question when.

I think it's su***** half of next year.

Christen Hjorth from Deutsche Bank. Just to start with the first one, probably for David. The Mercaluz margin looked very good in the first half. You did point out there's a couple of good months for them, but just to get a sense of that versus normalized a big pickup versus what they generated last year, for example.

Yes. No, I think the result in the first half, if you were to just look at the Mercaluz's contribution to the group, the operating margin was supernormal because it had those 2 months in it. Ordinarily, we'd expect their margin to be sort of mid-teens. It was stronger than that, as I say, in the first half. So looking sort of further forward, if you just take the Salvador and take the Mercaluz business, we'd expect and it sort of normalized to be that sort of 9% to 10%.

When we think about our broader ambitions for Iberia, again, which we talked about Capital Markets event, we want to get to EUR 1 billion of revenue. That's our target. I mean the sort of zone, if you like, for the operating margin that we see for a mature business in different business streams would probably be more in that 7% to 10% margin.

And the second one, obviously, sticking with Spain. Clearly, a bit of a benefit, I imagine, from the heat wave that we've had across Europe. Just your sense whether that drives brought-forward demand or actually triggers a structural change in the demand for air conditioning and therefore, you can see good sales even as the weather gets cooler because people realize they need to have air conditioning in the summer months.

Look, you already have a strong AC penetration in countries like Spain, right? So many of the houses have already AC. But I do think that the penetration of AC will continue to increase. And of course, if summer months are particularly hot, the AC systems have to work harder. It might shorten their lifespan. So therefore, you will sell more AC units over time. And I think all those fundamentals, if you want, are reasons why we invested into that particular product segment in Iberia and believe there is, among other segments, still a lot of stuff to do and to consolidate that particular market.

So I expect the heat to be an ongoing feature. And as we've seen in London this summer, it was pretty hot here, and I'm sure many of you who don't have air conditioning in the house thought about maybe next year, I should put some air conditioning on.

Alastair Stewart from Progressive Equity Research. A couple of questions. The first one on the U.K. and going on to second halves again. The -- it's probably a bit unfair to get granularity on 8 weeks of latest trading, but it's down 5.6% versus 4.9% for the second quarter and 5.2% for Q1. What's the sort of the direction of travel in that latest 5.6%? Do you get the sense it's getting better, worse and all change?

And you mentioned the Autumn Budget. But I get a sense this time around, there's far less speculation than in the 2 or 3 months before the last budget, which really did slow down the market. So maybe a bit of color on what your customers are actually seeing. So that's the first question.

So just off, I mean, what are we seeing? Look, I think if I can describe it, I think we're bumbling along a bit. I think week-to-week, we'll have -- I wouldn't say we have a good week. We just don't have a really bad week. I think the feature that we saw in May and June and July, though, in particular, was new build, and we saw that in CPI EuroMix. We saw the volume that was being drawn off on sites was down quite significantly. So I think that as we went through the first half, that was the thing that really emerged. We started off with new build was flat and then it really came off.

So now look, I wouldn't say it's getting worse. I just think it's bumbling along where it is. Now you're right in terms of that speculation that we had, I mean, last year, crikey, it was horrendously attritional in terms of all these -- all the pipeline that was out. We're not seeing that to the same extent yet. Let's hope that we don't see it. But I think the ramifications for the sort of Q4 and into Q1 next year is really what happens in that budget. Do we see another tax raising exercise? And if we do, then I don't think that will be particularly good for confidence more generally. But that was the context in which we made that comment.

Second question, probably quicker. Timber frame, 66% penetration in Ireland. Just out of interest, where does that come from 5 years ago for you? How much has timber frame rallied in Ireland? Because I haven't a clue.

No. I mean that's been quite strong growth over the last decade, but still sits beneath the level of timber frame in Scotland or in Scandinavia, where it would be probably closer to 90% of timber frame. So we still see further opportunity in Ireland for that to grow from a penetration perspective.

Charlie Campbell at Stifel. So a couple of questions. The first one, it's really around the drop-through. And I suppose if you look at the results and you put GB to one side and you do the exercise of the drop-through for the other countries, it's maybe not as much as we might have thought. So just wonder what the offset is there because you've talked about gross margin obviously kind of picking up in all those areas and discipline on overhead. So I guess there's some investment going in the other side, just to understand what that is really.

So you probably have to look at it geographically really, in terms of that drop-through. If we look at Island of Ireland, the thing to bear in mind is there is also an element around MacBlair in there, which has its exposure to the U.K. If we look at the businesses in the Republic of Ireland, we were pleased with the level of drop-through that we saw. The common theme across all the geographies that is impacting -- has impacted the around drop-through is really around labor inflation and property costs. If we look at our overhead base, 75% of our overhead base is drawn from people and property.

And property, I would say, is still suffering that tail of the inflationary impact that we've seen that's coming through in rent. So that's sort of still coming through. People is very heavily influenced across many of our businesses, either by, if I take the Netherlands, collective labor agreement, collective labor agreement for 2026 is up a little under 4%. If I look at minimum wage levels in Ireland or in GB, that's where the pressure is coming.

So that's the thing that we're having to work really hard from an operational efficiency to try to offset. If we look at Iberia, then what we have been doing in Iberia is we have been investing in the business. So if I look at my like-for-like overheads in Iberia, I mean, that's up somewhere around about 5%. But some of that is really because we've been investing in that business for the future. We've been putting those new branches in, which is why that drop-through doesn't look as strong as ordinarily we would expect through -- given that level of revenue. But yes, we're all over that one.

And second question, the risk of being too optimistic. The drop-through in the U.K. if -- when this recovery comes through. Maybe we ought to be thinking at least the gross margin because one would have thought there's really not much overhead to go in for quite some time. Is that the right way to think about that?

I mean I would love to aspire to a drop-through rate that came in at the gross margin. I think that's a bit bullish because I think inevitably, there's other stuff that comes along. I mean, typically, in a recovery, and it does depend upon the pace and the speed at which volumes come back. But typically, you'd be looking at 15% to 20% would be a reasonable level of drop-through, I would have said.

I would love it to be coming through at the gross margin. I mean the real kicker in drop-through is if you can combine that volume uptick with some improvement in gross margin and then it becomes a bit adrenaline-fueled and then you will see much stronger levels of drop-through.

Sam Cullen from Peel Hunt. I've just got one and really related to that 75% number on property and labor costs and sort of the question du jour currently. What are you doing or exploring in terms of AI to take some of that labor cost out or be more efficient across the business, particularly with the centralized model in Ireland?

Yes. Look, I mean, we're doing a lot of work generally across the sort of centralized functions. But it's not just about productivity, but it's also about quality as well in terms of the output. So that's where the principal focus is because a lot of that labor cost is people serving people in branches. It's moving product, putting product on shelves, helping customers. So that's where the major element around labor expenditure sits. But yes, the AI level, we're using across all elements, whether it's recruitment or whether it's marketing and whether it's product descriptions.

So I mean -- I think that will -- where it will help is -- comes back, I think, probably to Charlie's point around drop-through is that it will just enable us to be more efficient and benefit then when we see volume uptick without having to put additional resources in.

Ben Varrow, RBC. One on Iberia. With the target to the GBP 1 billion, can you just remind us how we should think about organic growth sort of as we head into next year and to that target out to 2030?

Look, I do this like mental math by Eric, right? So I guess on an annualized run rate with the businesses we have, we should be somewhere around EUR 430 million, EUR 450 million in revenue. I would expect them to organically grow to EUR 600 million plus by 2030. So we need to acquire and grow around EUR 400 million to get EUR 1 billion, right? So that's really how I look at it, and we have a pipeline which would facilitate that. But as we keep saying, we don't buy a business for the sake of buying a business if we don't think the valuation is right or there is something which we don't think after looking at the business closely that it will give us what we really expected it to be.

So the pipeline is there to facilitate that. I'm confident that we will get there. But I think I just want to reiterate the EUR 1 billion is a target. I don't -- if you end up at EUR 850 million and 9% operating profit, I wouldn't look at it as failure, right? I would still be content with that. If everything goes great, we might end up above EUR 1 billion, who knows, right? But you really have to think about, okay, should be more than EUR 600 million purely organically with the business we already have and then add another few hundred million, which should then keep growing to that portfolio.

And of course, the earlier between now and 2030, we'll be able to add those businesses in, the more confident to get to EUR 1 billion. But in the end, we want to have quality businesses which we buy at the right time for the right valuation, rather than businesses we overpay just for the sake of having them early in our portfolio.

Okay. Jamie at the back?

I'm Jamie Murray from Bank of America. Just on free cash flow, why did that fall by about 10%? I think you mentioned cash conversion fell a little bit, but if you could just provide a little bit of color around why that happened and also how you see that going forward into H2?

Yes. I mean the cash conversion dropped a little bit compared to last year because last year, actually, we released capital from working capital. This year, we invested into working capital, which was where that was an incremental drag. I mean ordinarily, you have to bear in mind, if we think about our operating profit, how we characterize our free cash conversion, it's after we paid tax. So typically 20% tax rate in round terms. So that's going to come off and after we pay finance charges as well.

So actually, something in the range of 70% to 80% would be a reasonable level and an expectation level. We've had some really strong performances. I think we can continue to do good work around working capital, but the most important thing for us is to make sure that we've got the products available for customers. And when we end up with a bit of conflict in the Middle East, then a bit more investment into working capital is a sound thing to do.

That looks like it. We've got no questions on the line. So I think that draws to a conclusion of the proceedings. Thank you very much for coming. Good to see everybody. Thank you.

Thank you all.

Good afternoon, everybody, and a warm welcome to Grafton's Capital Market event. Just before I hand over to Eric, just a few formalities for the start of the day.

The first thing is that there are no fire alarms tests planned for this afternoon. So if we do hear the fire alarm, if we can make sure we exit through the exits with the green signs, make your way out with the building, and then we'll be directed to the assembly point. That's the first thing.

The second thing is, if I could just respectfully remind everybody, if you could make sure that your phones are turned to silent and the klaxons are turned off and the big vibrating things are all turned off, that would be marvelous. Excellent. Thank you very much.

And at this point, I will hand over to Eric Born to start the day.

Thank you, David. Welcome to the Grafton Capital Markets event. I'm delighted to host you today together with many of my colleagues. We will explain our ambitions and why we believe Grafton Group is uniquely positioned to generate significant value over the next five years.

You will hopefully also get a sense of the management bench strength we have across the group as you meet many of my colleagues. And just for reference, the Grafton presenters and attendees, as well as the glossary, you can find in the appendix of today's presentation. A few key points I would like you to take away upfront.

Grafton is a European distribution platform of scale with plenty of growth opportunities and leading positions in multiple markets. You will hear more about the different markets from my colleagues later on. We have plenty of ambition, a clear strategy, and a powerful federated operating model, allowing us to operate customer-centric businesses with the benefit of a multinational group.

We generate significant free cash flow, have a strong balance sheet, and a track record of being disciplined capital allocators. Our aim is to deliver ambitious financial targets between now and the end of 2030 and, of course, beyond. The agenda for the day will be kicked off by our CFO, David Arnold, and myself, followed by presentations from my colleagues and some breakout sessions.

Before the final Q&A and drink reception, our Chairman, Ian Tyler and I will conclude today's session. We are indeed a European platform of scale with approximately 10,000 colleagues and over 600 locations offering extensive product ranges from our 15,000-plus suppliers to our large, predominantly SME-sized customer base.

In 2025, we generated over GBP 2.5 billion of revenue with a strong adjusted EBITDA margin of 12.7% and an operating profit of 7.3% or a good GBP 184 million. In fact, we delivered a strong performance throughout the cycle over the last 10 years. The average ROCE in that period was 13.7%. We had a cumulative cash flow -- free cash flow of GBP 1.8 billion, improved the operating margins during that time period by 180 basis points, and delivered a TSR of 77.8%, well above the TSR of our FTSE 250 peer group.

Let me talk about our purpose-led strategy of building progress together. Working as a team to provide our customers with construction-related products and solutions when and where they need them, underpinned by our long established values. Being brilliant for our customers, value our people, being entrepreneurial and empowering, have ambition, and we will hopefully bring those across today, and of course, be responsible, trustworthy and sustainable.

Our growth agenda builds on three core pillars. Long-term growth supported by structural growth drivers in our market. Operational excellence and continuous improvement to give our customers an excellent value proposition. And of course, using our free cash flow and balance sheet to further grow with value-enhancing acquisitions. All of that is supported by our federated operating model and ongoing investments in sustainability and technology.

We invest in a diverse and well-trained workforce and have exceptionally high colleague engagement, which is measured across the group. We focus on sustainable supply chains in all of our markets, and our digital and AI-enabled solutions continue to not only further enhance our existing customer propositions, but also drive ongoing operational efficiencies across the businesses of the group. A few words about our market. We operate in the large and relatively fragmented market of distributing construction-related products.

The market size in Europe is estimated to be greater than EUR 440 billion, and the estimated market size in countries where Grafton has operation is estimated larger than EUR 130 billion. So in other words, the overall market is large, it's fragmented, it has underlying growth factors, and it gives us significant opportunity to grow going forward. A key long-term growth and value driver is the selection of where in Europe we want to operate and what distribution model do we choose in each market. So let me give you a flavor how we look at that.

When it comes to regional country selection, we of course, look at what's the expected GDP growth, does the population growth in the years to come? Is there a structural housing shortage? And does the existing housing stock need improvement? Is it easy to do business in the country? In other words, is there some political stability and a strong legal system? Do we have access to the necessary talent pool to execute our ambitions? All of those points and more are points we take into consideration when picking a geography.

But then when it comes to the selection of the distribution models, the questions are, what is the profitability and return potential of distributors in the specific geography?

Are there strong, trusted local brands with the ability to drive organic growth beyond market growth? What's the customer profile of distributors? Do they have a few very large customers, or do we have a lot of smaller customers, which is something we usually prefer? Are there consolidation opportunities in addition to organic growth? And can we further enhance the business through the systematic application of what we call the Grafton way?

I will talk more about that later. By getting these two points right and applying our federated operating model, we build a portfolio of trade-focused, differentiated, and customer-centric distribution businesses in each geography.

Our operating model allows the businesses to remain locally relevant whilst leveraging the benefits of a multinational trade-focused distributor. This leads to strong, highly engaged, and empowered teams, differentiated models with trusted local brands, local scale, and a customer-centric approach to business, and superior returns, a strong ROCE, and cash generation. And an outcome of this approach is due to the diversification it creates, there is less volatility and a resilient financial performance throughout the cycle. At Grafton, we understand how to serve the trade customer.

Superior returns are generated by leveraging our combined knowledge across the group, building local scale, and operating strong distribution brands in different geography. It is not generated by having one homogeneous distribution model. What do I mean when I talk about local scale? Strong coverage across the relevant areas within each operating country with the appropriate logistics setup that underpins the specific value proposition. So if you look at Ireland, the Island of Ireland, we have more than 120 locations. The same is true in Great Britain.

In Northern Europe, including our partner stores, we sell products from over 260 locations, and we already have 110 locations 20 months after entering the highly fragmented Iberian market. But the secret sauce of Grafton Group, what sets us apart from other businesses is our federated operating model. The way we do business. It's the Grafton way.

Our lean support center ensures strong controls, governance, common standards, clear policies, and enables consistent performance management and talent development across the group. We, of course, make sure that best practices are shared and implemented in our businesses, and expert knowledge from within the group is used to support the businesses in the geographies.

Capital allocation is strictly controlled by the group, making sure we invest where we believe we will get the best possible returns. My colleagues will bring this to life later today with some specific examples during the breakout sessions, focusing on technology, M&A and talent. But of course, we apply this in every common area of the business. Another example would be procurement and ESG, two functions to support the business.

Our businesses in geographies have full sourcing autonomy, which ensures speed, customer relevance, and accountability. We want them to sell to their customers what the customers want. At the same time, we have full central transparency across the group's over 15,000 suppliers, and millions of SKUs. The transparency is enabled through our AI-enabled central platform, giving our teams insights to make the right decisions and ensure best prices across the group.

In terms of ESG, 98% of our emissions sit in Scope 3. Hence, ESG is fully embedded in our procurement processes to translate Scope 3 and regulatory realities into data-driven decisions that strengthen the supply chain resilience. Feel free to talk to my colleagues, Remco and Rosie, who cover group procurement and ESG during the breaks, should you wish to know more about how we ensure local agility with central insights in the areas of procurement and ESG. The way we work allows our geographies and businesses to take advantage of the group's combined learnings, knowledge, and processes whilst being locally accountable and empowered to execute for their customers.

We passionately believe that the Grafton Way provides strong controls and governance whilst enabling local accountability, agility, and empowerment to best deliver for our customers and achieve superior returns. The ongoing interaction between group functions and the businesses, as well as between geographies, is why we define our purpose as building progress together. It's an internal loop of continuous improvement. All of this is enabled by an ongoing performance management process where each geography and business is reviewed on a monthly basis with a quarterly deep dive review with the management teams to track progress and align beyond the financial performance.

Let me now share a short video with you, which is about Salvador Escoda and how the Grafton Way helped to acquire the business, but also to drive value post acquisition.

[Presentation]

I hope that gave you a little bit of a flavor how important and how helpful our way of doing business is when we actually acquire businesses, and that we have a very clear plan what we do with those businesses once acquired.

So looking at our existing businesses and geography, we believe there is good long-term growth potential in all markets, but also significant recovery potential in Great Britain and Northern Europe, where volumes are currently depressed. In Ireland, we expect continued growth with an operating margin of around 10%. If I look at the businesses, our current portfolio in Great Britain and Northern Europe, we currently operate at a margin of between 6% and 6.5% in terms of operating profit. In a recovered market, we would expect the profitability of our portfolio to be at least 9%, which means 250 to 300 bps higher than in the current climate.

In Iberia, we expect to get accelerate the growth through the extension of our existing branch network, and as Stephen mentioned in the video before, additional M&A. The ambition is to generate, and again, this is an ambition, GBP 1 billion revenue in Iberia by the end of 2030. The ambition is here. But obviously, it depends on the ability to execute transactions at reasonable multiples. In the end, we are disciplined in the way how we allocate capital, but that's the ambition. In terms of operating profit margins, I would expect us to deliver an operating profit margin corridor somewhere between 8% and 10% as we build out the Iberian business.

To make it simple, we believe our key value levers to deliver superior returns until the end of 2030 are drive organic growth by winning new customers, increase our share of wallet, optimize our branch network and open more branches, leverage digital solutions and our product offering, including own brands, drive operational excellence through productivity and efficiency improvements, and the implementation of digital and AI-enabled solutions, how we allocate capital growth and maintenance CapEx, M&A, and capital returns to shareholders. And of course, our market assumptions.

We assume, as I mentioned before, ongoing growth over the period in Ireland and Iberia, and I'm talking about underlying market growth assumption, and a gradual improvement over the period in Great Britain and Northern Europe. By applying our levers and given the market assumptions taken, we would expect to deliver over GBP 850 million free cash flow, an EPS CAGR over the period of greater than 10%, and a ROCE by 2030 of 13%. I would like you to note that whilst we assume a gradual recovery in Great Britain and Northern Europe, we do not yet expect to operate at the normalized margin levels I mentioned in the previous slide in those geographies by the end of 2030.

Let me now hand over to our CFO, David Arnold, to talk in detail about capital allocation and finance.

Thank you, Eric. In this next section, I wanted to provide a framework on how we think about capital allocation, how the group has evolved and applied that framework over the last 10 years, and then to paint a picture of how the group will evolve over the next five years, and what we expect its financial profile to look like in 2030. So how does the Board and the team at Grafton think about capital allocation?

How do we prioritize the use of both our free cash flow and our balance sheet? As we will see shortly, one of Grafton's defining characteristics is its free cash flow generation, and so capital allocation is a critical part of our day-to-day thinking. And thinking about prioritization and the hierarchy of that allocation, first and foremost, we use our cash flow to fund organic development and to develop our existing businesses. Expanding and cementing our brand positions and strengthening our operations in existing markets is our #1 priority for free cash flow.

Secondly, we recognize the importance of returning capital to shareholders, and we have an explicit dividend cover ratio of 2 to 3x earnings. Next, we allocate capital to M&A, to inorganic growth. Because fundamentally, the Board believes that well-executed acquisitions at sensible multiples will deliver long-term growth, as well as generating free cash flow for shareholders.

And finally, where we have surplus capital, we will use this to undertake share buybacks, or if appropriate, and depending upon relative equity valuation, also look at special dividends.

So on these next few slides, we'll look at the financial evolution of the group over the last 10 years. Now 10 years is a long time, you may say, but our business is a long-term one, and we run it as such. Interestingly, if you look at our revenue over the last 10 years, it's remained pretty constant at GBP 2.5 billion. Profitability has improved markedly, with EBITA increasing from GBP 137 million to GBP 184 million, and the operating margin has grown by 180 basis points. But as you can see from the pie charts on the right-hand side, the composition of our group has changed markedly.

Back in 2016, GB represented almost 70% of our sales and a similar level of profit. With the disposal of our traditional merchanting businesses in 2019 and in 2021, together with the acquisitions which we've made since on the Island of Ireland, in Northern Europe and Iberia, the geographic shape of Grafton has shifted markedly. GB represented only 30% of sales in 2025 and under 1/4 of our profit. And in 2026, its relative share will be lower still. You can also see how the growth and strengthening of our position in our home market has created a real powerhouse for Grafton, with just over half of our profit derived from the Island of Ireland in 2025.

And our Irish powerhouse is an important contributor to our free cash flow. Here, you can see our free cash flow per share and how it's increased from 57p in 2016 to 87p in 2025. Over the last 10 years, Grafton has generated an average of GBP 177 million per annum in free cash flow or just under GBP 1.8 billion. That's 7% more than our current equity market capitalization. Our balance sheet has also been strengthened. And you can see from the chart on the bottom right that we've moved from a net debt position to net cash with the disposal of our traditional merchanting businesses in 2021 being transformational for the balance sheet.

And you can see on this slide the totality of free cash flow and disposal proceeds over the last 10 years and how this capital has been used in each component of the allocation hierarchy. You can see from the table that we've returned just over GBP 950 million to shareholders over that period. And here, you see the impact in a little bit more detail. With just over GBP 0.5 billion returned back to shareholders in dividends, and you can see how we've increased the dividend over the last 10 years from 13.8p in 2016 to 37.75p per share and deliberately reduced our dividend cover over that period from 3.5x to 2x in more recent years. The Board's explicit dividend payout ratio target is 2 to 3x earnings.

