Marshalls Stock

Good morning, everybody, and welcome to the Marshalls 2026 Half Year Results Presentation. First of all, thank you to everybody in the room for joining us and of course, to those online, too. As usual, I'm joined this morning for the presentation by Justin Lockwood, our Chief Financial Officer. Now just a quick rundown of the agenda. I'm going to give a brief overview of the Group highlights before handing over to Justin, who will take us through the Group's half year financial results in more detail.

I'm then going to return to share an update on the progress that we are making by way of an operational review, highlighting the tangible metrics to demonstrate the progress that we are making. I'll then return to share -- sorry, I'll then wrap up with a summary and a view on the outlook before opening the floor to questions. And just a quick reminder for our online participants, you can submit your questions at any time via the chat, and we'll read them out in the room before responding.

So before I hand over to Justin to take us through the half year results in detail, just a quick reminder of the priorities that we set out in March. You'll recall we talked about sharper execution and a tangible delivery that will be evidenced through visible KPIs and profit growth. Well, the message at the half year is simple. We are doing just that and delivering on exactly what we said we would do. Our refreshed operating focus for improved outcomes is enabling us to lead the market. We've strengthened our customer engagement, supported by new product development across all of our business units. We're more disciplined with cost and pricing.

And alongside our great service and product propositions, we are converting our market position into better financial outcomes. In Landscaping, we're seeing a recovery as the performance improvement plan starts to flow through into profitability. In this business unit alone, we have launched six new ranges to address gaps in the product ladder. And customer confidence is improving. Market share is growing, and our cost reduction program remains on track.

Beyond Landscaping, the balance of our diversified portfolio continues to provide resilience. Roofing remains a strong profit contributor and Water Management being well positioned strategically. The result of this is growth opportunities across different demand trends and multiple end markets. And finally, financial discipline remains a priority for us. Cash conversion continues to exceed target. Net debt is lower than June last year, and leverage is reducing in line with our expectations. So the strategy remains unchanged, and our focus continues to be on sharper execution, and the first half shows that this is beginning to deliver. And with that, I'll hand over to Justin to take you through the financial detail.

Well, thank you, Simon, and good morning, everybody. So I'm going to take you through the key financial highlights for the period, and I'll then talk through the detail of the financial performance at both Group level in each of our reporting segments and from a cash flow perspective. I'll then give you an update on the strength of the balance sheet before closing with a recap on the capital allocation policy.

So this slide sets out the key financial highlights for the period. And you can see that revenue was broadly flat year-on-year at GBP 318 million. And that's in the context of weak activity levels in our end markets. However, operating profit increased by 8% to GBP 30.7 million, and that reflects an improved performance in Landscaping Products. And those growth rates are amplified as you go down the profit and loss account, such that profit before tax increased by 13% to GBP 24.9 million with the benefit of a lower finance charge. Earnings per share increased by a slightly faster rate of 14% to 7.6p per share and benefiting from a lower effective tax rate. And we've increased our interim dividend by 14% as well, reflecting the application of our capital -- of our dividend policy. And pre-IFRS16 net debt has reduced year-on-year by about GBP 15 million, and that's driven by our continued disciplined approach to cash and capital management.

So I'll now move on to the performance for the half year at Group level. The chart on the left of this slide sets out a year-on-year revenue bridge that illustrates that revenues were broadly flat across each of our reporting segments, arriving at that total of GBP 318 million. Now that's against the context of weak activity levels across the key end markets of new housing and private housing RMI. And with that backdrop, volumes were lower year-on-year, and there was a slightly softer product mix. However, that was largely offset by the benefit of pricing actions that we implemented during the period.

The chart on the right of the slide sets out a similar bridge, but this time for operating profit. And it sets out the component parts of the GBP 2.3 million increase in operating profit to GBP 30.7 million. And you can see from the bridge visually that profitability in Landscaping improved by a little over GBP 5 million. And that was partially offset by slightly lower profits in both Roofing and Building Products and slightly higher central costs. Now the profitability numbers included in this presentation are all stated after adding back adjusting items. And for the first half of this year, it's quite simple. It's a GBP 5.2 million adjusting item relating to the recurring noncash amortization of intangible assets that arise on acquisitions.

