Howden Joinery Group Stock

Good morning, and welcome to the Howden's 2026 Interim Results Presentation. I'll begin by introducing our performance in the first half, and Jackie Callaway, our CFO, will then review our financial results for the period. And I'll then share my perspective on our 2026 performance to date and our plans for the remainder of the year, and then we'll take your questions. In the first half, the business continued to advance on all fronts in what remains a challenging marketplace.

The results met our expectations for the period, and we're on track for 2026. Group sales in the first half increased by 3.3% and were up 3.7% on a trading adjusted basis. In the U.K., the number of kitchens we sold increased, and we are well positioned to take market share again this year. We maintained an industry-leading gross margin with gross profit ahead of last year, and we balanced recovery of cost rises with our commitment to providing competitive prices across the board for our customers. Underlying profit before tax for the period was also ahead of last year, increasing at a higher rate than reported sales with underlying operating cost -- underlying operating profit increasing more so.

We progressed our strategic plans for the U.K. business, which support our trade customers and total sales of our international operations continue to increase. At the half year, we had a total of 975 depots trading, including 893 in the U.K. The business delivered strong operating cash flow, and we maintained a robust balance sheet. This gives us the flexibility to continue to invest in our growth plans for the business and provide shareholders with an increased interim dividend for this year.

In 2026, we will also return a total of GBP 100 million to shareholders through our latest buyback program announced in February. The interim results demonstrate the strength of our local trade-only in-stock model. Our market-leading product lineup, consistently high stock availability, industry-leading service levels and a very engaged team have all contributed to our performance, which benefits from the ongoing investments in our strategic initiatives. In the U.K., we had a record number of customer accounts as at the half year, with a similar proportion trading as last year. As well as maintaining an industry-leading gross margin, our total KPI sales volume was ahead of last year.

Our performance to date has been in line with our expectations. And whilst we have peak trading ahead of us, we are on track with our plans for the business and our outlook for the year is unchanged. We have a robust business model and operate in fragmented markets with significant growth opportunities. This year, we planned for the size of the kitchen market to be level on the year, and we believe this outcome remains the most likely outcome. We are well prepared for the challenges and opportunities ahead in what remains a challenging marketplace. And our customers, namely self-employed people, are highly adept at winning business in all market conditions.

Delivered by our highly entrepreneurial and well-incentivized depot teams, our service-orientated trade-only in-stock model is hard to replicate and it's difficult to compete with. And we have initiatives in place to make it more so. At present, we believe the value of our principal U.K. markets, which are relatively unconsolidated, is some GBP 11 billion and that there are significant long-term growth opportunities for us. We continue to prioritize investment in the business on this basis. So I'll update you on our strategic initiatives, which are key to the longer-term development of the business after Jackie has taken you through our financial results for the period.

Before handing over to Jackie, I will briefly cover our acquisition of DIY Kitchens business for an enterprise value of GBP 390 million, which completed on the 23rd of June. DIY Kitchens is a vertically integrated kitchen business, which sells its products exclusively online, principally to end users, particularly those looking to self-manage the purchase of their kitchen. And as such, its online self-service business model is quite distinct from our own relationship-based trade-only fully in-stock model and one through which we can access directly non-trade kitchen purchasers, thereby expanding the group's addressable U.K. marketplace -- customer base.

It's a very profitable business, cash generative and a growing enterprise like Howdens. It has well-invested manufacturing, scalable capabilities and also an entrepreneurial culture. Whilst DIY Kitchens is much smaller than our trade-only kitchen and joinery business, the two are complementary because of their disciplined focus on serving distinct customer bases, which have very different requirements. We believe that they are each the best at what they do and that both businesses have plenty of room to grow.

Accordingly, DIY will operate on a stand-alone basis from Howden Trade and we'll continue to be an online-only business, focusing on non-trade customers with a differentiated kitchen product, which is made to order and displayed in a small number of destination showrooms. In summary, by size, this is an incremental acquisition, which is additive through DIY Kitchens' differentiated online self-service model, which extends our direct customer reach and is accretive to revenue, EBIT and EPS.

So having said that, I'll hand over to Jackie, who will take us through our financial results for the first half and our guidance also for the full year. Thanks, Jackie.

Thanks, Andrew, and good morning, everyone. I'm pleased to present Howden's half year results for 2026, and I'll begin by summarizing the key highlights. Howden's first half performance shows the resilience and growth potential of our differentiated in-stock trade-only business model. Following our last trading update in April, the business continued to perform well in the final two periods of the half. Group sales increased by 3.7%, adjusted for the one fewer trading day this year. We maintained our industry-leading gross margin, which was 70 basis points ahead of last year as we balance price and volume effectively.

The margin reflects the benefit of the price increase implemented at the start of the year and our focus on productivity, sourcing and manufacturing efficiencies. Operating expenses were tightly controlled, and we delivered an underlying EBIT margin of 12.4%, with profit growth ahead of sales while continuing to invest in strategic initiatives that strengthen our competitive position. Underlying profit before tax was up 4.3% to GBP 122 million. The underlying effective tax rate was 23%.

Finally, we delivered underlying EPS growth of 5.5%. Let's now look at sales growth in a bit more detail. We maintained a disciplined approach to balancing pricing and volume. While the market remains competitive, our differentiated trade-focused business model delivered by a highly entrepreneurial local depot teams supported continued volume growth in the kitchen market, we still expect to be about flat this year.

Overall, U.K. revenue increased by 3.3% to GBP 991 million and was up 2.3% on a same depot basis. The price increase implemented at the start of this year had an impact on sales of around 1.6%. International depot revenue was EUR 46 million, 8.5% ahead of 2025 on an adjusted basis and 7% higher on a same depot basis.

In France, sales for the first half continued to increase. Our focus remains on both developing our depot teams capabilities and actively managing the depot estate to optimize performance, including by trialing a more compact depot format that incorporates recent U.K. format innovations. In the Republic of Ireland, our depots traded well, and we're opening more depots there this year. Andrew will take you through our international operations in more detail shortly.

Now turning to profit before tax. Starting from profit before tax of GBP 117 million in 2025. Gross profit was GBP 28 million ahead of last year. The price increase at the start of the year delivered a GBP 16 million benefit with volumes and mix contributing GBP 12 million. Kitchen volumes increased as we continue to invest in new product introductions and associated kitchen products.

Overall, within our cost of goods sold, despite the ongoing uncertainty in the Middle East, we've offset inflationary increases of around GBP 8 million in the first half. Howdens supply chain has remained robust and our predominantly near-sourced vertically integrated business model is resilient across all macroeconomic conditions. We are maintaining very good ongoing stock availability, which supports our trade customers in securing and delivering work, and we've hedged fuel and energy expenses through to the end of the year. And we will continue to stay vigilant in the current environment, keeping a sharp focus on productivity, efficiency and disciplined cost control.

Looking at operating costs, increases were held to GBP 21 million, balancing tight cost control, with a further GBP 9 million investment in our strategic initiatives. This disciplined approach supported an increase in underlying EBIT margin and an underlying profit before tax of GBP 122 million for the half year. Now looking at operating costs in a bit more detail. Ongoing investment in our strategic initiatives was GBP 9 million in the year, and this included the incremental costs of the new U.K. depots, which totaled GBP 5 million, included the cost of 25 depots opened from the beginning of 2025.

We invested a further GBP 3 million in other strategic initiatives, predominantly digital. We also invested in our international businesses, for example, by opening depots in the Republic of Ireland. In our existing U.K. depots, additional costs were GBP 7 million related to a combination of labor costs, property costs and volume increases. We also incurred GBP 3 million of additional labor costs arising from the government's changes to the employer's national insurance and the minimum wage, which came into effect last April. I would also highlight that we've offset around GBP 11 million of inflationary cost increases with productivity and efficiency actions.

In 2026, we now expect inflationary headwinds of around GBP 40 million in the total cost base. So that's across both cost of goods sold and operating costs. These headwinds are in areas such as commodity, labor and additional property costs. And the additional GBP 10 million higher than -- sorry, this is GBP 10 million higher than our previous guidance and reflects the additional cost pressures as a result of the uncertainty in the Middle East. As in previous years, we will take a disciplined approach on costs with ongoing actions to offset these inflationary headwinds where practicable.

In the first half, our actions delivered combined cost savings of around GBP 19 million across operating costs and cost of goods sold. We will also continue to invest in our strategic initiatives to fund future growth, and Andrew will take you through our plans for 2026 shortly.

Next, let's look at the cash flow. Cash generation was strong, and we ended the first half with GBP 333 million of cash. In total, we invested around GBP 12 million in working capital to support our growth. Capital expenditure was GBP 41 million as planned. Our normalized CapEx spend will continue to be around GBP 125 million a year. And aside from maintenance CapEx, which is around GBP 30 million a year, within this, there are three major investment categories that we are prioritizing to support profitable growth and strengthen our competitive position.

Firstly, manufacturing. We continue to make investments in our U.K. manufacturing base to enhance productivity, increase our capacity and broaden our capabilities. And this includes our plans to develop the Runcorn site, which will increase capacity there by around one million rigid cabinets. In 2025, we acquired the lease for some additional land, and this enabled development work to begin on a new trailer park, which frees up space for the expansion of the factory. And in the first half, following clearing and development of this land, the first trailer has now been parked there, enabling work to start on the site extensions, which is progressing to plan.

Secondly, we'll invest in depot reformats and openings. Our updated format provides the best environment to do business with our trade customers, and we continue to see attractive investment returns when we convert a depot. And finally, we will invest in digital. We will continue to support our trade customers by upgrade to our digital capabilities to make them more productive and to raise brand awareness. We're also using technology to support new services and ways to trade while delivering productivity benefits to the depots.

Moving now on to cash tax. In previous years, we've benefited from the prior year tax credits arising from our patent box claim. This is normalizing now. And looking forward, we expect cash tax to be around GBP 60 million a year, with an effective tax rate of around 23% to 24%. Finally, our GBP 100 million share buyback is underway, with GBP 7 million completed in the first half and a total of GBP 39 million completed by the close of business on Tuesday, the 21st of July. We remain on track to complete the full buyback by the end of this year as planned.

Moving on to capital allocation. Howdens is a highly cash-generative business, and we continue to take a disciplined approach to capital allocation. Our priority is to invest in and develop our differentiated business model to deliver sustainable profit growth. At the same time, we aim to maintain a progressive and sustainable ordinary dividend, providing shareholders with an attractive ongoing income stream.

Following completion of the acquisition of DIY Kitchens, the group retains a robust balance sheet and expects to remain in a net cash position. And going forward, we will continue to prioritize organic growth, maintain our progressive dividend and look to return surplus capital to shareholders while maintaining a net cash position. And importantly, following the acquisition, our existing dividend policy and the previously announced GBP 100 million share buyback program for 2026 are unchanged.

The Board has declared an interim dividend for 2026 of 5.1p per ordinary share, an increase of 2%, which will be paid on 20th of November to shareholders on the register on the 16th of October. We continue to expect to remain a net cash position to support future investment in growth and ongoing shareholder value creation.

So to summarize, we have performed well in the first half. Our differentiated in-stock trade-only model continues to demonstrate its resilience and growth potential, and our strategy is well defined and being executed well. Our robust balance sheet and strong cash generation support continued investment in our strategic initiatives and in the future growth of the business. We are firmly focused on growing our profits faster than sales, and it was pleasing to achieve this in the first half.

Looking ahead, we are well prepared for our peak trading period in the autumn, supported by our strongest ever product lineup across kitchens and joinery and the strength of our local depot teams, first-rate product quality, market-leading stock availability and the skill of our trade customers and winning work. We remain well positioned to continue to grow profitably and meet current market expectations for 2026. Thank you, and I'll now hand you back to Andrew.

Thank you, Jackie. We believe our markets give us significant longer-term growth opportunities, and our strategic initiatives are key to capitalizing on these. And I'm going to use them as a framework to review our first half performance and our plans for the rest of the year. So based around our key features of our business model, the initiatives are to evolve our depot network, to improve our range and supply management and to develop our digital capabilities and service and to grow our international operations. So firstly, we will look at depot evolution.

High service levels, including local proximity and immediate availability are very important to our trade customers. We continue to see profitable opportunities to open depots. For the medium term, we continue to see scope for around 1,000 depots in the U.K. versus the 891 trading at the end of 2025. And this year, we expect to open around 25 more depots as compared to 23 in 2025, of which two were opened in the first half.

Last time, I took you through the latest iteration of the updated format, and the format enables us to provide the best working and trading environment and to make productivity and space utilization gains in a cost-effective way. The format innovations have strengthened our competitive position, and our program to revamp depots opened in the old format is now well advanced. By the end of 2025, including relocations, we had revamped 410 depots to an updated format. These principally comprised of conversions of our larger and longest established depots.

This year, including relocations, we plan to update the format of around 30 more depots and completed 10 of these in the first half. So by the year-end, we expect to have revamped around 66% of the depots, which opened in the old format and to have around 75% of all U.K. depots trading in the updated one. We're also modifying the layout of some of the depots converted earlier in the program so that these incorporate more of the latest format innovations.

The next point is range and supply management. Sales of new products are a significant contributor to our performance. In the first half, sales of products introduced this year and over the preceding 18 months represented over 15% of the U.K. product sales, a higher proportion of sales than for the comparable 24 months in H1 last year. And value for money always features in purchasers' buying decisions, and we're committed to providing our customers with market-leading easy to fit and fairly priced product.

And given the pressures in household budgets, price featured predominantly in 2025, we expect it to do so again this year. With an emphasis on value for money and choice at all price points, our offering is well positioned to take advantage of this. This year's new kitchen program makes more color, styles and finishes available to more budgets, principally at entry and mid-level price points. So excluding paint order, we have 23 new kitchens so far this year, and we entered the second half of our entire offering with such kitchens organized around 11 families with a similar kitchen count to last year.

Elsewhere, we're innovating other long established product categories and adding more colors and styles to our fitted bedroom offering launched 2 years ago. This year, we have a total of 13 new kitchens for our established entry and mid-price families, most of which have been in depot since the start of the year and all of which are now in stock well ahead of our peak trading period. For our entry-level families, we have introduced five new colors, which are popular elsewhere in our offering, including Greenwich in natural walnut and we launched -- which we launched at the start of the second half.

At the mid-level, we've launched nine new kitchens for our established families, including five more colors for our more modern shaker kitchens, so Frome, which, going forward, replaces Chelford in our lineup. And recent additions to these families include Frome in reed green and Halesworth in mist, both shown.

For the second half, we also have our new mid-level contemporary family, Winterton, for the first time. Winterton is available in five colors, including gloss sandstone and gloss white. Our higher-priced kitchen portfolio comprises four families, including three shaker-style families, which are collectively marketed as classic timber kitchens. In the first half, the proportion of our classic timber kitchens sold paint water continued to increase. For the second half, we've refreshed our paint to order palette with four new colors. And for our top-end in-frame shaker family, Ilfracombe, which is exclusively available in paint to order, we've added a new beaded-style door frame option, as shown in the picture.