And as we move forward over the next few years, we do intend to move cover back more towards the middle of the range rather than keeping it at its current level of 2x. And for any income-seeking investors out there, I would note that our current dividend yield is a very rich 4.5%. With our buyback program, which commenced in 2022, we've also bought back GBP 430 million in shares in the period up to the end of 2025. And that reduced our shares in issue by over 1/5. In the current year, we've completed a further share buyback of GBP 25 million. We do think that the real benefits of this program will be felt by shareholders once the recovery in our weaker markets takes hold. Now it's important to think, when we're thinking about cash generation and our balance sheet, to also consider what the Board thinks about financial leverage. We're a cyclical business, and we need to manage the business accordingly with one eye firmly on the long term.

For that reason, we hold an investment-grade credit rating and maintaining this rating is a core priority for us. Our target range for net debt is 1 to 2x lease-adjusted net debt to EBITDA, but we will manage our financial leverage depending upon where we sit in the overall market cycle. If markets are in a firm upswing, then financial leverage at the top of the range would be something that the Board would be comfortable with. But in an average or weaker markets, we'd look to be more in the bottom or middle of the range. And as of today, I'd say we sit more in the middle of that range as regards a target and comfort levels. And that would translate into a theoretical net debt ceiling of about GBP 600 million if we were to deploy that incremental borrowing to acquisitions. That compares to our net debt at the end of last year of GBP 123 million, and analysts forecast for the current year of between GBP 300 million and GBP 350 million, taking into account the acquisitions which we've made in the current year in Mercaluz and Cygnum.

And so what of our target investment returns? Now as you'd expect, we look at any development investment, whether that's organic or inorganic acquisitions, through a number of different financial lenses. And strategic criteria, of course, are important. But first and foremost, our priority financial metric is return on capital employed. For organic and inorganic development investment, we're essentially looking to deliver long-term return on capital employed exceeding 13%, well ahead of our weighted average cost of capital, which we judge on a pretax basis is currently around 9%. When we make platform acquisitions, in general, we're looking for a double-digit return on capital employed, where together with additional growth capital from Grafton by way of organic investment and bolt-on acquisitions, we would expect in time to build the business to exceed our target rate of return of 13%.

Naturally, whether we're making organic or inorganic investment, we have to consider how these investment decisions line up against our strategic priorities, some of which are set out here. One of the key points which we also consider as part of our investment process is how these decisions line up against the alternative of returning capital to shareholders. And equally, when the Board does take the view that we have surplus capital, we judge a share buyback against the alternative returns from acquisitions or indeed whether we should consider a special dividend as being more appropriate.

So finally, in my section, if we pull together our strategic vision and financial parameters, what do we think Grafton looks like in 2030? We will be geographically diversified with leading positions across multiple European geographies. Our target is to deliver over GBP 850 million in free cash flow over the five years 2026 to 2030. Our intention is to retain an investment-grade credit rating, and at the end of 2030, we would expect our financial leverage to lie in the range of 1 to 2x lease-adjusted net debt to EBITDA. We will drive the business to deliver a minimum 10% compound average growth rate in adjusted earnings per share before property profit from 2025 to 2030 through the application of the Grafton Way and using all the levers at our disposal. In 2030, we are targeting to deliver a return on capital employed of approximately 13%.

And finally, we expect dividend cover to lie within the Board's target range of 2 to 3x, and we do expect to supplement ordinary dividends with incremental capital returns to shareholders when appropriate. And having set the scene for the group's overall ambitions, I would now like to hand you over to Patrick Atkinson, Damien Dwyer, and Pippa Casey, who will introduce our Island of Ireland powerhouse. Thank you.

Good afternoon, everyone. I'm Patrick Atkinson. I'm the CEO of the trade-focused businesses on the Island of Ireland. I joined Chadwicks in 2015 and have been responsible for leading the growth in those businesses in the Republic of Ireland. In the last couple of years, I've assumed responsibility for all our trade operations on the Island of Ireland, including the Macnaughton Blair businesses in Northern Ireland.

Bringing these two elements together has enabled us to maximize our scale and synergies across the island and further leverage our strength and growth opportunities. I'm also joined today by Damien Dwyer, who runs Woodie's, our consumer-focused DIY home and garden brand, who will be explaining more about our Woodie's business shortly. He's joined by Pippa Casey, Digital Marketing Director for the business.

We intend this afternoon to give you some color on the extent and strength of our position on the Island of Ireland, how we serve our customers, how we win our markets, and most particularly, how we will continue to grow and outperform the market. But first, let me give you some context on the scale and breadth of our presence on the Island of Ireland today, because I think this is worth highlighting to you, our investment community.

From a business that was established in Dublin at the start of the last century, we have progressively grown into the Irish powerhouse with sales in 2025 on the Island of Ireland of just over EUR 1.25 billion from a combined population between the Republic and Northern Ireland of roughly 7.3 million people. So to put that in context, that sales per head of roughly EUR 170, significantly larger than any of the other well-known brands operating across the U.K. and Ireland. Our businesses together generated a double-digit operating margin from 122 branches and the combined efforts of over 3,500 exceptional colleagues. If we look at the economic backdrop of Ireland, we see an economy in the Republic that has experienced strong economic growth over the past few years, and is expected to have one of the fastest growth rates in Europe for the coming years.

This is strongly supported by positive population growth through inward migration and a government that is in a strong fiscal surplus. The rising population has seen an increased demand for housing, especially in the first-time buyer, social, and social and affordable sectors. This sector is strongly supported by multiple government policies and a committed investment of over EUR 100 billion in housing and fundamental infrastructure such as water, waste management, transport projects, all underpinning a promise to build 300,000 homes by the end of 2030.

Our market position and broad product offering leaves us really well placed to service the valuable infrastructure projects and the increasing growth in housing completions, moving from 36,000 to 55,000 per annum over the next few years. These factors, coupled with a strong renovation market driven by growth in house prices, strong consumer confidence, retrofit grants, and a huge demand for secondhand homes will all underpin Grafton's growth ambition in Ireland. If we look back over the last few years, we have seen -- we have experienced strong growth post the global financial crisis. With the exception of 2020, when due to COVID, we were closed for six weeks, but bounced back sharply in 2021 when we could open -- reopen fully.

Excluding those two years, we have seen a normalized and sustainable margin of 10%. Further building on our strong merchanting position, our strategy has been to grow our share of wallet with our customers in our core business and also extend our offering to trade customers through the more recent acquisition of adjacent businesses to complement our core business. This is represented by the purchase of Proline, Sitetech, Wood Floor Warehouse, HSS Hire and the most recently acquired timber frame solution provider, Cygnum. As you can see from the map, we have a strong coverage across the island.

Revenue last year at EUR 923 million, across all the locations, delivered by over 2,000 colleagues and an offering over 200,000 individual SKUs. So in practice, what does this mean for our customers? As you can see from this illustration, we supply everything to everyone that needs building products or solutions through a combination of general and specialist distributors. From early-stage infrastructure and groundworks, first-fix plumbing and heating, renewables, core building materials, and all the way through to second fix kitchens, stairs, flooring and ironmongery. We offer the complete package. Our adjacent specialist businesses now account for more than EUR 300 million of our distribution business revenue. These specialist distribution businesses quickly gain access to our large trade customer base and of course, their sites, allowing them to grow faster than they would as independent stand-alone businesses. I'll give an example of that a little bit later on. So how do we win?

We are the largest bill of material -- builders' merchants distributor on the Island of Ireland by a factor of 5 or 6x, an enviable position. We've grown to 88 locations, both through acquisition and organically. We have over -- we are serving over 20,000 credit customers, and this presence in the market gives us a buying synergy to be competitive across the whole Island of Ireland. We continually add to our range, either through organic additions or through the acquisition of specialist businesses that have a specific competence to serve the sites we are on across multiple sectors. We have extensive product training for our colleagues, who are long-serving and highly engaged. We have invested heavily in reengineering processes through digital intervention, increasing efficiencies, speeding up time to serve, and removing paper from the business.

We are flexible insofar as we can move to smaller formats or formats with no yard or a simple pop-up to serve extra large sites in strategic development zones with hundreds of subcontractors needed materials, and then we move on when that site's built out. Examples of this are our 5-year on-site branch in the current PLC Seven Mills site in West Dublin, and also our pop-up branch beside the 4,000-unit glass bottle site in Dublin's Docklands. As the Irish market has evolved, most notably with the need -- with the rise of large-scale housebuilders, we've adapted our offering to meet our customers' changing needs. And so now to demonstrate how we will continue to win and grow share in the future, what are the real underpinnings of our differentiation on the Island of Ireland?

Our priorities are threefold. Driving growth with our customers, focusing on the gross margin levers in our business to optimize returns, delivering operational excellence in our business so that we have the most productive, most efficient, and slickest processes to support customers on the Island of Ireland. We've invested heavily in our digital offering, which I'll speak a little bit more about later. We are expanding our central distribution center to allow us to further progress direct sourcing and develop our own brand offering, thus increasing our control of our supply chain and creating greater efficiencies. Our ongoing expansion of our product ranges include the development of our renewables offering for more sustainable buildings, which is a sector that is growing exponentially and in parallel with the development of modern methods of construction, delivering housing at a faster and more sustainable pace, hence the recent acquisition of our Cygnum timber frame solution.

In terms of our digital journey, we have five new elements to that digital strategy. The first two being the Trade Hub and Trade Hub Pro. The Trade Hub is a central digital platform that brings together e-commerce, account management, and document access into a single unified experience for trade customers. It allows customers to buy at agreed rates, check real-time stock across the network, and manage their accounts end-to-end, including invoices, statements, and transaction history. Having all this admin in one place simplifies everything and improves efficiency for both the customer and our branches.

The Trade Hub Pro, which builds on this foundation by enabling full digital procurement for large multi-site contractors. It introduces structural purchasing workflows, including requests, approvals, and other -- and order placement, all managed within the platform with full visibility and audit trails. We've enhanced our user journey. We have introduced a 1 Hour Click and Collect and same-day delivery for orders placed before 12 noon. We are using AI for product enhancement and product enrichment for allowing us to populate our information management system to descriptions, attributes, images, and technical documentation, and efficiently developing out that platform. We've developed a new virtual rep concept. This solution being piloted via a WhatsApp-style interface, is designed to provide fast, conversational, full support for trade customers as if speaking with a sales rep and provides immediate responses outside of traditional channels and hours.

And then we have our branch of the Future. This is in full development. The Chadwick's skip-to-counter concept is a core element of that branch of the Future strategy, focusing on removing any delays from the in-branch experience. Customers will be able to complete purchases directly in the yard using handheld devices. This enables faster, more flexible grab-and-go purchasing, reducing queues, and allowing customers to get in and out quickly. I mentioned earlier, I was going to talk a little bit about one of the acquisitions that we have and how that integrates. I think this slide will start to bring it to life for you and how we have the support of the group in the inorganic development of our trade offering. Supported by group corporate development team, we identify opportunities to expand our specialist offering into main contractors.

A really good example of that is the Sitetech business. Sitetech is a specialist early-stage concrete and masonry accessory specification business. It has a high-margin technical product offering. As you can see, their significant growth in revenue and profitability since acquisition is given by two additional elements. First of all, access to a broader customer base through our CRM system, and the ability to distribute a range of mainstream products through our merchanting business network, giving them national coverage previously difficult for them to attain and manage at scale. So just looking forward, and to summarize, we have a fantastic platform on the Island of Ireland to serve trade customers for building products and solutions.

We believe that our operating margin of 9% to 10% is sustainable based on our current business composition, and with continued outperformance against the backdrop of an underlying growth rate in the economy, that is likely to be one of the fastest in Europe. There are further opportunities to expand our branch network as new communities are built out in urban areas and enhancing our specialist offering through further acquisition in key product and service categories and expansion across the island.

We see significant opportunity for growth with the underlying macroeconomic outlook very favorable, which we can augment with continuing outperformance in organic and inorganic growth. We are processing our digital transformation to include the use of AI at a pace which will support our customers and make it easier for them to do business with us, while staying relevant to their changing needs in what is now a very dynamic environment, which, due to the high levels of demand, will continue to grow for many years to come.

I'll hand you over now to Damien Dwyer.

Thanks, Patrick. Good afternoon, everyone. As Patrick mentioned, I'm Damien Dwyer, and I'm the CEO of Woodie's. I'm joined today by my colleague, Pippa Casey, our Digital and Marketing Director at Woodie's. So as Patrick has already explained, the overall growth of Grafton on the Island of Ireland, and he has talked about our trade-focused offer.

And I want to take some time to talk about our consumer-focused retail offer in the Republic. So what is Woodie's? Woodie's is Ireland's leading omnichannel DIY home and garden retailer, and we are the most recognized and trusted brand in our sector in Ireland. Our business is built around a strong store estate and a growing e-commerce proposition. Since the first store opened in 1987, the business has been at the heart of Irish retail, and it has become the go-to destination for home improvement in Ireland. As the retail arm of Grafton, we represent circa 11% of total Grafton business and almost 1/3 of the Island of Ireland division.

Woodie's combines strong brand equity with consistent financial performance. The business operates at double-digit operating margins and in 2025, delivered an operating margin of 13.5%, with strong cash generation being a core strength. Woodie's has delivered a sales CAGR of 6% over the last decade. At Woodie's, we serve a broad customer base. That's homeowners, families, renters, and more and the proposition is designed to win on range authority and value. Our offer spans the full home improvement mission, giving us strong participation across essential and project-led categories.

Our model is intentionally store-led, but it is digitally enabled. That's stores, click and collect, home delivery and extended online-only ranges are core parts of how customers shop with us today. The strategic intent here is simple. Make woodies.ie the starting point for customer journeys and connect that seamlessly to stores. And at its core, Woodie's is a scaled, trusted Irish retail platform built on excellent stores and strengthened by digital. And for anyone that doesn't know Woodie's, it's synonymous with Irish retail. It's an institution. It's a locally loved brand, and the success of the business is anchored in a brand that is both trusted and widely recognized. We have brand awareness of 97% of the Irish population.

We operate a nationwide network of 36 stores that is complemented by a fully integrated e-commerce model, giving us both scale and depth. Our large store formats anchor prime retail parks, positioning us in high-traffic, highly visible locations. And this is a strong competitive advantage and would be difficult to replicate. We combine this with immense range authority and depth, selling 30,000 products. And that's underpinned by seasonal relevance and constant innovation. So this all translates into strong customer engagement. We have over 17 million annual visits and high in-store conversion.

But behind all of this sits a very well-developed sourcing model, enabling value, availability, and margin strength. We have a continuous focus on developing a sustainable and forward-thinking supply chain. Our own sourced and exclusive brands represent almost 30% of our purchases. Critically, our in-store experience is a competitive differentiator. We have highly trained, highly engaged colleagues who drive customer experience, loyalty, and conversion. We are a gender-balanced business, and we are ranked really highly in the Irish market that supports both talent attraction and retention. In 2025, Woodie's achieved #4 position in the Great Places to Work Best Super Large Organization.

We're the only retailer to appear in the top 20, and we continue to be the highest placed European retailer in the Great Place to Work Index. Put simply, Woodie's wins because we get the fundamentals right. That's customer focus, that's highly engaged in-store teams, that's brand love, that's scale, and that's a strong operating model. At Woodie's, we have a clear strategy focused on driving profitable growth, driving strong returns, and further scaling the platform over the medium term. Firstly, we are focused on growing the core business. Now that starts with protecting and developing the store estate, which remains the engine of the model and the primary driver of volume and customer engagement.

On this front, we are opening a store in Ennis, County Clare tomorrow, and we have a pipeline of new stores in our 5-year plan to continue to fill white space geographical locations. Secondly, we are integrating a digital offering around our customers. Our approach is to serve customers where they want to shop, with that seamless connection between stores and digital. The key point here is customer value. Typically, customers shopping across channels spend 2.5x to 5x more than single-channel customers. So digital is not a separate channel strategy for us. It's a core lever to increase customer value, increase customer frequency, and increase customer basket size.

At Woodie's, we have a modern, well-invested store estate, and we are optimizing the business for continued success. This means ongoing investment in technology and platforms. In 2025, we completed a full ERP implementation, and our retail and digital technology stack is modern, scalable, and ready for AI optimization. On people and capability, we've industry-leading colleague engagement and labor turnover with a 10-year record as being recognized as a Great Place to Work.

On supply chain and sourcing infrastructure, we've a well-developed sourcing model with over 85% of our supply base going through our central distribution center, with almost 30% of our purchases being own and exclusive brands. So our strategy is to grow the core, scale digital, invest in capability, and allocate capital with discipline. In line with the Grafton Way, this means driving sustainable growth, driving strong cash generation, and driving long-term value creation. And naturally, in a retail environment, maintaining competitive advantage through a compelling digital offer is critical, and that's why I wanted Pippa to explain some of the great work we are executing on this front.

Thank you. Thanks, Damien. Good afternoon, everyone. As Damien previously mentioned, our strategy is to be Ireland's omnichannel leading DIY home and garden retailer. And I'm going to walk you through how our digital strategy is one of the core pillars underpinning this. But first, a little bit of why it's one of our core pillars. So as Damien mentioned, omnichannel customers are significantly more valuable.

So a customer who's shopping both in-store and online with us is spending 2.5x someone who's shopping in-store only. And a customer who's shopping across all of our channels is worth 5x an in-store-only customer. So really for us, creating seamless omnichannel experiences is going to drive customer value.

Secondly, as Damien also mentioned, Woodie's, our e-com platform, is a really powerful front door to our physical store estate. So 60% of our customers research on our website before coming into store. And so we know that driving that experience is going to increase our footfall and our share of wallet with our customers. And lastly, over the last 24 months, we've seen real growth in our pure e-com channel. So that's an opportunity for us to gain incremental market share, particularly in white spaces around the island, with a strong e-com experience. So what have we done so far?

Over the last 24 months, we focused on really getting the core technology stack in place. So as Damien said, an ERP implementation. We've also really enhanced our core e-com platforms, and we've increased our fulfillment capacity. This has allowed us to increase our volume, extend our range on the website, and also to introduce more complex distribution models. And secondly, we've launched some new revenue streams. So extended online range has been a real growth driver for us. Essentially, we've done that in a capital-light approach, which means that we have product available on our Woodie's website that is fulfilled directly from our supplier to the customer. We do not own or distribute the product.

This has allowed us to tap into some really new ranges in specialist products and a broader range of our existing product range. So a couple of examples of that would be high price point, really bulky aluminum pergolas. Another example of a product would be high price point robotic lawn mowers. So for those of you that are familiar with the Irish climate, we're great at growing grass, so we're happy to meet that demand for robotics. So as a result of that, we've gotten our road map in a really good place, and we're seeing the delivery of that growth. Our sales have increased by 44% through our digital channels over the last 24 months. And so what are we doing going forward? So looking at our future road map, we are focusing on four key areas.

So continuing to expand that online range. And so far the range has grown about 20%, and through extended range, we're going to increase that to 50% over the next 18 to 24 months to keep driving that incremental demand. And secondly, a big focus for us is CRM and loyalty. We want to get to know that in-store shopper. And actually, being part of the Grafton Group has really benefited us. Our sister company, Selco, have been very generously knowledge sharing with us around their loyalty journey. That's allowed us to get some of the fundamentals right before we launch our own loyalty program. Really, for us, loyalty is about acquiring first-party data that will allow us to really increase our share of wallet with our customer and also to attract a newer customer base into the Woodie's business. And thirdly, retail media.

This is a new area for us. We have a really brilliant store estate. We have a great digital platform. We now want to start using that to sell some advertising space within our stores to our suppliers and, in the future, to brands not within our sector. Really what we've seen there is a real interest in that from our supplier base, and it's very margin accretive, so some green shoots there for us on that strategy. And last but not least, continued e-comm penetration. So we've invested in our technology, and we continue to be in a really good phase of innovation.

We'll be launching a Woodie's app in the next 12 months. And that will allow us to be more mobile-friendly and also will complement our existing e-com platform really well. So where we are in Woodie's is we've done the foundations. We've got a clear road map for success. We've seen that really working over the last 24 months. We continue to be really ambitious. Our digital store is now our #1 store. And our plan is to deliver 130% growth in that channel by 2030.

So thank you very much. I'm going to hand you back to Damien to look forward for Woodie's.

Thank you, Pippa. So to close, I just want to summarize how we see the next phase of growth and where we are taking the business. So our growth strategy from here is focused on further scaling what we already do well. That means deepening our market-leading proposition by continuing to grow share. We are also accelerating digital as a core growth engine, using it to drive higher engagement, higher frequency, and basket size.

That means tripling the digital share of business and doubling digital revenue over the period to 2030. We are also leveraging data and loyalty to build deeper customer relationships, insight, and lifetime value. We're also expanding on our footprint in our categories, capturing white space opportunities across both stores and product categories. And as I mentioned, we're opening a new store tomorrow, and we have a pipeline for the next number of years. And critically, we are delivering all of this through one integrated model, combining stores, digital, and supply chain capabilities. So from an investor perspective, there are three things to take away. Firstly, the model is scalable. Secondly, the opportunity remains attractive. And thirdly, growth is disciplined. Woodie's is a scaled market-leading platform. We have headroom for growth. We are already leveraging a proven model.

We are accelerating digital. We are operating with a great brand and world-class teams, and we've proven capability to deliver great customer experiences, return sustainable long-term shareholder value. Thank you. So now I will hand over to Frank Elkins, the CEO of U.K. Distribution.

Thank you, Patrick, Damien and Pippa. Good afternoon, everybody. My name is Frank Elkins. I'm the Chief Executive Officer for GREAT BRITAIN GB. I joined Grafton Group in August 2024. My background for those that don't know me, I've done 30 years in construction and distribution. My previous employer before coming and joining Grafton Group was Travis Perkins, where I did 12.5 years there, my last job being Group COO for all of the businesses across Travis Perkins.