So I'll now move on to each of our reporting segments, starting with Landscaping Products. Revenue held steady in Landscaping Products despite weaker markets. We focused on building market share, and we've done that through a focus on our customer proposition and our service levels, and we're pleased to see improving customer Net Promoter Scores as a result of that. However, volumes in this segment were lower year-on-year despite the positive share momentum. And that was offset by pricing actions that drove some P&L benefit.

Operating profit increased by GBP 5.2 million in the first half of the year, and that was driven by the Landscaping improvement plan, which showed itself in the P&L account through improved gross margins, lower manufacturing costs and reduced overheads. Now that was partially offset during the period by surcharges that we started to see flowing through the P&L account arising from higher oil prices and the war in Iran. And as Simon mentioned earlier, we remain on track to deliver the GBP 11 million of annualized cost savings by the end of 2026. So in simple terms, the Landscaping improvement plan is delivering better financial outcomes.

So now moving on to Building Products, where revenues were down just less than 1% during the period, and that reflects a mixed performance across the business units with continued growth from Mortars & Screeds, offset by lower revenues in Water Management and Bricks & Masonry. Mortars & Screeds continued to benefit from its strong service proposition and demand for its ready-to-use product, and that's in the context of relatively low build rates on housing developments. Water Management revenues were down year-on-year, reflecting the soft-core housing -- new housing market, but that was partially offset by growing infrastructure-related revenues.

And similarly, in our Bricks & Masonry business, soft activity levels in new build housing and competitive supply -- the competitive supply position impacted revenues in that business unit. Operating profit was GBP 700,000 lower year-on-year at GBP 6.2 million. And that reflects the impact of lower business volumes, oil price-related surcharges flowing into the P&L account and a slightly less efficient manufacturing performance. And that latter driver arose from the extended site shutdown that is not expected to recur in the second half of the year. Now those challenges were partially offset through commercial -- or targeted commercial actions that are set to recover some of that surcharge cost inflation and ongoing overhead discipline across the reporting segment.

Now moving on to Roofing Products, where revenues again were down a touch year-on-year, and that reflects continued growth from Viridian Solar, offset by weaker revenue performance from Marley. Viridian Solar, as guided, the rate of revenue growth moderated slightly during the first half year to around about 7% as the adoption of roof integrated solar driven by part of the 2021 building regulations became increasingly embedded.

In Marley, revenues are lower due to increased competitive intensity in concrete roof tiles. And you may recall from our presentation in March that we highlighted that we expected a 12% increase in supply capacity during the 12 months to June, and that's pretty much what's happened. And alongside that, we've seen softness in demand from new build housing.

However, in that -- against that context, we're pleased that we increased our share of the concrete roof tile market, and that's supported by our focus on the more resilient RMI market rather than new build. Now the challenges around the concrete roof tile market were partially offset by growth in clay roof tiles and improved attachment rates for Roofing accessories. As guided, operating profit reduced by GBP 1.7 million to GBP 23.1 million, and that reflected continued growth from Viridian Solar, offset by lower profitability in Marley. Viridian Solar's profitability growth was driven by higher volumes and continued commercial discipline. And in Marley Roofing, the lower volumes of concrete roof tiles and weaker manufacturing efficiency reduced profitability in line with our expectations.

So I'll now move on to the lower half of the profit and loss account from operating profit through to earnings. And as mentioned earlier, Group operating profit increased by 8% to GBP 30.7 million. Finance costs were lower year-on-year by GBP 600,000, reflecting the deleveraging from our focus on reducing net debt. And as a consequence, PBT increased by 13% to GBP 24.9 million. The effective tax rate was 23% in the period. That's 1 percentage point lower than this time last year, and it reflects the benefit of the patent box arrangement that we have in place. And so take all that together, we get an EPS growth of 14%, driven by improved operating performance, lower finance costs and the reduced effective tax rate.