This year, we have also migrated two of the leading paint to order colors over to the in-stock offering of our Chilcomb and Elmbridge families. And for the second half, we have also just launched our new natural walnut effect cabinet, which replaces our croft gray cabinet and is our first cabinet refresh in several years. The natural walnut cabinet complements a wide color palette, can be specified for all of our kitchen families, and offering it from stock for immediate delivery is a first for the U.K. mass market.

Solid surface worktops, which are often but not exclusively associated with the sale of higher-priced kitchens continue to represent significant opportunities for the group. Our offering in this category, where we trade as Howdens Work Surfaces or HWS is underpinned by our in-house manufacturing capability, which is among the largest in the U.K., helping us offer rapid template to fit times.

In recent years, we've increased the number of decors we offer in this service. And for this year, we've introduced clearer, simpler ranging and more delineated pricing to demonstrate the value that we offer at all price points. Ahead of peak trading, our total offering will comprise of a similar number of options to last year.

In 2026, we've continued to upgrade our offering in other categories, including our own label brands, which complement the third-party branded products that we sell. In appliances, we've put in place a major refresh to our Lamona brand, which is one of the leading integrated appliance brands in the U.K. And we've modified the design, lowered the prices of a suite of high-volume products without compromising these products functionality and updated the design and specification of several higher-priced products, including washing machines, fridge freezers and cookers.

Elsewhere in flooring and ironmongery, we've extended the offering of our own label brands, Oake and Gray, Fuller and Forge, and added new product finishes, designs and subcategories. As well as being substantial businesses, doors and joinery remain a key footfall driver building product for us. For our door lineup, new product includes a new premium range of Howdens' branded solid engineered doors. And in joinery we've developed the subcategory extensions into wall paneling, spare parts and loft spaces, which we initiated in 2025.

Half 1 fitted bedroom sales continue to increase as well as representing a source of incremental sales and profit that help us foster customer relationships. Installing fitted bedroom suits the skills of our customers who fit kitchens, and a significant portion of total bedroom sales compromise purchases either by new customers or by customers who had bought from us relatively infrequently. We develop our bedroom ranges in-house, utilizing our existing designs and supply infrastructure, and they have a high cabinet content, which matches our manufacturing capabilities.

Our 2025 offering comprised bedrooms in five leading family designs run from our kitchen portfolio, including a new family, Clerkenwell, launched during the year. And this year, our focus is on entry and mid-level bedrooms, which have a total of five new ones, including second half -- including, for the second half, a new mid-level family, Winterton, which we've just launched in three gloss colors.

Howdens is an in-stock business and the trade tell us that a high level of stock availability is one of the key reasons that they buy from us. The investment in our XDC network, which enabled us to offer next-day delivery service and other initiatives, including daily traders, facilitate exceptional levels of service. In the first half, deliveries totaled some 30 million pieces, and our service level from primary to depots was a world-class 99.98%.

Our in-house manufacturing capability, which is a source of competitive advantage for us, and we keep under review what we believe is best to make or buy balancing cost and overall supply chain availability, resilience and flexibility. And investments in manufacturing in recent years have strengthened our competitive position by increasing our manufacturing capacity and by adding broader and newer capabilities.

Our Runcorn factory, with its high-volume, low-cost cabinetmaking capability, has always been an integral part of our manufacturing and logistics strategy. Our 3-year development program for Runcorn site is now underway and is proceeding as planned. In line with our long-term ambitions for the business, the program will give us at Runcorn more capacity, more flexibility, broader capability and lead to lower COGS than would otherwise have been the case.

And turning to our digital platform. We use digital to reinforce our model of strong local relationships between depots and their customers. We use it to raise brand awareness to support the business model with new ways and services -- ways to trade with us and to deliver productivity benefits and more leads to our depot teams and our customers.

In the first half, new registrations for our online account facilities, which provide efficiencies and benefits for customers and depot staff alike increased. New registrations totaled some 56,000. Around 62% of customers had an online account at the year-end, with 80% of trade users regularly looking at their individual and confidential prices. Customers with an online account have, on average, continued to trade with us more frequently and spent more than non-users. We saw high levels of engagement with our web platform and growth in our social media presence, which also stimulates interest in viewing our products and services online. And site visits totaled 11.3 million in the period.

Among kitchen specialists, we continue to have the highest number of fitted kitchen site visits in the U.K., and the time spent viewing pages and the number of pages viewed per visit were at consistently high levels. Across the leading social media channels, our follower base is at over 800,000, that's up 17%, with about 4.6 million engagements a month. We are seeing increased usage of our upgraded Click & Collect service for everyday products and new account management tools introduced last year is helping depots manage their relationships more efficiently and productively.

This year, our new depot pricing and margin tool, PAM, is operating in all U.K. depots. And it was designed in-house, and PAM makes depot pricing management easier and more effective. It provides comprehensive data for depot teams to make more informed pricing decisions with a higher degree of confidence and enables depots to access quickly the impact on margin of those price changes. Depot feedback has been very positive, and we see both more bespoke local pricing and improvements in depot margin on the product incorporated in the system.

And finally, international. Total sales -- sorry, total half 1 sales of our operations based in France increased following a significant year-on-year increase in half 1 last year. We now have in place an experienced leadership team adept at depot management in tough market conditions. The business has continued to respond positively to measures taken to improve existing depot sales performance.

In 2026, we continue to focus on both developing our depot teams capabilities, particularly account management, and actively managing our depot estate, including by closures and relocations where necessary. As we look to optimize the existing depot performance. As we guided last time, we anticipate closing up to six depots in sub-optimal locations later this year, having closed two such depots last year.

Alongside this, we're trialing a more compact version of our format. It is under half the average size of the current depots in France, has lower rental costs and the layout incorporates recent U.K. format innovations. In the first half, we opened one of these depots in France to the west of Paris. And in the second half, we are intending on opening another one, serving the city of Tours in the Loire Valley. Overall, we expect to end the year with around 60 depots trading.

Half 1 sales in the Republic of Ireland were well ahead of last year, and we are opening more depots there in 2026. The Irish market suits our differentiated model and one which sets us apart from the incumbents. We commenced trading in the Republic of Ireland in 2022 using a similar format location strategy to that in France with the local team supported by our U.K. infrastructure and our digital platform.

By the end of 2025, we had 16 depots trading, including nine clustered around Dublin and three serving Cork. In the first half of this year, we opened two more depots, which respectively serve the areas around Wexford and Athlone. And in the second half, we expect to open at least three more, which would increase the number of trading to 21 depots by the year-end.

So for 2026, we are well planned, including on our strategic initiatives as day-to-day, we deliver value to customers across all price points and product categories. We already have 23 kitchens in stock well ahead of peak autumn trading plus a very competitively priced paint-to-order kitchen offering and our lineup in other product categories is the best that we've had in my time at Howdens.

We have a program of Rooster promotions in place to keep Howdens at the front of the trade's mind, together with other price initiatives. And we continue to improve service and availability and increase functionality we offer online to the benefit of our depot customers and end users alike. During 2026, we plan to open around 25 depots in the U.K. and reformat around another 30 existing depots. We expect to end the year with around 80 depots trading in France, Belgium and the Republic of Ireland. And finally, in the second half, DIY Kitchens will contribute to the group's results for the first time, and we are looking forward to working with the team there.

Lastly, outlook. Whilst we have peak trading ahead of us, we're on track with our plans for the business, and our outlook for the full year is unchanged in what remains a challenging marketplace. We plan for the size of the U.K. kitchen market in 2026 to be level year-on-year, which in our view, remains the most likely outcome, and we are well prepared for the challenges and opportunities ahead.

We aim to retain a profitable balance between price and volume as we continue to maintain competitive pricing whilst aligning operating costs and work with suppliers to keep product and input costs controlled. We're confident that our business model enables us to address the opportunities in the market across changing conditions. And in summary, we're well placed to outperform our competitors in 2026 as we both continue to invest in our strategic initiatives and return a further GBP 100 million to shareholders through our latest buyback program. So thank you very much for listening. And Jackie and I will now take your questions.

[indiscernible] opportunity as we look forward?

Yes. I think TradeFest is the all-important period, of course, and you can't have a good year in Howdens without delivering TradeFest. So we've put a serious level of work into making sure the depots are in the right place. First thing is having the right product lineup for the period. And I think we are as well set as I can possibly think that we would be. We've got a brand-new cabinet. We've got 23 kitchen ranges. We've got a lot of day-to-day products. So I think the team has done really an exceptional job of lining up the product offering for the peak.

The second thing is making sure the teams are as incentivized as well as possible and understand the trading rhythm we need to hit as we go into it. So we've done this year a similar thing that we did last year. We did 10 regional boards. We completed them just at the back end of the first half. We went around the country. And they brought in, imagine, 100 depot managers in a room per region. And I would say the feedback is just as strong and the fighting spirit is strong as ever.

So I walked away from all of those sessions, very encouraged by the second half plans for TradeFest. It's also the second year that we're doing this event. And we would have taken some lessons out of last year to make it even better. So we brand it TradeFest, but it's better than a sale. And it struck a chord with our depot managers very well. We've actually branded it. We've registered the name TradeFest, and we're doing it again this year, and it's really focused on helping the builders sort of sell our products.

So it's absolutely into the core of the model of the builders really being successful through the event, and it celebrates sort of their work and them bringing the work, which is the most efficient thing that we can do. So you'll see our builders doing a lot in social media even more than last year.

From a stock availability point of view, we're in terrific place on it. I mean it's just the advantages of being so focused on vertical integration and all the work that we've done on our vertical integrated capabilities have meant that when we sit around as an exec and talk about what's missing -- we talk about what's missing, and there's very, very little missing in our entire product offering for peak. So we expect to run service levels through peak at sort of 99.98% all the way through.

And that's a key thing for delivering this peak that is -- can't be replicated by the competition because we're the only people with stock on the ground, able to get kitchens out before Christmas. So I feel we're as well set up as we possibly can when I look at sort of the lead indicators on it, and momentum in the business is enough there to do what we want to do for peak and deliver the guidance that we've got.

So having said that, the market is tough, but our teams are so able to fight. You wouldn't want to be up against -- competing against them. So they're well incentives -- the incentives look fantastic for the teams this year.

Then in terms of inflation, we are guiding an additional GBP 10 million of inflation this year. It's primarily as a result of the Middle East war. So we've seen cost price increases primarily around commodities, particularly raw materials, timber. So anything that's got a sort of energy fuel impact. So that's going to hit our cost of goods sold primarily. It's in our stock now. So it's already happening. It unwinds into the P&L in the second half of the year. We will look to offset all of that. So we've guided in line with expectations today. So there's a little bit more price coming through in the second half, but also productivity is a big part of how we offset inflation.

To your question on go forward, this is something we've been good at doing in the past. If you think about productivity, it's three areas. It's better buying and cost of goods sold. The buying team over the last few days have done a fantastic job, and they'll continue to do that going forward. The manufacturing teams are very good with cost efficiencies in the plant. So areas like reducing waste, better productivity on headcount. So that will continue.

And the third area that we're very focused on is in our operating costs. So that could be logistics where we -- every year, we see our logistics teams doing a good job on cost savings, better procurement, again, people savings. So something we've done well in the past and we'll continue to do well in the future. We will always look to offset our cost increases with productivity efficiencies.

I didn't realize it was me. Emily Biddulph from Barclays. I've got three, please. The first two are on DIY Kitchens. I just wondered if you could give us a sense of what you think the addressable market is for that business or how big do you think it could potentially be? Secondly, how does DIY Kitchens acquire customers? Obviously, the core business has a trade to sort of promote Howdens. But is there a sort of advertising expense we should bear in mind here or sort of something that might change in the group because of the existence of DIY?

And then thirdly, you obviously delivered 5.5% profit growth in what looks to be a flat market in H1. If we wanted to be really ambitious and sort of imagine that the U.K. market grows at some point, is there a list of sort of strategic initiatives that you have in the back pocket that you would like to be doing in a stronger market? Or are you doing things at the pace you'd like to be? And actually, if we think about incremental volume, we should look at that sort of dropping through to the bottom-line impact?

Well, I'll go with the third one first because I think that's exactly right. I think one of the things that we've been quite distinctive on here is pressing ahead with our strategic initiatives and investing well into the business to do all of the right things, whether it's manufacturing, revamping the depots, investing in digital, the stuff I've covered. And if the market got into that place, and we don't see it this year, but if the market got into that positive place, I think it looks extremely attractive actually for both businesses.

So I think we're extremely well placed when it comes back. And others who may have backed away from space, we've not. We've opened up more space. Those who may not have invested in manufacturing, but we've done the opposite, and we've invested extremely well in our manufacturing. And one of the big plays we've made and why we're incredibly confident in the Howdens' business model, it is making the investment into the Runcorn plant that gives us capacity to manufacture more cabinets for the future. That's a long-term play that we're very proud we're making. So I think all the metrics look incredibly attractive when the market turns a bit in our favor. And I don't think we need to do anything differently.

We've always spoken about the kitchen market being split into, but we talked about Howdens sort of addressing the whole market. But DIY clearly addresses a different type of customer to the Howdens customer. And as I've got into the business and understood it more than you do through a due diligence process, I think I'm absolutely bang on in what I thought, which was this is a sort of canny customer, if you like, who is not having bought their first kitchen, probably their second or third. They're confident about doing it. They want to do it themselves. They may have a builder there, and they're very sharp on price.

And that -- we know that DIY doesn't affect the Howdens business. If you take the two DIY showrooms in Witney and one in Yorkshire and you track what's happened to the depot performance around those showrooms, there's absolutely no impact. If anything, it's slightly positive because customers come to the area. So a third showroom will open up for DIY in Livingston, which is in between Edinburgh and Glasgow. That was due to be opened up in January next year. We bring a bit more capability to it all, and it will be pulled forward until the end of October this year, sort of the third.

One of the beautiful things I love about this profitable model is a lot of it is also being done through social media and sort of lower cost forms of communicating with customers. And DIY also, it's word of mouth. And a lot of it is on social media. It runs a very strong reputation with its customer base. Most of their work is done. They do pay a little bit on pay per click, but it's very efficient. Most of it is naturally -- around natural search. And I do not propose that we start spending more on that. So it's more of the same. The showrooms help, but I don't want a big network of loads of showrooms. I want a number of large destination showrooms that people are happy to drive a couple of hours to. So I would say no sort of change in the metrics there.

Priyal Woolf from Jefferies. Just two questions from me. You've obviously talked about the market backdrop being challenging. So just in that context, I wondered if you're seeing any signs of down trading to lower-priced kitchens and if there's some sort of mix effect we need to factor in over the next couple of months?