One of the reasons that I joined Grafton Group was around what Eric has talked about earlier, the federated model that we have within the business. I, as a competitor to Grafton previously, have seen the value that federated model produces. The agility and the decision-making in an ever-changing market and the focus that Grafton colleagues had in terms of the proposition in an agile way. And I'm delighted to be part of the Grafton Group.

So let me just give you an overview of what's in GB. So Grafton entered the GB market in 1988 with an acquisition of the Builders Merchants, which we've since disposed of. But within GB today, we have 5 business units: the generalist business of Selco, and 4 specialist businesses, CPI EuroMix, Leyland SDM, T.G. Lynes and StairBox. The combined turnover of those businesses is GBP 765 million and producing an EBITA margin of 6.5%.

I've put the map up here just to give you a flavor of the strength that we have in our London and Southeast markets. So if I take Selco, our generalist business, it has 74 stores across the U.K., but 37 of those cover London and the Southeast markets. Leyland SDM has 34 branches. And all of those are in London, predominantly in Zone 1 and Zone 2. And T.G. Lynes, our Mechanical Services business operates from a single site in Enfield and predominantly services London and the Southeast. Our 2 other specialist businesses, CPI EuroMix and StairBox operate from their manufacturing facilities and cover the whole of the GB.

So let me give you a bit more flavor about the businesses that sit within GB and what they do. On this slide, I've tried to give you a view of the product range, but also importantly, the project life cycle of the businesses that we have. And if I start with Selco, Selco is our generalist business. It represents about [ 3/4 ] of the turnover of GB. It provides a solution to our small trade customers as a one-stop shop -- so in reality, we go through the whole project life cycle for an extension or new build. At the beginning of the project, we can supply timber, bricks blocks and cement. At the end of the project, we can provide kitchens, bathrooms and all of the DIY. Selco as a generalist business is predominantly exposed to the RMI market and services the small trade market.

If I then take our specialist businesses in order of project life cycle, we start with CPI EuroMix. CPI EuroMix provides Masonry, and mortar products to the new build housing market sector. It has a unique solution by providing silos to the large housing -- national house builders, but also has a solution for the smaller builders through distribution of bagged products. It's predominantly exposed to the new build housing market and its customer base is trade and large trade.

If I then take the StairBox business as next in its project life cycle, StairBox provides stairs and wooden windows and doors to the retail and trade merchant market. It's predominantly exposed to the RMI market sector. Next in that project life cycle is T.G. Lynes, our mechanical services business or Big plumbing, exposed to the commercial market sector, whereby its products are installed in schools, prisons, hospitals. Its market is mainly exposed to the commercial market sector and in reality, services the small trade -- sorry, the larger trade customer base. And finally, Leyland SDM, right at the end of the project and a specialist in paint and decorating products. Its customer base are split between retail and trade and predominantly exposed to the RMI market sector.

So if we look at the GB portfolio, the reality is we have a really nice balanced portfolio of businesses. On one side, in terms of exposed to the RMI -- sorry, exposed predominantly to the RMI, but also to the new build market sector and providing a product solution across all of the needs of a small trade customer.

So if we look at the historic performance of those 5 business units, and this doesn't include Plumbase, which we disposed of in 2019 and Buildbase that we sold in 2021. As you can see, pre-COVID, these businesses were turning over GBP 600 million and EBITA margin of just over 10% -- in 2020, as Patrick talked about, we had to close our stores for a while due to COVID and then go to digital solution, hence, the slight downturn in our business. But then in 2022, we saw -- sorry, 2021, we saw the spike in terms of RMI demand due to the fact that we were all locked in our homes and seeing the requirements of repair and maintenance improvement in our home. And we saw really high demand for repair and maintenance in that market sector.

And in hindsight, we now talk about those returns being super normal profits. Since COVID, we have seen a deteriorating RMI market, and it's been well versed in terms of new build and RMI stats. The reality is the ONS data that we see from '24 and '25, certainly, the ONS are question it. And as a market sector, we wouldn't recognize those numbers. I mentioned earlier the Southeast market exposure. We have seen house price deflation in London and the Southeast at minus 1 versus the average in the U.K. of 2.4.

We've seen the decline in housing starts from minus 30 from the previous -- in 2025 of date the previous year. And we've seen the introduction of building safety regulations on high-rise buildings, putting delay to new starts in the London market sector, all causing us a downturn in our market sector. So why do we believe that GB can perform well?

Well, first of all, I know that many of you will have seen the trading update in terms of the GB businesses at minus 5% like-for-like sales. There's no question that we operate in a tough market sector. The new build housing stats are there to be seen. We've seen the lowest new housing starts since 2026 and minus 20% against 2019 numbers. But -- and we're not shying away from the reality that the market is difficult. But we don't believe the housing market is derailed. It's just delayed.

And why do we remain optimistic about the U.K. housing market? Well, housing demand is there to be seen. 1.3 million households are on the English waiting list for new homes, the highest number for a decade and a growing number over the past 3 years. Successive governments have recognized the need for new housing and the labor governments at the moment are trying to push for 1.5 million homes to be built in their term. They have been helpful in terms of deregulation of planning, which encourages new builds. And we believe as -- as lower interest rates and lower inflation over the medium term begin to soften, but actually the confidence of our consumers in terms of new home buying.

But as Eric mentioned, GB has the attributes that we look for from a Grafton Group. It is one of the largest -- sorry, it's one of the largest European construction markets. It has an undersupply of housing. It has an aging housing stock. 80% of the U.K. housing is 50 years or older, and it's also growing population. So all the attributes that we look for in a market the Grafton Group wants to be in.

So I'm now going to spend a bit of time talking about Selco because it's our largest business in GB. It has 74 stores and has a really strong brand presence. It has a unique store format in terms of the fact that we have 15,000 SKUs available for our customers to self-serve. We lay out our stores in an easy way for our customers to shop project, and we have visible pricing that means there isn't the complexity or friction in that customer journey.

We have highly skilled colleagues who understand the products and requirements for our trade customers and are knowledgeable and want to build relationships for small trade customers. And we have a third-party distribution center that provides us with best-in-class availability at 99% availability across those 15,000 SKUs. We also have the best-in-class from a merchant market sector in terms of digital penetration at 6.5%. And we recognize this as an opportunity to grow, and I'll talk about that in a bit.

So what have we done since we came -- or what have I done since we came in to Grafton Group and looked at the Selco business? Well, we put in the largest customer survey to really understand the needs of that small trade customer. And what we found from that survey was these 5 buckets were the most important things to our customers: speed, certainty, value, convenience and knowledge.

The other thing that came out of that survey was that our customer base in Selco is a decade younger than in the standard merchant market sector. Why is that important? It's important because those customers are experiencing a different level of service through the omnichannel experiences that they have when they shop in other ways. And that means within these buckets, we've seen the heightened requirement for service, and we're changing our customer proposition as a result of that.

So how are we responding to this? We have got a number of key initiatives in flight or we're developing plans to do, and I'm not going to cover every single one of them. Speed is really important to our trade -- small trade customer. We've introduced a loyalty scheme, as Pippa mentioned, which rewards and differentiates our most valued customers and takes away the friction of the requirement for negotiation on price. We're in the processes of developing an app, which is trade specific, providing information around rewards and savings through the loyalty scheme that our trade account customers have received and will increase the functionality around search and their ability to trade on that.

We also see that faster fulfillment, the requirement for our trade customers to get the product really quickly has increased. Click & Collect is one of our fastest-growing channels in Selco. And we've recognized the fact that we need to put in a plan to be able to deliver a same-day delivery service as well. All of this needs to be not just as an in-store experience, but actually on our web channel as well. And we've got plans in terms of how we develop our web channel through '26 and '27 to provide a better search experience and different fulfillment options through our web.

Certainty. Our customers demand the fact that if I go on to a website that the product that you say or the delivery that you're going to give is certain. So we've just rolled out across our Selco network, a delivery management system. This provides an ETA to our customers. It provides the ability to track online their delivery. It gives some acknowledgment that we've picked and packed that delivery and it gives an electronic POD and the ability to feedback at the point of delivery, the experience that they've had.

We're also delighted to announce that we've been given the opportunity to invest in Selco's own distribution center. And that will give us the opportunity to drive better stock accuracy and extend the range and fulfillment options that we give both in-store and online. Value is an increasing important element to our trade customers. Price transparency and our customers demanding better value has led to us looking at how we provide our customers with a stronger shelf-edge price. And we have invested and started an investment program in terms of those products that really matter for our small trade being invested in.

And this will culminate in the ability in terms of a really strong shelf-edge price with a loyalty scheme that rewards our loyal and largest customers. We're also very fortunate that to be in the position whereby we have first-party data of all of our customers. And we're using AI to be able to look at that and understand the customer journeys that they're going on and serving up to them relevant products to the projects that they are doing and promotional campaigns that are specifically relevant to them.

Finally, we've started introducing our own brand range, product that is specific to the trade at the right value. All of this is underpinned by our brilliant colleagues, and you'll hear more about what we do to train and develop them through the breakout session with Karma and Sally later, but also data-driven decision-making. I talked about first-party data, but we're using data in many ways to drive decisions around the Selco business and a continuous improvement, as Eric talked about, around operational efficiency. We have looked at our store processes, and we're driving to ensure that we have the best operationally efficient network.

So how is Selco going to win the recovery? Although the market recovery is an important element of returning Selco to stronger margin operating margins, we have a significant opportunity within the organic growth initiatives that we have in flight or planned. I've already mentioned our direct sourcing and own brand. It currently represents less than 1% of our total turnover. We have got the opportunity in terms of having our own new distribution center, which provides us the opportunity to give better fulfillment online and a wider range of product.

We've introduced a loyalty scheme, meaning that we will drive a better share of wallet and also recognize our largest and most significant customers to us. We've got the opportunity to invest in digital, the launch of an app and the development of our website. Digital represents 6.5% of our total turnover in Selco at this moment. And we recognize that there is an opportunity to open new branches, some in the geographies of London and the Southeast. But through the process improvement and efficiency, we think there could be an opportunity to put new stores down at a lower cost to serve in a more efficient way.

But we're not just doing that in Selco. We've looked at the customer proposition across all the GB businesses and are looking at how we develop that customer proposition. And I just want to give you a couple of examples of what we've done. CPI EuroMix has just launched the first digital app in the market sector that it serves, a unique proposition to those large customers. This provides an online digital proposition from the point of ordering, maintaining and topping up your silos, giving the large house builders the ability to be able to manage multiple sites on a digital app and making that easier for our large trade customers.

Leyland SDM last year opened South Kensington store. It was in profit within the first 5 months, but also really importantly, the 2 stores that were less than a mile away from it saw no cannibalization as a result of it, giving us the confidence that we can still develop our network within Zone 1 and Zone 2 in London, giving our trade customers the convenience of pickup locations within Central London.

And finally, in terms of window builder, we've seen StairBox deliver a stair builder app, and we've used that as a platform to be able to develop a window builder portal for our customers. The complexity of designing a window is, believe me, very complex. And we've provided a digital portal that takes that complexity out, gives you in-time availability and price and you're able to order it online, making that journey really simple and easy, both for a retailer and a trade customer.

So in summary, looking at GB. We remain really positive about the outlook from a point of view of new build and RMI market in the medium term. The fundamentals are there about the lack of housing and the requirements for new housing in the market sector, which then leads to RMI. We've talked about the strengthening of our customer proposition and being really clear about what's important to our trade customers and around the buckets that we've talked about, speed, certainty, value, convenience and knowledge. We aren't waiting for the market to recover, and we're investing in these key initiatives to drive a better performance despite whatever the market throws at us.

And we are looking at operational efficiency and how we drive efficiency in our network but also with the new GB structure, how we collaborate as GB to find opportunities to drive and collaborate. And you'll hear a little bit about that later as well. And finally, through the research that we've done, we've prioritized the initiatives that really matter to our customers to make a brilliant proposition. Thank you very much.

I'm now going to hand over to Eric, who's going to sum up and take Q&A.

Thank you, Frank. So you all see the topics we have covered. I hope you got a good sense from me what the strategy is, how we look at the markets, how we execute to our operating model. David talked about our capital allocation framework and finance in general. Patrick, Damien and Pippa gave an overview about the Island of Ireland. And last but not least, we heard Frank talking about our businesses in GB.

So we will now come to the Q&A where we will cover those specific topics, which we have covered up to now before we then have a second layer of Q&A covering the topics, which are yet to come. After that, we will have the coffee break.

So just, we've got obviously a couple of mics around. If you wouldn't mind just saying who you are. And then if you would give us the liberty if you do have more than one question, let's just ask it one at a time if we're going to direct it to our colleagues, that will be great. And why don't we go to Shane first on the front. Thank you.

Shane Carberry from Goodbody. Just the first one, I guess, when I think about the 2030 targets and the EPS CAGR in particular, you mentioned a little bit around the background to that, but you talked about kind of a gradual improvement in GB in Northern Europe, given what Frank has kind of talked about. When I think about that gradual improvement within the 10% EPS CAGR, am I thinking about us getting back to 2019 levels? Or that's not the kind of working assumption that you're using to achieve that 10% CAGR?

Look, I think on that one specifically, I think as I mentioned in my presentation, we think that the markets will gradually recover, but we do not expect to hit the margin levels of a normalized market in Northern Europe and GB over the time frame of 2030. But do you want to add something?

No, look, I think we've taken a reasonable view in terms of growth across the business over that 5-year period. Euroconstruct, I don't know if anyone has sort of followed it, published their June report this week. There were some quite ambitious targets that they were or forecast, I should say, that were out there. So we're not quite in the heady heights that they're forecasting overall for the business. So I think we've taken a sensible view. But no, we don't view Northern Europe or GB as getting back to a normalized market, by which I suppose we mean somewhere around about 2019 volumes.

And then I guess a couple on Ireland for me. Maybe one on Chadwicks. In terms of the branch of the. future piece, is that something you could expand on? And I know that kind of forms into the Chadwicks growth plan. And just the second one on Ireland then in terms of the white space that Damien talked about in Woodie's, obviously, you mentioned opening in ennis. How should we think about kind of Woodie's rollout from here to the end of the decade?

Should we let Patrick, if you wouldn't mind sort of picking up the branch of the Future piece and then hand over the baton to Damien.

Sure. Thanks, Shane. So the branch of the Future is a 4-year program that we have that is there to really speed up the service that we have for our customers, remove paper, make the branches more sustainable, really because time is money. So customers coming in, they need to get -- skip the counter, get to the yard if that's -- if they don't need shop products. So it's a whole plethora of different work streams that we have working just to make that a really slick experience for the tradesmen coming into our branches.

Thanks, Shane. So in terms of Woodie's and white space, from tomorrow, we have 36 stores. But next year, Woodie's will be 40 years old, so 36 stores in 40 years. What we're, I suppose, just being realistic in terms of sites and over the next while, we do have ambitions. We have identified sites. We're working on a pipeline, but that's 1 to 2 stores per year, Shane, at best. We've mapped every retail park in Ireland. We know our targets. But one of the biggest constraints for us is actually having suitable sites. There has been very little retail space built in Ireland since the financial crisis. And there's 96%, 97% of commercial occupancy on retail parks. So it's somewhat of a constraint. But as I said, we have identified and we have a couple in the pipeline for the next few years.

Sorry, maybe just expand on that. Does the e-commerce side of things make you think any differently about what the right size is from a [indiscernible] network perspective?

Yes. The site that we're opening tomorrow will be our smallest store to date. So we certainly looked at compressing and maximizing the opportunity within a tighter footprint and how we merchandise, how we range. And it's certainly given us opportunities there as well, Shane. And I think in terms of broadening the range and the online-only products as well, certainly gives us scope to do more there with the launch of next-day delivery and supplier-only dropship ranges, definitely broader opportunities.

Will Jones from Rothschild & Co. Redburn. First just around [ Ireland ], please, and maybe a couple of [indiscernible]. But looking at the margin target of holding broadly flat, obviously, at a good level. Just wonder whether distribution and Woodie's may differ potentially within that given particularly the level that Woodie's has hit over the last few years? And then maybe just a wider update. It's a market we don't see as readily, but the competitive landscape in both businesses, how you describe it?

Shall I pick up the margin piece and then we can sort of go back and talk about the competitive landscape. Look, I think, as Patrick alluded to, we do see a sustainable margin on the distribution side as being 9% to 10%. We think not just in terms of the growth of the market, but also the strength and the levers that we've got that, that does feel like a sustainable margin. Woodie's always challenges me because I think in most conversations, I always talk about the margin diluting back more towards 10% and the team consistently deliver some way above that. I think when we look at, again, the levers that they've got under control, a lot of the work that they're doing around ranging and digital, I think we've provided a lot more support in terms of gross margin and outcome to hold it above that 10% level.

So when we set our margin target, if you like, of around about 10%, I think it's built up from sustainable margin in Chadwicks and Woodie's continuing to defy the CFO nicely. And perhaps we just talk about the market landscape and the 2 elements, I think, because slightly different markets, obviously.

Sure. So the market landscape in Ireland, there's only 2 players, ourselves and one other who have actually branches on the island of Ireland. They either operate north or in South. In the South, we have 5 competitors who have turnover somewhere between EUR million and EUR 150 million. And then there's about 350 independent merchants who operate through 3 different buying groups, and that's say that's structured pretty much. Does that answer that okay?

Happy to defy you, David, in a good way. So I suppose in terms of Woodie's and competitive landscape, we serve a broad range of products, and we have both generalist and specialist competitors across the categories that we serve. I mentioned we have a strong operating model. We have a lean structure, and we have scale to support our buying as well. So generally, we are the #1 buyer in terms of our suppliers and our single largest customer. So we work really well with a small select number of supply. We have a very well-developed own source and exclusive brands, and that gives us margin depth and strength as well. And that's something that we have developed and intensified over the last couple of years as well.

Our central distribution center also gives us that opportunity for scale and probably ahead of somewhat of our competitor base as well. We're -- some of the brands that you would know that operate in the U.K. were 3 to 4x the number of doors of them in the Republic of Ireland. So in terms of our market, we have strength, we have depth, we have a strong operating model, and we have scale.

I would probably -- sorry, just to add for -- to be complete, I mean, B&Q Screwfix, the range, they all operate in Ireland amongst others, right? But as Damien said, the proposition, the overall value proposition of what is excellent. And you guys compare competition on a range-by-range basis. So it's really category by category to make sure that the overall value proposition is superior compared to other players.

And then the second was just a couple of bits around Selco. I think previously, in prior years, at least, you talked about potentially a store network expansion to 90 plus. Is that potentially a number you're kind of stepping back from and it's more about sweating the existing estate better from here forward? And then maybe just talk a little bit further about the own brand initiatives and how significant that could be, which products you're doing in, et cetera?

Let me take the first one and then let Frank answer that. I think we still believe you could have 90-plus telcos. I think a slightly different way how we look at it is we have a model which works exceptionally well in and around the Greater London area, right? But we kind of opened the same model in other area where demand or revenue per site is much lower, which by default gives you a much lower return. So I think part of it is there are certain locations, which we have in the London area where we would love to open.

And if we get the ability to open or the opportunity to open, we will open with the [ Bolan ] as we currently have. At the same time, Frank and the team kind of work on how can we make sure we have an undiluted value proposition for the small tradesmen in an operating model which is more cost efficient, i.e., where we make the return, albeit we will have less revenue per site, right? But overall, we still think we can further grow the network over time, but the composition of the network might look slightly different over the years. Sorry, Frank.

Just in terms of own brand proposition, in, we have good, better and best really is a proposition within a number of the ranges that we have. All of those at the moment are branded or branded product. And we believe there is an opportunity to provide small freight customers with the right specification at the right value. We signed a new deal with a Far East sourcing company, and we've got a team out there that have developed a whole portfolio of products that we plan to bring in over the medium term.

Aynsley Lammin From Investec. I think I've got 3 actually. Just on the first question, if you -- kind of [indiscernible] your target return on capital employed 13%, is that more margin and recovering in the P&L? You haven't really spoken much about the balance sheet. Is there any opportunity there to squeeze out a bit more working capital, et cetera?

So look, I think it is more about the margin development. When we think about return on capital employed, I mean, we were just under 11% last year. Operating margin for the group was a little over 7%. Capital turn was 1.4x. I think in better markets, achieving a capital turn of 1.5, 1.6x is something that we should be striving for. We should be, to use Will's phrase, sweating the assets harder. And I think we have that within our wherewithal. Combine that then with a margin improvement, which doesn't get back to all markets firing on all cylinders by 2030, and that's where you get back to that more 13%.

So I think there is definitely opportunity. We've seen that in businesses. Any will talk about, for example, IKH when we acquire particularly family-owned businesses, there is an opportunity to drive efficiency in working capital and some of the systems that we apply more broadly across the group give us that capability. And again, I think you'll hear a bit more about that later as well.

And second question, just on the kind of big market, lots of opportunity to grow in. Would we -- should we be surprised if you acquired 20% of the market cap back in share buybacks over the next 5 years? Or do you see so many opportunities on the M&A front, that's really a priority? And are there any -- I guess, should we be surprised if you don't enter another big country in a new country, Germany or France during that period?

So first of all, we do have a big pipeline, and we do have a big opportunity to execute M&A. However, it's a bit like the buzz, right? So sometimes the buzz comes and you can take it, sometimes there are 3 in a row and sometimes you stand there for hours and unfortunately, the bus doesn't come, right? So the question for us and how we look at this is, if we buy, we want to be clear what's the plan when we buy it and do we have -- both David and I firmly believe buying at the right price is very much a key element of having a successful M&A deal, right? Yes, it's what you do with it. But if you overpay, it kind of doesn't really work.

So in that sense, it's -- I don't want to dodge the question, but the quantum of share buybacks will really depend on how well can we execute on the M&A front, where is the relative value and so on and so on. So that's why I don't think I would want to give a specific number in any way or shape. I don't think you would either, right?

No. I think the -- I guess the way to look at our target on earnings is that a large element of that does lie within our control precisely from deploying that free cash flow. The EPS, if you like, accretion from deploying that capital, whether it's into acquisitions or share buybacks. I mean if I take Salvador, Escoda as an example that we acquired in '24, I mean we've run the -- well, what if we spent that money on shares instead of investing into the acquisition. And I mean, short period, but if you just looked over year 1, the earnings pretty similar actually in terms of the accretion. But the difference was that we had GBP 10 million more in the bank account at the end of owning Salvador.