So I'll now turn on to our cash flow performance and the resulting net debt. The chart on this slide sets out the component parts of the reduction in net debt during the period, starting with EBITDA of GBP 44 million on the left-hand side. And we've continued to focus on working capital efficiency during the period. And as a result, our cash conversion performance has been very good at 98% and that has restricted the seasonal cash outflow of working capital during the period to about GBP 20 million, which is an improvement year-on-year.

Finance and tax cash flows consumed about GBP 11 million during the period, which is pretty similar to this time last year. And net CapEx was GBP 7 million, and that reflects gross CapEx of GBP 8.5 million, partially offset by the proceeds from site disposals of GBP 1.5 million. We continue to take a targeted approach to capital expenditure and the key areas of spend in the period were on more efficient secondary processing capacity in Landscaping Products and increased maintenance capital spend in Marley, which is focused on improving the manufacturing efficiency, which causes some degree of P&L hit during the first half of the year.

We had GBP 2.9 million of adjusting items paid. They simply related to the restructuring actions that were implemented in 2025. And so take all that lot together, and we closed the half year with net debt of GBP 137 million. That's GBP 15 million lower than this time last year and GBP 1 million lower than our year-end net debt position despite the usual seasonal cash outflow from working capital.

So now moving on to the balance sheet. So this slide sets out a range of metrics that are focused on working capital management returns and balance sheet strength. And you can see from the table on the right-hand side that debtor days, creditor days and inventory turn are all broadly unchanged, reflecting that focus on working capital management that I touched on the last slide. Return on capital employed was a touch over 7%, which is in line with last year. And we continue to target an improvement in return on capital employed in the medium term as we deliver the benefits from our Transform & Grow strategy, and we see a normalization of market volumes. And Simon will talk through what a pathway might look like for that in his operational review.

The balance sheet remains resilient and robust and strengthened a touch during the period with leverage reducing to 1.7x. And we've got significant headroom against our syndicated bank facility of GBP 125 million. And it's that source of capital along with the cash-generative nature of the business model that will provide the cash and the capital that we need to execute our growth plans going forward.

So finally for me, moving on to a recap on our capital allocation policy. Our first priority remains to invest in organic growth opportunities. And in our strategic plan, we envisage spending between GBP 20 million and GBP 30 million a year. And in 2026, we expect gross CapEx to be around the bottom end of that range. However, we expect to generate between GBP 4 million and GBP 5 million in cash from site disposals, which will reduce the net CapEx to around GBP 15 million or GBP 16 million.

We've increased the interim dividend by 14%, and that reflects the application of our dividend policy of maintaining 2x cover of adjusted earnings and paying 1/3 of the anticipated full year dividend at the interim stage. The balance sheet is deleveraging. We talked about that on the last couple of slides. So we reduced net debt and leverage in the first half of the year.

And we expect continued reductions in net debt from the organic cash generation from the business as we go forward. And we continue to target EBITDA -- sorry, leverage to be in the range of 0.5 to 1.5x EBITDA and expect us to be around the top end of that range at the end of this financial year. And with that, I'll hand back to Simon, who will talk you through the operational review.

Thank you, Justin. Before we go into the operational review itself, I just want to share with you a short video that I think really demonstrates where we sit in the market and indeed why we are winning.

[Presentation]

Okay. So I'm sure you'll agree that video really does capture the diversity of the products and the systems that we deliver, demonstrates why we are winning in the market. So I'm now going to take you through a more detailed operational review step by step. So first of all, despite a tough market and a continued tough market backdrop, delivering on our commitments is the key thing that I want you to take away from our first half performance. The strength of our product portfolio and overall service proposition is certainly key to delivery.