And then the second question, I do appreciate it's early days, but in terms of trends that you've seen against this sort of challenging backdrop, is there any discernible difference in terms of the levels of demand or the lead indicators between DIY Kitchens and your incumbent business?

I mean the lovely thing about how we've set up our kitchen model is we love cabinet volume. And from a margin point of view, our margins are pretty level, whether you're at opening mid or high price points in Howdens. So for us, it's important that we drive significant cabinet volume growth. I would sort of expect, but not really to -- any kind of overall numbers to affect the business. I would expect us to remain particularly strong in the mid-end, and opening price has always been very robust for us through all of this cycle and the better end has always been sort of brand-new business territory for the business.

So we progressed on all three in the first half. We had noticed a good pickup in the midrange, and I'd expect that to continue as we go into the second half. I think you see customers doing things like they want the solid surface, so they might trade down on the door, but the overall kitchen value is the same. They're just putting the emphasis in different places.

I think it's too early for me to comment on the DIY thing. I mean, I think from a demand point of view, we're very comfortable with what we have seen post the acquisition and the momentum of the business. But we got the keys 4 weeks ago. Julian Lee is in there doing a great job settling down the team and organizing how he wants organizing to get more volume out of the business. And I think it's been sort of a textbook handover from Alf and Clare to Julian, but also in our manufacturing operations, Julian has handed over to his number two, and that has been as smooth as it possibly could have been.

It's Charlie Campbell at Stifel. I've got a couple of questions, please, if I can. You referenced the best range ever. I just wondered if you could sort of show us your workings a bit behind that because that's an intriguing statement. And then secondly, I just wondered what the impact of PAM has been already? And how should we think of that going forward? Is that a tool that helps depot managers secure sales by reverse engineering to the right price? Or is it about kind of giving less away and discounting and going...

Yes, all of that actually. Yes. Look, I commented on our best range ever. I think what the team have done superbly this year is we've continued to move the Howdens offering of being a sort of slow follower maybe 8 years ago to being really on the front foot around product and how we test product in regions and then know for certain, when we launch something, how well it's going to sell. So our accuracy on forecasting of new ranges coming through is very good.

So we say it in the math. We know how much new innovation we've got. We measure our new product introductions as a percentage of sales. We love innovation because it keeps the margin strong as you've seen in the first half. And we've got gear that our depot teams can sell that nobody else has got in the market. And a good example of that would be the oak cabinet that we've launched.

And James Mackenzie, when he joined the business, had been working with the team and doing the rounds, and we've seen so much of it in the upstream, in the shows and with suppliers and with some competitors in Europe, we've decided just to go for the cabinet new color, and that's really a year ahead of when we plan to do it. So that's a big feature of something new that the depots will get accretive margin for because it's so fresh to the market.

And then the range, it's just a constant refinement. And I think we've advanced ourselves so much further than the rest of the market with the product range that's right for us, using the lessons of colors that we put in paint to order, that we know where they're safe options to go and put into the core range. There's two ways that we fuel our thinking into the core range, and one of them is find the gap, but the other is understanding what colors are working in paint to order, where you're not investing any stock, you're just investing in effectively paint colors and learning what to do there.

So I made that statement this year. I probably could have made it last year because I think we're constantly improving every year. The PAM tool primarily affects non-kitchen product and where we've grown quite a lot, our most actively traded product areas is the stuff behind the counter, everything to help the builder get his job done. And there are others who are very transparent in price around those areas and quite a lot of product categories for the teams to get around.

So we put PAM, which is a price and margin tool built on the lessons from our stock management tool, which we call TED. So PAM primarily does pricing on everything outside of kitchens, but does some elements of basic kitchens like sinks and taps. But the teams can quite easily see where the pricing is of that product with competitors, but also see it with immediate depots, and they can see that sort of price volume mix. So they go in and actively use it. It's important for a couple of reasons because customers can go online now in the confidential area and they can see their Howdens pricing. So it has to be right. It has to be right with the local depot.

And they can also jump on somebody else's website and find out what the price is. Very difficult to do in the kitchen, but on non-kitchen stuff it is. So it's been a very, very helpful tool for the depot managers. And I think it increases over the long term, real confidence in our pricing on non-kitchen product, and the results would show that it's working.

Two questions really. First, clearly, DIY Kitchens is a bit of a departure for Howdens and its DNA of not really acquiring things over the years. Has it raised any eyebrows within your existing workforce in terms of changes of direction or not? And the second question, the 1,000 U.K. depots, how is availability of the sites from here to there looking for you? And how much of this is about sort of genuinely fresh territory enabled by XDC versus infill? Just trying to get a sense because the incremental returns from the depots appear very high despite you sort of getting towards the 1,000.

Yes. Great questions. Look, the DIY Kitchens, I'll just be absolutely clear on this. It is not a change of direction for the Howdens business model. And when I went on the calls with all the depot teams, this is -- the sort of genuine feedback was they just felt pride amongst the teams that we've been able to buy this business and grow it out. Our teams see it as an entirely different business model. They know that what they do in Howdens is about -- we plan for the builder. We work in a triangle between the builder, the end consumer and our depot teams. We're there all the way through the project.

It's relationship-type business, and DIY is a transactional business. Howdens is trade only and DIY is online only. And never the two will meet, and I've given the teams the commitment that it will not be the same gear sold across both businesses, but it's an incremental opportunity. So we settled the teams down. There was no issue.

A couple of questions came back, and I said, I want you to forget about it, and that's what they've done. So when we did the full day regional boards, there was not one question from any one of the teams in any of the regional boards about DIY. We said you compete with them in the normal way that you would normally, and you compete with them because we win on service and we win on support to the builder customer and so on.

So I'm extremely comfortable that it is completely incremental and that it is a discrete thing and there is no change whatsoever to the Howdens business. So no eyebrows. Amongst the supply base, you would imagine a lot of eyebrows went up. One of them described it to me as sort of clever chess move and you haven't expected it and they sort of seen us maybe buying other types of businesses. But we've not bought anything.

I mean you could argue that the worktop business, but that's really sort of a make versus buy type decision. It is the first time we bought something, and I was very, very thoughtful about doing it for quite a long period of time, and I got to know Alf and Clare for about 5 years before we made the move. So it was just very conscious of what we were doing.

I love Howdens as a business. And my absolute focus is on growing the Howdens business. There's lots of runway for us to do that. And DIY, I think it's just so interesting because who knows what's going on down the road around AI, who knows that there will always be customers who want to be empowered to buy their own kitchen and there's customers there that no matter how good we are in Howdens, there will be kitchens sold there. Otherwise, we'd have the whole market. So I think there's a long way to grow out DIY.

And I'm conscious, I mean, I didn't answer your question, but I could see the DIY business being 10x the size it is at the minute, or maybe that's an exaggeration. It won't be in my lifetime, but it's got that feeling, when I go in there, of a very, very exciting opportunity and a fresh, innovative way of selling kitchens in the future that's both incremental and accretive. And I'm glad we've got it. // Your second question, Geoff, on the 1,000 depots. Look, it does get harder. It does get harder as time goes on. But we've got a really strong property team. And the -- a lot of the agents know that we're out looking for stuff. We're flexible in the type of space that we can take and it's better that we're in the area, even if it's sort of slightly sub-optimal. And we opened up our first one in Waterloo underneath the Arches, and we've managed to fit in there very well.

And I think it's a combination of driving the convenience measure for the builder because time is money and drive time is money. We can get the stock there with XDC and what we hold in balance between XDC and what's in stock. But quite a portion of the number is within London actually, where we've got around about 100 depots inside the M25, and it should be quite a lot more than that, but we just got to be very thoughtful on how we get there.

So it's really sort of inside the M25, driving convenience, some smaller depots and the infills outside in rural catchments. I mean we're very clear that 1,000 is about the number. And you probably will see our rate of openings slow over coming years because we will never compromise on quality. But last year, I called out that we might move from 30 down to 20, and then we ended up sort of doing 23. And this year, we're going to do 25. I think we've got a good lineup for next year actually. We're very confident we do a similar sort of number next year, too.

Rob Chantry at Berenberg. Three questions from me. So firstly, could you just talk about the changing shape of U.K. trading locations and how it impacts you? So you're doing well, others are struggling. Does that impact footfall in the areas? Does it create opportunities to go for a one-stop shop type approach? But how does the dynamics of trading estates work when everyone else is struggling?

Secondly, depot maturity, just limited to how you're thinking about it has changed in recent years. Is there a correlation with the larger depots continuing to grow, the midsized ones with 3, 4 years old, showing stronger growth? Once they're all in that same depot-like mix, how do they mature? How do you think about that? And then thirdly, I think historically, you've mentioned flooring. I think the fourth biggest in the U.K. Can you give us a quick update on strategy, manufacturing, distribution, standalone or integrated, exactly what the economics of flooring look like for Howdens?

I'd say on the first one, U.K. trading locations, they're busy. They're busy at the minute, and parking is often an issue. And I think trading estates in general have become busier with businesses like Screwfix and Toolstation, pulling customers online, who may not necessarily be always trade customers, but a right mix of customers end up going on to trading estates. And trading estates sometimes get hot and cold over a period of time.

We'll tend to move around six to right depots a year to make sure that they're in the right sort of place. We're always optimizing it, but they remain busy. And we tend -- because we started our journey quite earlier than others, we tend to be in more featured spots than others.

On depot maturity, I think the point I would probably raise is that we've always thought about a 7-year maturity in depots. But our biggest depot, which I always quote as being [ Davey ], our manager at Glasgow depot. He will clear the -- he tells me he will clear the GBP 10 million mark this year. And Davey has consistently done that, led the way every single time. He's an unbelievable manager. And that's sort of a figure that we probably never would have thought we would have hit on a per depot basis, but it leads the way for the others to get there.

And we've got a number of depots that are not too far behind that. So I think that challenges how -- is 7 years the right maturity because that depot in Glasgow has been open over 25 years, and it's still growing because the strategic initiatives support it. Great leadership supports it, great incentives, the relationship he's built with the trade customers all support it. And I don't think there's much more to say sort of on our maturity profile, except to sort of push it out over time.

Flooring, I don't know where we rank at the minute in sort of flooring, but it's grown particularly well this year. And we've done a combination of own brand, which is our Oake and Gray flooring brand that has done superbly well. And we've launched some new more premium brands into the range, supported by XDC. And we've refreshed all the displays across the estate in flooring. So we're growing very well, and I don't think the competitors are at this sort of story.

Clyde Lewis at Peel Hunt. I think I've got three, if I may, Andrew. You talked about a flat market for the kitchens in the U.K. this year. Is that on a volume or a value basis? That's the first one. Second one, probably following on from Rob's question, a little bit about flooring, but talking about the, I suppose, the non-kitchen revenue within the U.K., was that better or worse than that 3% figure that you've reported for the first half?

And the third one was probably around Runcorn and the investment there. I'm thinking, a, have the metrics and the numbers changed at all in terms of the spend and the returns, but also -- and I know you're pretty keen on keeping a clear demarcation between DIY Kitchens and Howdens, but the bit where it may overlap, certainly when I look at it, is on the manufacturing side. And I'm wondering whether certainly we're doing cabinets out of Runcorn, whether those cabinets can easily be directed into DIY Kitchens and speed up that whole return process.

Look, it's great to have capacity, isn't it, when you built it out ahead of time. I don't know is the answer to all of that. But the cabinet is different, and I will always keep the cabinet different. The panels are panels and they can be made anywhere. But I have no plans for that. DIY has had a very strong investment program. It makes to order rather than to stock, which is slightly different. But we are certainly -- we will have optionality, if you like, for that, and we'll work that out as we go forward and how well it grows.

We're also having interesting conversations with suppliers as well because a lot of the products are similar across the piece. So James is well placed to shake all that down. But we will have capacity, and there will be opportunities to optimize supply across the two, I suppose is what you're getting at.

Kitchens versus non-kitchens, there's not a lot in it, to be honest. In the first half, it's nicely balanced. We -- I am absolutely obsessed with customers coming in on a routine basis, and they might come in and buy joinery or flooring or whatever, and that gives us the opportunity to sell them kitchens. So decent balance between the two, and most of the other categories in good growth actually in the first half of the year, and I'd be worried if they weren't because you don't see the sort of frequency of customers. Do you want to do the one on the market?

On the market, yes, on a value basis, it's flat, flat year-on-year on a value basis, probably slightly down on a volume basis.

Probably slightly down.

Allison Sun from Bank of America. Just three questions from me. So first of all, do you feel any pressure from your competitors, maybe like Wickes, which we know they're probably having a small comeback story. Do you feel anything from their side?

No.

Number two -- I guess that's probably the answer. On the DIY Kitchens, because obviously, we feel very good about this deal. But did you see any potential challenges or difficulties when you do the integration? Anything you could think of? And lastly, do you have a number target for the showrooms for DIY Kitchens at all?

I've answered the first question. I don't -- every competitor bothers us every day. But I think we're so well ahead on product development, service, incentives with the teams. I don't worry about that. Challenges from DIY, I mean there's always -- I mean one of the things I think we've done really well over all of the years of Howdens has been focused. And we're focused on kitchen categories. So when I go and spend time with the DIY team, we talk kitchens and that's -- we're obsessed about panels and hinges and supply chain and matching the front and the back end.

It's not complicated to pick up, given what we know from Howdens. So if I had been worried about defocus, I'm not because it's separate. It's going to have its own leadership team. And I will never defocus myself out of Howdens.

But I see more -- way more opportunity than any challenge. But the obvious one is, does it defocus you from your core business? And I'm absolutely certain it does not. If anything, it will strengthen us because you look at similar problems from a different angle. And it's pretty thrifty on cost at DIY, and you take those challenges back to the core business, and there'll be opportunities there. Each of the supplier will get a challenge around it. We're buying similar machinery in Europe for DIY as we are for the U.K. So the -- I think the opportunity is really significant and is incremental and additive to the business.

From a showroom point of view, I think we'll feel our way forward. But what DIY has cleverly done is they've got this model where the customer does quite a lot of the work themselves. They place the order, take responsibility for the design and they get in a car and they drive a good distance to go and see good displays. And what they offer is fantastic.

If you ever get an opportunity to go up to Witney or York, you'll see the two largest showrooms in the U.K. But I don't see us building a whole lot of showrooms across the U.K. I would see us doing six or eight or 10 sort of territory. There's only Oxford down south at the minute. And then Scotland has been a very good market for DIY. So one up there is totally appropriate.

Ben Varrow of RBC. I'll do two, please. Just in terms of the midterm margin, just your thinking there. Obviously, you're putting in some new capacity DIY Kitchens in as well. So just your thinking around operating leverage within the business in the midterm. And then the second one is just in terms of France. Can you give a sense of the mix of depots have perhaps reached breakeven level and the change of travel there and what you're looking to see to accelerate the growth?