And that's, I guess, the real power isn't it, that we generate more cash flow that enables us to do more things. And so that, I think, is a difference. If we think of it through the EPS lens, through the EPS lens, between acquisition and buybacks, it can contribute similar to free cash flow, it would be additive to our free cash flow targets.

And then just a quick one on the property profit. I think your EPS target, in property, is there much scope you got any capacity to do much of that?

I think in terms of the portfolio that we've got at the moment, I don't think that there will be a significant cash generation over the next 5 years as, for example, we saw average over the previous 10. If we looked over the previous 10 in total, it was about GBP 120 million. Some of those freeholds were effectively cash following the disposal of Buildbase as well, where we retained the freehold of some properties. I don't think it's going to be as low. So -- sorry, I don't think it will be as high going forward.

Christen Hjorth from Deutsche Bank. Just maybe to follow up on the own brand piece, but more on the sort of group level because it's been mentioned several times, obviously, the Iberian acquisitions are quite focused on own brand. Is that sort of a century-driven thing? Is it something that could be century driven in terms of driving more own brand? And I suppose related to it, it sort of feels in some areas that there's a bit of a blur between vertical integration, manufacturing and StairBox is a good example of that. How do you think about that across the group? And I suppose it's digitally led as well? So that's my first question.

Look, I think in the beginning, when I spoke about how do we look at markets and how do we look at models, if you look at Spain and in the HVAC market, in particular, the businesses which have good returns have strong own brands. right? So if you sell the [ Daikin ], unfortunately, you will not have the same margin. So we also sell the [ Daikin ], but the proportion is much, much lower. So if you look at our overall businesses, it's not just in Spain where we have very strong own brands. If you, for example, look at IKH, and I'm sure Anu will mention, we are one of the largest sellers of PP and workwear in Finland. And we have a brand called Paton, which is our own brand. And it is very prominent next to Helly Hansen in Finland, right?

And of course, having a systematic view on where you apply own brand in a category and where you position it is one key lever to not only hit the price point, but only deliver strong gross profitability on those products. And I guess they are multi one we didn't mention. I think Frankin Selco will actually introduce a product, which originates from our colleagues at IKH, which will -- which is called Six, right, which is a known brand of IKH. So we just look more systematically, if you want.

And call it the graph, it's evolution and the businesses really talking together and Remco, where are you, Remco, managing our group procurement and those forums, making sure that the category manager of the different operating companies actually know what is going on and what we have in the different geographies and how that will help them to drive the portfolio or the percentage of own brand up. I think it's a key value lever. At Selco, we are just very, very low. And as Damien said, in Woodie's, it's like 30% of own our proprietary brands, right, which we sell.

So you have to look at this as an evolutionary way how we continuously improve the business, but it has to be locally owned. We don't believe in going to the Selco category manager from a group point view. You have to hit 10% own brand and see other brands. And then he will just turn around, well, I stock them, but we don't sell them because no one wants. So I think it has to be driven organically, if you want, and we create a climate that, that collaboration is there and the people actually work together. And for me, it's a tremendous success to see the category team from Selco in the U.K. launching a brand from IKH in Finland, right? Who would have thought? But that's one step in how we continue to enhance the overall proposition.

The other thing I would just add to that is the importance of sensitivity to the differences in local customers. And those customers in Finland take patron pair of trousers that in Sweden wouldn't sell. And so unless we're really alive to that, certainly, what we're not going to do is have a common brand, a common set of products because they won't tackle the price points or the particular specification that is wanted in the market necessarily. So that's that real sensitivity, which again, I think plays to the Grafton way.

And then just the second one around capital allocation. you're very clear on the returns on capital that you set out. But how do you think about investing countercyclically where maybe the returns might not be there immediately in year 1, take GB, for example, versus Iberia or Ireland where maybe the immediate returns are more obvious.

Yes. I think what's really important is to make sure that through the cycle, we maintain brands that are really competitive and really well placed then for when the cycle turns to come out of it. I think the thing that we've learned over the years is that if you starve businesses of keeping fresh, making them look good for customers. If you wait for that upturn to then invest, what you suddenly find is it is a huge wall of capital that you have to put in that never really delivers that incremental returns. So much better to keep investing. And that's why if you go and never look at the Selcos, you go and never look around label and SDM, they all look good. They all look well invested, and that's really important, and that's something as a principle that we hold close. I'll come to Charlie.

Charlie Campbell at Stifel. I've got 2. The first one is a sort of general question about Ireland. And we're used to seeing these very strong sort of forward indicators. But there are kind of physical constraints aren't there in terms of planning, in terms of labor. I'm just wondering what you think the outlook is for those and whether those constraints can ease to allow this growth to kind of continue?

It's probably a good one for Patrick to pick up that.

Thanks, David. There's been 4 or 5 elements that have been restricting the growth in housing, in particular, over the last few years. I think the work the government have done in the last 18 months to 2 years in terms of freeing up planning, getting financing sorted, commitment to infrastructure, they have been the 3 biggest things. Other things around skilled labor and so forth have been an issue, but we right now have more apprentices than we've had in the middle of the boom actually in the system.

So I think they've done a really good job, and it's like turning the big shift. It doesn't happen overnight. But I think that the mechanisms and the policies they put in place to free up land and to put really big commitments on to local authorities to deliver on housing numbers in each local authority, all of that is contributing, and we're starting to see that momentum happen now.

And the second one was a very quick question, I suspect. Just wondering if you would do retail anywhere else outside Ireland. I mean it clearly works very well where you are, but would you take that to any other country?

The answer is kind of. So -- and the reason I say kind of is you look at certain markets, right, there is far more a blend between -- if you look at Leyland, right, Leyland has a blend of the professional paper decorator of guys who maintain apartment block who kind of are the handyman and they pop into a Leyland and get the stuff they need for maintaining the apartment blocks they look after. And you have people like me going to buy a Hammer [indiscernible], whatever I need because it's just local and pop in. And many of the people in the investor community we have spoken to have over the years, outed themselves as Leyland customers here in Central London, right? So that is retail.

And if you look at certain markets, for example, you look at Portugal as part of the Iberian portfolio, we have -- we do sell product into Portugal at the moment out of our trade businesses in Iberia, but we haven't yet put in any physical presence in terms of branch locations in Portugal. But there are a lot of models in Portugal where you have, let's say, a 65% trade, 35% retail customer base. So it's a bit more of a hybrid.

So I think, again, you have to look at what's the distribution model that works in a local market and generates the return and do we think we can bring something on top to that model over time to drive value, right? So in that way, it's kind of -- do I -- would I now rush and say to my colleague, Bert, that we should open up Woodie's stores in the Netherlands. The answer is no because you have pretty much every global DIY retailer with super strong positions already in that market. And I think the train has left the station. Those markets have been built out. And the dominant positions are there. But that doesn't mean we wouldn't do something which crosses across trade and retail as in many markets, that is the case.

We'll take Flor's question as the last one, and then we'll break for coffee.

Florence O'Donoghue from Davy. First one actually for you, David. It's a very quick one, actually, just clarifications on free cash flow. Your decks typically break up CapEx into development and investment. So in your guidance here out to 2030, is that fully loaded? Or is it just on that replacement basis?

Yes. So when we calculate free cash flow, it is after replacement CapEx, but before development and organic CapEx.

So free cash flow would fund development CapEx.

Understood. Second one, I might direct this to Patrick. Cygnum looks a really interesting deal. I'd just like to hear a bit more about in terms of the genesis of it, what will bring to Chadwicks, how interlinked with Chadwicks, the opportunity for the business under your ownership?

I think to understand why we acquired Cygnum, you need to really understand where the market has gone. The -- what we've seen in terms of how houses are built out now are much less traditional than they used to be. And we're seeing timber frame representing somewhere in the 62%, 63% of scheme houses. Other modern mentioned of construction, there are 6 other ones as well within -- which are starting to grow. So the genesis and the reason for buying Cygnum was really to stay relevant to where our customers had moved in terms of how they were building houses. Otherwise, we wouldn't have the opportunity to grow with those modern methods of construction, and that's the reason for...

[Break]

Good afternoon. My name is Bert Bunschoten. I'm the CEO of the Isero and Polvo Iron Montery business in the Netherlands. Together with ODA, you will give some insight in the Northern European business. I joined the business in 2012 as CFO and became CEO in 2014. After a successful buy and build under private equity ownership, the business was acquired in 2015 by Grafton. Prior to joining Isero, I worked as CFO of Intersafe, a pan-European Warfare and PPE merchant and held financial roles at Hagemeyer and DSM.

I started my career at a big 4 firm and I'm in charge of accountant. Over the past decade, I've been closely involved in building and scaling the business, transforming it into the market leader we see today. Since Grafton entered Northern Europe just over 10 years ago, we have built a business of significantly scale and quality. We have grown from a starting position of 38 branches and approximately EUR 90 million of turnover in 2015 to a business that generates currently EUR 550 million in sales through a network of 265 branches and partner stores and more than 2,000 staff involved with 6.3% operating profit in the low end of the cycle. The growth has been driven by a combination of acquisitions, organic expansion and continued development of the commercial models.

An important milestone was the acquisition of IKH in the second half of 2021. The business averaged double-digit margins up to COVID. However, profitability has declined, predominantly driven by external cyclical factors. The Dutch economy has experienced only modest growth, whereas construction activity developed more negatively. Housing completions have declined with approximately 2.5% per year since 2022 and new commercial construction is currently almost 25% below the peak in '22. The Ukrainian war that started in '22 and the increase in European Central Bank interest rates impacted the Finnish business. Anu will explain more about that in detail.

At the same time, inflation has been significant post-COVID and supplier prices have adjusted more slowly than underlying cost inflation in a weaker market environment. These effects are the key drivers for the decline in margins to 6.3%, while we generated a significant amount of cash. Anu will tell more about IKH, and I will focus on the Dutch business. Our growth has been underpinned by disciplined and well-executed buy-and-build strategy. We have established ourselves as the clear market leader in the specialist distribution of ironmongery, hinges and locks, power and hand tools and workwear and PPE, more than double the size of our nearest competitor. Sales are over EUR 400 million from 121 branches with healthy operating margins.

Key milestones in this journey with the acquisition of Frinkers & Moser in 2017 and Polvo in 2019, both of which strengthened our footprint and capability significantly. These transactions were supported by Grafton's corporate development team, and they are instrumental in creating today's platform. The Netherlands team now has the relationships, market knowledge and execution discipline to originate and deliver M&A opportunities supported by group where necessary. We have completed multiple bolt-on acquisitions and have embedded a repeatable model for consolidation in a fragmented market.

In addition to acquisitions, we have continued to expand organically, opening branches in attractive locations where acquisition opportunities don't offer the appropriate return or are just not available. We continue to optimize our branch network through selective consolidations. Looking ahead, we expect a gradual recovery in the Dutch housing market and construction market. There is a structural shortage of housing, which is expected to support an increase in new housing completions over time. The renovation market remains robust, supported by an aging housing stock with 87% of houses completed before 2000. Population growth is expected to continue, providing additional demand support, while commercial construction is expected to remain broadly flat.

In summary, we are operating in a market where short-term conditions are challenging, but long-term fundamentals remain solid and supportive of recovery. While scale is important, the key driver of our performance is the evolution of our model. Supported by Grafton's merchandise experience, our stores have become more customers focused, increasing the space available for customers to shop and reducing the areas behind the counter. We introduced store programs to manage the shop floor, resulting in improved collect sales and higher average order size. At the same time, we have significantly expanded our value-added services. Today, more than 17.5% of sales include service elements.

For example, in smart locks and access control, we go far beyond product distribution. We advise, manage projects, configure systems, provide installation and support and maintenance afterwards. We see a growing share from carbon-free factories. We manage inventory on site, but also in service stands of our customers, offer work printing and digital budget tools and perform inspection and certification for equipment such as power tools. These services are increasingly embedded in our customers' operation, reducing total cost of ownership for our customers, increasing switching costs and support more stable and differentiated pricing. This is a key element in our ability to protect and structurally improve margins over time.

Our model is built on key strength. First, deep technical and product expertise. In a complex category such as ironmongery, customers rely on advice and solution support, not just product availability. We have close customer and supplier relationships and thirdly, fast service and reliable delivery. Availability and speed are critical for our customers, and we consistently differentiate in this area. Finally, our ability to tailor solutions to customer needs that allows us to compete on total cost of ownership rather than price alone. Alongside this service-led model, we have developed a strong omnichannel capability. Today, almost 10% of sales are generated online, fully integrated with our branch network, field sales teams and technical support functions.

Our dense network, combined with a flexible local logistics model supported increasingly by electric vans is a structural competitive advantage. We are, for instance, able to deliver twice a day a market-leading service. As the market recovers, our focus is not only to participate in the recovery, but to outperform it. We will deliver this through a combination of growth, mix improvement and efficiency. We will align the formats and propositions of Isero and Polvo, creating a combined offering that leverage scale, network density and service capability in a way that competitors cannot easily match.

We will leverage sales opportunities with our existing product ranges in adjacent segments such as installation and civil engineering. We will pursue growth in specialisms like PPE and workwear and access control, and we continue to build our national footprint through branch openings and disciplined bolt-on acquisitions. Digital has been a clear focus, and we will continue to accelerate digital ordering.

In parallel, we are executing on efficiency initiatives, including the renewal of our ICT landscape and optimization of logistics through mechanization and integrating Polvo Logistics. Bringing these elements together, we are confident in restoring operating margins to the 8% to 10% level. The improvement is expected to come from self-help initiatives that are fully within our control, combined with the market recovery as volumes normalize across the construction sector.

To conclude, over the past decade, we have built a leading position in a fragmented and attractive market. We see a clear pathway to grow the business and to expand our network to approximately 135 branches while actively optimizing our footprint through selective consolidations. We leverage scale with a differentiated service-led model that creates strong customer relationships and supports pricing power. We have a proven track record of disciplined growth, integration and execution, and we have clearly defined levers to improve profitability. As market conditions normalize, we are confident that we are well positioned not only to benefit from the recovery, but to outperform it in a controlled and disciplined way. Anu will now give you further insight in the IKH business. Thank you.

Thank you, Bert. So my name is Anu Ora, and I am the CEO of IKH in Finland. I joined the company in June 2025, which is exactly 1 year ago. And in my background, I have experience from multiple different retail and wholesale segments, including, for example, IT, food, automotive spare parts and power sports. And of course, currently at IKH, a wider technical wholesale. I also worked in the beginning of my career at strategy consulting at Boston Consulting Group.

So what attracted me to IKH is very much the unique business model and the multichannel approach. So we operate own stores in bigger cities, we have partner stores in Finland and international opportunities and also the B2C online channel. IKH was established in 1956 by Alakortet family and the family very successfully developed the company over the decades. Today, the company consists of approximately 145 stores owned and partner-driven and the central warehouse in Kauhajoki, where all our central operations are located. While the central operations naturally bring us a lot of efficiency and ability to serve our Finnish customers with over-the-night deliveries, they, of course, are also a sizable fixed cost base, which does not easily flex down in times of depression.

Our main customer focus is in B2B, and we serve them with quite wide product assortment, including, for example, workwear, PPE, tools and spare parts. So let's take a closer look at the business mix of IKH. So it's pretty equally that of the own stores in big cities and that of the partner stores in smaller cities and villages, both in Finland and then also outside of Finland. What is very important in our business is that we have wide product range that we carry in our local distribution center. And that really is a selection of products that well suit our business-to-business end customers.

So workwear, PPE, we have the hand tools and the power tools. We have the spare parts and accessories for work machines and tractors and then the complementing assortment of different construction and maintenance products. What is important in our assortment is that we are very strong with private labels or our own brands. So 1/3 of our business actually comes from the own brand offering. And we have a range that covers all our main categories. An interesting detail about Finland is that weather has naturally a big impact in our business. The seasons come sooner or later and therefore, are longer or shorter. But most importantly, we love winter. We love cold weather. We love a lot of snow because all that boosts our business quite a lot. So we sell more vehicle batteries, warmer workwear, snow equipment and so on.

So let's move on into macroeconomics. And so Grafton acquired IKH second half of 2021. And in the beginning of 2022, Russia invaded Ukraine. And because of the closeness of Russia, I mean, Finland had extremely long border with Russia and with our history that immediately started shaking the Finnish consumer confidence. But not only that, but also the ECB starting to increase the base interest rates. It was a combination that started impacting the houseowners in Finland. Most part of the mortgages are actually tied into floating rates. So the interest rate increases hit quite hard the Finnish housing market.

And as you can see in the middle graph, the housing market went down with more than 50% and is today at historically low levels. Economy also otherwise has been in stagnation, but especially the construction market has been hit very, very hard. And naturally, this has had an impact on IKH in terms of eroding the sales and also putting pressure on our margins. So from the double-digit levels, we are down to 5% operating profit margin today. But if we want to turn this positively, there is quite a sizable recovery opportunity in Finland because the market will recover gradually and reach the historical averages.

So how is IKH winning in the market? What is our winning format? It has a lot to do with the partner store model. So as I said, we do operate own stores in the bigger cities -- but we approach the medium-sized and smaller cities together with our partner store owners. With the centralized model and with own stores, it is difficult to go into that big of a network in a scarcely populated Nordic country like Finland or any of the other Nordics are. So with this partnership model, we have much more flexibility to build a network that really can cover the whole of the country.

One of the sweet spots of this model is that the local IKH store owners, the partner store owners, they are in their communities, relevant players and can build relations to the other business owners in their community and therefore, be close to their customers and be able to serve them better. So we see the partner store model as extremely scalable. It's also resilient in chains, but it's also a capital-light way of approaching markets outside of Finland. But of course, the partner store model is not enough. We need to be able to serve our customers with a good offering. And what does the good offering then mean? It means that we have a wide assortment of products, the B2B customer segments.

It is a combination of leading A brands and strong own brand offering. It also means that we need robust systems and processes to support the business. And then we have the IKH brand, which actually is extremely well recognized and appreciated in Finland. So we win together with our partners. How is IKH planning to win in the recovery? Well, first of all, I see that there is a sizable recovery opportunity just in the market, but it's not enough. We are working hard on several initiatives that will take us forward, and we plan to outperform the market.

So if you look at the right-hand side boxes, I think there are three main elements. One is that of the digital investments. So the demand planning and replenishment, the ERP and then the digital channels. The second would be that of the sharpening of our B2B customer focus. And third is the expansion in Scandinavia. So I will walk you through all of this in a bit more detail. When it comes to digital investments, we have three ways. We start with the demand planning and replenishment programs. Nathan already described that we have been given an opportunity to learn from the other group companies, and we are currently in the middle of implementation of [indiscernible] which is one of the group preferred suppliers.

And while doing so, we've received great support from the Grafton IT team and also our sister companies, which have already knowledge of this system. Secondly, we've already started the design phase of our new ERP solution. And with help of that, we will be able to support the development of our operating efficiency and also build a better ground for our growth in the future. And thirdly, we are also looking into improving our digital channels as omnichannel strategy is very vital also in our customer segments. Secondly, we are working with sharpening our approach to B2B customer segments. What does that mean? We've realized that there's quite a lot of untapped market potential in the B2B customer segments.

And therefore, we have set up a separate field sales force that has given a task to work closely with selected portfolio companies and segments to learn more about them and therefore, to develop our offering towards these customer segments. Already after first months of experience, we can say that there is good growth potential in growing the share of wallet of IKH from these customer segments.

And we will continue on this path to bring growth to both our own stores and of the partner stores. And thirdly, we started working closely with expansion outside of Finland. So IKH already has 20-plus partner stores in Sweden, which is our current focus market. But we are also in a process of widening that partner base in Sweden. Sweden has very much the similar geography. So similar opportunities for partner stores to serve many of the locations where bigger formats cannot actually successfully work. And it's not only that, but we have also made a decision to go closer to our customers to serve them better.

So we've signed a contract with a 3PL warehouse solution provider and started already a pilot where we will be able to bring all our fast-moving products to Sweden and therefore, serve our customers in Sweden with a lot faster order to delivery time schedule, moving from the current 3-plus days to over-the-night deliveries. So by serving our customers better, by focusing on finding new partners, we will grow in Sweden.

So to pack this all up, we have absolutely a clear market potential when Finland goes up into the recovery of the construction market. But also with help of all of our self-help initiatives, we will outperform the market. So in my eyes, there is a very nice path for organic growth, but also bringing IKH back to the double-digit margins where we were historically. So it's my time to thank you. And let me, at the same time, invite to the podium, Mario Ballarin, who is our Head of the Iberian Operations. Welcome.

Hello. Good afternoon. I am Mario Ballarin, and I joined the Grafton Group just 5 months ago as CEO of Grafton Iberia. Before joining Grafton, I worked in the British group, Bunzl for 17 years. The Bunzl Group shares some similarities to Grafton as it is a decentralized business model where acquisitions play an important role in its growth strategy. I held several positions during my 17 years in Bunzl. I started as Finance Director of Bunzl Spain after the first acquisition of Bunzl in Spain.

4 years later, I moved to South America as General Manager of Bunzl South America, except Brazil. I was 6 years there. We developed the region with 10 acquisitions and organic growth. And after 6 years, I came back to Spain. And I held the position of Managing Director of South and Eastern Europe, Middle East and Nordic countries. I was overseeing an operation of 11 countries, 31 companies in the last year and EUR 1.1 billion revenue.

Throughout my professional career, I have been involved in the acquisition, integration and subsequent development of approximately 30 companies. Well, after 17 years in Bunzl, I was very happy and pleased of joining the Grafton Group after its first acquisition again in Iberia. The group entered the Iberian market only 18 months ago, providing a unique opportunity to help shape and accelerate its development in the region. The building materials distribution sector in Iberia remains very fragmented and offers significant growth potential, making it an attractive market for both organic expansion and acquisitions. I am truly excited about the opportunity to contribute to the achievement of Grafton Group's ambition in Iberia.

And here, you have the ambition here in the bottom of Grafton in Iberia that is to achieve EUR 1 billion sales by 2030 with EBITA of close to 10% of sales. How we are going to achieve this? Well, we have two businesses in the HVAC sector, and we want to develop this sector through bolt-on acquisitions that will complement our businesses geographically or by product wise. Also, and I will explain later, we are planning to develop organically. We have a lot of possibilities to develop organically our businesses with new branch openings, new customer channels and export and new capabilities. Also, we aim to develop new models, new verticals that we are not present. We are also only present in HVAC at the moment. And we want to develop that through anchor acquisitions.