However, the greater focus is providing the confidence and the resilience that we need right now. The sharper execution approach that we set out in March is now embedded and beginning to deliver measurable results. And the key point here, and as a reminder, this is not a redesign of the strategy. It is about sharper execution, putting resource, management attention and accountability behind the areas that matter the most.

And this is showing itself in three ways. First of all, focus. We're making clearer choices about the leadership where leadership time and indeed capital is directed, which is helping us to prioritize the actions with the greatest positive impact. Secondly, the pace in which we are moving. Accountability for delivery is much clearer across the organization with greater emphasis on outcomes rather than the activity itself. This change in approach is improving our confidence in delivery and helping to strengthen our resilience. And with this more efficient approach, the business is better positioned to convert recovery into profit growth. And as I walk through the business units later in the presentation, you will certainly see the evidence of this renewed approach flowing through to the results.

Now our diversified portfolio is a real strength for us. The fact is value creation for Marshalls is not dependent on one specific area of market recovery. And across the Group, we have 3 distinct drivers that will create value. We have self-help actions. We have structural growth. And of course, when it comes, we have cyclical upside. In Landscaping and Roofing, the primary opportunity is self-help. And whether this is a recovery or maintenance play, it is all within our control. Improving commercial execution, cost and pricing discipline and of course, operational performance will all enable us to optimize share and maintain market-leading positions.

For Viridian Solar and Water Management, the primary driver is structural growth. These businesses are well positioned behind longer-term demand trends, including energy transition, Water Management and infrastructure investment. And for Bricks & Masonry, the largest driver is cyclical upside. The business is exposed to recovery in new build and RMI markets but now has a stronger operating base to benefit when demand returns. So the key message again, this is a balanced portfolio. Some businesses are driven more by self-help execution, some by structural demand and some by market recovery. However, together, they do provide multiple routes to margin improvement and value creation over the medium term.

So let's bring this all together to demonstrate how operating profit could progress over time. And we've built this visual to help. If we think about the drivers that I've described as value buckets, you can see clearly how you may bridge back to double the operating profit that we achieved in 2025. In this model, self-help is worth around GBP 17 million, and this is driven by cost management, by management-led margin expansion and share growth in our mature markets.

Structural growth gives us some GBP 14 million, and this is driven from our exposure to markets that benefit from longer-term regulatory tailwinds. And the third value bucket is cyclical upside, which is shown at around GBP 25 million. And this is simply demand normalizing over time, providing benefit through operating leverage. And the result of this is GBP 112 million worth of operating profit. And just as a reminder, that is less than what we achieved on a pro forma basis in 2021 and 2022.

And the key takeaway here is the balance of that delivery. Around 55% of the uplift comes from self-help and growth market exposure, both of which are within our control and not dependent on the market turning. And that is giving us some real confidence in the plans that we have got. And in this model, we do retain downside flexibility. If the recovery in our traditional markets is delayed, further cost reduction actions provide additional optionality. So we are well positioned in either scenario.

So I'm now going to take you through each of the business units in a little bit more detail. You will recall the primary opportunity in Landscaping is self-help with commercial excellence and the reset of the cost base clearly building a positive momentum. If we then underpin this with renewed customer confidence driven by our service and product propositions, you can see clearly why we are confident in our plan.

So I'm just going to work from left to right on the slide. Customer engagement has improved materially. Better service performance has helped rebuild customer confidence with Net Promoter Scores up 11 percentage points since 2025. And that is translating into stronger commercial commitment with growth in our share of wallet and overall market share growth of 2.6 percentage points.

Commercial excellence focus is driving more value from our specification-led model. We are engaging earlier with decision-makers, improving project support through our new digital tools and strengthening the mid-range offer through new product development. The early indicators here are very encouraging with project quotation activity up by 15%. And this is supported by the Marshalls Design and Engineering tools that were introduced in June. And from a new product development perspective, Lunar Textured was successfully launched in May.

