Luceco Stock

Good morning, everyone, and welcome to Luceco's Interim Results Presentation. My name is Thorsten Muller, and I was recently appointed as CEO of the company joining at the start of September. I've previously worked at Halma, where at one of the divisions within the safety sector. Before that, I served in senior leadership roles at ABB, Osram and Bosch.

Let's turn to the agenda for today. Will is later going to take you through the details of the first half that the team has delivered. I'll then share with you my first impressions and initial priorities as well as the outlook for the result of the year, followed by any questions you may have. Let me take the opportunity to express how excited I am to be joining such a high-quality business. The Luceco team has continued to deliver strong results during the first half, building on the momentum achieved in June 2025.

Starting with the headline numbers. H1 was a strong first half with performance accelerating across the group. Revenue was up 13.4% to GBP 142.6 million, driven by energy transition, where revenue more than doubled. This also means that the energy transition contribution to the half year revenue increased from GBP 2 million back in 2022 to GBP 18 million in 2026. That growth is converting into profit with adjusted operating profit up 14.5% to GBP 15.8 million, resulting in a return on capital invested improvement by 50 basis points to 20.5%.

Leverage remains comfortable at 1.5x bank EBITDA, allowing headroom for future M&A in line with our capital allocation policy. Reflecting the performance and our confidence in the outlook, we have increased the interim dividend by 16.7%.

With that, I will pass to Will to take you through the performance during the period.

Thank you, Thorsten. Good morning, everybody. I'll take you through the first half performance, starting with the financial review before moving on to the business review and the growth opportunities that support our medium-term outlook. Revenue for the first half, as Thorsten mentioned, was GBP 142.6 million, an increase of 13.4% on the prior year. Growth accelerated through the period with like-for-like growth of 12.9% in the first quarter and 14.9% in the second quarter. Energy transition activity was the principal driver, with revenue up 119.5%, while the remainder of the core business grew by 6.5%, all 3 operating segments, all 4 sales channels and each geography delivered growth.

Adjusted gross profit increased by GBP 59.8 million -- excuse me, adjusted gross profit increased to GBP 59.8 million and adjusted gross margin was 41.9%, broadly in line with the prior year despite increases in key material costs. We continue to benefit from strong manufacturing productivity and close cost control while maintaining a disciplined approach to pricing. We are working with our customers to pass through higher commodity costs. Adjusted operating costs increased by approximately GBP 5 million to GBP 44 million. The increase reflects targeted investments in EV infrastructure, marketing and technical capability, together with wage and salary increases.

We are also simplifying the operating footprint following recent M&A, including the consolidation of D-Line warehousing and associated labor into the wider group during the first half. Adjusted operating profit increased by 14.5% to GBP 15.8 million, and adjusted operating margin improved by 10 basis points to 11.1%. Adjusted net finance expense was broadly stable at GBP 2.9 million, resulting in adjusted profit before tax of GBP 12.9 million, an increase of 19.4%. The effective tax rate was higher than in the prior period when we benefited from the utilization of previously unrecognized tax losses. We expect the full year adjusted effective tax rate to remain below the U.K. corporation tax rate of 25%.

Adjusted earnings per share increased by 13.6% to 6.7p. Reflecting the group's strong first half performance and momentum for the full year, the Board will pay an interim dividend of 2.1p per share, an increase of 16.7%. This slide provides more detail on the composition of the 13.4% revenue growth in the first half. Currency was a GBP 0.6 million or 0.5% headwind, giving constant currency revenue of GBP 143.2 million and underlying like-for-like growth of 13.9%.

Wiring Accessories revenue increased by GBP 3.8 million, contributing 3% to group like-for-like growth, a robust performance aided by CMD. It's pleasing to report that CMD enters H2 with a healthy order book. Integration synergies are flowing through and aided by Luceco's competitive manufacturing and product sourcing, the excellent CMD sales team are winning key tenders. Portable Power was the standout contributor, adding GBP 12.8 million, driven by energy transition activity. The strength of our established wholesaler relationships are helping us bring our expanding energy transition range to a broader contractor base.