These verticals need to show an attractive growth potential, also need to be fragmented and has strong profitability. Following these anchor acquisitions in new verticals, we will develop the business organically and also leveraging scale, cross-selling opportunities and complementarities across our existing operations. We will also enhance the capabilities of our businesses by leveraging the experience and expertise of the Grafton Group and developing the strong talent within the acquired businesses. And this is what we have now in Spain.

As you know, by the video, Salvador Escoda was acquired 18 months ago. Salvador Escoda has today 95 branches, 600 employees and revenues were last year almost EUR 250 million and EBITA of EUR 16 million. And just a little more than 1 month ago, by the end of April of this year, Grafton acquired the second company is Mercaluz Group. Mercaluz has 18 branches, has 350 employees today and the revenue of Mercaluz last year was EUR 150 million and had an EBITA last year of EUR 23 million. Together, these two acquisitions provide Grafton Group with a strong platform for growth in the Iberian market and establish a leading position within the growing HVAC distribution sector in Iberia.

Okay. Here, we have some KPIs, macroeconomic KPIs in this for Spain. Among others, we can see a strong GDP growth in the last 4 years at a CAGR of 2.9%. We can see also that population is growing at 1.1% CAGR during the last 4 years in a country of a population of 50 million people. And also, I want to highlight the housing completion -- the forecast of housing completion for the next 3 years that is expected to increase by 15% per year due to a shortage -- big shortage of houses, but also due to international demand for investment purposes and also searching for holiday homes.

I would like to highlight also the strength of the Spanish economy in the last 4, 5 years that is above the average clearly of other European economies. And this strength is due to several reasons. One is the growing population driven by immigration. Another is the boost of the tourist sector since COVID times. Another is the robust export sector and strong external services activity, also the diversified economy and also the diversified and relatively cheap energy mix. And there is one very important KPI here that is not in this slide, but is the temperature. The increase in temperature in the last years has increased the demand of air conditioning, refrigeration and ventilation solutions, and this has a very positive impact in our business. And we told that you love winter, we love summer.

Okay. This is the same KPIs for Portugal. Portugal is a 10 million people country. Typically, it's 20% of the market of Spain. From our two businesses in Spain, we have exports to Portugal are around EUR 7 million, but our plans is to be present there through some acquisition soon. The KPIs in Portugal are similar -- follow the similar trends that in Spain, but at more moderate pace. But it's important the housing completion in the past, 9%, is very significant because where Portugal also has a housing problem and also a very big international investment in properties. The building materials sector in Portugal is also very fragmented.

Okay. And here, we have a little -- the story of Grafton in Spain that as you saw in the video, it started 18 months ago with the acquisition of Salvador Escoda. Salvador Escoda is a company of 52 years old, sorry, that was founded by Mr. Salvador Escoda, and is a specialist in the HVAC sector, but specialist in air conditioning, refrigeration and ventilation, has a very strong brand. It's called Mundoclima and acts as a one-stop shop for installers. During the 18 months since acquisition until now, many things has happened in Salvador Escoda. The first thing was the leadership management transition. Mr. Salvador Escoda retired last year and his daughter, Marta Escoda, has become Managing Director of the company. You saw both in the video in Salvador and Marta. This transition was managed perfectly. Also, thanks to Grafton, there has been several new things in Salvador Escoda is the opening of 7 branches during 18 months. We have enhanced the teams. We have improved the teams with new capabilities, in particular, in the marketing department, in the HR department, IT, property management and sustainability. We have integrated all the reporting systems, the controls and process of Grafton. And with all these new things, Salvador Escoda has been able to continue growing by 7% last year.

One month ago, we acquired the company, Mercaluz. Mercaluz is based in close to Alicante as a [indiscernible], and it's a 40 years old company also in the HVAC sector, but much more specialized in two categories, air conditioning and household appliance. The owner -- the founder was Mariano Moreno and the sons were managing the company because the father retired 10 years ago. They were very successful. Mercaluz Group is a fast-growing company and has a very strong brand called Johnson. And the company will be continued managed by Eloy and Paco Moreno, the two brothers. And while they continue, leadership will help ensure business continuity while supporting the next phase of growth and integration within the Grafton Group.

Okay. And here, I will go a little deeper in explaining what is the business model and value proposition of the two companies that we have now in Iberia because both are in the HVAC sector, but they have a very different business model and value proposition. That's the reason that they will continue to be managed independently, allowing each business to capitalize its unique strengths and fully capture the opportunities available in the market.

We have the first business, Salvador Escoda that has three main categories, air conditioning, ventilation, refrigeration, but also has the rest of categories of product that installer needs, such as heating, gas, electrical materials, lighting, then they will address mainly 85% of the sales to professional installers. The value proposition of them is to be the installers store. This slogan installer stores is in each one of the 95 branches. It's a one-stop shop. The installer goes there and takes everything that they need and they give service and they give advice and that's the reason that they have 95 branches in all the main cities, big and medium cities, they are present. They have 800 employees. It's a strong structure, and they have 140,000 SKUs. What is not in Salvador Escoda doesn't exist. This is the value proposition.

Mercaluz is another value proposition. They only have two categories, air conditioning and household appliance. 75 is own brand, the brand Johnson. And they go to professional installers, but they also go to distributors, to wholesalers and to developers. The value proposition of Mercaluz is value for money. They have a good product with a very good price. The professional installers and the distributors have a very good profit buying this product from them. The structure is much more leaner, only 18 branches and 350 employees today. The branches of Mercaluz are totally different to Salvador Escoda and Salvador Escoda are shops with a small warehouse in Mercaluz's opposite. They are big warehouses and a small counter for some installer [indiscernible].

Well, that's the reason that the two companies will be managed independently. And we hope that maintaining their individual entities and operating models, we can maximize our reach across a broad and rapidly growing HVAC market while preserving the unique strengths that have driven the success of each business. Salvador Escoda growth during the last 5 years at a CAGR of 7% and Mercaluz at a CAGR of 11% per year.

Okay. Iberia is a highly fragmented market in the building materials solutions sector. Our growth strategy is based on both organic and acquisitions. First, we are planning to grow as I told you before, with bolt-on acquisition in the HVAC sector and anchor acquisition in the other models, other verticals. We also have huge opportunities to grow organically. We can arrive to new customer channels that now we arrive, but with not a lot of determination. We arrive in a reactive way, but they are quite good, quite these channels.

Nowadays, we are focusing the installer, in particular, in Salvador Escoda, almost 90%. And there are some other channels such as industry, maintenance companies, infrastructure companies, public sector, all hospitality that is restaurants, hotels that use all our products. This is something that is a source of important growth for us. Also export markets. We are exporting about EUR 13 million, EUR 14 million between the 2 companies in a reactive way. When they call from France, from Germany, we sell. But we have the products, we have the volume, we have the brand. It's quite easy if we put the resources to explore this and this other source of growth.

We will also grow through cross-selling across our portfolio of companies, strengthening our digital and sustainability capabilities, and expanding into other markets with our brands, as you have seen here. The most important levers for increasing our profitability are based on leveraging scale and best practice and our focus in our own brands, in particular, Mundoclima for Salvador Escoda, Johnson for Mercaluz. With own brands, we control the prices, we control the margins.

In addition, our performance will be driven by higher productivity resulting from improvements in logistics, efficiency, automation, digitalization. In this regard, the experience and support of the Grafton Group are key enablers in achieving these objectives.

How we are going to win? Well, we have a network of 120 branches all around Spain, not yet in Portugal, but in the future, will be in Portugal also. We have 1,200 very experienced employees. They have a deep knowledge of the products and deep knowledge of every region of Spain of the market in each region. We have a product range of 150,000 SKUs. We have 70,000 customers. We have two very powerful brands, and we have all the support of the best brands and suppliers of the market. We also benefit from Grafton Group extensive experience and capabilities to further develop key areas such e-commerce offerings, digital capabilities, logistics and sustainability. All of these assets, together with our strong ambition to grow, make us highly optimistic about the future development of Grafton in this region.

And looking forward and as a summary, Iberia, we have two very strong economies with very good prospects in Iberia, not only in the economic side, also in the property development. The building materials sector is very fragmented. There is a big opportunity to consolidate this sector in Iberia. We are now present in the HVAC sector. The HVAC sector is growing much more than the average sector in any distribution sector is growing by between 4% and 6% per year. And the global warming and increasing temperatures are having an important positive effect in this sector.

We also have opportunities to grow, as you have seen and to develop the companies with Grafton support and help. Based on all these factors, I strongly believe that Grafton Group ambition for Iberia to achieve EUR 1 billion revenue by 2030 is totally possible. And we, in Grafton Iberia, will be very proud and delighted to make this goal a reality. That's all for Grafton Iberia. Now I will hand over to our Chairman, Ian Tyler and Eric to conclude.

Okay. Thanks very much indeed, Mario. I'm just going to be a couple of minutes here. First of all, for me, thank you. Thanks, everybody, for taking the time today just to dive a little deeper into Grafton. And it is great to see everybody here, but I'd especially like to thank Michael Chadwick for being with us today. Michael, as you will all know, was instrumental in creating the base of Grafton, which we have today. And it is really kind of you, Michael, to be here.

Now Michael and I were talking a few days ago. And as is Michael's won't, he made a very simple but very astute comment and a very relevant one for us here today. We observed quite simply that our industry, the sort of building materials distribution industry is actually quite a difficult industry to make money out of. And I think you can probably put Michael's comments the other way around. It's quite an easy industry not to make money out of. And I think if you want to see the proof of that, look back at some of the issues, performance of the industry right here in the U.K. and across Europe over recent years. It's an issue which Eric and the team are very well aware of.

But actually, as Michael has also demonstrated over many years that those same industries run well, invested in thoughtfully and with real care over capital discipline. They can deliver through the cycle, and that is important, they can deliver material value for shareholders. So I hope what we've shown today is that Grafton sits very much on the right side of that equation. And particular, under Eric's clear leadership that we have a strong and deeply knowledgeable management team and that we have an operating model which draws the right balance between the tangible benefits of integration and the absolute necessity of local and regional accountability that we've got a strategy which focuses our capital and our management resources on markets which can sustain strong market positions and long-term growth.

And then as a result of that, we have a platform and a portfolio of businesses which can deliver sustained shareholder returns over the long term, notwithstanding all the very relevant issues around market recovery and cyclicality. These businesses can and should deliver strong value for shareholders in the long term. So once again, thank you for your attention today. I hope we have demonstrated what I believe is the real strength of Grafton. And with that, I'll hand over to Eric.

Thank you, Ian. So to conclude, before we have our final Q&A, followed by the long-awaited drinks reception, I'm sure, let me summarize why we believe Grafton Group offers a compelling investment opportunity. We are a European distribution platform of scale with significant growth opportunities, and we will further strengthen our leading positions in our existing markets as well as enter new markets over time. Our diversified portfolio provides strong resilience throughout the cycle with excellent cash generation. The consistent application of what we call the Grafton way provides us with key levers to significantly enhance our financial returns until 2030.

In summary, we are confident in our ability to create significant shareholder value over the next 5 years. And we articulate that as delivering a free cash flow cumulative over that period of at least GBP 850 million to deliver an EPS CAGR of at least 10% over that period and deliver a ROCE by 2030 of 13%.

So thank you all for attending. Thank you, the team for all the efforts you have done in your presentations. We hope we brought life to what Grafton is about. And in fact, what the secret sauce of Grafton Group is, which we believe our unique operating model and how that links into our purpose of building progress together in that interaction between geography operating company and group expertise. So I hope we could really bring that across clearly.

And with that, I conclude and would move to the final Q&A where we can cover all the areas you heard in the second part. Thank you.

I look at the timing and see how we have immaculately landed at 16:30, and I think anybody would think we've got a Swiss CEO. Sorry, there's a question over there.

It's Tom Frame from Shore Capital. I just was hoping you could comment on a potential trend that other retailers in the space have talked about products, not just small ones, but sometimes bulky items being delivered straight to site and ordered online, so to save tradespeople and builders time and needing to do extra visits to physical stores. Do you see this as a potential long-term trend? And if so, how well placed would you be to deal with that?

Patrick, maybe that will be a good one for you, given that you have a lot of heavy building products and a lot of the larger customers as well.

Sure. What we haven't seen is a lot of the larger housebuilders ordering online and ordering of our e-commerce site. What they are doing now is using the Trade Hub that I described earlier. So there's two ways to do that. Their prices are all guaranteed on the system. So it's their account, their pricing, and they get to do that. The Trade Hub Pro, which is the more recent one, allows our larger customers who have remote sites around the country.

On the problems they had was getting approval from their head office for acquisitions for day-to-day products every single day, day in, day out, and it was taking too long to get that. Platform we've done for them now is they can get approval directly into their buying office, which comes into ours and we deliver straight away. So that's the way we're handling the large orders at the moment. What we are seeing the smaller trade guy who wants timber or fencing or whatever, they're buying online, and we're delivering straight to them. So that's how we're handling the larger one. I hope I've answered that question.

Yes, sure. Just how well placed are you versus maybe other retailers or other distributors that maybe have fewer physical stores relative to their online presence and therefore, a lower cost base.

In terms of large building materials, we don't see certainly in the market, we don't see builders buying large bulky building materials online.

And just a question based on what Frank said regarding Selco. -- customers demanding better value. Correct me if I'm wrong, but I assume that service levels and assurance of supply is still more of a priority to customers rather than price. But is this still a little bit of a headwind in terms of your margin growth? And just related to that question, at a group level, what do you expect as an average selling price increase for this year?

Do you want me to pick up the…

So from a point of view of price, when we did our survey with the customers in the hierarchy of needs, price had moved. But in reality, as you rightly say, availability, certainty and consistency were all elements to that. My point around pricing is actually that visible price and making it really transparent for our small trade customers that great value. And that's what we're seeing. We're seeing a more demand to ensure that actually I get the right price first time. Hence, our investment in shelf edge and loyalty to make that really easy and simple and also to be able to drive that price transparency online.

I think just as regards to sort of a general view of where do we see price inflation in the current year, it's still quite difficult to be able to predict it accurately. Some pricing on some products that we're buying in, take anything with plastic in is double-digit increases in price. Some prices has yet been unaffected.

I think the one thing that is -- I can say with certainty is that certainly the pricing that we will see this year is going to be higher than the pricing increases that we thought we were going to get at the beginning of the year. I would think that we will probably see pricing in somewhere in the 3% to 5% overall level across the businesses, but different businesses will be affected quite differently, I would say. So for example, if we take Woodie's, Woodie's have procured a significant proportion of their products already for the year. 2027 might be a bigger risk as regards to inflation.

If we go across to Sam.

Sorry, Sam Cullen from Peel Hunt. I've got a few on Spain or two on Spain, definitely. There's a comment I think Mario made around the acceleration of demand in Spain over the last few years with different weather patterns. Do you have a sense of how penetrated the Spanish market is in terms of air conditioning units, whether it's every 9 out of 10 houses has an air conditioning unit now versus 7, 3 years ago and how much that structural story has got to run going forward?

I don't have exact numbers, but I can Yes, -- in the South and Eastern part of Spain, where the weather is warm and human -- humid, perhaps 75% of the homes or even 80% has air conditioning. In the north, it's less, it's 30%. But this -- in the last 5 years, this percentage is increasing a lot. Even the municipalities and the government is making that mandatory for schools, hospitals or public sectors -- sorry, or public buildings.

Also municipalities are building cold shelters for the people that has no air conditioning at home because there are, in particular, in the South and East part of Spain, they can arrive to 48 degrees and old people is a problem if they don't have. Then we are seeing increasing this rate of having air conditioning very, very fast. And also with high temperatures, they broke faster because the machine goes faster. It's not only the first installation, it's also the replacement.

The second one, which is sort of related to that. When you talk about growth over the next 5 years and you split between organic and acquisitive, Firstly, I guess, do you have a sense of how much is coming organically and how much is going to be acquisitive? And then related to the acquisitions, will there be other areas of structural growth or other areas that will still grow nicely because of the Spanish economy and the housing market there? Or how to think about those segments you're going to be moving into?

We are targeting -- our ambition is to arrive to EUR 1 billion in 2030. Last year, the pro forma revenue was EUR 400 million. This year, I hope that will be EUR 450 million more or less. And I think that the growth -- these 2 companies have a growth in the last years of 11% CAGR, Mercaluz, 7% CAGR, Salvador Escoda. I hope that in the next year, we can grow at almost 10%. And then the rest will be by acquisitions and probably we need to add 350 acquisitions and 200 organic until 2030. And the second question was, sorry?

Just the product channels that you talk about moving into, will they be sort of macro proxies? Or will there be areas where you think you're going to see penetration rates increase like it has in air conditioning as well 5 years?

Well the HVAC sector probably is the vertical which is growing more. That's probably the reason that we have enter first in this one. But we are looking in other sectors that need to have potential for growth. They need to be profitable and they need to be fragmented. There are -- you have the general building materials sector. The electrical material, the electrical material is much more concentrated in Spain and not so profitable. We have ironmongery, we have insulation. We have lighting, we have timber. We are analyzing that. But probably the HVAC sector is the most fast-growing sector.

We have a decent pipeline across, let's say, multiple product specialism, right? And of course, HVAC is the one which is propelled at the moment in terms of growth for all the reasons Mario has mentioned. For us, the question is what do we do with the business? So there are other verticals which are very interesting where an entry platform could be anywhere around EUR 50 million, but we can then significantly scale it and build it to 3, 4x the size over a period of time by organically and inorganically bolt-on. And that's what we're interested in and looking at the ROCE we can generate out of that, right?

I'm the one who is the first one to say we have to be ambitious and we have to set targets or aims because you will always directionally get there if you set the stool out, right? I have yet to see a sportsperson that want to become last, right? They say I want to win and then they might not win, they might become second, third or fifth or whatever, but directionally, they want to improve. Our aim is to deliver EUR 1 billion revenue by the end of 2030.

Now as I said, when I mentioned it in my presentation, it will be dependent on can we execute acquisitions because even if the underlying growth, let's say, would be 7%, 8% and some organic expansion, let's call it, 10%, you will be short of a few hundred million, right? So -- but what we will not do is kind of sacrifice the discipline in capital allocation to hit the number, right? So that's what I'm saying it's about -- that's the ambition, but it is all within the framework of -- it has to make sense. We have to get the returns. So hopefully, we will get there. And we have to be -- we also have to be careful in that market, right?

We don't want to kind of pump up people's expectations. And we have been very disciplined. And we -- I think Stephen probably mentioned this in his session. We are not shy of if a business has -- if we have to add in more cost into a business, then we thought to have to put in to have the stand that we need, whether it's around cyber, whether that's around capability in the finance function and so on and so on. We will go back to the table and say we thought it x, but is why.

So we're going to have another discussion. And we are prepared to walk away if we don't believe we can make it work financially. And I think those are really important issues. So take the EUR 1 billion as the directional aim. If everything works like we hope, we will be across -- we will be a multi-specialist. HVAC will be one part, and then there will be 1 or 2 other areas where we will have two platforms, which we will continue to build out and achieve the EUR 1 billion like that.

Varrow from RBC. First one, just similar in terms of organic growth up until 2030. Are you able to share in terms of revenue, what you're assuming?

We've taken a prudent and sensible view across the business that before we bring together all the initiatives and pull the levers and self-help and business improvements that you've heard about today, that the market will be growing somewhere between 2.5% and 3% CAGR across the period from 2025 to 2030 at a group level.

Okay. And next, also out through 2030, once you hit that 13% return on capital employed, is it fair to assume that each group business meets or exceeds that level?

I think if we get to 13% at that point, then each business will -- well, yes is the answer to that. Yes.

Last one, free cash flow. Can you talk a bit about -- I think you meant there was a question on sustaining CapEx. How should we think about that through the period? And then also the shape of working capital, particularly if you've assumed some sort of macro uptick at some point in U.K. and Europe?

Yes. Look, I think -- I mean, we've built in a sensible level of working capital requirements through the period. If we look at the business, I mean, typically, it runs somewhere about 10%. So we add GBP 100 of revenue, we need an incremental investment of GBP 10 in net working capital. So we've tendered -- we've looked at it from -- in that respect. Then when we think about replacement CapEx, I mean, in general, replacement CapEx, we treat it as running in line with, if I can describe it as normal traditional depreciation before you worry about leases.

Shane Carr from Goodbody. The first one was just on Salvador and Mercaluz. And I guess just expanding maybe a little bit on the kind of cross-selling opportunities that are there? And perhaps just is there any kind of buying synergies that we should be aware of as well between two businesses?

As I explained, we are going to keep the business managed independently. They are different businesses and Mercaluz has only two categories, air conditioning and household appliance. They compete in the air conditioning also Salvador Escoda has 35% of his sales in air conditioning. But in this -- they are, in some way, competitors, but they arrive to different customers. They compete in very few customers. Then we are not expecting huge cross-selling because they need to be independent. In the synergies, yes, of course, we have some common supplier, and we will try to achieve some cost savings.

The business case is not built -- lets just be very transparent. The business case is not built on massive cost synergies. Yes, the own branded ACs are sourced via the same set of big suppliers, right? There will be a conversation, but we are talking here about in the round of things, relatively small element of synergies you will get. We bought Mercaluz because it's a very different model. They have, as Mario explained, Salvador is very broad, lots of SKUs, the one-stop shop for the installer, right? We can see that model to be further scaled.

We can see improvements we can make to that model over time and building that operating margin up from where we sit today, at least a bit. So I would expect us to get somewhere towards the 8% on Salvador Escoda over time as we manage that business effectively. Mercaluz is a totally different business, very small SKUs, very focused on their Johnson brand. And for that Johnson brand, we have the brand rights across Europe.

So we will now need to figure out also and that's not factored into the case, what else can we do, what other markets can we use those particular brands. But the Mercaluz model has been built on how can we further scale organically because that model is really by opening more branches. How can you further scale that within Spain and drive high profitability and growth in that particular model. The investment case has not been built at all on kind of product procurement synergies.