And finally, the cost base reset is progressing to plan. Network optimization is improving efficiency and projects that we delivered in 2025 are driving intra-site journeys down by 19% and complexity is being reduced, including a 30% SKU reduction since 2025. So the overall program is creating a more efficient operating base with GBP 11 million worth of annualized savings on track to be delivered this year. So the key message here is very clear. These self-help actions are not theoretical. They are visible in customer metrics, operational efficiency and shared momentum, and they provide a stronger platform for continued margin improvement and further recovery potential.

Now on to Marley Roofing. Again, the primary opportunity here is self-help. In other words, things within our control. This business unit is being managed with real commercial and operational discipline. We have successfully defended our market share and therefore, continue to deliver a resilient profit contribution. We also continue to push new product development in this business unit, including the launch of Edgemere 2.0 as part of our new low-carbon roofing tile offer.

Now I'm just going to move around the graphic. In social housing, RMI, we're maintaining our market-leading position in a much more competitive market, and we have grown share in social housing. Now this is a core resilient end market for Marley and protecting share here underpins the earnings resilience of this business unit. We're also growing value from our full roof system-offer, increasing the attachment rate across accessories, ventilation and solar, where we have seen an increase of 2 percentage points compared to half 2 in 2025.

And again, this is a really important lever for maintaining margin and customer loyalty as we sell more of the complete system rather than the roof tile alone. Alongside social RMI, we're driving share in private RMI. And by deepening contractor engagement and making it easier to specify, buy from and indeed install our products, we have grown our specification bank by around 20% on a last 12 months basis. And underpinning all of this is operational excellence. We're maintaining service, quality and cost discipline whilst progressing our capital expenditure plans.

We've already deployed 20% more capital to maintain the quality of our products, and that investment program is on track. So the key message again here is very simple. Marley is a resilient profit contributor. We are defending share in our traditional heartlands, growing attachment rates across the system, and we're investing with discipline to keep the business fit for the future.

And now on to Viridian Solar. Now the primary driver in this business unit is structural growth, and this is evidenced by successfully scaling this business unit through the Part L transition, where we've seen revenue increasing 300% between 2021 and 2025. And as we see the Part L adoption becoming largely embedded, our focus is increasingly on optimizing market share and margin and maintaining customer relationships from the platform that we've already built.

Now the next regulatory opportunity for this business unit is the Future Homes Standard, and our analysis indicates this has the potential to materially increase the addressable market. Now in preparation for this increase, our focus today is on being ready for our customers through specification support and capacity planning as the transition develops. And alongside the core market, the ArcBox product provides a safety-led adjacent opportunity. Now half 1 export sales increased significantly, and we continue to develop this opportunity through international partnerships and disciplined validation of demand. And again, a very simple key message. Viridian Solar has already scaled successfully, holding share and margin in a dramatically expanded market. And we also have a clear phase of regulatory growth ahead, and we are building additional optionality through targeted innovation.

And on to Water Management. Again, Water Management will benefit from structural growth drivers, and we continue to pivot this business unit towards infrastructure-led growth. We're focused on demand visibility, specification influence and operational readiness. And this will enable greater conversion of sales and support future growth in this business unit. The objective here is very clear to create a scalable and agile infrastructure-driven business.

Looking at demand visibility, the AMP8 investment cycle is now underway, and that is showing up in our numbers. AMP8 sales are up more than double compared to the first half of 2025. Our quote activity is also increasing and the pipeline is improving. And this is supported by broader climate adaptation trends and the adjacent infrastructure opportunities that we see. And just to frame the scale of that, the U.K. physical adaptation market is estimated at between GBP 57 billion and GBP 64 billion out to 2035.

We're also starting to influence specification by engaging earlier in project life cycles. We're working with consultants, water companies and utility providers, and we now have framework agreements in place with three water utility organizations. And when we talk about operational readiness, we are very well placed. Our national manufacturing and delivery footprint supports scale, and our technical and engineering capability remains a key differentiator for us. Our investment plans are kept deliberately capital light within the existing network. So the focus here for the second half of the year is firmly on the development of our infrastructure growth platform to ensure that we unlock those opportunities as they move from design into delivery. And in the meantime, we will maintain a competitive position in our existing markets.