LED lighting added GBP 0.9 million, which included a strong first half performance from DW Windsor. We have seen some recovery in our overseas operations. As you would expect, our business based in Dubai has had a challenging 6 months from an operational standpoint. The team there did a great job over this period and still delivered growth in the first half. However, we do note that events in the region could delay significant investment projects in the second half.

Moving to adjusted operating profit. The group delivered an increase of GBP 2 million or 14.5% to GBP 15.8 million. Portable Power contributed an additional GBP 2.3 million and was the principal driver of group profit growth. The benefits from substantially higher energy transition volumes more than offset the additional investment in infrastructure, marketing and capability required to support this opportunity. Wiring accessories reduced by GBP 0.4 million. Although we saw strong top line revenue growth, profitability was temporarily affected by the timing of material cost increases.

We expect this effect to reverse over the forthcoming quarters as pricing actions take effect. LED lighting added GBP 100,000 and was broadly stable. Taken together, the bridge demonstrates that strong revenue growth was converted into a slightly improved group operating margin while we continue to invest for future growth. As normal, our business -- in our business, we expect our operational leverage to improve in the second half as a result of seasonal growth in our order book.

Turning to cash flow. Adjusted free cash flow was an outflow of GBP 2.1 million in the first half compared with an inflow of GBP 10.3 million in the prior period. You might recall that 2025 benefited from unusual timing of working capital movements between December '24 and January '25. This makes '25 a tough comparative when we reviewing '26. Adjusted EBITDA increased GBP 2.1 million to GBP 20.4 million. Working capital was a GBP 10.1 million headwind. We have consciously invested in the first half as we built stock to support expected second half trading. We increased capital expenditure by GBP 1.1 million to GBP 4.9 million, in line with our capital allocation policy.

Interest paid was unchanged at GBP 2.9 million, and tax paid was GBP 2.9 million compared with a GBP 0.4 million receipt in the prior period. We expect the usual stronger second half cash generation, though lower than 2025 due to timing of accounts receivable collection. Finishing on the numbers, this slide brings together our cash flow track record, working capital metrics and leverage. The group generated approximately GBP 52 million of adjusted free cash flow over the last 3 completed financial years. The phasing has varied, but cash generation has consistently been weighted towards the second half.

Average inventory days increased to 145 from 136 and inventory rose to GBP 71.2 million, reflecting higher volumes, the stock build to support second half trading and increasing mix of higher-value energy transition products. Debtor days improved to 76 from 78, demonstrating continued discipline in receivables management. Bank net debt was GBP 69.6 million at the half year compared with GBP 68 million a year earlier. Bank leverage improved to 1.5x EBITDA from 1.6x and remains in the middle of our target range of 1 to 2x. The group had GBP 44.4 million of undrawn facilities and the facility matures in May 2029.

We remained comfortably within our banking requirements, providing capacity to invest organically and pursue selective bolt-on acquisitions in line with our capital allocation policy. Now I can talk about some of the long-term structural growth markets in which we are participating. On the left, Electricity is expected to account for a materially greater share of consumer energy demand over time as transport and heating electrify. The big ticket items include EV chargers, heat pumps, solar panels and batteries.

However, these installations also require associated electrical infrastructure. Products such as enclosures, isolators, metering and circuit protection increase the electrical product content of a renewables-ready home by an estimated GBP 200 to GBP 300 compared with a traditional home. On the right, the U.K. EV charger market is forecast to grow at a sustained double-digit rate. Forecasts predict a compound annual growth rate in charger installations of 13% to 2030 and continued growth beyond this time with the potential to be another 3x larger.

New electric vehicle sales regained momentum in the first half, supporting the long-term requirement for residential and commercial charging infrastructure. Crucially, Luceco can participate in both parts of this opportunity, directly through sync energy charging products and through the broader range of electrical accessories required to enable the transition. Demand flexibility provides an additional recurring revenue opportunity from the installed base of connected chargers. As more transport and heating are electrified, peak electricity demand will rise significantly and less consumption can be shifted to different times.

An EV battery can hold several days' worth of the electricity used by a typical home, which illustrates both the load created by widespread charging and the value of managing when the charging takes place. Managed EV charging, including vehicle-to-grid capability is therefore expected to be an important source of flexibility for the electricity system. The regulatory framework for distributed assets is now in place following changes to the balancing and settlement code in November '24 and November '25. We moved to an in-house charger management platform in the fourth quarter of 2024 and achieved COP-11 metering certification in the first quarter of 2026, with the certification applicable to the installed base.