Makes sense. And then maybe this one is for Bert, just in terms of learning a little bit more about the Dutch customer. It seems given what you talked about in terms of kind of the store and the space sizing maybe needing to increase in some of the stores in Zero versus when we talk about Ireland and Woody's maybe a smaller store being an open in Ennis and possibly smaller stores for Selco is an option as well. But it seems like the customer maybe want something slightly different in the Netherlands. Is that how we should be thinking about the kind of layout from a store network perspective?

Yes. An average store of Zero is between 750 to 1000 square meters. So that is completely different. And we have then between 10,000 to 14,000 items on stock. We basically have 2 types of stores. We have stores that we have to say, collect only, and we have stores where we do the regional delivery from. So those regional stores, those are a bit bigger. And the other ones are smaller. But we have a particular range of lightside products. So we don't have timber, no building materials, et cetera. So the product portfolio is completely different. It's really power hand tools, hinges and locks, iron monitory and products like that.

Probably to not have any confusion, when Bert mentioned that with the help of grafton and actually on the merchandising side. We didn't increase the footprint, but we reallocated space within the footprint. So rather than having lots and lots of products behind the counter and very little which was shoppable, they developed and changed the concept to have well merchandised and less behind the counter. So the customers actually come in, pick and select and buy it rather than having to go for many of the products to the counter. And that's what changed. But the footprint was the same.

A very quick and last one, Will.

Will Ross, maybe just to complete the geography question on Finland. Clearly, I think the business' margin has come down most over time, and it's been very tough macro. But could you give us a sense maybe of where the extent of the low-hanging fruit? I know you've had issues, I think, on aged inventory and supply chain last year, but are there any quick wins in Finland on the margin?

Well, certainly, I think in terms of some of the self-inflicted issues that we had around stock and inventory and product availability, I think Anu and the team have done a great job in addressing that one. I don't know, do you want to pick up in terms of the immediate areas of focus on quick wins, Anu?

Yes. I think I mean, historically, it's the net working capital. During the past couple of years, we freed up EUR 27 million of net working capital by simply managing it better. But currently, we are working a lot with commercial initiatives, so driving growth and that we can easily do with this, as I said, sharpening our approach to our B2B customers. So there's a lot of more potential in the customer segments that we already serve. We have extremely wide customer base, but we haven't simply focused on what do they need, what we can offer.

And we have a lot of potential in kind of increasing the share of wallet. And I also see that absolutely, there's potential in -- outside of Finland because the model as such that we have works well in the neighboring markets. So we are already up and running with the pilot of the 3PL warehouse, and we see that there is interest and demand in that market.

So those would be the things that we push immediately. But otherwise, it's managing the assortment, managing the pricing and so on. So the beginning of this year has been good versus last year. So we see that there is potential.

And I would probably add that over the last 18 months, and we had to wait for Anu quite a bit because we wanted to have a really strong CEO in Finland. And Anu was kind of locked in her previous CEO role. So we created kind of -- we hired her, but had to wait quite a bit until Anu landed. But in the meantime, made a lot of enhancements on the management layers, which Anu already was very actively involved in those recruitment processes.

I think today, we have a super strong team in Finland. Yes, we do need the market to help us a bit as well and the market will turn. But I think with all this help -- and we will be -- when will be in Finland? In 2 days -- 2 weeks for the QBR. Yes, in 2 weeks. So we will go through all the different initiatives and we have our quarterly in detail. And they have so many levers to pull that I do expect Finland to, as Anu said, return back into clearly double-digit operating profit margin. But for that, we need a bit of help on volumes because we have a massive central distribution center in Kauhajoki, and whether you have a bit more volume with less -- you won't have less people in that fixed cost base, right? That fixed cost base is there. It has a lot of operating leverage.

Okay. All right. Excellent. Thank you very much, everybody. Really appreciate everybody's coming. Thank you very much for your questions and your interest. And if you are free to share a small but perfectly formed glass of something, that will be great. Thank you very much.

Thank you very much.

All right. Good morning, everyone, and welcome to the Grafton Full Year Results Presentation. A few operational highlights from me before I hand over to David, who will guide you through the financial numbers in more detail. Good morning. A resilient Group performance in 2025 with pleasingly a return to revenue and to profit growth. So revenue was up for the full year, 10.4%. Adjusted operating profit was up 7.1%, and our adjusted return on capital employed was up 60 basis points at 10.9%, comfortably exceeding our cost of capital.

We made continued progress on our development activities to further strengthen the group, enhanced leadership teams and the talent pool in general across the Group, including bringing in -- for Iberia to really focus on our growth aspiration in that relatively new market for us. We successfully integrated the first platform acquisition we did, Salvador Escoda, which I'm pleased to say delivered the profit growth in line with our plan, and we made good work to prepare that business to be ready to accelerate growth going forward. We also strengthened our market position in the Republic of Ireland with the bolt-on acquisition of HSS Hire into the Chadwicks Group to further extend our hire proposition to our customers. And in general, we delivered a strong cash conversion and preserved a strong balance sheet to continue to support the future development of the Group. So I shall now hand over to David, who goes into more detail.

Thank you, Eric, and good morning, everyone. As Eric has already covered off some of the headline details of our performance in 2025, I'll talk you through some of the financial details now starting with the income statement. Revenue of GBP 2.52 billion was 10.4% higher than last year. Thanks to the hard work of our teams across the group, we delivered a resilient adjusted operating margin pre-property profit of 7.3%, only 30 basis points below last year.

This reflects a continued focus on margin management with the group achieving a 50 basis point improvement in gross margin, together with a proactive management of our cost base to mitigate the ongoing inflationary environment on operating costs. It's pleasing to report that we saw a return to profit growth for the first time in 3 years, with the group's adjusted operating profit before property profit of GBP 184.3 million, 6.2% ahead of 2024. Adjusted operating profit, including property profit of GBP 5.9 million was 7.1% up to GBP 190.2 million.

The net finance cost of GBP 10.1 million was higher and reflected 3 elements: lower interest income on deposits following interest rate cuts, lower cash balances due to acquisitions and share buybacks; and finally, a foreign exchange movement. The effective tax rate was 18.2%. That's lower than the 19.5% indicated at the half year and reflected the geographic mix of group's profits and a credit relating to updated estimates of liabilities relating to prior years. Adjusted earnings per share was 75.4p, 5.1% higher than 2024 and which benefited from our share buyback program. Since we first started our share buybacks in 2022, we've reduced our share count by over 20%, and I'm delighted that we're announcing a new GBP 25 million share buyback today.

For more technical guidance on 2026, I've included some information in the appendices, which you may find helpful. As noted in our January trading update, the Group has adopted a new reporting structure that better reflects our strategy and management focus. The Group is now organized into 4 geographical areas, the Island of Ireland, Great Britain, Northern Europe and Iberia. And I've set out on this slide where the various brands now sit. For clarity, all results presented today follow the new reporting structure with comparatives restated. And we've included a couple of slides again in the appendices to help you track through the new segments.

Let's look now at movements in revenue for the year in comparison to 2024. The organic movement, which I'll cover in more detail on the next slide, saw revenue increase by GBP 30 million. Acquisitions contributed GBP 195 million of incremental revenue in total, largely due to the full year impact of Salvador Escoda, which reflects the benefit of an additional 10 months of trading compared to 2024. The divestment of the noncore MFP piping business in the Republic of Ireland at the end of May reduced revenue by GBP 5 million. As MFP mostly supplied internal customers, the revenue effect is limited here, but you'll see a larger impact later when we discuss the operating profit impact. Finally, the strengthening of the euro against sterling accounted for an exchange gain of GBP 18 million in the year.

This slide analyzes the net increase of GBP 30 million in organic revenue. It should be noted that revenue in the year was supported by modest levels of product price inflation, and that's in contrast to 2024 when product price deflation, particularly in our distribution businesses in Ireland and Great Britain, adversely impacted sales. The Island of Ireland segment, where all businesses delivered year-on-year growth was a key driver of organic growth with revenue up GBP 34 million. In a difficult market, organic revenue in Great Britain was broadly flat year-on-year, which we felt was a creditable performance. Revenue in Northern Europe declined by GBP 6 million, largely due to lower trading activity in Finland. Organic growth in Iberia relates only to the last 2 months of the year as the business was acquired on the 30th of October 2024.

Turning now to the movement in reported adjusted operating profit. We'll look at the movement in the profitability of the like-for-like business in a moment. The net impact of new and closed branches had a small positive impact on profits, while the impact of the MFP divestment, which I talked about earlier and is shown separately here, resulted in GBP 2.6 million reduction in profitability. Acquisitions added a total of GBP 13.2 million, mostly driven by Salvador Escoda in Spain with GBP 1.4 million coming from 7 months of trading from the bolt-on acquisition of HSS Hire Ireland. Property profit was up GBP 1.9 million in the year, while the stronger euro had a positive impact on reported sterling profitability.

Looking at the movement in adjusted operating profit in our like-for-like business, you can see that all operating segments, except Northern Europe reported an increase in adjusted operating profit. Our businesses in the Island of Ireland delivered a strong profit growth as strong sales performance underpinned gross margin expansion. And in Great Britain, even in a very challenging market and with sales broadly flat, profits were higher, thanks to a 120 basis point improvement in gross margin. Northern Europe experienced a reduction in profits, driven by -- primarily by lower sales in Finland and ongoing operating cost pressures in both the Netherlands and Finland, which I'll cover in more detail in a few minutes. Finally, central costs were higher in the year, partly due to the planned investment made towards the end of 2024 and into 2025 to strengthen capabilities to support the group's strategic priorities.

Moving on now to look at each segment in a little bit more detail. Our Island of Ireland segment delivered a strong performance during the year, supported by favorable economic conditions in the Republic of Ireland. Revenue of GBP 1.07 billion increased by 4.3% on a constant currency basis. Average daily like-for-like sales were up by 3.5%, with all businesses reporting year-on-year growth. Woodie's delivered another year of strong growth, supported by a particularly strong performance in plants and garden products with growth driven predominantly by increased transaction volumes alongside modest increases in average transaction values. Chadwicks saw good growth across the hardware, heating and plumbing categories. The gross margin increased by 20 basis points in the year, driven primarily by the strong performance of Chadwicks.

Overheads increased due to inflationary pressure, while all our businesses continue to mitigate these impacts through productivity gains, better use of technology and more efficient rostering. Adjusted operating profit of GBP 111 million was 1.8% ahead on a constant currency basis, but the operating margin was slightly down by 20 basis points to 10.4%, largely due to operating cost pressures. The integration of HSS Hire Ireland into Chadwicks continues to progress well with a short-term focus on systems integration. The outlook for the construction market in Ireland remains positive with a focus on accelerating new housing supply expected to continue for at least the next decade. In Northern Ireland, market conditions were and remain more challenging with the construction sector delivering modest growth in 2025, primarily due to an increase in new housing, albeit from a low base.

Moving next to the Great Britain. We were especially pleased that our targeted commercial actions delivered a 120 basis point improvement in the gross margin despite a very competitive market backdrop with subdued volumes. Around 60% of our sales in Great Britain are generated from London and the Southeast, and this market has been particularly affected by a weak housing market with London seeing the lowest level of housing starts in 40 years. After a positive start to the year, overall construction activity softened from late quarter 2 and remained that way into the second half with the U.K. government's autumn budget further weighing on consumer sentiment.

Revenue in Great Britain of GBP 765 million was broadly unchanged in comparison to prior year. Average daily like-for-like sales were up 0.4% with strong growth in our manufacturing businesses, helped by softer comparators from 2024, largely offset by a modest decline in our distribution businesses, which represent a greater share of sales. Notwithstanding inflationary pressure on costs, especially with respect to labor and property, overheads were tightly controlled across our businesses with the increase in like-for-like overheads contained to 1.8%, well below general inflation levels. Adjusted operating profit of GBP 49.2 million increased by 6.2%, supported by that gross margin expansion.

In our Northern Europe segment, performance in the year was below our expectations. Revenue of GBP 469.7 million declined by 1.1% on a constant currency basis. Average daily like-for-like sales increased -- decreased by 0.5% in 2025, with moderate growth in the Netherlands more than offset by a pronounced decline in Finland. Sales increased in the Netherlands, driven primarily by strong branch sales and growth in national key accounts, in addition to increases in project-related sales and modest product price inflation. After a strong start to the year, momentum in the Netherlands eased as several major construction projects reached completion and the start of new projects was delayed. Sales in Finland fell sharply due to difficult market conditions, unfavorably mild weather at the start of the year and temporary operational issues that disrupted our internal supply chain. Challenges have gradually eased in the second half as management took decisive actions.

Gross margin increased by 90 basis points in the year, reflecting strong performances in both geographies. In the Netherlands, active commercial management actions more than offset the adverse mix effects of large construction projects and key accounts, which accounted for a higher proportion of sales, whilst gross margin in Finland improved primarily through optimization of rebates and procurement efficiencies. Overheads remained under pressure in the year, reflecting general inflationary pressures, the high settlement agreement under the industry-wide collective labor agreements in the Netherlands and strategic investments which we made to strengthen the Finnish business. Adjusted operating profit of GBP 29.6 million was 17.2% below prior year on a constant currency basis. The operating margin was 120 basis points lower at 6.3%, reflecting the impact of lower sales in Finland and the inflationary pressure on overheads across both geographies.

Salvador Escoda is one of Spain's leading distributors of HVAC, water and renewable products, which we acquired at the end of October 2024. We're very pleased with how the integration of the business has progressed and its trading performance in its first full year under Grafton ownership was in line with our pre-acquisition expectations. We've strengthened the business further during 2025, adding resources and support to its experienced management team to create a strong foundation for Salvador Escoda to accelerate organic and inorganic growth in the coming years. Salvador Escoda reported revenue of GBP 212.9 million and delivered an adjusted operating profit of GBP 13.6 million, representing an adjusted operating profit margin of 6.4%. The year-on-year increase reflects the benefit of an additional 10 months of trading in 2025.

On a pro forma basis, in comparison to prior year, average daily like-for-like revenue was 6.1% higher, driven by strong growth in the air conditioning, ventilation and refrigeration categories as well as favorable market backdrop. The Spanish economy continues to be one of the fastest-growing economies in Europe with GDP expected to have grown by approximately 3% in 2025. The Spanish construction market is forecast to grow slightly faster by around 3% to 4% in 2026, supported by sustained housing demand, substantial investment in renewable energy and transport infrastructure and the accelerating shift towards energy-efficient and sustainable building practices.

Within the construction sector, the HVAC segment is well positioned for strong growth, driven by tighter energy efficiency rules, rising consumer focus on efficiency and higher temperatures across the Iberian Peninsula. Despite navigating significant change in 2025, the business delivered a strong trading performance, outperforming the prior year on both a reported and pro forma basis. The group continues to support the local management team in driving organic growth. New business -- new branches opened in Vic in Catalonia and Plasencia in Extremadura, enhancing our existing market positions in these regions. We continue to assess further growth opportunities in the attractive Iberian market with a strong pipeline of potential new branch locations in hand.

Now this slide analyzes our cash flow in the year. As you can see, the group generated strong free cash flow of GBP 168 million in 2025, representing an 88% conversion of adjusted operating profit into cash and contributing to more than GBP 700 million of free cash flow generated over the last 4 years. And some key highlights to note. We were pleased to see a reduction in net working capital of GBP 12 million in the year despite higher sales. Optimizing our investment in net working capital, whilst not compromising our customer proposition continues to be a key focus across the group. We continue to reinvest to strengthen our businesses, notwithstanding current market weakness in certain geographies with a net GBP 41 million invested in replacement and development CapEx. There was a GBP 14.3 million investment in net M&A activity, being the acquisition of HSS Hire Island, partially offset by proceeds from the divestment of our MFP piping business in the Republic of Ireland.

And finally, we returned GBP 128 million of capital, net of issued shares under the LTIP and SAYE schemes to shareholders in the year. Of that, GBP 72.6 million was paid in dividends. And you'll have seen from today's results that we propose to increase the full year dividend by 2% to 37.75p per share. Dividend cover for the year was 2x, and it is our intention to restore dividend cover more firmly within the 2 to 3x dividend cover ratio as we move forward. The cash-generative nature of businesses continues to support both shareholder returns and a strong balance sheet, providing significant firepower for the group to capitalize on organic and inorganic development opportunities. At the end of December, our net debt was GBP 123 million, representing a lease-adjusted net debt-to-EBITDA ratio of just under 0.4x, slightly better than at the end of 2024.

And finally, just turning to the balance sheet. I'd just note the net working capital increase, which you see there of GBP 8.8 million in comparison to the end of 2024, and that's largely due to the recognition of the deferred consideration related to the divestment of MFP. Adjusted return on capital employed was 10.9%, almost 2 percentage points higher than our estimated weighted average cost of capital and 60 basis points higher than 2024. And I'll now hand back to Eric to talk about current trading trends, our strategy and outlook.

Thank you, David. On the left, you can see the average daily like-for-like revenue change in constant currency for Q1 '25 and for the first couple of months in 2026. It's early in the year and the important trading months are still to come. So if you go to the Island of Ireland, wet weather impacted the trading on the Island of Ireland and in Great Britain. However, Ireland delivered some growth, supported by the softer comparators following the storm Eowyn in the prior year during that period.

In GB, in Great Britain, the market environment remains challenging, as you can see on the like-for-like numbers. We had modest growth in Northern Europe with a strong Finnish performance, offset by some softer trading in the Netherlands, which was impacted by a change of holidays. In other words, they had the Carnival period in the like-for-like period, which will not deliver the sales you would hope during the period. But ongoing strong momentum in Iberia.

From an outlook point of view, Island of Ireland, the construction outlook remains positive in the Island of Ireland with the retail consumer slightly more cautious than previously, but we have a positive outlook overall for the Island of Ireland. In terms of Northern Ireland, we don't expect any significant uplift during 2026. Moving to GB, a slow start, as I mentioned. However, the important months are yet to come and January, February was certainly impacted by bad weather conditions in Great Britain. We would expect a modest market growth in the second half of the year.

Northern Europe, the Netherlands construction market is expected to gradually recover during the year. And in terms of Finland, we don't expect any meaningful improvement of the construction market until the second half of the year. Iberia, as David already mentioned, the construction market is expected to grow 3% to 4% during 2026, and we would expect our product segments to do well within that market environment.

In terms of medium-term outlook, positive across all geographies because they all are supported by the structural growth drivers of not enough housing and aged housing stock. So the long-term drivers are very positive, and we have strong position in all of those markets. The recovery potential is especially great in Great Britain and Northern Europe, where we have a lot of operating leverage and the business has not cut into the muscle. So whilst we are lean in those businesses, we are ready to take advantage of increasing volumes when they will arrive. Tight cost control really gives us the benefit of the operating leverage as volumes return.

So let me say a few words about our strategy. So how do we intend to drive growth and create value going forward. As you know, we focus on European markets with long-term growth characteristics. And within each geographic market, we build strong positions to distribute construction-related products and solutions to our predominantly trade customers. In terms of operating model, we have a federated operating model with local execution, supported by strong group capabilities, how we help the businesses to improve and drive results across the geographies.

So what sets us apart are really strong and experienced leaders in each market supported by the group, but the accountability really sits in the market and the ownership. That drives very high colleague engagement and a relentless focus on providing customer service and a real sense of ownership. And I think that's something which really sets us apart because our businesses really care. We also have a very resilient model based on the geographic diversification we have. And you can see this again in this year's results where 2 of our markets are challenged, let's say, in 2 of our markets are in a more positive macro environment, which overall still leads to a very, very strong generative -- cash-generative business, which is a real underlying strength. And as David mentioned earlier, we are very disciplined in terms of our financial discipline. So we will maintain our credit grade rating, and we have a very clear structured approach to capital allocation, which you can see on the right of the slide.

So it's really around, first, fund organic growth and keep our existing estate fresh and make sure we have sufficiently invested into the existing estate, pay a dividend in the range of a dividend cover of 2 to 3x with an ambition to move closer to 3x over time than we are at the moment. Third priority, inorganic growth. We have a very strong pipeline, and we are focused on driving growth at this moment in time in our already existing markets. So it's not about planting a flag in another country at this moment in time, focused on the existing markets and then to return surplus capital to our shareholders, which we did again with the announcement this morning of a further GBP 25 million share buyback.

And I think the next slide nicely illustrates this in practice when you look around the capital allocation between 2022 and 2025. We started in '22 with a net cash position. We generated over GBP 700 million of free cash flow after replacement CapEx. We then allocated a good chunk, namely GBP 721 million to pay dividends and execute share buybacks and return that money to shareholders, whilst we also invested roughly GBP 100 million in development CapEx and over GBP 160 million in acquisitions. So I think that's a very nice illustration around the cash generation of the business and how we allocate the capital mindfully.

But of course, we want to tell you more about all of that and how we drive future growth with a Capital Markets Event, which will be held on May 20 here in London. And the event will focus on the group's strategy and growth ambitions over the medium term and you will have the opportunity to not just meet David and me, but of course, many other senior leaders and see more about the bench strength of the management team we have from all the different geographies. So shall we move over to Q&A.

Shane Carberry, Goodbody. Two, if I can, please. The first one, just in terms of the gross margin in the U.K., really impressive 120 bps increase year-over-year. Could you talk a little bit about the dynamics behind that and some of the levers that you had to pull to achieve that outturn? And then the second was just to get a little bit more color around Iberia. It's been kind of 14, 15 months now since you bought Salvador Escoda. So how has that process been? Has it integrated as well as you thought it would to date? And just thinking looking forward, now that you've hired a CEO, how should we think about how things are going to evolve from here from an organic and inorganic growth perspective relative to what you might have thought 14, 15 months ago?

Okay. So let's start with GB and the margin improvement. I think in general, given we have, as you know, a federated structure, we have people in the businesses who are focused on the bottom line. This is a performance-led culture. And as -- for example, as demand was soft, we saw in some of the activities we did early in the year when we drove promotions that even with support of suppliers, the incremental volume you generate on the promotion activities actually led to a lower gross profit than in absolute pound sterling numbers than if you wouldn't have run a promotion.

So the businesses will have been very tactical picking their battles, if you want, and more making sure we deliver an overall attractive basket for our customers rather than drive aggressive price promotions into a market where you will not have the incremental revenue and will be net-net out of pocket. So those were some of the levers. Of course, others were working hard on some of our exclusive and own brands and how are they positioned and what's the share of those and all sorts of commercial activities and collaboration with the suppliers to manage the gross margin overall. But I think that is really something where you have to be nimble and you have -- and I really attribute the strength of the federated structure and that operating model for the businesses to take the right decisions because it will be impossible for us to legislate if you want from a Group point of view, how they have to react to daily trading. So that's the bit on GB.