Now finally, turning to Bricks & Masonry, and this is very much our cyclical upside story. And in the current environment, we are protecting margins through disciplined execution. Now this is the most challenging market where competitive supply conditions persist and new housing demand does remain subdued and customer decision-making is slow.

But against that reality, our first half focus has been squarely on what we can control and how we protect margin. Now that means execution excellence across service and delivery and disciplined management of our cost base, including supply chain, manufacturing and logistics. And of course, staying close to our customers through site support, ease of use and national partnerships.

On capital allocation in this business unit, we are being deliberately selective. We have no plans to further convert Landscaping lines to brick lines, but we do retain capital-light optionality should conditions warrant it. So again, a very simple key message. We're protecting our market position and strengthening our execution model now so that when demand recovers, the business delivers meaningful operational leverage.

So now let's turn to the summary and the outlook before moving into Q&A. So as a reminder, our strategy is unchanged, and our focus on execution is feeding through to delivery. Self-help actions have driven higher profit, earnings and dividend despite marginally lower revenue. Market leadership is strengthening through new product development, more disciplined pricing and overall reliability.

Landscaping is recovering as the performance improvement plan converts to profit with greater customer engagement, new product development and disciplined cost management. And our product portfolio diversification is providing countercyclical defensiveness. We have more than one value bucket. self-help and structural drivers are within our control. And finally, we have strong financial discipline that has seen deleveraging track in line with our expectations.

So yes, our end markets do remain subdued. However, we are not banking on any material market recovery in the second half. Our confidence in our ability to deliver on our full year expectations comes instead from what is within our control. I said to you back in March that I was focused on commercial and financial discipline, and that absolutely remains the case. We are delivering against the plan. The GBP 11 million worth of annualized Landscape savings remains on track. And the operational improvements that we set out in March is translating into outcomes in line with our expectations.

And as a result of all of this, our expectations for full year profitability are unchanged. And beyond this year, our Transform & Grow strategy will continue to underpin the medium-term improvement in margin, cash generation and returns that this investment case is built on. Apologies. With, of course, the pathway to doubling our operating profit over the medium term. So in progress -- so in summary, good progress, a resilient and diversified portfolio and a business that is extremely disciplined on the things that it can control. Our strategy is unchanged, and we remain firmly focused on execution to drive better returns for shareholders. And with that, I'd like to ask Justin to join me for question and answers.

Well, thank you for the presentation that was done there. That was a prerecorded presentation. Today, we've got Simon and Justin who are able to answer your questions live. [Operator Instructions] Now moving to the questions that have been submitted so far. First question that we've got for Simon and Justin is, how is the order book now? And are there any signs that demand is beginning to improve?

Okay. Thank you, Scott. I'll start here and feel free, Justin, to chip in. The order book status is mixed in areas where we are exposed to new house build, as you would expect. But what we have been doing over the period is building a very healthy pipeline specification, certainly through commercial infrastructure and infrastructure generally. And we certainly have a growing order book in reference to our pivot towards Water Management. So overall, we're happy with the performance of the order book given the markets. And clearly, it is slightly more subdued in those areas that are more exposed to new house build.

And the next question is the share price doesn't seem to reflect the improvement in profitability yet. What are people missing? And what are you doing to help this?

Justin, do you want to take this one?

Yes, sure.

Well, I guess the share price has had a pretty decent run ahead of the results announcement. It was up by about 30% in a month. And subsequent to that, I guess, we've maybe seen a little bit of profit taking from people that have taken short-term positions. So there's also the context of what's going on in the macro economy, which certainly does have an impact on U.K. cyclicals.

Now having said that, we're really focused on what's under our control. And hopefully, you can see from the results in the presentation for the first half of the year that we're focusing on what we can -- well, we're focusing on the controllables and executing where we can. So we're just really focused on improving the business. And as we deliver -- continue delivering improved profitability, we'd expect that to be reflected in the share price over the medium term. So our real focus is on what we can do for the business and not so much on the day-to-day fluctuations of the share price.