More than 30,000 chargers are currently active in demand flexibility. Changes to the regulated mechanism have been phased in during Q3. Growth in the active base more than offset changes in the mechanics. This remains an evolving regulatory market, so the value per charger may change over time. Nevertheless, demand flexibility is strategically attractive because it adds a recurring revenue stream to the initial hardware sale with the opportunity growing as we expand the installed base and the functionality of the platform.

Bringing the financial and business review to a close, this slide shows the progress made since 2022 and the profile implied by the market consensus for 2026 before today. Revenue increased from GBP 206.3 million in 2022 to GBP 271.4 million in 2025, while adjusted net operating profit increased from GBP 22 million to GBP 33.8 million. Over that period, adjusted operating margin improved from 10.7% to 12.5%. The consensus figures shown for 2026 before this morning's announcement are approximately GBP 310 million of revenue, GBP 41 million of adjusted operating profit and a 13% adjusted operating margin.

Including self-funded acquisitions, this represents a 4-year revenue compound annual growth rate of 10.8% and a 230 basis point improvement in adjusted operating margin since 2022. The progression reflects the combination of continued growth in the core business, the increasing contribution from energy transition and disciplined management of the cost base. Further operational consolidation and efficiency opportunities provide additional support to the margin over time. Our objective is to sustain this combination of growth and improving returns while retaining the balance sheet capacity to invest in the most compelling organic and inorganic opportunities.

With that, I will hand you back to Thorsten for his first impressions of the group and his initial priorities.

Thank you, Will. As you'll be aware, I started in post 3 weeks ago, but I thought it would be beneficial for you to run through my first impressions and the priorities for the next few weeks. As Will outlined, Luceco has built significant momentum over the last few years and has delivered consistent compounding growth during that time. The business benefits from its strong foundation, generating sustainable commercial advantages. This is based on 4 pillars. An innovative portfolio of products, services and brands across all its segments, well-established routes to market with a profound understanding of our customers and their needs, a highly agile, vertically integrated supply chain that allows us to respond to market conditions at pace, bringing new products to customers at a remarkable speed. And finally, a strong team with entrepreneurial and customer-centric mindset.

These 4 pillars drive an attractive financial profile. Our market position in established categories provide a sustainable and predictable base of revenue and cash flow. This allows us to address and invest into any attractive structural growth opportunities offered by the energy transition. This is evident in the work the team has done in EV charging, a segment that has its origin in the highly accretive targeted acquisition of Sync EV 4 years ago.

Since then, we organically grew the segment through focused and agile product development, which has unlocked recurring revenue streams that provide additional upside, albeit in an evolving regulatory environment. Product innovation has been core to Luceco's growth strategy for many years. This slide highlights the breadth of the 2026 pipeline across our core categories, supported by product development teams in both the U.K. and China. With energy transition, the pipeline now includes high-power DC charging as well as vehicle-to-grid capable and a smart portable EV charger. DC charging broadens our proposition beyond our established AC residential offering, while vehicle-to-grid capability reflects the expected future direction of the market, allowing the vehicle battery to support household energy use as well as to transport.

In wiring accessories and portable power launches include 3-phase and HVAC circuit protection, grid-light modular as well as luxury switches, 65-watt integrated USB charging and home office power products. These developments extend the range into further attractive professional and consumer applications and create additional opportunities through our established customer relationships and routes to market.

Dynamis Stadium lighting and Hinged trunking are different products that demonstrate the same approach, applying our product development and sourcing capabilities to adjacent categories where our brands and channel access can support growth. This momentum, underpinned by Luceco's business model, market position and financial profile provide a strong platform for us to build on in the coming months and years. I will present my thoughts more fully in March at our full year results. In the meantime, my 3 priorities over the coming months are going to be focus and stringent capital allocation, ensuring that Luceco is focused on the most compelling opportunities for future growth across all our markets, products and channels.