Yes. Look, Jackie and I are very focused on getting core Howdens back to the sort of 17% territory where we've been before when we had great volumes going through the factories in this business has operated up at 19% during the two big COVID years. So to the question earlier about when the market comes back and volumes really run through the business, it's about that. But we're doing a lot around cost, good clever margin management, and we can make progress back up as you've seen us growing profits ahead of sales in the first half. We want to do the same in the second half, and we'll be very challenging ourselves as we go into next year.

France, Jackie and I did a full review of the French business yesterday, and they are making good progress and our depot managers are incentivized in getting to breakeven. We have a number of depots, which we don't disclose, but a number of depots increasing their hurdle rate and getting over the breakeven point last year, and we expect a whole load more this year.

And we tidied up the -- we will, by the back end of this year, have tidied up the depots that we weren't confident would get to that place. But there's a lot to play for in the second half for France this year, and they're very well set up to do it. So we'll update more at the full year on that.

Zaim Beekawa of JPMorgan. Just a couple of questions on the wardrobes business. Can you remind us on the opportunity set at present? And I think you said you're focusing on the entry to mid. What would drive you to focus more on maybe a premium wardrobe range? And what would that do to the opportunity in that business?

We like our bedroom business. We make the vast majority of it. We've backed it into our kitchen range. And it's grown very nicely, and we've done it in a way that doesn't make the depots focus off kitchens and on to bedrooms because we're absolutely focused on selling kitchens. So it's been a very good incremental opportunity.

Howdens started off its kitchen business and opening price and then moved into the middle. And we've done that. People don't tend to spend the same amount of money in the bedroom as they do in a part of the home that they are happy to show off to people coming in. So we have pitched it as opening and mid-priced.

So I think that premium opportunity would be much longer term for us. I think we've hit it at exactly the right -- sort of addressable market is around about 1/5 of what the kitchen market is. So it represents that sort of opportunity for us. We've got 1/4 of the kitchen market. And could we ever get there in bedrooms? I don't know, but it's growing very well. You asked a second question, I can't remember. No, you didn't. Just one. And then the final question in front of me.

I'll keep it to two. Regarding the Magnet CVA, Wren hasn't been shy of chasing after customers there. Is there any sort of guidance sense you can give us any benefit to first half numbers in terms of either picking up Magnet customers, or anything of that nature that you can point to?

I don't know if I can really. I mean we've got a very long history with Magnet, obviously, because Matthew came out of Magnet, a lot of our earlier managers are from Magnet. There's still a lot of Magnet managers around. So we've got a very strong sense of what's going on in that business. And we've taken a number of the sites already, and we may take some more.

But when I sit in front of the depot managers, which we do 7 times a year in front of every depot manager, I never ever, ever hear Magnet as a concern. I don't even hear we've won business against Magnet. It's just sort of gone sort of thing. So there's nothing really I'd point to there at all.

And just as a lead indicator in the international business, can you give us a bit of a flavor or a sense of how the number of accounts is developing and how you're going about doing that, please?

Yes. We do it similar to the U.K. actually, that's our most successful way, is developers out on the road building accounts and building relationships with customers, and it's growing very well. So it takes time to show a customer how they can make money out of the Howdens offering. And our best depots in France do that incredibly well. So yes, we are growing the account base well.

We had one of our U.K. regional Managing Directors in France for 2 years. He's just returned, having handed over to a local who's reporting into Sebastian Krysiak. And Zoran would have been very, very strong on growing the account base and the conversion rates that are brought from that. So I think those processes are properly installed in the French business now.

Okay. Great. I was going to ask about the DIY Kitchens balance sheet, but I'll take that offline.

Okay. Great. I think that summarizes it. We're done. Thank you very much.

Good morning, and welcome to the Howdens call. 207-544-1375 Howdens call. I'll now hand over to Andrew Livingston. Please go ahead.

Good morning, everyone, and thank you for joining us on this call this morning. Earlier today, we announced that we've agreed to acquire the parent company of Ultima Furniture Systems Limited, which trades as DIY Kitchens for an enterprise value of GBP 390 million. DIY Kitchens is a high-quality, vertically integrated kitchen business, which sells kitchens exclusively online, principally to end users, particularly those looking to self-manage the purchase of their kitchen.

I'll explain why we've made this move, and then Jackie will take you through the financials. I'll make some closing remarks, and then we'll open the call for your questions. In DIY Kitchens, we're acquiring a highly profitable and growing enterprise with a proven business model quite distinct from our own trade-only full-service model through which we can access directly non-trade customers, thereby expanding the group's addressable customer base in the U.K. By way of background, I've known DIY Kitchens for some time, so we know the business well. The business was originally a manufacturer of kitchens supplying wholesale to independent retailers.

With further investment in manufacturing and distribution capabilities, the founders, Alf and Clare Ellis then successfully transitioned the business to one serving end users directly online. And in the last 5 years, the CAGR in sales has been 17%. The business has the founders' entrepreneurial spirit in it, which sits well alongside Howdens own strong entrepreneurial culture. We believe DIY Kitchens is the best example of a vertically integrated online kitchen business operating at scale in the U.K. As such, DIY Kitchens will operate as a stand-alone business in parallel to our much larger Howdens trade-only kitchen and joinery business.

In terms of size, it's an incremental acquisition for the group. On a pro forma basis, DIY Kitchens would have represented around 5% of group sales in 2025. The economics in terms of revenue growth potential, margin, earnings per share and cash generation are all highly accretive for the group. There are 3 principal reasons why we see the business as being a good strategic fit for Howdens. First, DIY Kitchens is a successful business, which gives us an additional route to market and expands the group's accessible customer base in the U.K. The business has grown rapidly by attracting an emerging customer type who is motivated to plan and design their own kitchen from the comfort of their own home with control over the ordering process.

The business achieves this through an online platform, which purchasers use to design and order kitchens and provides high-quality made-to-order product with low selling overheads. So for example, no brochures, but few large showrooms. DIY Kitchens has consistently delivered strong growth and impressive returns and is highly rated by its customers with an excellent Trustpilot score. Secondly, like Howdens, DIY Kitchens is positioned for growth. It is well invested, scalable and vertically integrated across its manufacturing and supply chain. While structured differently, both businesses have strong vertically integrated manufacturing and supply operations.

DIY Kitchens operates around short production runs made to order, whereas Howdens manufactures to stock predominantly long production runs. In-house manufactured product represents around 40% of the cost of goods sold, comparable to Howdens level of manufacturing and product quality is also very high. DIY Kitchens online-only proposition is currently supported by 2 large destination showrooms adjacent to regional distribution facilities where customers can make a trip to see impressive displays of product. A third showroom is under construction in Livingston in Scotland, and we see opportunities for further U.K. coverage with destination showrooms with broadly a 2-hour catchment.

And finally, following completion of the transaction, we believe the group will comprise of the 2 best business models in the U.K. kitchen industry. In recent years, both businesses have outperformed the kitchen market as a whole. The U.K. kitchen market is large and remains relatively fragmented. And with their distinctive and complementary business models, we see plenty of room for both Howdens Trade and DIY Kitchens to continue to grow. Both models have efficient cost bases, making them strong, robust, high growth and high-margin propositions. Their respective manufacturing operations contribute profit and value with the ability to make sourcing decisions, which balance lower product costs with overall supply chain availability, resilience and flexibility.

These businesses are complementary because of their disciplined focus on servicing distinct customer bases with very different requirements. Howdens offering is entirely dedicated to trade customers who build their own businesses off the back of our in-stock depot proposition and our overall net trade customer account base has continued to grow year-on-year. Builders trade with Howdens time and time again because they value the full service offering from stock to design. We offer customers confidential local pricing backed by credit terms that help them manage their cash flow and in-stock proposition in more than 890 locations across the U.K., and we see this continuing to rise to 1,000 in the coming years.

And we are staffed -- which are staffed by depot teams, including designers on hand to support throughout the planning and the installation process. None of this will change. DIY Kitchens will remain an online-only business focused on non-trade customers with a differentiated product range, which is made-to-order and displayed in a small number of destination showrooms nationwide over time. Many of you will know that I was the CEO of Screwfix for some time prior to joining Howdens. And a key reason for Screwfix's success in my time there was its freedom to operate independently. We will run DIY Kitchens and Howdens as distinct and separate businesses so that each model can continue to focus on its well-defined customer base.

And this will ensure that there are an unhindered growth opportunities for both businesses. While DIY will operate as a stand-alone business with its own infrastructure, we do see cost savings over time. These will be focused at least initially where there is a common approach to raw materials, sourcing and machinery. Finally, I would like to explain how DIY Kitchens will be managed within the group. DIY Kitchens leadership team will be led by Julian Lee as Managing Director. Julian has led Howdens manufacturing and logistics operations for the last 6 years and will continue to report to me in his new role. Julian also oversaw and led the development of our solid surface worktops business, including the Cornerstone acquisition of Sheridan's Fabrications, which we also purchased from an entrepreneur.

Howdens Work Surfaces or we now call it HWS is now one of the leading suppliers of solid work surfaces in the U.K. The founders, Alf and Clare Ellis, will retire from the business on the completion of the deal, but Alf will continue to provide advice and support as needed. Their son, Matt Ellis, who is pivotal in the launch and success of the online business, will become the digital -- the DIY Digital Marketing Director, and he will also be a key member of the leadership team of the business. Now I will hand you over to Jackie, who will take you through the numbers. Thanks, Jackie.

Thank you, Andrew, and good morning, everyone. I'll cover the key numbers, how we're funding the acquisition and what it means for capital allocation. The deal enterprise value is GBP 390 million on a cash and debt-free basis. The consideration is GBP 292.5 million of cash plus GBP 97.5 million of new Howdens Joinery Group plc shares issued to the vendors. The enterprise value represents a multiple of approximately 8.5x of the last 12 months EBITDA for the period ended 31 March 2026. The deal is subject to customary regulatory approvals, and we currently expect completion during the summer.

Financially, DIY Kitchens is a fast-growing, high-margin business with strong cash generation and attractive returns. In 2025, DIY Kitchens generated revenues of GBP 136 million and has achieved revenue growth of over 17% per year over the last 5 years. In 2025, EBIT was GBP 37 million at an impressive EBIT margin of 27%. Cash generation is very strong, supported by customer prepayment and the business does not offer consumer finance.

Turning now to the balance sheet, capital allocation and shareholder returns. The transaction includes DIY Kitchens freehold property assets valued at around GBP 55 million. On CapEx, DIY Kitchens is already well invested in manufacturing. We'll continue to invest where this supports growth and offers appropriate returns. The GBP 292.5 million cash consideration will be funded from existing cash balances and a new GBP 240 million bank facility. Howdens is a highly cash-generative business with a disciplined approach to capital allocations and DIY Kitchens is similarly cash generative. Following completion of the acquisition, the group will retain a robust balance sheet.

Howdens expects to remain in a net cash position post the transaction. And going forward, we expect our capital allocation priorities to remain unchanged. The group will continue to prioritize organic growth, maintain a progressive dividend policy, and we'll look to return surplus cash to shareholders while the group maintains a net cash position. The transaction doesn't change the group's existing dividend policy or impact the current GBP 100 million share buyback program to be completed in 2026.

We expect the acquisition to be immediately accretive to revenue, operating margin and EPS and to deliver returns on capital employed above our cost of capital from the outset. Finally, I wanted to confirm that Howdens will announce its half year results on the 23rd of July 2026. Year-to-date trading has continued to be in line with our expectations, and we remain on track with the outlook for 2026. Thanks, everyone. And with that, I'll hand you back to Andrew.

Thanks, Jackie. So let me summarize. Howdens has a strong organic growth model in which we will continue to invest through our strategic initiatives. DIY kitchens represents an attractive opportunity for us to access a new route to market. Like Howdens, it's invested well in manufacturing, strong vertical integration, high capture of margin in the value chain, scalable capabilities and a deep, well-embedded entrepreneurial culture.

It will sit very well alongside Howdens because it's considered a completely different proposition by both the trade and by the Howden staff. We will have 2 of the best business models in our industry, and I am very excited to be leading this group with such a significant opportunity in both of these businesses over the coming years. So now I'll hand you back to the operator for your questions. Thank you.

[Operator Instructions] Your first question comes from Christen Hjorth with Deutsche Bank.

Congratulations on getting the deal over the line. A couple of questions from me, if that's okay. So first of all, the DIY Kitchens growth over the last 5 years has clearly been impressive and almost double that of Howden. If you look forward to the next 5 years, do you expect DIY to continue to outperform on the top line quite significantly? And then the second one is just on the competitive landscape for DIY Kitchens specifically. Are there competitors out there with that same model? And if so, what do you sort of see as the key competitive advantages that DIY Kitchens has?

Thanks, Christian, for your questions. Look, I think what excites me so much and why I love this deal, we're buying a distinctive customer base here, and it's appealing to a different set of customers. Howdens has got moats around it, which we've talked about over the years. It's built for trade. We've got a growing customer base of 540,000. The model, which we are obsessed about is very strong. DIY has had growth. I mean Howdens growth has been 9% compounded over the last 5 years, which should be pretty much industry-leading. DIY is growing from a much smaller base, yes.

So 17% is -- and we'd be very comfortable with that sort of figure going forward because it's a very fresh new proposition and sort of makes me feel -- think about early Screwfix, and I used to run that business. And I know what it feels like. I'm not sort of commenting from the sidelines around that business, and I was in there when it got bought shortly after it got bought from B&Q. And entrepreneurial, fresh route to market, this is something new. So there isn't any real competitors doing the same sort of thing. You'll go and you'll find a worktop supplier online doing specific things.

But actually, customers going online from the comfort of their home for those customers who want to do it and get involved, build a kitchen plan, place an order or take a sample and have it delivered to their home, so they can see the color of the kitchen door in their home is a fresh new experience, and it's ticking the box for a number of customers. So we feel very comfortable that this is a complementary model. Even the depots that we have around the DIY showrooms show no impact on sales. If anything, it's the opposite because more customers are coming to the area. They go to the showrooms, they have a look around and they go and place their orders online.

DIY is very disciplined about its operating model. No home visits, you get involved, you design your kitchen, you have a place, you do it all yourself. Howdens is there to support the trade customer all the way through the journey. So it's relationships and the depot manager is important and the builders -- the customer, the builder builds his business off the back of our credit and our design service and our availability and all the work we've done on XDC and the biggest driver of convenience for the builders is the number of depots that we've got. So I think it's wide open for us to grow this business very well.

And it's hard for us to bring their propositions online. So I think this is a smart way for us to attack this online proposition, of course, online is growing. So given the strength of our business model and the opportunities to acquire additive stuff, I mean Jackie and I all the time get businesses across our desk. We see very, very -- we don't really see anything that's worth acquiring that's additive to our brilliant business model. But DIY is one of these businesses that is additive and it sits well and it's perceived and seen as something very different by our teams in the Howdens business. So yes, we feel there's a great pathway ahead of us here.