If you look at Iberia, I think that has been a great success so far, right? So we have -- we are absolutely in line with where we expect to be. This is a business we acquired and in year 1 of acquisitions had a higher ROCE than our cost of capital. So we buy a platform which already in year 1, ROCE is greater than our cost of capital. So that's a good thing. Secondly, we had an experienced management team in a family setup, which had to learn a lot about how we do things in a PC environment. So we had to strengthen, for example, the finance function, the HR functions, the health and safety function, property, right? We have growth ambitions, but we wouldn't have had the infrastructure at the moment we acquired the business to accelerate growth beyond 2 or 3 branches a year, even if the opportunities come up, we just didn't have the infrastructure. Nobody have had the backbone and the infrastructure to absorb a bolt-on acquisition and integrate it, right?

So that's really the work we have done during this year to create that, if you want the engine room within Salvador Escoda. And now we are ready to accelerate growth organically, but also to absorb bolt-on acquisitions as they might present themselves to execute. So that's within Salvador Escoda. So we strengthened the management team. We still have the same CEO or Managing Director for that operating business, which is Marta Escoda, the daughter of the founder, who already run the business when we bought it. The plan was always -- we singled out Spain or the European Peninsula as a very, very attractive market for 2 reasons. One, it's a growing market. Secondly, it's highly, highly fragmented, right? So it kind of really gives opportunities for M&A as well as organic growth across multiple verticals.

So with Marta, we have an excellent person to run Salvador Escoda, but you need a different animal in the local geography to drive our growth ambitions, to help us to get the position we would want to have by 2030. So -- and that was the backdrop why very early on, we made the decision to go out and bring a CEO in for the Iberian Peninsula. And I'm very pleased, Mario has started in January. And I'm convinced we will have more to report over time from how we will successfully grow across Iberia.

Charlie Campbell from Stifel. A couple of questions following on from both of those really. So Spain margin 6.4% in the year. It was more like 7% before you bought it. I guess that comes from putting in more infrastructure to support the business and make growth more sustainable. But how should we think about margins longer term in Spain? Should we think about that 7% as achievable and perhaps more as volumes drop through? And secondly, on the GB and on the gross margin, did you change the incentive structure there at all? Are people perhaps more focused on growth than they were before because that really is an extraordinary performance.

Look, in Iberia, we do believe there is room to enhance the margins in Salvador Escoda over time. But if I look at Iberia in general, we would expect for this business to substantially grow, so in Iberia and have somewhere a margin corridor between 7% and 10%, would be kind of the margin corridor we would expect to be throughout the cycle in Spain. So I hope that answers that bit. In terms of incentive structure, no, we haven't changed the incentive structure in the business in GB. We have enhanced the management capabilities within GB. So we have a long-serving colleague, which has kind of oversight over CPI, EuroMix and StairBox.

And then we have Frank Elkins, who joined us in 2024, right? Time flies when you have fun, in 2024. And he has been really, really focused with the team and enhancing, as I said, the bench strength, which is an ongoing process, right? I always compare this to like a football coach that you -- whenever you have the opportunity, you strengthen your team. It's a team sport, right? And that's exactly what we have done. So the focus or the achievement has been by targeted activities and focus. But people are bonused on delivering the outcome on the bottom line, right? So in a sense, that incentive has always been there. So the incentive hasn't changed.

And I suppose just on that financial piece around Spain, as Eric alluded to, the business is exceeding our cost of capital in its first full year and really very much return on capital employed is our sort of foremost guiding financial metric, I suppose. Operating margin is sort of -- is a good metric for quality. But really, it's about driving return on capital employed and cash.

Sam Cullen from Peel Hunt. I've got 3, if possible. Coming back on the Selco gross margins, I guess, how do you -- let's say, volumes do pick up second half of the year and they grow again next year. What's the sensitivity around kind of unwinding some of that gross margin increase to take more volume? And how do the guys on the ground judge if, when, how to do that? That's the first one.

Should we just pick them off as we've got another couple coming. I mean, look, I think on gross margin, yes, you've got to play the game that's in front of you. And I think in 2025, it was a game of weaker margins. And therefore, what do we do focusing on that bottom line. And I think that mantra continues going forward. So we just need to be nimble and responsive to how the volume and the strength of the market demand sits overall in GB in the same way that we're not focused on market share as a particular metric and are led by what's the impact on the bottom line. I just think we'll be nimble and the gross margin may come down if we see that strength in volume that we know that we can more than recover that by seeding some margin. So it's that flexibility and nimbleness that we need really.

Second one is on central costs. I think you highlighted there was a step-up in investment this year. Do we expect that to be at the end of that step-up and it to be kind of inflationary from here? Or do you envisage...

No, I think it's a modest amount. I mean, for example, to give a bit of color on some of the areas that we focused on, it was more support on transaction services so that, again, we were better placed to be able to pursue a broad pipeline of acquisitions. It was elements like cybersecurity and support for a number of the ERP implementations that we've got going on around the group. Some of it was bringing sensible things, for example, like payroll into the center and taking it out of the businesses and saving some of the costs in the businesses. So there were sort of a variety of tactical things. Do we think that there will be major moves or significant more increases in central costs? I don't think it will be significantly more in terms of the investment in additional functions or roles.

And the last one is back on the U.K. If we don't see a pickup in overall market volumes, do you see wider consolidation in the sector over the medium term, may not be from yourselves but from other players?

It's a good question, right? So we have private equity active in the U.K., right? Do I think they -- if there is no recovery, that was your question, do I think there will be a lot of appetite of those ICs to invest more money in the sector? I'm not sure, right? In terms of the listed players -- in theory, there should be more consolidation. If you look at how many general builders merchants there are in the U.K., you would expect there to be more consolidation. Whether that will play out like that is yet to be seen, right? So we -- again, and I'm clear on that, we are -- from our own investment point of view, we believe in the businesses which we have in the U.K. irrespective of where we now sit in the cycle, and we will continue to support those businesses.

And if the right organic growth locations come up, whether that's for a Selco or for TG Lynes or for a Leyland or anything, we will invest the money into it if we believe in the case. You have to look throughout the cycle. You can't just sit and think, now it's bad, it will always be bad because the fundamental growth drivers are there in the U.K. The question is when. But if you then come to M&A capital, do we deploy M&A capital in the U.K. Well, for GB, I'm not saying no. But as you will have seen, we look at capital allocation in a framework, which says, do we actually believe this is the right allocation of capital. Do we get a return on capital and the cash generation out of this business, which we think is really accretive for our shareholders and the business over time. And if the answer is, yes, we do and we find a market like that in GB, well, we will allocate capital. But if it's in Spain or in Ireland or somewhere else within our existing markets, we will allocate it.

Flor O'Donoghue, Davy. Just 2 for me. One is just on OpEx for this year, just your sense of rents, rates, labor, what they're looking like. Second one then is just on selling prices. What's the current state of play in relation to them?

So I think on OpEx, I mean, if we look last year, there were a number of high areas of inflation. You take the Netherlands, for example, where there's a collective labor agreement, and we saw salary increases of 6% in 2025. That under the collective labor agreement for 2026 will be more like 4%. So we're definitely seeing it reduce. But I would still think that we'll be working really hard to contain it in that 3% to 3.5% level because of what we see in terms of some of the statutory increases, national insurance effectively for a full year. We've got what's happening on national living wage, for example, either in Ireland or in the U.K. Those pressures are still there. Pressures on property rents in terms of the inflation that we're seeing where you've got 5-year rents that are refixing this year that we've got the catch-up from a few years ago as well.

So yes, we'll work really hard, but I would still say it still feels 3%, 3.5% we'll be doing well to contain it to that, I think. And we'll have to work really hard around efficiencies and cost control to mitigate some of the softness in the market. As regards overall, what we're sort of seeing across the piece on selling prices, I would say probably not a too dissimilar picture in '26 to what we saw in '25. Depending upon geography, Netherlands was probably closer to 1%. Ireland on the distribution side was more like 1.5% to 2%. I think we're still in that sort of zone, certainly talking to manufacturers and suppliers. It felt at the start of the year that we were in that sort of zone. Of course, we're slightly in the lap of the gods in terms of exactly what happens to the evolution of inflation in the year. But yes, we started thinking 1%, 1.5%.

Christen Hjorth from Deutsche Bank. Just 2 for me. First of all, on the GB like-for-like at the start of the year, just trying to unpick some of the one-offs in there and I suppose the extent to which the first 2 months is a read for the first half and maybe how you exited those first 2 months because obviously, the number was a bit standout on GB. And the second one, sort of maybe a bit similar to Sam's question, but looking at Europe, I mean, there's a few players out there looking to consolidate European distribution. So in the context of that, what really sets Grafton apart, particularly, I'd say, in terms of being the acquirer of choice for some of the businesses that you're looking for?

Do you want to pick Europe and I'll come back to GB?

Look, many of the consolidator -- not all of them, but many of the consolidators are across Europe are private equity backed, right? So if you look at what we bring to the table is we -- if you think about the family-owned business, we will be a home for the family-owned business and not a transitionary home for family-owned business. And I think that's a major competitive advantage we have. We can have owners talk to people who work for Grafton, who sold their business to Grafton and they can talk about how that experience was for them. And by the way, we do this frequently, right? We have people coming and visit Sitetech or other businesses and which are part of the Chadwicks Group now, and they can really talk about that firsthand experience. We also have that experience with Salvador Escoda, right? How was it for them. And I think that's a major, major benefit. What was the second part of the question?

GB like-for-like.

Yes, GB like-for-like. I mean, look, the year has started off weakly. There's no doubt in GB. To some extent, it was -- has been influenced by the wet weather. But I think that's an element of it. I think market is -- remains tough at the moment. The good news is that the year is not won or lost in the months of January and February. So there's a lot to play for in the year ahead. There's some really great stuff that we're doing in the GB businesses. So I think confident about that. The underlying market, there's a lot of really good fundamentals that should start to see -- we should start to see some volume growth coming through during the course of this year.

The biggest point is really around confidence. That's the thing. And over the last 5 days, that confidence has probably taken a bit of a not more generally. We just need to see how the next sort of few weeks pan out really. But I think if confidence can come back, there's a whole bunch of reasons to feel optimistic about volume growth, I think, in GB.

Okay. So I think that looks like it from the room. We haven't got any questions online. Thank you very much, everybody. Enjoy the sunny day.

Thank you all.

Thanks.

Good morning, and welcome to the Grafton Group Half Year Results Presentation. Let me first go through some operational highlights before I will hand over to David Arnold, our CFO, to go through the financial review.

So some operational highlights in H1. First of all, we returned to organic revenue growth with like-for-like growth in the first half of 2.4% in terms of daily revenue. We had a resilient performance as a group with strong contributions from Spain and from Ireland. Also I would like to point out that U.K. distribution returned to profit growth for the first time since 2021, despite a still difficult market backdrop, and our diversification trend continues with now almost 2/3 of the revenue being non-U.K.

The focus continue to be on operational improvement, continuous improvement, where the performance was supported by ongoing operational efficiencies and some self-help actions on the cost side. Our lean central team supports the operating companies across the group to implement best practices across the state, and we have continued ongoing investment into our businesses throughout the cycle to be excellently positioned for market recovery.

We are also pleased with the progress we have made on group development activities. We further strengthened our market position in Ireland, where we acquired HSS Hire as a bolt-on for Chadwicks Group, complementing our existing hire business in Ireland. The Salvador Escoda integration in Spain is well on track, and we have made positive progress on our organic growth plans for Salvador Escoda. And we are actively pursuing further opportunities for growth across our chosen markets in Europe.

I will now hand over to David, who will go through the financial details.

Thank you, Eric, and good morning, everyone. Before we turn to some of the detail of the group's first half financial performance, let me give you a few key takeaways at the outset.

Firstly, it's pleasing to report that we saw a return to profit growth in the first half for the first time in a few years. Adjusted operating profit was up almost 10%, and adjusted earnings per share increased by 6.5%.

Secondly, we again saw strong free cash conversion, which continue to reinforce the group's robust balance sheet position. At the end of June, we had net cash of GBP 246 million.

And finally, it was another period marked by strong capital returns to shareholders with GBP 81 million returned through dividends and share buybacks. Since we first started our share buybacks in May 2022, we've reduced our share count by almost 20%.

Reflecting the group's strong cash generation and our positive conviction on Grafton's future prospects, a new buyback program for GBP 25 million is announced today. The highly cash-generative nature of the group enables us to return capital to shareholders while continuing to actively pursue a robust and growing pipeline of acquisition opportunities.

In terms of outlook, we anticipate that trading conditions in the second half will broadly mirror those of the first half, with continued growth in Ireland and Spain. We reconfirm the 2025 adjusted operating profit is expected to be broadly in line with analyst expectations, recognizing that the important autumn trading months still lie ahead. Importantly, we remain positive about the medium-term outlook across our geographies and believe we are well positioned to capitalize as the weaker markets improve.

Turning to the first half income statement. Revenue of GBP 1.25 billion was 10.1% higher than the same period last year. Thanks to the dedicated efforts of our teams and a continued focus on margin management, particularly through disciplined pricing controls, a focus on delivering value for money for customers and enhanced supplier support, the group achieved a 60 basis point improvement in gross margin during the first half. This offset the impact of inflationary pressures on our operating costs, leaving our first half margin of 7.3%, unchanged on the first half of last year.

We continue to proactively manage our cost base in the period with benefits continuing to flow through from actions that were initiated in the prior year to support our results. As I've mentioned already, the group's adjusted operating profit pre-property profit of GBP 91 million was 9.5% ahead of 2024. The increased net finance cost of GBP 4.2 million primarily reflected lower interest income on deposits following interest rate cuts as well as lower cash balances due to the acquisition of Salvador Escoda and completion of the recent share buyback programs.

The effective tax rate before the exceptional profit on the disposal of our MFP piping business in Ireland was 19.5%, which was 50 basis points lower than the prior year rate of 20%. The reduction in the effective tax rate primarily reflects the geographic mix of group profits with a greater proportion generated in Ireland with its lower rate of corporation tax.

Adjusted earnings per share were 35.5p, 6.5% higher than 2024. The beneficial impact of our share buyback program resulted in a supportive effect on EPS relative to the increase of 3.5% in adjusted profit after tax. Now in the appendices, I've also included some technical guidance for the full year.

Looking at the first half revenue increase, the organic movement, which I will cover in more detail on the next slide, saw revenue increase by GBP 18 million. Total acquisitions contributed GBP 106 million of incremental revenue largely due to the acquisition of Salvador Escoda in Spain.

This slide analyzes that GBP 18 million increase in organic revenue, and it should be noted that revenue in the first half was supported by modest levels of product price inflation, and that contrast to the prior year when product price deflation, particularly in our distribution businesses in the U.K. and Ireland, adversely impacted sales.

Our Irish distribution and retailing businesses maintained their strong performance in the first half, while our Netherlands distribution business returned to modest levels of growth.

In the U.K., a slow improvement in the construction sector of the economy continues to emerge, contributing to revenue growth in our manufacturing business and significantly slowing the rate of decline in our U.K. distribution businesses.

In Finland, where the recovery of the economy and the construction sector have been slower than anticipated, we saw a decline in revenue of GBP 4 million in the period. Net new branches across the group contributed incremental revenue of GBP 1 million in the first half.

Turning to the increase in reported adjusted operating profit. We'll look at the GBP 2.2 million increase in profitability of the like-for-like business in a moment. And you can see the net impact of new and closed branches which had a negative net impact of GBP 0.5 million, and that's largely due to the divestment of the MFP piping business in Ireland. While, as you can see, acquisitions added GBP 6.7 million, mostly driven by Salvador Escoda in Spain with the remainder coming from 1 month's trading from the bolt-on acquisition of HSS Hire Ireland.

Looking at the increase in adjusted operating profit in our like-for-like business, you can see all businesses, except Finland and the Netherlands, reported an increase in adjusted operating profit. Our businesses in Ireland delivered strong profit growth, underpinned by expansion of operating margins, while our distribution business in the U.K. returned to profit growth for the first time since 2021. Performance in Finland, which I'll cover in more detail in a few minutes, remains below expectations.

And moving on to look at each business in a little bit more detail. Our Irish distribution business performed well in the first half, despite a broadly flat construction market. While activity in the commercial construction sector has increased after several years of decline, the necessary ramp-up in housing supply has yet to materialize, despite strong government support.

Nevertheless, with its excellent market-leading position, revenue of GBP 323.8 million increased by 3.5% on a constant currency basis. Growth in average daily like-for-like sales of 3.7% in 2025 was supported by product price inflation of 3.5%, which accelerated in the second quarter.

Gross margin improved in the first half due to active commercial management, increasing supplier support, which more than offset the impact of higher overheads. Adjusted operating profit of GBP 31.5 million increased by 7.3% on a constant currency basis, supported by higher sales and gross margin expansion.

The integration of HSS Hire Ireland, which broadens Chadwicks' offering into larger hire equipment and complements its existing Sam Hire brand is progressing well, with early trading in line with expectations.

We were pleased that our U.K. distribution business returned to profit growth with a 30 basis point increase in operating margin. Revenue in the U.K. distribution business of GBP 394.4 million was in line with prior year as RMI demand continued to be weak, especially in London and the Southeast. This important geography accounted for approaching 2/3 of our distribution revenue in Great Britain. Average daily like-for-like revenue was 0.2% higher in the first half, supported by product price inflation of 1.9%.

After good momentum from March through to early May, market conditions softened noticeably through to the end of June. Gross margin improved in the first half, reflecting our active commercial strategy despite the weak volume environment. Notwithstanding inflationary pressure on costs, especially with respect to labor and property, overheads were tightly controlled across our business, with the increase in like-for-like overheads contained to 1.6%. Adjusted operating profit of GBP 13.9 million increased by 10.3%, supported by gross margin expansion.

In the Netherlands, the anticipated recovery has been slower to materialize. After a strong start to the year, momentum eased largely due to the completion of major construction projects and delays in new project commencements. Revenue of GBP 175.2 million increased by 1.4% on a constant currency basis. Growth in average daily like-for-like sales of 2.8% was driven primarily by higher sales from national key accounts, in addition to modest product price inflation of approximately 1%.

Gross margin improved in the first half, primarily due to active commercial management despite the adverse mix effect of large construction projects and key accounts, representing a higher proportion of revenue.

Overheads remained under pressure in the first half, primarily driven by wage inflation linked to industry-wide collective labor agreements negotiated amid a continuing very tight labor market.

Adjusted operating profit of GBP 13.9 million declined by 6.7% on a constant currency basis with a 70 basis point reduction in operating margin.

Good progress was made on a multiyear business improvement project covering the operating model and supporting systems, which once fully implemented across the Dutch business will realize benefits to customers, increase efficiencies and reduce the cost to serve.

Salvador Escoda is one of Spain's leading distributors of HVAC, water and renewable products. We're very pleased with how the integration of the business is progressing, and its first half trading performance was in line with our pre-acquisition expectations.

During the first half of 2025, Salvador Escoda reported revenue of GBP 104.2 million and delivered an adjusted operating profit of GBP 6.5 million, representing an adjusted operating margin of 6.3%. On a pro forma basis, in comparison to prior year, average daily like-for-like revenue in the first half was 6.9% higher, supported by the timing of strong project-related sales and favorable market conditions.

Salvador Escoda is a market leader in the Spanish construction sector. Spain continues to be one of the fastest-growing economies in Europe, and the construction sector is forecast to expand by 3% to 4% in 2025. The group continues to support the local management team in driving organic growth. A new branch opened in Vic in Catalonia, enhancing our existing strong market position in that region, and we continue to actively evaluate further development opportunities in the attractive Iberian market.

Turning to Finland, and the business performed below our expectations. Market conditions remain difficult, but we also encountered some temporary operational challenges, which affected the internal supply chain and which are being decisively and actively addressed by a strengthened management team.

Revenue of GBP 60.4 million decreased by 5.8% on a constant currency basis in the first half, with average daily like-for-like revenue down by 4.2%. While it was anticipated at the end of 2024 that the market conditions had reached a trough, the recovery in the Finnish construction sector has been much slower than expected. For example, new building starts are at a 30-year low now in Finland.

The business experienced significant gross margin pressure in the first half due to intense competition and the sell-through of slow-moving aged inventory at discounted prices. Adjusted operating profit was GBP 1.8 million with an operating margin of 3%, representing a significant year-on-year decline in performance.

Our Woodie's business in Ireland delivered a strong trading performance in the first half as consumer spending remained resilient despite global macroeconomic uncertainties. Revenue of GBP 138.1 million was 7% ahead on a constant currency basis, supported by a 5% increase in the number of transactions, while the average transaction value was 1.5% ahead.

Average daily like-for-like sales increased by 7.6% in comparison to the same period last year, supported by favorable weather conditions, which generated a strong performance in plants and garden-related products, with some seasonal demand pulled forward into the spring trading months.

Higher transaction volumes supported improved overhead efficiency, achieved despite ongoing cost pressures due to a further increase in the national minimum wage and general inflationary pressures. Woodie's has continued to drive productivity improvements to offset the impact of mandated minimum wage increases.

Adjusted operating profit of GBP 19.2 million was 12.2% ahead on a constant currency basis, with the operating margin improved by 70 basis points to 13.9%. The first half saw robust growth of 34.6% in Woodie's online sales channel, with online transactions representing approximately 5% of total sales.

Further enhancements to the in-customer store proposition were achieved through the refurbishment of our Navan store and the continued rollout of the home shop-in-shop concept, and that's now been extended to an additional 7 locations. This initiative is now implemented in 18 of our 35 stores across Ireland.

Our manufacturing business returned to growth in the first half and reported revenue of GBP 56.3 million and adjusted operating profit of GBP 12.2 million. The operating margin of 21.6% delivered 150 basis point improvement in comparison to last year. CPI EuroMix had a healthy start to the year as housebuilders ramped up output, but momentum eased into the second quarter.