Process excellence by defining and implementing best-in-class processes and technology to serve our customers and partners in an efficient and accommodating manner, making sure that these systems reflect the group's scale and future growth prospects and structure, ensuring that Luceco is a team-led organization, having a decentralized and lean operating model and a strong talent base in place that allows seamless scaling to facilitate our future growth ambitions. So let me turn to the outlook for the full year.

The group continues to experience strong demand across key product categories, channels and territories with revenue in our core business growing 6.5% in the first half of the year. Demand flexibility is delivering a recurring revenue stream. Our success in delivering growth of EV charger sales will also improve our demand flexibility revenue. We, therefore, expect that our adjusted operating profit will be ahead of market expectations.

Good morning, everybody. Thank you for attending the Luceco plc results presentation for 2025. Our highlights. Revenue was up 12%, operating profit up almost 17%, adjusted operating margin up 0.5 percentage point, and our net debt ratio 1.2x down from 1.6x, our full year dividend of 6p, which is up 20% on last year and our adjusted EPS of 15p, also up by 20% on last year.

Okay. The further highlights slide. Like-for-like revenue growth of 2% in the first half and actually close to 7% in the second half, which has accelerated further in Q1 of this year. This is despite subdued activity in our core overall markets.

Approximately 2/3 of last year's organic growth was from the EV charging category as a result of ongoing market share gains in a structurally growing segment. EV charger sales were up 85% in the year, and it is continuing to be strong this year. Operating profit margin was up to 12.5%, which is a 0.5% increase on last year, which was a further 0.5 point increase on the previous year.

Hence, operating profit 17% higher, giving us a 3-year operating profit compound average growth rate north of 15%. There was very strong cash generation of GBP 30 million. Since 2019, our free cash flow has totaled GBP 140 million on GBP 1.5 billion of sales, which equates to a free cash flow percentage of sales of approximately 9.5%.

have we achieved this in parallel with strong economic growth.

As per our strategy, we can use some of the cash from this core business to invest in M&A and our 2 most recent deals, our D-Line and CMD are both performing excellently with the integration work of which will be completed by the end of this year.

Thank you, Jon, and good morning, everybody. Let me start with a quick review of our income statement. Our revenue at GBP 271.4 million reflects a strong end to 2025, which we talked about in our recent trading update. Almost 12% up with 4.6% like-for-like growth is a creditable performance in a market like ours.

Our hybrid and professional wholesale channels had an especially strong year, growing over 11% with over 8% like-for-like growth. The EV charger products that the group now offers are clearly attractive. Growth of almost 85% year-on-year is ahead of the EV market and another excellent performance.

Our energy transition sales, of which EV chargers are the majority, delivered GBP 18.1 million sales in 2025, up from GBP 9.8 million the year before. The information we monitor covering demand for our products across certain customers leads us to believe that the strong performance we saw towards the end of 2025 is continuing into '26.

A year ago, I spoke of the strong performance in our overseas operations, which delivered a near 23% improvement in '24. They found '25 more challenging as the wider economic events that you are all aware of had an impact. Our outdoor LED lighting businesses struggled in 2024 with an impact from local authority funding.

But it's pleasing to see that DW Windsor has recovered strongly in '25, following some self-help measures, and this is continuing into the new year. The housebuilding market has been a more difficult place again this last year. It only represents approximately 5% of revenue, although our team are achieving impressive market share growth.

The 2024 acquisitions of D-Line and CMD have been integrated well, and synergies are starting to show through. CMD previously sourced a significant level of componentry from overseas third-party suppliers, and our in-house manufacturing facilities are especially well suited to the production of these components more competitively.

The D-Line warehouse facility in the North of England will be closed in the summer as its operations are being integrated into the existing footprint of Luceco. Gross margin for the year was 41.8%, a year-on-year improvement and the highest annual performance we have achieved.

This was delivered in spite of an uptick in some key raw material costs, for example, copper. Sea freight costs were relatively calm through much of 2025. I will speak about the current experience shortly. Our containers from Asia to Europe have been traveling around the Cape for over 18 months. So we are not seeing a direct impact on routings as a result of the Iran conflict. However, we are clearly experiencing indirect effects.

Journeys around the Cape keep our inventory goods in transit balance around double its historic levels at circa GBP 12 million. Our Jiaxing production facility continues to improve, delivering productivity, benefits from operational leverage and overhead savings, again in 2025, assisting our gross margin. The U.S. dollar represents a revenue headwind for us again in '25.