Your next question comes from Emily Biddulph Barclays.

I've got 2 as well, please. Do you have any sense of sort of what the market share is of this company amongst its sort of total addressable market or sort of how big the addressable market might be for this company? And I suppose related to that, do you have any sense of what proportion of customers visit 1 of the 2 showrooms and whether sort of to kind of give us a sense of the quantification of how much more of an opportunity there is if there are more showrooms rolled out, are sales sort of actually kind of concentrated around those showrooms at the moment despite it being an online business?

Thank you. That's very good. Look, it's a smaller business. It's about 5% of our revenue. So think about 1% or 2% market share. This is both small and separate to -- we think of the Howdens business being in the trade part of the GBP 6 billion kitchen market. This is the other side, something entirely different. So it's starting out in its journey on that side of the market. I think customers like to see product, but we've -- and they're prepared to drive for it. I think of customers being -- looking for something to do at weekends.

And certainly, I see and I've been in the DIY showrooms many times over weekends and of course, in our depots in the surrounding areas. And I think people like to touch and feel stuff. So there's a good proportion of customers who do want to go and touch it, but are very happy to go and place the order and do the ordering process as they go through it. All of this to learn. We've got all of this to learn about how we bring customers through the checkout, how we increase the conversion rate. And I'm skilled at doing that from Screwfix. James McKenzie who is our Commercial and Marketing Director, also came from Screwfix and ran Toolstation. So we've got the skills in our team to do a good job on this business and grow it nicely.

Your next question comes from Robert Chantry with Berenberg.

Just 3 questions from me. Firstly, can you just talk about the pricing dynamics of the 2 businesses in context given the different model, i.e., do you expect more customers to go and compare and contrast different pricing availability? Secondly, on manufacturing, I see it's well invested and kind of good in-house manufacturing. Do you see any opportunities to scale the different techniques that they have into the broader Howden model?

I imagine there's pretty different levels of automation, different levels of manufacturing skill set. And thirdly, just on financing costs, Jackie, I know you mentioned expect to be a net cash position post transaction, the RCF in place. Is there any guidance you can give on potential interest impact, any leases to think about, et cetera?

I'll do your first question first. The 2 businesses come from completely different places. So DIY was really servicing into the studio independent type business as its core business before it went to end customers, Howdens serving trade customers. And by the way, our pricing is set on Howdens, the sort of 540,000 prices set differently for each customer in Howdens that's the number of customers we've got. So they're not really comparable business models. When you're sitting with one of our designers and if a DIY quote is in front of them, it happens occasionally, but not very often.

There's -- Howdens is a full service model. It's home visited, it's designed, it's stocked. It carries financing for the builder or sort of credit for the builder in his account. And we think of DIY as something entirely different that the trades don't really want. So it's very, very separate from it. But DIY on its own is a price competer, and we will carry on doing that. So no change. 2 businesses run entirely differently. In terms of manufacturing, look, Howdens is -- and probably this is one of the reasons why we knew about this Alf and Clare retiring. We're very, very close to the kitchen industry. We are kitchen industry obsessed.

So we know everybody in Europe. We know everybody in the U.K. and I sort of discovered and heard about this thing and so of Alf and Clare got to know them. So the relationship has been built for some time because on an acquisition like this, the cultural fit is absolutely critical, particularly with Howdens with such a strong entrepreneurial culture having another business that's also sort of family feel very important. But Alf and Ellis is a fantastic manufacturing capable person, and he's a brilliant businessman, and he's built this fantastic business.

And he's invested wisely and he's invested ahead of time to ensure that the business has got future capacity. So he always have said to me, I've always grown out capacity and built machinery ahead of time before the business needed it. And that would be a very similar philosophy to us. But that business has a very different thing on manufacturing than we do. DIY make to order. But DIY's business, their manufacturing production line is their automated cabinet production line is probably one of the most modern cabinet production lines in Europe. And it's known to be among the supply base is the most interesting thing to watch.

So we will carry on bringing our skills on kitchens around supply chain and forecasting and optimizing distribution routes to customer, all the stuff that we're good at, we can bring to that business. And Julian is very, very well placed, Julian Lee being the MD, very, very well placed to bring those skills across. And we'll continue on with our developments in Howdens, where we're expanding Runcorn and we're investing into making another 1 million cabinets. So I think we're very well placed to own this business and do a good job with it. Jackie?

Yes. And then in terms of the questions on financing, firstly, there's no leases in the business. So we've purchased all the land buildings and property and equipment, so no leases. The facility is a 3-year facility. It's at SONIA plus a margin. I'd note that both Howdens and DIY are very cash-generative businesses. So we will expect to start paying down some of that debt as soon as we take it out. I'd also note that we'll -- we believe that we can pay down the debt and continue with our capital allocation. So we will return excess cash to shareholders as well.

So in terms of looking forward to next year, Rob, I'd be looking at an interest around about the sort of GBP 13 million for next year would be what I'd put in at this point.

Your next question comes from Geoff Lowery with Rothschild & Co.

It's. Two questions really. The first is, can you remind us how big you think the retail or consumer market is relative to the trade market at this point? I'm just really trying to access your observation about the increase in addressable market for you. And then the second question is more one for Jackie. When you referenced surplus cash, can you remind us or update us what that definition of surplus cash is at which point you sort of think about buybacks in over time?

Go with one first, Jackie.

Sure. So just in terms of surplus cash, pretty straightforward. It's the cash on our balance sheet less the debt facilities that we've got. And certainly, Geoff, what we've done is we've modeled that out looking forward and believe that we can continue to pay down that debt and then also to return excess cash to shareholders. So we can do both.

Yes, I think your question...

There's no sort of intra-year working capital adjustments or similar in that view of surplus cash.

No, no, there's not, no.

Yes. I mean, Geoff, broadly, we think about the market. Geoff, in your first question, we think of the market as a whole. Howdens has got about 540,000 trade customers. We think the market about GBP 6 billion. We think broadly half of it is retail. And this business that we're acquiring DIY Kitchens has got around about 1% to 2% of the total market. So lots to go at.

Your next question comes from Clyde Lewis with Peel Hunt.

A couple of questions, if I may. One, I suppose, around areas that Howdens are currently strong in or starting to grow, things like bedrooms, things like sort of overseas presence and I suppose the solid surface offering as well. Are those areas that you can transfer into DIY Kitchens and sort of take that business into, I suppose, a bigger market that they can serve in terms of the retail side of things?

Look, it's a good question. I think the immediate opportunity for DIY is in the U.K. It's a brand new, relatively brand-new proposition to the market. So there is -- it's online and it's kitchens, and that's where it will be for now. And I think as we take this business, put operational improvements into it and grow it out, there is so much for it to be done just as it is.

But some of these opportunities may be right for later on. But it's -- for now, it's kitchens, it's online, it's kitchen categories. And there's nothing changes in the Howdens strategy whatsoever.

Okay. Okay. But you wouldn't -- at this point, you wouldn't see the opportunities of taking DIY kitchens into, say, Ireland or France or into bedrooms at that point?

I think sticking to our knitting and there's just so much opportunity within the U.K. There's only 2 showrooms, for example. And I don't see -- I see a few big showrooms. I don't want a retail business with multiple showrooms, multiple displays. I want this business to be performing well online, but a few regional showrooms are important and think big cities and think U.K.

Okay. And the second I had was probably around the historic performance of the profit levels at DIY Kitchens. If we look at companies house, it's certainly stepped up in 2025 from sort of, I suppose, mid-20s levels in terms of millions of pounds. What was the sort of reason behind the step-up last year?

Yes. It's basically a slightly different perimeter. So we bought the business, including all the property. So if you look at the perimeter and Companies House, it had leasing costs in there. So that's the biggest driver. The second driver is clearly, as they continue to grow as with Howdens, there's a big drop-through through to the EBIT line. So that would be the second one. But it's mainly -- there's no lease costs in our numbers.

This concludes our question-and-answer session. I would now like to turn the conference back over to Andrew Livingston for any closing remarks.

Thank you very much for your questions. I just want to iterate that this is a complementary business opportunity. It's a completely different proposition to Howdens that Howdens is in great shape as we grow out our estate to 1,000, complete our refits, all our range developments and our absolute focus on the trade remains a complete focus for us. This is a new leg growth in our journey. I'm here 8 years. I think I'm extremely excited about this business.

I don't hold any nonexecs anywhere else because my focus is entirely on Howdens and now this acquisition. So a rare day for us really because you very seldom find a business of this quality that's additive to the group and fits in such a complementary way. So thank you very much for your support.

Good morning, everyone, and welcome to Howden's 2025 Results Presentation. So I'll begin by introducing our performance for the year. Jackie Callaway, our CFO, will then review our financial results for the period. And then I'll share my perspectives on our 2025 performance and our plans for this year and then we'll take your questions.

The business advanced on all fronts in as we anticipated a challenging U.K. marketplace. The results were at the top end of our expectations and we've made an encouraging start to 2026.

Group sales were up 4% year-on-year, with the business continuing to perform well in the final two periods of the year. In the U.K., we gained kitchen market share, which helped us mitigate a small single-digit decline in the overall market size. Our kitchen volumes rose which helped us consolidate the significant market share gains that we've made over the past 5 years or so with our longest established depots making a substantial contribution to the share gains that we've made over this period.

We delivered an industry-leading gross margin with gross profit up on last year, and we balanced recovery of cost rises with our commitment to providing competitive pricing for our customers.

Reported profit was 5% ahead of last year, increasing at a higher rate than sales. We progressed our strategic initiatives for the U.K. and total sales of our international operations increased significantly.

At the year-end, we had a total of 970 depots trading, including 891 in the U.K. The business delivered strong operating cash flow, and we maintained a robust balance sheet. This gives us flexibility to continue to invest in our growth plans for the business and provide shareholders with an increased total dividend for the year.

For 2026, we've also announced today a new GBP 100 million share buyback program. Our full year results demonstrate the strength of our local trade-only, in-stock model, a strong product lineup, high stock availability, industry-leading service levels and a very engaged team have all contributed to our performance which benefits from the ongoing investments in our strategic initiatives.

In the U.K., the number of customer accounts as at the year-end and the number of accounts trading during the year were similar to last year's record levels with customers and average spending more. So far this year, our performance has been in line with our expectations. And whilst it's early in the year, we are on track to meet current market expectations for 2026, what remains a competitive marketplace.

For 2026, our planning assumptions that the overall size of the kitchen market will be about level year-on-year following several years of decline. We are well prepared for the challenges and opportunities ahead with our customers who are typically self-employed. People are highly adept at winning business in all market conditions. And delivered by our highly entrepreneurial and well-incentivized depot teams, I believe, are service-orientated, trade-only, in-stock local model is the right one to deliver sustainable market share gains. Our model is hard to replicate, difficult to compete with, and we have initiatives in place to make it even more so.

In 2025, we believe the value of our principal U.K. markets totaled some GBP 11 billion. versus our U.K. sales of GBP 2.3 billion, which also includes the contribution from our fitted bedroom initiative, bedrooms being a significant market in its own right. Our markets remain relatively unconsolidated and there are significant long-term opportunities for us. We will invest in the business on this basis.

So I'm going to update you on our strategic initiatives, which are key to our longer-term development of the business after Jackie takes you through our financial results for the year.

So Jackie, thank you.

Thanks, Andrew, and good morning, everyone. I'm pleased to present Howden's financial results for 2025, and I'll begin by summarizing the key highlights. The business performed well against all financial metrics in a challenging marketplace. In the second half, we continued the positive trading momentum achieved in the first half and following our last trading update, the business continued to perform well in the final two periods of the year.

Group sales increased by 4.1% to GBP 2.4 billion. Gross margin was 110 basis points ahead of last year. We benefited from the price increase implemented at the start of the year and from effectively managing price and volume as we continue to take market share. We maintained our focus on productivity and delivered further sourcing and manufacturing efficiencies in the year.

Operating expenses were tightly controlled, and we delivered an EBIT margin of 14.7% with profit growth ahead of sales while continuing to invest in our strategic initiatives. Profit before tax is up 5.1% to GBP 345 million. The effective tax rate was 22.4%, down from 24% in 2024 as we refined the patent box claim.

And finally, we delivered an EPS growth of 8%, and this reflected the profit growth achieved in the year, a lower tax rate and the lower share count as a result of the share buyback program.

Now let's look at sales growth in a bit more detail. In challenging market conditions, we maintained a disciplined approach to pricing and volume through delivery of a differentiated business model by a highly entrepreneurial depot teams, we also gained share in a market we estimate fell by around 3%.

Overall, U.K. revenue increased by 3.8% to GBP 2.3 billion, was up 2.6% on a same depot basis. The price increase implemented at the start of the year had an impact of around 2%. And our international depots, revenue was EUR 99 million, 12% ahead of 2024 and 9% higher on a same depot basis.

In France, the new senior leadership team focused on strengthening depot capabilities. Our Irish depots have traded well since we entered the market 3 years ago, and we expect to expand the footprint further this year. Andrew will talk through these initiatives in more detail shortly.

Now turning to profit before tax. Starting from profit before tax of GBP 328 million in 2024. Gross profit was GBP 84 million higher. The price increase delivered a GBP 41 million benefit with volumes and mix contributing GBP 29 million and sourcing and manufacturing benefits a further GBP 14 million.

Kitchen volumes increased, and we grew our share of sales in each of the three price bands we follow as we continue to invest in new kitchens and associated kitchen products. We believe there are significant longer-term growth opportunities across all three price bands.

Our in-house manufacturing and strategic sourcing capabilities remain a key competitive advantage for us. We are progressing plans to develop the Runcorn site, which will increase capacity there by around 1 million rigid cabinets, supporting our longer-term ambition for the business while preserving the low-cost manufacturing advantage.

Total operating cost increases were held to GBP 68 million, balancing tight cost control with investment in our strategic initiatives. This disciplined approach supported an increase in EBIT margin and a profit before tax of GBP 345 million for the year.

Now let's look at operating costs in a bit more detail. Ongoing investment in our strategic initiatives was GBP 28 million in the year. This included the incremental costs of the new U.K. depots, which totaled GBP 12 million and included the cost of the 52 depots opened this year and in the prior year.

We invested a further GBP 13 million in other strategic initiatives, predominantly digital. We invested in our international businesses, for example, by expanding our presence in the Republic of Ireland. And our existing U.K. depots, additional costs of GBP 11 million related predominantly to volume increases, we also incurred GBP 11 million of additional labor costs arising from the government's changes to the employees, national insurance and the minimum wage, which came into effect last April.

And other costs, this mainly related to variable pay and incentives, which were higher this year given the strong trading performance and the actions we are taking to optimize the depot network in France. I would also highlight that we offset around GBP 27 million of inflationary cost increases with productivity and efficiency actions taken in the year.