Bulk product volumes, which represent approximately 90% of revenue, increased by 5.7% compared to 2024, driven by higher volumes on existing housing sites. Overall, the business delivered strong profitability growth in the period underpinned by higher volumes and improved fixed cost absorption.

StairBox continued to be affected by the weak RMI market in the U.K. Volumes of stairs sold were broadly flat in comparison to the first half of 2024, but we did see volume growth in the wooden windows market. Overall, profits increased largely due to gross margin improvement supported by tight cost control and relatively stable raw material prices.

Now this slide analyzes our cash flow. And as you can see, the group generated strong free cash flow of GBP 78 million in the period, representing an 86% conversion of adjusted operating profit into cash. And some key highlights to note here. You can see the reduction in net working capital of GBP 4.9 million in the first half, despite actually a growth in sales, and optimizing our investment in net working capital continues to be a key focus across the group. We continue to reinvest in our businesses with just over GBP 20 million invested in replacement and development capital in the first half.

And finally, there was a GBP 14 million investment in net M&A activity, being the acquisition of HSS Hire Ireland, partially offset by proceeds from the divestment of our MFP piping business in Ireland.

The cash-generative nature of our businesses continues to support both shareholder returns and a strong balance sheet, providing significant firepower for the group to capitalize on organic and inorganic development opportunities. At the end of June, our net debt was GBP 147 million, representing a lease adjusted net debt to EBITDA ratio of just under 0.5x, broadly unchanged from the end of December.

And turning finally to the balance sheet. I'd just draw your attention to the increase of a net working capital of GBP 12.1 million in comparison to the year-end, and this is largely due to the recognition of the deferred consideration related to the divestment of MFP.

Adjusted return on capital employed was 10.9% in the first half, above our weighted average cost of capital, which we estimate at 9%, and higher than the full year prior year comparison. We believe this represents a resilient performance in the context of where we sit in the construction cycle.

And on that note, I'll hand you back to Eric to talk us through the outlook and strategy.

So let me say a few words about current trading for the period July 1 to August 24. Overall, like-for-like revenue growth in that period was 2.3%, so very similar to the first half with a continued strong performance of our Irish businesses.

In U.K. distribution, we had a reversal of the trend, which we saw into June and trading in the first few weeks of July-August was improved relative to the back end of Q2.

Trading in the Netherlands was impacted by the timing of the regional holidays and somewhat weaker project sales.

In Finland, as David alluded to earlier, the market continues to be difficult. And if you look at the overall market in Finland on technical trade, it's about minus 6%, right? That's the market estimate on technical trade, what -- how the market has declined year-over-year. But as David said, we also have some challenges there.

Manufacturing performed well compared to a weak trading period in prior year. And pleasingly, Salvador Escoda on a pro forma basis, 9.4% increase over prior year, driven by strong air conditioning sales. However, as always, the really important period is the autumn period, and those numbers are right during the summer holiday. So I wouldn't put too much rate into that overall.

So if I look at the outlook overall for the different countries, we continue to have a positive outlook in Ireland, notwithstanding the impact on U.S. tariffs. But the construction activity in H2 is expected to be similar as in H1, and there is strong government support to increase investment in housing and infrastructure. So we remain to be positive on our Irish economic outlook.

In the U.K., we are confident in the medium-term outlook. We believe the fundamentals are continue to be positive, but we don't expect any meaningful volume recovery during this financial year. Higher household savings and the pent-up demand in RMI is expected to support the recovery once it comes. But of course, the current speculation around property taxes and other things related to the autumn budget are anything else than helpful.

In terms of Netherlands, the construction recovery is somewhat slower than anticipated, and the timing of the upturn is uncertain. However, the medium-term outlook remains positive. And if you look at, for example, the GBMs in the Netherlands, they start to see some increase in volume starting now. But of course, our business with ironmongery and fixings is more later in the cycle, so we would expect to see some recovery over time.

Finland, as David said, the construction sector is at a 30-year low. There is muted economic growth, but we do expect a recovery -- a slow recovery going into 2026. I would point out in brackets that actually our business is one of the few players, which is still profitable in Finland, given the overall outlook, even though we are not necessarily pleased with the current performance of the business.

And for Spain, the economic growth continues to trend positive. It's one of the fastest growing markets in Europe, positive construction outlook, and the HVAC sector is very well positioned for robust growth. So we expect the economy in Spain to continue to do well.

Let me quickly talk through in terms of our ambition of what are the plans if you go through market by market and overall. So in Ireland, we plan to continually enhance our existing strong market position, as we demonstrated with the bolt-on acquisition of HSS, but it's not just M&A, it's also further organic expansion, which is on the plan.

In terms of U.K., we strongly believe in the long-term prospect of the U.K. And the focus is on capturing the market recovery, where we think we are well positioned. But we will also deploy further capital organically and also unorganically if good opportunities arise. And we can buy for, what I would call, a fair price to buy an asset and further develop it.

In the Netherlands, we continue to focus primarily on organic expansion, especially in the Eastern area of the Netherlands, where we still have a lot of wide gaps and build out the network of Isero. But of course, we also have a pipeline of potential acquisition opportunities into adjacent segments and to strengthen Isero.

Finland, the focus is to capitalize on the market recovery. We have a strong management team, a strengthened management team in place, and we want to sweat the asset, which we have as the markets recover.

Iberia, slightly different. We entered the market with the platform acquisition, and we endeavor to continue to scale our business significantly over the next few years. And we see very strong growth opportunities organically and inorganically.

And of course, as we build out and strengthen our existing markets and build out our position in Spain, at some stage, we would enter a new attractive European market. And for that, we actively evaluate the different entry opportunities. But that's further down the line. The immediate focus is on existing markets, including Iberia.

So overall, Grafton is very well positioned to deliver value for our shareholders going forward. We have attractive market positions with a very strong portfolio of different distribution market -- different distribution models across our existing markets. They are supportive market fundamentals like the aging housing stock, the shortage of housing, et cetera. But as I said earlier, our immediate focus is to strengthen the existing positions and to accelerate our expansion in Iberia.

But we believe Grafton is a very, very strong platform with a good geographic diversification across European markets. 64% of the revenue is outside of the U.K. We are highly cash generative, which is a distinction compared to other assets in our segment, even if you look at the ones which are privately held.

So we are very cash-generative, despite subdued market in the U.K., in Finland and in the Netherlands. Our assets are well invested and excellently positioned for the market recovery, and we have the real ambition to become a leading player in the European building material distribution market, which is a highly fragmented market. And we endeavor to capitalize on the growth, which is there for us to grab over time.

I will now hand over for Q&A. Over to you.

And sort of normal rules of engagement will apply. We'll take the questions in the room first. Once those are finished, there may be some questions that we get over the airwaves. We'll pass the mic around to those who have got questions. [Operator Instructions]

Well, we'll go to Shane at the front first, that would be great, please.

Shane Carberry from Goodbody. If I could start with the U.K. distribution business first. And I suppose if you could just give us a little bit more color on some of the levers that have been pulled in terms of the margin performance was obviously quite good in the first half. So it would be helpful to just get a little bit more color around the levers pulled there.

Let me pick that. I mean, I think the U.K. was interesting when we look at the actual underlying market dynamics. In March, April and May, we actually got a glimpse of what we thought recovery looked like, and we were quite hopeful at that point. And then we did see the market weaken. We deliberately took a strategy in the U.K. of focusing on the bottom line and focusing on gross margin.

So there was a lot of work that was done working with our suppliers, in particular, but also taking conscious decisions around pricing to not go aggressively for price because, quite frankly, it didn't feel as though the volume was there in the market to support the uplift that we would be looking for from a profitability perspective. So we were quite deliberate in our strategy there.

The other element is obviously around productivity, and we're doing an awful lot of work. And that's not just in the U.K., that's across the business, how can we apply technology, how can we make ourselves more efficient at the back end and free more time up for colleagues at the front end to be able to support customers in store or in branch.

And that's really an enduring theme around and will continue to be over the next few years. And the investments that we're making across the business are very much about technology and productivity and efficiency.

Perfect. And then the second one is just on the point that you made towards the end there, Eric, just regarding kind of potential expansion longer term into other markets in Europe. Could you kind of talk a little bit about, I guess, the advantages of the Grafton Group platform versus other kind of European building material peers that you'll be able to take advantage of in those markets when they come along?

Well, first of all, there are not many international listed peers in our sector. Let's say, like, most people are either are not international or they are privately held. I think where we see the benefit is, of course, I think in-country scale is important, right, because a lot of the benefits on -- especially on heavy-side materials are in-country where you have the scale benefit.

On the light side, you have better opportunities to take scale benefits in terms of procurement across multiple countries, right? But over and above that, we invest a lot in technology, which we can then lift and shift into different countries. You attract as you are a larger player a far -- a good talent pool which you can develop.

And we just firmly believe that the scale opportunities internationally and in countries are needed to really drive the benefits for our customer and also generate enough money to actually invest and continue to invest into a changing operating model with more and more digital elements to it.

Will Jones from Rothschild & Co. Redburn. First, maybe just if we talk about Ireland. Clearly, good overall performance, top line and margin. But within that, I think volume is back to flattish, having grown quite nicely last year. And I think you mentioned the housing supply increase not coming through. But I guess, just general expectations on when you think the return to volume growth in Ireland and maybe just touch on the gross margin improvement there as well.

Yes. Look, I'm -- we're very optimistic about volume growth in terms of the construction market in Ireland. The first half was pretty flat, I think, from a sort of new homes perspective. A little bit disappointing against the ambitions, which I think the government and, sort of more broadly, the market was expecting. Volume growth last year was pretty flat. I think it was coming in at 30,000-ish units that were completed.

I think expectations for the current year though have improved as we've gone through the year. I think we're now looking at an increase in overall new homes being completed, up high single digit, is possibly 10%. So the outlook is positive for this year and indeed going into next year. And I think we're seeing some of the housebuilders quite optimistic in terms of -- in Ireland in terms of their output going forwards.

More broadly, in other sectors like infrastructure, government is committed to increase infrastructure. So against what was a relatively flat volume backdrop last year, we would look and expect that to be improving in the second half and going into 2026.

In terms of gross margin, as with the U.K., really, a lot of work around gross margin, a lot of work working with suppliers in terms of making sure that from a purchasing perspective, we're getting best value, and a lot of work at branch level working with our colleagues in Chadwicks branches just in terms of how best to manage gross margin in branch, and that's -- that paid off in the first half.

And then maybe second just if we go back to Finland. It seems we've got a combination of macro industry and maybe some company stuff as well. But perhaps, you could just unpick those and particularly elaborate on what you think is company-specific in the first half performance. I think there was a mention about supply chain issues as well. I'm not sure if that was the industry or yourselves and what you're doing to address that.

Look, the largest topic by far is macro, where we have some -- when we refer to internal supply issues, there have been some Far East suppliers which have been changed by the local management in recent time. And one of those core suppliers didn't deliver on what they should have delivered. And so you end up having a problem in a relatively long supply chain on availability of certain products.

And that's what the team is working through and that's what we were referring to. So it was mainly a change from some Chinese suppliers to Taiwanese suppliers who then weren't able to deliver on the commitment they have made in time.

Aynsley?

Aynsley Lammin from Investec. I think I've just got questions around the U.K., actually. Maybe a bit more color on new housing versus RM&I and commercial what you're seeing there. I know you're predominantly RM&I, but maybe feeding in from the EuroMix business as well for new housing.

And then just related to the second question. As you look into H2, you've obviously got full 6 months of the employer's next cost coming through. Market still remains difficult. I mean, are you confident you can still maintain that good margin increase in H2 versus H1?

Starting off with the margin point, I mean, I think that's very contingent upon actually what we see in terms of underlying volume growth. When you strip out inflation, still, volumes remain under a little bit of pressure in the U.K., and we'd expect that to continue in the second half.

And as you rightly say, Aynsley, cost pressures aren't really ameliorating in particular. So we could be in a position where, once again, it's quite a grind in the second half in the U.K., I think particularly leading up to the budget. And as Eric alluded to, I think some of the rhetoric at the moment around homes, in particular, is unhelpful from a sector point of view.

We are predominantly focused on RMI. Selco is really a business entirely focused on customers who operate in the RMI world. The same would be true of Leyland SDM. In T.G. Lynes, there is a focus some on RMI, some on commercial and new residential.

So our exposure on new build is, as you rightly say, really through CPI EuroMix. RMI, we see continuing to be pretty flat. I don't see a huge improvement there. Clearly, the government has intentions to continue to try to expand housing output. I think that, that will come through, but that takes time.

We saw a good start to the year. Maybe some of that was influenced by timing of things like stamp duty, but we saw a good start to the year in terms of volume pickup. But then that momentum did seem to ease, as I talked about. I think we'll see some growth in the second half, but perhaps at a lower level than we saw in Q1.

Alastair Stewart from Progressive Equity Research. Again, a couple of questions on -- this time on RMI. Interested to see your comments on London and the Southeast. Specifically, could you have a bit of a -- provide a bit of color regionally and by subsector of RMI? So that's the first question.

We sort of struggle in terms of subsector because, for us, our focus is really around private residential RMI rather than bringing in public. Again when...

Sorry. I meant is roof extensions. Or...

I see. To be honest -- yes. Yes. I think what we're seeing proportionately is it's about the R&M and not about improvement. So extension work has really dropped quite significantly over the last couple of years.

Regionally, look, I think London and the Southeast has been particularly influenced by what's happened in terms of mortgage rates. So I think that's why we're seeing a more subdued market around London and Southeast. And I think that probably also plays out into the broader housing market.

When we look regionally, Midlands and Northwest are doing slightly better from an RMI perspective than we see in London and the Southeast.

And the second question, very briefly, you mentioned the tax speculation. Is that a sort of broad feeling you're getting? Or are you actually seeing -- literally over the last couple of weeks, have you seen any drop-off in activity...

I don't think we've seen a drop-off on the back of it. But equally, what we haven't seen is -- it does feel like groundhog day. And when we're talking about improvement in U.K. volumes, I just think we've -- we're putting off the point at which we will see a good volume recovery a bit further into the distance because confidence is everything in our world.

Confidence is everything in terms of homeowners that has a spillover effect into broader consumer confidence. And all the speculation around potential taxes on property will naturally not act as encouragement over the next few months to people to go and build their extension.

We'll go that way first, and then we'll come that way.

Christen Hjorth from Deutsche Bank. The first one, just on Selco and any color on the performance outside of London and the Southeast. And I know previously, you've talked about looking at the formats in the region. So any comment on that would be great.

Well, let's start first with the thing in terms of format, right? What we are evaluating -- or the team is evaluating in Selco is there a potentially better model to capture business in areas where your throughput will inevitably lower outside of the London area on a per site basis than within the London area, right?

So if you look at the revenue per site, there is quite a bit of a difference versus the model is pretty much the same, which means the fixed cost, whether that's in terms of staff needed to operate it, whether it's in terms of rent rates, there might be a small differential. But it's very similar, but the throughput. And therefore, the revenues are different. So therefore, you will have a lower return, right?

So the question is, is there something we can do differently? So if we come to a conclusion that there is something, we will try it. And then I'm sure we will talk to you about it, but at the moment, we are still in the process of looking through that.

I think in terms of overall pattern, the -- we see that the area of the London area has been pretty -- has been slightly stronger influenced than the other areas. And if the bulk or a big part of your profitability comes from that area, then that's not desirable. Let's call it like that.

Perfect. But I mean, just the second one on Woodie's. Another fantastic performance on margins. I think it was the full year results where you pointed to some competition potentially coming in. Just any update on that? It looks like it's been dealt with quite well. But any comment?

This is -- look, the competition is coming in. Ireland is clearly attractive. More players are coming in. And inevitably, our view is that competition -- increased competition, a, makes you have to be better in terms of value proposition to stay ahead of the game, but there is always a risk that your operating margin will come a bit down over time.

I think what the team has done excellently is continue to work on each category and on the value proposition in each category. We have a fantastic retail team in Woodie's, and that's why we are able to maintain. It's about the value proposition to the end customer, combined with continuously working on the cost to serve and how do we use digital, how do we use process improvements to take the cost to serve down. And the combination of the 2 support the operating margin.

I think the caution David and I always have, it will not be a street where there will be a lifelong ever-going increasing on operating margin in Woodie's. It will be inevitable that at some stage, that curve will probably slightly turn. But we are very confident with the position we have and with the progress we make overall as a team there.

We'll go to Harry.

Yes. It's Harry Goad of Berenberg. A few questions on M&A, please. So firstly, can you just remind us where you would be willing to take leverage to if the right opportunities presented themselves?

And then, I guess, the supplementary still on M&A is just talking a little bit about the landscape in terms of what you're seeing in terms of opportunities, what acquisition multiples being asked for like the competitive landscape for these assets.

Look, I think on the leverage, we consistently said we want to maintain investment grade. So therefore, the leverage will be, let's say, not too high, if that makes sense. So -- but if you look at the landscape, of course, in terms of multiples or multiple expectation, it's always difficult to talk about multiples when markets are down, right, because nobody -- everybody wants to sell an asset on, let's say, throughout-the-cycle earnings rather than I'm on the bottom and now I sell it at the multiple which is the average multiple, right?

So that's not how the transaction happens. And of course, it's difficult -- it's different in every market. So you look at Scandinavian, multiples are higher than in other markets. I mean, you guys are well aware of that. I think if you look at it around what are the opportunities at the moment, what is the competition at the moment, I think the competition is as usual, right?

There are a lot of PE players who either try to do buy builds in certain markets or have platforms and try to build a platform out further. I think at the moment, it's -- to transact, it's -- in the U.K., you would have the phenomena. As I said earlier, earnings are down with each player, and people will not sell existing earnings on a normal multiple. So that's not really attractive for us to buy at this moment in time.

In other markets, like in Spain, we believe we have an extremely healthy pipeline at reasonable multiples, which are accretive to us, and we are confident we can execute in that particular market. I think you have to look at it market by market.

And as I said many times, it's a relationship game because most acquisitions, we are focusing on our businesses, which are privately held. So it's about building the relationship, working it through and, in the end, pay a fair value, but not too much.

Flor?

Flor O'Donoghue of Davy. Just asking, wondering about staff and rental inflation maybe looking into next year. It's obviously been -- there have been 2 headwinds over the last couple of years. Just wondering what your thoughts are, how they're looking into next year.

I think we're probably in the 3% to 4% range overall is our starting point as a sort of a natural level against which we will be working really hard from a productivity perspective to try to mitigate that.

I still think there's quite significant pressure on rents and rent resets around London and the Southeast. And we still face the headwinds of national minimum wage increases. And in that note, we're sort of beholden to what governments may decide in terms of policy. So factoring at the moment 3% to 4%.

Great. Second one, just on the portfolio. Obviously, we saw a disposal in the first half. Any further thoughts on any other businesses that may exit Grafton Group in the medium term or so?

Certainly, not at this moment in time. So we are currently committed to the assets we have. And we will, obviously, as you would expect, review the portfolio on an ongoing basis. But we think we have strong assets in all the markets we are in.

Clyde?

Clyde Lewis at Peel Hunt. Just wanted to sort of maybe explore that manufacturing orders number that -- or the revenue that you've seen in July and August. Obviously, a pretty big increase. You've flagged obviously the easy comps. But is that a lot more CPI rather than StairBox?

And I suppose sort of as you look at the sort of June, July, August, have you seen an overall improving trend, even though the comps last year were a bit difficult? So trying to sort of explore what's driving that as well as those easy comps?

Yes. So actually, I mean, to put it into context, July and August last year, manufacturing was down double-digit like-for-like in that period. And we do need to be very cautious because this is a period when many people will be off on holiday that are on sites. So be careful about reading too much into it. Actually, from a volume perspective, the bulk deliveries that are going into housebuilding sites actually, I would say, is pretty -- was pretty flat in the period.

Actually, what we did see was our bagged product. So that's a product that's going more into the RMI world. There was an element of growth that we saw around that. StairBox volumes have been pretty flat.

So I would say it is much more about coming up against what was a very low number last year that we're seeing an improvement to be a more normalized level, not about in either business or a particularly pronounced improvement in volumes.

Okay. And following on from that. From memory, CPI is probably one of the businesses that does have a bit of an order book. How does that look again compared to where...

Yes. Well, what -- I mean, what CPI is seeing is basically the number of silos on sites is pretty flat actually and has been all year. What we're actually seeing is more throughput through existing sites. And that may be indicative of what we see more broadly in house builders in terms of outlet numbers. So there's a slightly -- sales rate is slightly better than they were going back 12 months ago.

So there's more production going on existing sites, but not a huge uptick in terms of new sites coming on stream. Once we start to see those silo numbers lift, then we'll feel more confident that actually that is about more development. We will see more volume. That's the thing that we're not seeing at the moment.

Okay. The second one was around, I suppose, industry capacity, particularly in the weaker markets. I'm thinking probably Finland, a bit in the U.K. as well, maybe a bit of the Netherlands, as to whether you're seeing capacity being taken out by any of your competitors, given the soft volumes that are still persisting.

Not really, no is the simple answer.

Thank you. Sorry. Charlie?

Charlie Campbell at Stifel. Just one quick question, actually. Just looking at appendix 3. I'm just slightly struggling to...

This sounds like the Barrister's question. I refer the jury.

Just looking at the Q2 like-for-like. So I'm just surprised by how good they are, given the comments you've made about the lull in May and June. Is the interpretation, therefore, that actually April was really pretty good across those areas?

Yes. And that was my sort of opening comment really to Shane, which was we got a glimpse in March, April and May of a recovery. And May's like-for-likes actually were pretty good. But it was the first 2 weeks of May that were pretty good, and then it softened noticeably and into June.

And the real contrast was -- and I suppose when we made our comment in the July trading update, I mean, what we had seen at that point was that all our markets had seen significant weakness.

We saw in Ireland markets that had been growing 4%, 5%, 6% in March, April and indeed recorded it in May go to flat suddenly in June. So those numbers absolutely don't do justice to that sudden weakness that we saw across all our markets. And that was the thing that was more unnerving, quite frankly, because it was across all markets. And that's why we felt we had to flag it at that point.

Now as we've seen since, as we've seen the group overall has improved in July and August, which is reassuring.

Okay. We'll just see if we've got any questions outside the room. We've got no questions outside the room.

Well, look, thank you, everyone, for attending, and we'll see you soon. Thank you very much.

Thank you very much.