The RMB has been declining against sterling, and we saw the benefit coming through our cost base. As I've said in the past, we follow a policy to place forward cover, which delays the consequences of currency movements. Overheads at circa GBP 80 million were up circa GBP 11 million on 2024. The majority of the increase was attributable to the newly acquired D-Line and CMD businesses representing GBP 6.6 million.

We made some targeted investments in select overhead categories, notably in energy transition-related activities such as marketing, technical and support. Our wage cost inflation was in line with that seen in the wider U.K. economy in 2025. Adjusted operating profit was GBP 33.8 million, above the indication we shared in our January trading update and over 16% ahead of the prior year.

Pleasing to see that our adjusted operating profit margin has now moved from 11.5% in 2023 to 12% in 2024 and now 12.5% in 2025, good, consistent improvement. We've managed to unlock some previously unusual losses, giving us a onetime benefit to our 2025 tax charge of some GBP 1.6 million.

We are heavily weighted to the U.K. and increasing it with further U.K.-based acquisitions. Here, the headline corporation tax rate is now 25%. We continue to take advantage of various U.K. and overseas government incentives that mitigate some of the tax burden, though I expect our rate in 2026 to be materially above that in 2025.

The reduction in our tax rate in 2025 to circa 19%, together with the GBP 1.9 million increase in our finance charge, reflecting the funds used to pay for the acquisitions partway through '24, means our adjusted operating profit improvement delivers a pleasing increase in adjusted earnings per share of 20% to 15p.

The Board has consequently recommended the dividend be increased with a final of 4.2p, taking the total to the year to 6p, 20% ahead of the previous year. This slide provides a bit more detail on the drivers of our revenue performance. The acquisitions of Dine and CMD have driven the most significant change in our revenue this year. Both of these fit well into our group and the impact of a full year of ownership has increased group sales by around GBP 21 million. D-Line arrived in late February 2024 and CMD at the end of September that year.

We have previously said that we will begin to see the synergy benefits in our P&L between 18 to 24 months following completion. It takes time to design, tool and commence component production in our facilities, and we remain on plan with CMD. We are making progress and the benefits of the D-Line acquisition are already showing through.

Focusing on organic performance, our hybrid and trade channel space and within them, specifically our EV charger offerings recorded an excellent increase. Our non-U.K. operations performed less well in 2025 against a tough comparative given their success in 2024. The Middle East performed well in '25, much of it weighted towards the last quarter of the year, but clearly, business may be challenged in 2026.

Our Mexican operations found 2025 very tough. U.S. tariffs are having an impact on the projects market that we sell to in Mexico. Back in the U.K., the new house build market had another challenging year in 2025 and appears to be recording further deterioration in early '26.

We are enjoying some good market share gains, but we remain cautious. Infrastructure-driven external LED operations are benefiting from some good self-help measures underway. Currency impact is mainly the effect of the U.S. dollar move versus sterling on our FOB sales. Average rates across 2025 at $1.32 were 4 basis points worse than 2024 and reduced our year-on-year sales by just over GBP 3.2 million.

This slide shows the key drivers of our adjusted operating profit performance. Once again, it is pleasing to share strong operating profit improvement with an increase of some 16.6% over 2024, which follows the 21% improvement in the year before. Volume helps at our gross margin levels and the productivity initiatives at our Jiaxing, China facility are showing through in our numbers.

A higher proportion of wiring accessories are manufactured in-house. So revenue growth in this segment improves utilization at Jiaxing. Production of CMD products there further helps in the future. The full year impact of our acquisitions added some GBP 2.6 million to 2025 operating profit.

We have lots of work underway to enable our factory to manufacture for their acquired businesses or to resource product for them. The team has a proven track record in delivering these types of synergy benefits.

Freight costs were relatively benign in 2025. They have ticked up recently as the market experiences some indirect disruption from the Iran conflict. We saw elevated copper and silver prices towards the end of the year. I've said before that we carry a level of copper hedging that offers some short-term protection at times like this.

The situation in the Red Sea means our freight between China and Europe was already going around South Africa. This added cost and working capital, but has become the norm. Currency has helped in 2025. Average RMB to sterling at over 9.4 was almost 3% favorable.