In 2026, we expect continuing inflationary headwinds of around GBP 30 million in the total cost base, in areas such as commodities, labor and additional property costs. And as in previous years, we will offset these where practicable with further productivity and efficiency savings. We will also continue to invest in our strategic initiatives to fund future growth, and Andrew will take you through our plans for 2026, shortly.

Next, our cash flow. Cash generation was strong, and we ended the year with GBP 345 million of cash. In total, we invested around GBP 26 million in working capital in the year to support our growth. Capital expenditure for the year totaled GBP 125 million as planned before the GBP 31 million for the purchase of the Runcorn site.

Our normalized CapEx spend will continue to be around GBP 125 million a year and aside from maintenance CapEx, which is around GBP 30 million a year, within this total, there are three major investment categories that we are prioritizing to support our growth.

First, manufacturing. We continue to make investments in our U.K. manufacturing base to enhance productivity and increase capacity and broaden our capabilities.

Second, depot reformats and openings. Our updated format provides the best environment to do business with our trade customers, and we continue to see attractive investment returns when we convert a depot.

And finally, digital, we will continue to support our trade customers for upgrades to our digital capabilities to make them more productive and to raise brand awareness. We are also using technology to support new services and ways to trade while delivering productivity benefits to the depots.

Moving on to cash tax. We benefited from the prior year tax credit arising from our patent box claim. And looking forward into 2026, we expect cash tax to be around GBP 60 million, with an effective tax rate of around 23% to 24%.

And finally, you can see that in the year, we returned over GBP 216 million to shareholders through ordinary dividends and share buybacks, and we'd expect to have a similar approach in 2026.

Moving on to the pension scheme. Over the last 9 months, we have worked with the trustees to review the strategy of the defined pension scheme. The scheme is well funded with a surplus on an ongoing funding basis, meaning that, no contributions are currently payable by the company. The current funding arrangement is in place to the end of May 2027, while we undertake the next triannual valuation, which is due at the 31st of March this year.

We are now actively engaging with the trustee to manage and reduce pension risk over time through a collaborative joint working party framework. This will look to reduce and manage pension risk proactively in areas such as investment strategy, data and benefits and scheme funding.

Howdens is a strongly cash-generative business, and we have a robust balance sheet, which gives us the opportunity to invest in future growth as well as rewarding shareholders with attractive cash returns over a long period of time.

In total, we have generated GBP 3.8 billion in operating cash flows in the last 10 years. We've invested over GBP 900 million in the business. This high returning capital investment has been across both strategic organic growth initiatives and bolt-on opportunities like the investment in the solid work surfaces business 3 years ago, alongside our maintenance CapEx programs.

Howdens remains disciplined in the returns we achieved from our capital allocation and investment. This discipline is unchanged over many years and has driven our overall return on capital employed which in 2025 is a healthy 25% -- sorry, 23%, well ahead of our cost of capital. Over the same time frame, we've returned over GBP 1.5 billion to shareholders in dividends and buybacks. In 2025, we grew earnings per share by 8% as a result of our earnings growth, a lower tax rate and the buyback we completed in the year.

Now moving on to capital allocation. Our capital allocation policy is unchanged with the principles set out on the slide. We continue to operate within our clear capital allocation framework. And for several years, we have operated with a policy where year-end surplus cash defined as amounts in excess of GBP 250 million is returned to shareholders. This is unchanged and appropriate for Howdens despite the significant growth in the business over time. This still provides sufficient headroom to accommodate our seasonal working capital requirements, support CapEx into organic growth and ongoing investment into our strategic initiatives and opportunities whilst maintaining our strong balance sheet.

We also recognize the importance of the dividend and dividend growth to shareholders. The Board is recommending a final dividend for 2025 of 16.9p an increase of 3.7% and resulting in a total dividend of 21.9p per ordinary share. And the final dividend will be paid on the 22nd of May 2026.

Taking all of this into consideration and reflecting the group's continued strong financial position, the Board is also announcing today a new GBP 100 million share buyback program for 2026.

So to summarize, we have performed well this year in a challenging marketplace. Our trade model is different -- differentiated, and our strategy is well defined, and we are executing well. For 2026, our planning assumption is that the overall size of the U.K. kitchen market will be level year-on-year after several years of decline. We continue to be proactive in delivering productivity and efficiency savings to deliver profit growth and offset inflationary headwinds.

Our robust balance sheet and cash generation support our continued investment in the business. And we remain confident of delivering growth ahead of our markets while generating strong cash flow and attractive returns for shareholders. While it's early in the new financial year, we're on track to meet current market expectations for 2026 and what remains a competitive market.

Thank you, and I'll now hand back to Andrew.

Thank you, Jackie. As I mentioned earlier, we believe that our markets give us significant long-term growth opportunities. Our strategic initiatives are key to capitalizing on these. And I'm going to use those as a framework to review our 2025 performance and our plans for this year. They are based around our key -- the key features of our business model, such as industry-leading levels of service and convenience, trade value, product leadership, but they're all delivered by highly entrepreneurial teams who, in turn, build long-term relationships with local tradespeople.

So our initiatives are to evolve our depot network, to improve our range in supply management, to develop our digital capabilities and services and to expand our international operations.

So first, depot evolution. And high service levels, including local proximity and immediate availability are very important to our customers. And we continue to see profitable opportunities to open up depots. Overall, we have a line of sight to around 1,000 depots in the U.K. In 2025, we opened up 23 U.K. depots, including 18 in the two final periods with a total of 891 trading at the year-end. This year, we expect to open around 25 more depots, and we continue to take a highly disciplined approach to the location of our depots.

Our updated format enables us to provide the best working environment for our depot teams and to make productivity and space utilization gains in a cost-effective way. We will now show you a short video that takes you around our Stockport depot, which we opened last year, and whose layout is very typical of the latest situations of our formats. The kitchen displays show most of our kitchen families, including paint-to-order options and solid surface.

Our trade counter stocks many of our everyday products and provides a chance for a chat and a brew. Our open plan business area makes it easy for our trade customers to easily access advice from our teams. We have space for our designers to plan kitchens for trade customers and a full wall of our kitchen collection known in our depots as the Wall of Fame. And we have a new selection area for customers to view our kitchen door and work top combinations, including our solid surface proposition. And our presentation rooms are private and have high-definition screens to bring to life customers' kitchen choices in 3D. Our sales conversions here are extremely high.

Our restructured warehousing and racking is a vital Howdens USP and enables us to serve the trade with stock reliably and often instantly. The updated format has strengthened our competitive proposition and our program to convert older depots to this format is well advanced.

Last year, we completed a further 60 revamps, including nine relocations, taking the total so completed to 410. These principally comprise conversions of our larger and longest established depos.

Now this year, including relocations, we plan to convert another 45 depots. And by the end of this year, we'll have revamped around 68% of all depots, which opened in the old format, and we'll have around 77% of all U.K. depots trading in the updated one.

As I mentioned earlier, the latest iteration of the format has a separate area for customers to view kitchens, doors and worktop combinations. And over the next 2 years or so, we will also be making the minor layered modifications necessary to include this area in the depots that were prior to the 2025 refits.

Next, range and supply management. Investment in service, product and availability helps us develop long-term customer relationships and build competitive advantage. Sales of new products are a significant contributor to our performance. Sales of product introduced in 2025 and the prior 2 calendar years represent around 29% of U.K. product sales, with product launch in 2023 being the largest contributor.

Value for money is a constant feature of our purchaser's buying decisions, and we are committed to providing our customers with market-leading, easy-to-fit and fairly priced product. And given pressures on high sale budgets, price featured predominantly in 2025, and we expected to do so again this year. With an emphasis on value for money and choice at all price points, our offering is well positioned to take advantage of this.

Our kitchen NPI for 2026 makes more colors, styles and finishes available to more budgets, including at entry and mid-level price points. We are innovating in other long-established product categories and adding more colors and styles to our fitted bedroom offering launched 2 years ago. As we continue to invest in product innovation to capitalize on the significant growth opportunities we have, efficient management of our kitchen range is crucial to balancing customer choice and availability with our profitability.

Our rigid kitchen platform is shared across all our families, which helps us introduce new kitchen options at more price points cost effectively. And our stock management and replenishment enhancements, including our XDC network, enabled us to provide best availability on a broader offering at a lower cost. More efficient new product testing enables us to bring more proven new styles to market more quickly.

Our increased presence in the premium end market, which is where range innovations are usually made is also forming -- informing and accelerating our ranging decisions at other price points. Excluding paint-to-order, we have 24 new kitchens confirmed for 2026 as compared to 23 last year and 11 in the prior year. We will enter the second half with our entire offering of such kitchens organized into 11 families with a similar total count to last year.

In 2025, sales of our entry-level and mid-level kitchen families represented, respectively, the highest number of kitchens we sold and the most kitchen sales by value. Last year, we brought to market 13 new kitchens for our established entry and mid-level families and launched Frome in four colors, a new family whose styling updated that of our long-standing Chelford family. This year, we have 15 new kitchens for these families.

For our entry-level families are Heartland -- our traditional Heartland, we have five new kitchens in colors, which are popular elsewhere in our offering, including Greenwich, and Witney in porcelain and Allendale, shown there in Reed Green.

At mid-level, we have discontinued Chelford, and we will add six colors to our most modern and shaker range Frome, including Mist and Pebble.

Elsewhere, we've introduced some more emerging colors and finishes to our best-performing mid-level families, including Clerkenwell in Super Matt Mist and Halesworth in Ash Green.

We've upscaled our higher-priced kitchen portfolios in recent years, utilizing Howden's scale, supply and manufacturing capabilities to offer the bespoke look most associated with high street independents at competitive pricing.

Our offering now comprises four families including three shaker-style Timber families, which are closely marketed as Classic Timber Kitchens. In 2025, our Classic Timber Kitchen families performed particularly well with the paint-to-order options growing in popularity. The number of our Chilcomb and Elmbridge kitchen sold and paint-to-order colors, which are priced at the premium to stocked colors increased significantly in 2025.

This year, we are refreshing our paint-to-order pallet with four new colors with two of the leading paint colors becoming Chilcomb and Elmbridge stocked colors.

Last year, we extended the reach of our timber offering with the launch of a new family called Ilfracombe, an in-framed timber kitchen of classic design. Precision above Chilcomb and Elmbridge families, Ilfracombe is exclusively available in 24 paint-to-order colors.

Solid surface worktops, which are often but not exclusively associated with the sale of higher-priced kitchens continue to represent significant opportunities for the group. In recent years, we have increased the number of decors we offer in this service. And for this year, we've introduced clearer and simpler ranging and more delineated pricing to demonstrate the value we offer at all price points. Ahead of peak trading later this year, our total offering will comprise a similar number of options to last year with increased space available to display worktops in more of our depots.

We continue to upgrade our offering in other categories, including our own category, specifically own label brands, which complement the third-party branding product we sell. So our Lamona branding is one of the leading integrated appliance brands in the U.K. And for this year, we have a major refresh of our brands offering. We've modified the design, lowered the prices of a suite of high-volume products without compromising these products functionality.

Elsewhere, we've updated the design and specification of a number of high-priced products, including washing machines, fridge, freezers and cookers. Launched in 2023, our own label flooring brand, Oake & Gray now represents a substantial portion of the category sales, having introduced water-resistant laminates last year. New product for this year includes sustainably sourced engineered wood flooring with market-leading standing water resistance.

In Ironmongery, we launched our own label called Fuller & Forge. Fuller & Forge product has landed well and has significantly improved this offering in our category. For this year, we have new finishes and new designs, and we'll be adding new subcategories.

As well as being substantial businesses, Doors and Joinery remain a key footfall building product for us in our depots. Last year, we launched our more colors and bolder styles at all price points to our door lineup. A new product this year includes a new premium range of Howden branded solid engineered doors. In Joinery, we will continue to develop the subcategory extensions into wall paneling, stair parts and lost spaces that we initiated in 2025.

Fitted bedrooms were well ahead of the previous year. Bedrooms represent a growing source of incremental sales and profit and help us foster customer relationships. Installing fitted bedroom suits the skills of our customers who fit kitchens. And last year, a substantial portion of our total bedroom sales represented purchases either by new customers or by customers who bought from us relatively infrequently.

We developed our bedroom ranges in house, utilizing our existing design and supply infrastructure, and they have a high cabinetry content, which, of course, matches our manufacturing capabilities. In 2025 -- our 2025 offering comprised bedrooms in five leading family designs drawn from our kitchen portfolio, including new family Clerkenwell launched during the year. This year, we will continue to target entry and mid price points with five new bedrooms, including new colors for Bridgemere and Halesworth.

Our product offering is underpinned by our dedicated sourcing operations, which manufacture or source the right product in complex categories and distribute it efficiently across our depot network. Howdens is an in-stock business and the trade tell us that high levels of stock availability is one of the key reasons that they buy from us. The investment in our XDC network, which enables us to offer next day delivery service and other recent initiatives, including Daily Traders facilitate exceptional levels of service to our depots.

In 2025, deliveries totaled some 73 million pieces, and our service level from primary to our depots was at 99.98%. Now that is a world-class performance by any standard.

Our in-house manufacturing capability has a source of competitive advantage for us. And we always keep under review what we believe is best to make or buy by balancing cost and overall supply chain availability, resilience and flexibility. Recent investments in manufacturing have strengthened our competitive position by increasing our manufacturing capacity and by adding broader and new capabilities.

So our Runcorn factory with its high volume, low-cost making capability has always been an integral part of our manufacturing and logistics strategy. With planning permissions in place, our development program for Runcorn site is now underway. And at the end of last year, we also acquired the freehold of this site. We expect the works will take about 3 years to complete in line with our long-term ambitions for the business. And the program will give us at Runcorn more capacity, more flexibility and broader capabilities to deliver lower cost of goods sold than might otherwise have been the case.

Now turning to our digital platform, and we use digital to reinforce our model of strong local relationships between our depots and their customers. And we do this by raising brand awareness to support the business model with new services and ways to trade with us and to deliver productivity benefits and more leads into our depots and into our depot teams. Usage of our online account facilities, which provide efficient -- which provide efficiencies and benefits for our customers and depots alike has continued to increase.

New registrations have totaled some 59,000, around 61% of our customers had an online account at the year-end. Total users viewing our trade platform has increased by 45%, with around 80% of users regularly looking at their individual and confidential pricing.

Customers with online accounts have on average continue to trade more frequently and spend more than non-users. We generated high levels of engagement with our web platform and grew our social media presence, which also stimulates interest in viewing our products and services online.

Total visits totaled some -- site visits totaled some 24 million in the year. Amongst kitchen specialist, we continue to have the highest number of fitted kitchen site visits in the U.K. The time spent viewing pages and the number of sessions were consistently at high levels.

Across the leading social media channels, our follower base at around 720,000 was up 18%, and with around 6.8 million engagements in a month. Usage of our upgraded Click & Collect service for everyday products increased and the new depot account management tool introduced last year is helping depots manage their customer relationships more efficiently and more productively.