We carry forward FX contracts that taper down up to 12 months ahead at the moment. This delays the benefit when rates move in our favor. Of course, it also offers protection when they move against us. The increase in national insurance rates to 15% implemented in April 2025 added approximately GBP 1 million to our U.K. cost base.

A quick look at the last 3 years in 6 months sections. You can see the pleasing consistent profit growth improving from GBP 24 million in 2023 through GBP 29 million in 2024 and now GBP 33.8 million in 2025, a compound annual growth rate of 19%. This also pleasingly translates to an improving trend in operating profit margin from 11.5% in 2023 through 12% in 2024 and now 12.5% in 2025.

By the way, our business continues to be H2 weighted. This slide compares how the key drivers of free cash flow were different in 2025 against 2024. We delivered a lower free cash flow of just GBP 3.5 million in 2024. I explained that much of the working capital change in 2024, which caused the temporary deterioration in our traditionally strong free cash flow was caused mainly by 2 key factors that year.

The transition in sea freight to avoid the Red Sea increased our stock in transit by some GBP 6 million, which while now normalized was a onetime effect on free cash flow in 2024. The other was that we had a very impressive sales growth right at the end of 2024. Trade receivables in 2024, therefore, absorbed GBP 17 million of our operating cash flow.

This compared to the just GBP 3 million it absorbed across the whole of 2023. We said this time last year, we expected cash flow to improve, and it is pleasing to share the excellent cash generation achieved in 2025 as our working capital position corrected.

It may have, to some extent, overcorrected because we enjoyed stronger trading in Q3 this time, which does flatter the year-end working capital position. You will note from the CFO review in this morning's RNS, a comment that Luceco has delivered an average of GBP 20 million free cash flow over the last 5 years.

Finishing up on the numbers, this slide summarizes our working capital cash flow and debt performance overall. Working capital management is in a good place. I mentioned the small uptick in inventory days last year, a response to the Red Sea disruption. As you can see, our debtor days metric shows a further improvement, and I appreciate our great accounts receivables team back at base.

Bank net debt ratio, 1.2x is comfortably within our 1x to 2x range and shows great progress since we spent the nearly GBP 38 million on acquisitions in 2024. Our bank facilities were replaced during 2025 and now run to September 2028 with 2 1-year extension options, which would take it to September 2030.

With that, I'll hand you back to Jon to talk through our business review and outlook.

Turning to our competitive advantages. We are well positioned to deliver above-market growth. We have market-leading brands and distribution, especially in the U.K. We have vertically integrated manufacturing, and we have a culture of innovation and a proven product development resource.

We have a highly cash generative core business and a strong track record of accretive M&A. This, combined with the structural opportunities from the energy transition segment. Local generation via solar, local storage via batteries, electrification of heating by heat pumps and the electrification of transport via EV chargers are the pillars of the energy transition.

And we, as you know, are able to offer batteries and EV chargers. We are also able to offer all the accessories needed for the other product segments. We, therefore, have a clear strategy to increase our presence in these markets, which have high structural growth by expanding our product ranges and via M&A.

Now I will talk about some of the product innovation highlights from last year. Our platform lighting controls offer is an app that we have been developing over many years, which allows our project and commercial lighting segment to offer energy saving via lighting controls. This has been growing year-on-year and is becoming a major part of our lighting business.

Our Sierra Solar street lighting is a very interesting innovation. We have designed the product such that the solar panel can be angled in the direction of the sun. This is highly patented, and we're the only people offering this. And because we can angle the solar panel to the sun, we can increase the efficiency of the product by approximately 60%.

A smart Wi-Fi dimmer, updated pro chargers, our flow battery system that we've spoken about before and our Link EV charger, where we have separated the charging socket from the charger electronics, which means on the outside of the house, you just have a flush-mounted smart-looking EV charger, as you can see there.

We spent approximately GBP 6.3 million on R&D last year. We have 96 engineers in China supporting a team of 48 in the market-facing businesses. Innovation and product development has been a core part of our growth strategy for many years.

On the next slide, I can show you some of the highlights of the pipeline for this year. We have recently launched a range of DC chargers. Up until now, we only had AC chargers, but we have more high-power DC chargers, which we have white labeled from a Chinese manufacturer. We have vehicle to grid capable of residential chargers.

This is the way the market will be going in future. You will be able to park your car outside your house and use it as a battery from which you will be able to run the electricity supply for your house. This will mean you can charge your car when electricity is cheap and you can use it, obviously, when it's expensive.

This will become the standard of EV charging in the future. We have a column EV charger that we'll be selling into local authorities, particularly via our DW Windsor business that has great relationships in that space. I'm not going to go through all of these, but you can see some of the very exciting new product launches that we're planning for later on this year.

Now I can talk about some of the long-term structural growth markets in which we are now participating. The graph on the left-hand side shows what proportion of U.K. consumer energy demand will be provided from electricity. As you can see, it increases very significantly as the path over to net zero by 2050.

The big ticket items to make this happen are heat pumps, solar panels, also batteries and EV chargers. As you know, we are actively selling batteries and EV chargers. But we also sell all the downstream accessories that are used, for example, in heat pumps and solar panels. Accessories will add approximately GBP 200 to GBP 300 to the cost of a renewable house against a traditional home. And we are able to participate in all of that.

On the right-hand graph, you can see U.K. EV charger installations and how they are forecast to grow. This year, we will sell approximately 75,000 residential EV chargers, giving us a market share of approximately 15%. This has increased from approximately 5% when we bought the business in 2022. And you can see at maturity, the market will be approximately 6x larger than it is now.

Okay. To the next slide, recurring demand flexibility. You can see from the graph on the left-hand side, this is attempting to show what happens to peak electric demand in the U.K. without flexibility. That is the dotted line at the top. But if the grid is able to move the demand in a flexible way, we can reduce the overall peak of electricity that is required.

And the green section is the demand flexibility that will be provided by EV charging. The orange is going to be provided by other devices. And you can see, as a result of increasing demand flexibility, we can greatly reduce the peak electricity requirement for this country. This is why EV electric charging demand flexibility is so important.

It's important to understand that an EV car requires a huge amount of electricity. For example, my car has a 100-kilowatt hour battery. The average amount of electricity used in a residential environment is approximately 10 kilowatt hours per day. So my car uses approximately 10 days' worth of electricity demand for a normal U.K. residential house.

Once all cars have become electric and are plugged in and charged overnight, there will be huge demand, therefore, on the grid and the value in being able to move the charging around so we can shave the peak demand means we won't have to build more power stations, either nuclear or gas. This is obviously extremely valuable.

We currently have approximately 10,000 chargers actively enrolled in the wholesale demand flexibility market, and we are adding more every month. This has the potential to be a very significant new revenue stream for Luceco. However, it is a nascent regulatory environment we are operating in and the formula upon which the value per charger is calculated is controlled by Ofgem, it is very hard to forecast how that might change and when that might change.

It is, therefore, very difficult for us to forecast how much this new revenue stream may be worth, but it could be significant. As I said earlier, the core business is highly cash generative. We have the ability by 2030 to invest over GBP 100 million in M&A, and we have an experienced and proven integration capability.

We can buy a combination of brands, technology and distribution. Recent thinking is to buy international routes to market for our energy transition portfolio of products. Hence, we would pay lower multiples than if we bought an existing energy transition business, which tend to command a premium valuation.

We look at a lot of opportunities, but we are not currently actively engaged in any processes. And now to the outlook. Our momentum from the end of last year has continued into the first quarter of this year, with like-for-like double-digit revenue growth for the first 2 months of 2026. This has been driven by a strong performance in the majority of our categories, our channels and our territories.

While the Board remains mindful of the recent global economic disruption and the impact of the conflict of the Middle East is not yet known, the group is well placed to manage its operations with appropriate resilience and contingency measures.

The impact of the growth with the benefit of operationally leveraged manufacturing and distribution, investments in manufacturing efficiency and the delivery of acquisition synergies supports further operating margin progression. As such, the Board now expects adjusted operating profit for 2026 to exceed GBP 37 million with the potential for further significant outperformance dependent upon demand flexibility, underpinned by the strength and resilience of our core business.

Thank you very much for listening, and we look forward to updating shareholders as we proceed through the year.