We have also recently introduced a new depot pricing and margin tool, which we call PAM, and its now operational in all our U.K. depots. We designed this in-house and PAM makes depot price management easier and more effective. It provides comprehensive data for depots to make more informed pricing decisions with a higher degree of confidence and enables depots to access quickly and see the impact that it has on their margin. Depot feedback has been very positive, and we are seeing both more bespoke local pricing and improvements in depot margins on products, which we incorporate in the system.

And finally, international. In 2025, year-on-year sales of our international operations based in France increased at a higher rate than in the previous 2 years. In tough market conditions, the business responded positively to the measures taken to improve existing depot sales performance.

We now have in place a highly experienced leadership team adept at depot management and have invested in enhancing offerings of footfall promoting products alongside a number of other initiatives.

In 2026, we will continue to build out our depot teams capabilities, particularly account management, and actively manage our depot estate, including by closures and relocations where necessary as we look to build on the progress that we've made there.

We are also trialing a more compact version of our format initially at a test depot in Reims in France, to the west of Paris. At around 500 square meters, this version is under half the average size of a current U.K. depot has a lower rental cost and the layout incorporates all the latest U.K. format innovations that you saw in the video earlier.

We expect to maintain the aggregate number of depots trading at around the current number as we actively manage our depot estate to optimize its performance.

Sales in the Republic of Ireland, we're well ahead of last year, and we will be opening more depots there in 2026. The Irish market suits our differentiated model and one which sets us apart from the competition there.

We opened for business in the Republic of Ireland in 2022, and we used a similar depot location strategy to that in France with the local team supported by our U.K. infrastructure and also our digital platform.

By the end of 2025, we had 16 depots trading, including nine clustered around Dublin, with three serving Cork. This year, we expect to open around five more depots, which would increase the number trading to 21 by the year-end.

So for 2026, we are well planned, including on our strategic initiatives. These are aimed at increasing our market share profitably as day-to-day, we deliver value to customers across all price points and product categories. We have 24 new kitchens in stock well ahead of peak autumn trading plus a very competitively priced paint-to-order kitchen offering. And overall, our lineup in all product categories is the best that we've had in my time at Howdens.

We have a program of Rooster promotions in place to keep Howdens at the front of the trades minds together with other price initiatives. We will continue to improve service and availability and increase the range of services and functionality we offer online to the benefit of our depot teams, customers and end users alike.

During 2026, we plan to open around 25 depots in the U.K. and refurbish around another 45 existing depots to the updated format. In total, we expect to end the year with around 85 depots trading in the Republic of Ireland, France and Belgium together.

So lastly, before we take questions, outlook. So far this year, our performance has been in line with our expectations. And whilst it's early in our financial year, we are on track to meet current market expectations for 2026 in what remains a competitive marketplace.

We are planning for the size of the kitchen mark to be level year-on-year following several years of decline, and we are well prepared for challenges and opportunities ahead. We aim to retain a profitable balance between price and volume as we continue to maintain competitive pricing whilst aligning operating costs and working with suppliers to keep product and input costs controlled. We are confident that our business model is the right one to address the opportunities of our markets.

And in summary, we're well placed to outperform our competitors again in 2026 as we both continue to invest in our strategic initiatives and return GBP 100 million to shareholders through the new buyback program that we've announced today.

So thank you very much for listening to me and to Jackie, and we will now both take your questions.

Allison Sun, from Bank of America. Congratulations. It's very good results. Two questions from my side. So first is what makes you confident that 2026 overall kitchen market will be flattish instead of another decline? And second is, can you give us a bit more color in terms of the sales rate for P12, P13 last year and year-to-date?

Yes. We do a really incredible job in our business of listening to our depot managers and we highly value our day-to-day trading and the rhythm that we feel out of that comes a lot from our meeting with depot managers. And I go to -- we have 70 regional boards where we have about 90 managers coming to meetings, that happen 70 times a year. I get to 92% of those meetings this year with Austin, who sat with us today.

So you feel it. You can see the numbers online. You can feel the rhythm of the business. Last Tuesday, Austin, and I had some of our top managers to dinner in London. They come from different parts of the U.K. and Austin, I wanted to talk about a number of issues in front. All of them are feeling pretty good about the market. They say it's tough. They say it's competitive. There's no doubt, we're out fighting. And the retailers who go out with their false sales in my mind of establishing prices in December and giving you a half-price dishwasher and interest-free and all that nonsense. That's what we're fighting against at the minute, but we are making good progress against it all.

And I would say our feeling and our knowledge of the market would lead us to believe that we've got a decent year from a market perspective in us. Things like interest rates moving down and we would, of course, help. Do we feel that on a day-to-day basis? I don't know. But I think a combination of our initiatives, the product that we're landing this year and I have not chosen to show you all the product we've got coming this year because I just feel it's too sensitive now to be sharing in this forum to the market.

So what James McKenzie has done and brought to this business is brilliant. We've got so much product coming through in the second half of this year, and it will -- I think it's sensational what's happening.

So I think it's a combination of the market is going to be a bit better. We are so well placed to take more of it. Look, the back end of the year was good. There were different days of trading. We tend to trade pretty well towards the back end of the year, because we were the only guys in time with stock on the ground. And if somebody wants to get a job done pre-Christmas, they come to us.

And so we have a sort of rhythm in our business where we closed out our accounts. We've done Trade Fest, which was a great success for a new sort of branded proposition of our peak trading, honoring the trades and supporting the trades, great Trade Fest, delivered it all out, closed out the year, get the price increase prepared for, bedded in, in January and then come out fighting in January. And all of that, we would say it's gone very well to plan.

So not really going to comment on individual figures. We used to give out periods one and two at these events. And actually, if you look at it, it doesn't give you any indication as to whether the year is going to be good or bad, but we're just saying we're comfortable right now.

Aynsley Lammin from Investec. Just two for me, please. Maybe just elaborating on the kind of early trade in terms of timing and scale of price rises you expect this year? And within the 2.6% same depot sales last year, how much of that was price?

And then secondly, I guess just coming back again a bit more on the market share. You've obviously outperformed the market for, I think you said the market was down 3% last year, do you expect to continue to grow market share as much as you have been over the last couple of years in '26?

Yes. Look, we've probably become more and more sophisticated in our price increases as we've put them in and mentioned the PAM tool, which is mostly outside of kitchens where the depot managers will be flexing more prices as they go through the year, you'll see us do more dynamic prices as more and more customers go online, see their confidential pricing. But we want them to see pricing that our managers are completely comfortable with on a local level, and we've been making progress on that side.

On kitchens, we typically go out with the sort of 4%. We hope to retain about 2% of it type of thing, but it's too early to say that we've done that at this point in the year, given the depots are out fighting in the market. So -- but we're pleased with how that's all sort of laying out in terms of the like-for-like for last year.

I think you can read a sensible mix between half price, half volume. I think that's what we are pleased about what happened last year. I would continue to say that the market this year will be competitive, there's no doubt. We love the scrap.

And our customers are so well placed because they're running their own businesses. And when the market is tough, our customers go out and win the business, there's more at stake for them. And the depots that really perform like the depot managers, that Austin and I had in the room on Tuesday night, they're incredibly close relationships with their customers. It's like here, it is like -- and people say they know their customers in the business. We know our customers and our business. And when I say we know them, they really are very close to their customer base.

And one of the depots had 1,600 customers there. One had 800 customers there. The depot with 800 customers happens to be our highest-performing depot in the whole estate. And they don't change and they come back and they're regular and they just spend more and more with them.

So I would say the proposition is well placed with what we've got from a sort of a product point of view. We believe interest rates, I think, I say that, I'm not leaning on that as a thing for this year, but this is self-help, and it's the model really working incredibly well with the initiatives and our very strong day-to-day trading.

The thing I would add to it also for last year, people and our teams, I think they feel well. Morale in the business is high. And people have had a good taste of making money. And we don't turn up for the dental plan in this business. We turn up to grow profitable volume and I'm excited to see our depots earning well with the opportunity to earn even more in the coming years. They're a formidable bunch.

Christen Hjorth from Deutsche Bank. Two for me. First one, just for Jackie. So your first full year will be in 2026. Just an idea of the sort of areas that you'll be looking to focus on, is relatively new to the business. And the second one, just for Andrew. You point there's a lot more to go for in terms of strategic growth. I mean, how should we think about that? Is that sort of leveraging the investment that you've done to date in XDC and range, et cetera? Or are there more new areas to invest in to drive growth? That's the two.

Do you want me to start?

Yes, let me make a start. So look, it's been -- it's 9 months here at Howden's. It's been an absolutely fantastic first 9 months. It's an amazing business. And you don't really know till you get in. Having got in, it's well invested, very well invested. We've invested through what has been a difficult cycle, I think, in the industry. We're well set up for growth going forward. And we've got highly motivation teams to support us.

So from a -- is there things that I think I need to come in and massively fix, I think the answer to that is no. Because the business is well placed. There's a few areas that I am focusing on. I think pensions would be a good example of one that we talked about. I think there's some good opportunities around our pension scheme and how we might derisk it. So that would be an area. And I think it's around just within finance is just driving the finance team to be a good business partners to the business and to support what we're doing strategically. Those would probably be my two key areas.

And in answer to your second question, I think one of the things that we've got really right here is actually our strategic plan, which we call raised ambition internally is well understood right up and down the organization. And we tie together our business design with trusted trade relationships right at the center, and we constantly think about product innovation at value and making sure it's really convenient for customers to buy.

But then, of course, we're always developing new things. You'll see in our depot format, we're moving on the iterations. I'll never let this get as bad as it was when I sort of turned up. The depots were retired, and I don't think they did represent the right environment for us to do business with our customers.

And I remember my first presentation, Geoff Lowery gave me a knock and said, sort of, isn't it about time? And that has been a very, very successful program. We continue to do that and take lessons into France and just think about sizing as well to make them more profitable quickly.

From a ranging point of view, there is always more you can do, and we are very keen to stay on the front foot of a high proportion of innovation brought in as a big portion. So we measure it. We're incentivized on it, and the teams are incentivized it from bonus and LTIP point of view. So we do it because it's the right thing. It drives interest for customers. It drives margin accretion. It helps us deal with old stock. So we are obsessive. We spend an extraordinary amount of time on ranging. We're very good at testing it.

And I say these things because we're a kitchen and a joinery business. And we think in our heads about joinery driving footfall, joinery being the place where customers start working, they do flooring, they do doors, they do skirting, they do wall paneling and then they start creeping into doing kitchens. And we've got to keep on getting people into doing these trades. And there is a bit of a thing here about AI is going to change jobs and markets and so on. AI is not yet fitting kitchens in my mind. So we are keen on doing a lot of great work about how you build your business.

We've got to build a business builder program on in Howdens at the minute where we want to encourage people to go and start their own businesses in this trade space, and you can make a fantastic living out of the fit and out of the product on margin.

We feel we're comfortable with the categories. And each one of those categories, we feel we can grow in. So we're only 24% of the kitchen market by value. 75% of the market that we're not having right now, we've got a significant opportunity. And I think we're upsetting our competitors as we progress forward with that. And out there, you've got a number of competitors who are either clearing what they're doing and they're lashing out on price or they're trying to make it work and you've got some people under new ownership. And just chasing down a price rate is not the way to win in this market.

I'm also excited about what we're doing digitally and in preparation for the future, and people will think about how they design and plan and do thing -- different things on kitchens in the future.

And then I suppose the final part of it is the international piece of the business, and we are making progress in France, and I'm excited about the work that we've been doing on the estate there. And we've got two divisions that are flying. We had 1/3 of the depots that performed incredibly well there last year. Fortunately, we've got a 1/3 that need work. So we adjusted some of them and we're going through manager-by-manager and under SEB's leadership, we will get to a good place.

And Ireland, we've gone in. We don't offer trade credit accounts in Ireland interestingly. We just have gone in and done cash. It's not held us back in any way because the proposition is so fresh to the market and where it gets right. So I was explaining to the teams I've been down to Wexford to see the opening of our Wexford depot, right, the most beautiful plum site right in the middle of Wexford, and we will dominate the market.

The depot only just opened. It had 150 accounts already opened. It opened three when I was stood there. The manager and the team were exceptional. So we're really making a difference and understanding more and more how this model lands well because we're able to give new depot managers to our business tools and kits that help them run the business a bit more that we may not have been able to do before. So they get daily traders and they get a better stock management system, and they can do livestock. They're supported with online activity. They've got PAM now. They're well supported from an availability point of view. And I think we've become better and better at doing that.

And I think overall in the business, we've become strong at sort of pairing up, used to feel like a sort of supply and a trade division that feels very much like one business where we think right up and down. And even in France, Seb sits on the exec, he's part of the team. He -- we've even done a thing where we're twinning depots in France with U.K. depots and the way you sort of towns are twin. We're doing that. So U.K. manager, will work with a French manager plus an interpreter and build a relationship together. So a bit of a long answer, apologies.

Ben Varrow from RBC. I'll do two as well, please. First one on the market share, in the U.K. Could you provide some more detail on how that's developing at the different price points? And the second question is building on the France topic. What do you need to see there to start accelerating the depot rollout again?

Yes. I think one of the things on the market share and you're right on price points because sometimes you think of families as you go up and down the architecture and what is brilliant about our offering is it all sits on a common carcass platform. So it's a bit like the chassis of a car business, and you can move your way up and down. And if you want to hit your price point by putting a lower-priced door standard carcass and then invest in the solid surface work surface. That might be what you want to do.

We've seen growth at all price points. We've seen growth at opening price points all the way through difficult times because we're sort of untouchable down at that bottom end. Many of our kitchens will not even make it into customers' homes, because you'll find them in universities and council houses and whether it's genuine churn. And we brought some innovation at opening price.

Mid-price, we've grown. It's been tougher because everybody is at that mid-price thing and some people throw on credit, consumer credit and that type of thing. But we have stayed ahead by innovating and being faster than others to market and bringing things like metallics in into some ranges that might be sort of needing that kind of innovation. And the best end of the market for us has been a combination of just beautifully styled product that I think is better quality than the independents.

You'd expect me to have a Howden's kitchen, but it's what I've put in my house, the paint-to-order offering is just beautiful. And with a solid surface, good lighting, walk to any one of the independents around where I live in London, and I'm thinking it ain't as good as what I've put in my home.

And I think more and more people are discovering that do I go to an independent and I spend GBP 60,000, GBP 80,000 or do I go to Howden's, I've got a really strong relationship with my builder, and I'm doing it for considerably less. And I think you'll just see us continue to grow in that space of the market, and you'll see us doing work like this that just makes people reassess the brand and people sniff at value.

So we've done well at all price points. And we think we wouldn't particularly pull out one over another. We're just pleased with how we're doing. What do we want to see in France? I want to see more consistent delivery across all of the regions and we're very clear with that. More depots in profit. And we've got and had to put some fixed cost in France that will only be covered when the depots gets to -- the depot estate gets to a certain level of turnover. But we're pleased with how it's progressing. And we've made some choices about depots that perhaps we opened too quickly post-COVID, when we were growing very, very fast. And we got all our eyes with attention on this new smaller format that we're doing there. But I'm very pleased with the team and the level of energy in that business is fantastic. Jackie and I went over to do their year-end celebration, and it was electric. Yes.

Shane Carberry from Goodbody. Just two for me. Firstly, you've mentioned a couple of times the competitive markets. Could you just expand on that a little bit more? Is it the pricing point that you made earlier? Or is there some kind of shift in industry dynamics we should be aware of?

And then second, just kind of a longer-term one. When I think about this business in kind of 5 years' time and I think about the mix of products obviously doing a lot more in the bedrooms, doors, other joinery components. How big a portion of the pie could that be going forward?

Yes. I think when we say competitive market, we think about -- I suppose we think about price and we think about availability of product and we think about product innovation.

And if I split it down like that and I think about product innovation, nobody is anywhere near us from a product point of view. And I think 8 years ago, when I turned up in the business, I think people were ahead of us. And what we've done with innovation and find the gap and testing products and bringing more products to market, we're leading. We're not following at all.

And with that and with our availability, the combination of those two, it's very, very tough combination to fight against. But of course, if you've got people trying to get any kind of volume to put over their fixed costs, they're going to come out fighting on. January is the time. It's a very, very difficult period for a retailer. They don't have a bit of success in January. It's a long, long journey up until the summer for them.

So I say competitive in that context. But when we think of our depot managers, Austin's language is no kitchen left behind. And we're very, very clear about that.

I think if you think forward to this business, we're pretty good at sticking to our knitting. And we're pretty good at realizing the customer first and in our case, trade customer, trade customer all the way. And the stronger you are with your trade relationships, the stronger the business will become. They do well, we do well, and we appreciate entrepreneurialism deeply. We appreciate it in the depots, and we appreciate it amongst our supply base as well, those who come first to market.

We -- James has got a suppliers conference in about a month, and that will be a big topic for all of us to talk about. So I think the business will always be kitchen-centric, kitchen dominant. And I think you'll see innovation and new ways of shopping online and AI and scanning the room with your phone to help develop plans. But we see these as opportunities to help our design consultants or help customers get an image of where they want to go to, but we think it's important that we keep going with our business model.

Charlie Campbell at Stifel. I've got sort of two. The first one was on the efficiency gains. So sort of GBP 41 million in the year, GBP 14 million of that is from suppliers. Just does that not get harder and harder as the more to get out of that bucket? The GBP 27 million from kind of manufacturing efficiency, does that get more difficult as you're moving towards the new Runcorn?

And then the other question, just want to detail really, there's a GBP 6 million sort of exceptional around France, is that the end of that? Or does that kind of run on for a bit more as you further kind of arrange the branches?

So let me take the -- both of those. The efficiency gains, we've had a good result last year, to say GBP 14 million and cost of goods sold and GBP 27 million in OpEX. I think as we go into the budget, we see that there were inflationary headwinds coming again this year. We've guided that at around GBP 30 million, and it's across a number of areas, a little bit of timber inflation, a little bit of -- we see people inflation and also some property inflation, particularly around London rents. We will always look to offset inflation with efficiency projects. And I think one of the things that positive with Howden's has got a very strong muscle in this space. And it's one that we already have a track on the costs, and we already have all the projects that -- a lot of the projects identified.

So I feel confident that we can make a good dent in the inflationary amount again this year. And it's across multiple projects. I look to Julian here. So across manufacturing, it will be things like waste reduction, more efficient use of labor, good examples across logistics, it could be thinking about how we can optimize deliveries out to depots. It's another area that's a big project for this year. So I think we've got good confidence that we'll certainly dent a lot of that inflationary pressure this year.

And then on the cost for the French depots that we were looking to close over the next 2 years. It's a GBP 6 million charge in OpEx, and we don't see any further any further amount coming through at this point.

Ami Galla from Citi. A couple of questions from me. The first one was just understanding the bundles that typically a customer takes in. Can you talk about some of the attachment rates of flooring currently? And is this scope to penetrate that further?

The second question was on the pricing model that you are talking about today. What sort of information do you think does the depot manager now have it handy, which you previously did not have? I mean, just understanding more in detail as to what is different today with the model that we have in place?

And the last question was just on the maturity of the existing network in the U.K. Often, you've talked about the potential of the younger branches to kind of come up to the mature level. Can you give us the range as we sit here today of what the mature U.K. depot looks like? And where is the opportunity as we think over the next couple of years?

Yes. I'm sort of rethinking what maturity is for our business. Because when I wrapped up here, people said, they all mature in 7 years, then we thought of all these initiatives that we've brought into the business, like solid work servicing better kitchens, you grow your account base, we've been more efficient in the warehouse.

I was telling Matthew Ingle about our best depot there last year and where it had got to, and he nearly fell off his chair because it was about twice the level that he's seen before. And he offered the manager, if he hits his number here of GBP 10 million this year, he's offering a case of champagne, which he is very thoughtful about.

So I think we've just got such a long way to go even at our first depot hitting a big milestone like that. And so I don't know where the top end of maturity is. We've got a lot of work. If you think of the range between sort of GBP 10 million down to a depot at GBP 1 million, you've got a wide range there. And a lot of it's down to the capabilities of the manager and making sure the manager is empowered to develop the local relationships.

Of course, there's area and all the rest, but one of our depots we talk a bit about in Great Yarmouth is a very big job in our peak trading period. It's his sort of thing that he does each year. Half of his catchment in the sea, but he's the biggest depot.

So I would say we've just got really significant opportunity. And even when this business runs out of space and depots and we hit the 1,000, we will still grow and the like-for-like will still grow because we see so many opportunities in that.

Your question about the pricing model is a good one, because our range count has grown, given XDC -- and we put in XDC to make sure that product is available, and we've become very clear with Richie's leadership from supply chain about what's right to hold in stock in a depot and what's right not to hold in stock in a depot, because it might have high value, it might create a long discontinued problem later on.

So we've -- our shape of our stock in our depot is brilliant. And we gave the depots tools to develop that, and we call the system TED. Those of you who have been around some of our visits and depots, we often demonstrate it.

And then through meetings that I've taken with some of our managers, some of the managers then said, well, can we not use the same sort of thinking where we can look by SKU, balance it out and bring the same thinking into pricing, and we went back and built PAM. And what it gives our depot managers is understanding of where their price volume mix per SKU, per range, sort it all out and they can see where they're at versus their region. And then we feed in local pricing data. And it gives them real confidence that they're not only too cheap on some stuff or they're not too expensive on some stuff.

When we've got promotions going in that we do from a group from a sort of Rooster point of view, they can press a button and accept them. They're going to override them and not do it. All of this is to empower our depot managers not take power away from them because it's our managers operating locally. But it's using tech to make sure they're better enabled to make the right pricing decisions for customers and confidence levels go up with it as well.

Hopefully, that explains that. You did ask about flooring and attachment rates. We've got loads of room. We're only fourth in the U.K. on flooring. We're #1 in kitchens. We're #1 in doors. We've done some great work on own brand and own ranges. It's a priority for Austin to sell more flooring this year. Our attachment rate is not bad with kitchens, but there's lots more to do.

Geoff Lowery, Rothschild & Co Redburn. A question really around your supply business. If you had to rank what it really does for you across those buckets of product exclusivity, flexibility, resilience, sheer cost advantage, what would that ranking really look like?

And I guess the second question is you've obviously invested considerable amounts in that back-end infrastructure and transformed this in a wonderfully positive way. But we haven't really seen it at this scale, at this efficiency in an upmarket. So in a theoretical scenario where your volumes were plus 20%, say, would we see a meaningful leverage of a fixed cost component there? Different issue what you did with it, but the maths of that, would it be a kicker on your margin?

Yes. I think when I was looking at from Howdens from the outside, and I was running Screwfix at the time I was going around all the U.K. depots, I remember in the conversation with the guy that I taken over running Screwfix from and he said, businesses often have strengths. And it's clear to me that Howden's strength is in its manufacturing capability because you've got some incredible front-end implementation in the depots.

But the strength -- I think the big strength of this model is our vertical integration, our supply, our exclusivity, the cost advantage it gives us, our nimbleness around us, our ability to keep raw materials untouched and then flex in. We do things that I have never seen other businesses be able to do because of our agility. And that's at scale on big product, but also when we go and do a testing, a small testing thing, we've got -- James has got in his capabilities, a small batch production unit.

And the amount of work that batch production unit does for us around building out extra doors, flexing up and flexing down, making small batches that we can go and test in markets. It gives us an agility of [ Azara. ] And I think there is -- it gives us fundamental lower cost base where we can take higher margins in the market.

If -- I think we probably demonstrated our strength when we came out of COVID and we were able to flex up so quickly, and we hardly missed a beat. I mean, our service levels weren't at 99.98%, but they weren't very far off even though volumes dramatically lifted. And you saw the business started making 20% on sales. So it's a cash machine when you push volume through it.

I mean, there isn't anybody who could manufacture this level of volume for us and need another 1 million cabinets, hence, the investment in Runcorn. But I suppose we think about panel manufacturing where we're making -- we're moving beyond raw materials, but we're leaving stuff as work in progress. And then we build those items up to deliver to customers through our peak trading period. But I think it's absolutely fundamental and it's incredibly hard to replicate what we've done.

And I just sort of add just a wee bit of color to it. We -- I went to our Runcorn Christmas party and took my wife, which was an eye-opener for -- I can tell you. She -- but the feeling of our 1,000 manufacturing personnel at Runcorn at that party because we had purchased the site, made very clear what our plans were that this is a big future, and I stood up in front of them and said, you do a fantastic job for us. You make 3 million cabinets. The trouble is, I need another 1 million.

And I think they are -- it's very common to meet people in our Runcorn site that have got 20, 30, 40 years' experience working for us. You don't -- you can't just -- one of our suppliers, Egger -- Michael Egger, Senior, who makes most of our chipboard for us. He said to me, Andrew, you can buy the assets, but you can't buy the people. And I think it's that sort of combination of that is very powerful for a business. I don't know if I've answered you well enough, Geoff, but it's fundamental to us.

Zaim Beekawa, from JPMorgan. The first is on the new product sales. I think you said 29% in recent years, but quite excited about what's to come. So is that a number that you feel will pick up in the coming years?

And then secondly, obviously, very strong on the gross profit margin in '25? Can I think about the moving parts into '26, please?

Yes. I sort of feel comfortable that 2025, it will move up and down depending on what we do. I feel comfortable with where we're at. When you bring new range into a business, you've got to make sure people understand it. The depot teams understand it. We do have a big exercise in James' team. We build an expo. Some of you have been up to the expo at the factory, and we've got an expert Runcorn, and we're opening up our first expert, Watford next month worth going and having a look at.

And we use these spaces to show off our product offering, and you've got to train it into the team. So there's only so much a business can consume. You don't want to throw too much range in and not land well. And I think our cadence of about 2024 feels pretty good on the kitchens where the majority of the profitability is. You will see us do more on own labels. You'll see us do more innovation on outside kitchen areas. Kitchen is a fashion business. We've got to stay up on the front foot on it. Colors change, styles change very rapidly.

I think we were pleased with the margins, but margins, we've got to leave enough room for the managers to flex it. We did well last year. I think Austin incentivized the teams incredibly well last year to deliver margin and volume. We all understand the rules on it, but if the kitchen comes out and it's cheaper, we will always take it, and we will develop the margins on the other side. But we're comfortable with our industry-leading margins. We don't chase the percent. We chase cash. We like cash. And I would say probably more of the same this year would be my guess, yes.

So we've got time for one more. Christian, do we?

It's Priyal Woolf here from Jefferies. I've just got two questions on the International division. I appreciate you said that in the U.K., you're rethinking what maturity even means. But can you give us any sense of what maturity time line looks like in France, just in the context that, obviously, you're slowing down on the depot openings, focusing more on getting to profitability there.

And then the second one is just a quick one. Obviously, you're expanding in Ireland, you will be again at some point in France, is finding the correct sort of sites, any sort of obstacle yet at this point in time?

I think the quick answer on the second is no. We're always looking at -- we've been able to find the right sort of price location mix and very similar type of setup on trading estates in Ireland. And when we go into these secondary towns, we're getting good value, and we're getting prominent locations. So -- we've said around about 40. I don't know, it might be more, but a business of 40 in Southern Ireland would feel pretty good to us, and we'll be about halfway there by the back of this year, lots of growth to put on it.

In France, yes, we were very clear. We're putting the foot in the ball. We're going to get the operations absolutely where they want to be. This year is an important year for the French team. And next year, the one after will be the same, but we want to see that business getting to breakeven in a sensible time frame. And we understand that happens when you push more depots on top to cover the fixed cost, but we want every depot in profitability in France in the near term.

There's one question that we have to take because you've tried about 15 times now.

My arm is so tired from going up and down. I've got loads, but I'll keep it to two. Wren has bought Moores, it takes them into the trade bar, the kitchen market. Do you think that changes the way about how they attempt to broaden their addressable market in the U.K. at all? That was the first one.

The second one was on the small branch depot formats you're going to start opening in France. Should we be looking to see those pop up in the U.K. anytime soon?

Yes. Yes, I don't -- it's interesting. The Wren business have tried several times to open up a trade business to be like us. Often, they've opened up a specific site, and we get wind of it and we release margin criteria to our depot managers and extinguish any potential flame coming out.

On the contracts piece, we like routine, repetitive, repeating sort of maintenance type of businesses that we would sort of consider contract. The housebuilding stuff, we're happy to leave that to somebody else.

I don't want large, long production runs that disturb high-margin supply to trade customers. And I think it could distract us. We're very happy to take local, smaller regional house builders if the margin is right for us. But I'm not looking to chase after big house builders.

Symphony Group is better at doing that than us, they're better set up to do that than us. And the market is big. I don't know what their plans are, but I don't think it's going to change anything in the near future.

Small depots in the U.K., I think we just -- it's more important for us to be in the catchment than not be in the catchment. So sometimes we go in and we will take a site that's a bit bigger or a bit smaller. You'd certainly see us doing a wee bit being a bit -- wee bit more curious in London. And of course, we've got the capabilities to do it. We've become much better at how we merchandise depots, built all that skill, and we're amazing at how we fulfill and supply depots, and we know what to put in the depots. It's the right type of product. So you can cope on smaller spaces.

We're just about to open up in the arches at Waterloo, and that would be worth popping down having a wee look there. Limited parking, we think it's going to be a flyer.

I think we'll call it quits there, if that's okay. So thanks very much for your time.