Thank you, Justin. Lots of focus on operational efficiency. Are the easy cost wins done? Or are there still a significant opportunity to make the business more efficient?

Look, I think cost opportunities are never easy in the context of restructuring businesses. So that must be said. We've done an awful lot. I mean, we talked about the GBP 11 million worth of cost saving that is supporting our performance to the half year this year. Is there more to do? There's always more to do as far as I'm concerned. We will continually scan our network to make sure that we're absolutely operating at optimum and most efficient. So I do expect opportunities to arise as we travel through.

And we need to look at that in the context of what's happening in the markets that we operate. So we do expect to continue to scan the network and make sure that we're absolutely operating at our optimum. And if we see an opportunity to make ourselves more efficient, then we will do so. What I will say in terms of cost, that's not always about restructuring the network. There are other areas that we look at in terms of what we're doing up and down the supply chain. But yes, we will continue to look at those opportunities.

I'll just add something to that one on this occasion. So we're running -- as a business, we are running with significant surplus capacity. And volumes across our end markets are significantly lower than they were four years ago. And we are taking a conscious decision that we will run with that surplus capacity certainly for some time because we see the benefits of being able to bring that capacity back online when our end markets recover. If we thought there was a more structural reduction in demand, then that may necessitate a different approach to the cost base.

But we don't think that's the right answer at the moment. And as Simon said, we'll focus on seeking efficiencies across our network rather than something which is more significant. But in the event that, that did come to pass, then we would take a very different look at the way we're organized and the amount of capacity that we have.

Thank you. A question on a similar vein here, but how much of the margin improvement is structural and therefore sustainable versus benefits of one-off actions that won't repeat next year?

So the GBP 11 million of savings that we've talked about is -- of which GBP 3 million was delivered in 2024 (sic) [ 2025 ] and the balance of 8 will be delivered this year. That is all structural. So that feeds through in perpetuity.

Thank you. Now on to housebuilding. A couple of questions, which I'll just answer both of them, ask them both at the same time. What are your views on the new leader and the impact that he may have on housebuilding and also mixed views on the housing market in the press, what's your view?

Yes, I'll take this one, and again, feel free, Justin, to add. I think in terms of Andy Burnham coming into the role as Prime Minister, it's too early to say indeed what impact he will have, albeit there has been a lot of kind of talk of industrialization in the U.K., British manufacturing and indeed some chatter around stimulating housebuilding. Now prior to Andy Burnham getting into the role, there's clearly been a lot of work done around planning reform, and that's very, very welcome. I think we would all agree that we now need to stimulate demand and whether that be from a Help to Buy perspective, something on stamp duty or indeed activity that is going to drive mortgage rates down, and that again would be very welcome.

So I guess the message is let's watch this space and see what he does. But, the one thing I will say, up and down the supply chain in this sector, regardless of where you sit, there is a lot of lobbying going on to government at the moment through various kind of industry bodies, whether that be the Minerals Products Association from an input materials perspective, whether that be the Concrete Products Association from a manufacturing perspective, BDA Brick Development Association or indeed the trade unions. There's a collective view there and a collective approach to lobbying government for more activity. So a little bit too early to say. The noise has been very welcome. Let's see what happens.

Thank you. Next question, are you prepared to sacrifice some volume to protect margins if competitors continue to discount?

Well, look, clearly, we want both volume and margin, just to put that out there. I think not all business is good business, as you would be well aware. We've been very disciplined this time around in terms of how we are pricing our products, and that is supported by the service and product proposition that we've got.

And we aim to maintain those margins because we have got an offer that is supported by a range of things. We don't just transact. We've got technical capability. We've got a great product portfolio. We've got first-class service proposition. So therefore, we look to maintain margins. Clearly, we would always look at things on a case-by-case basis and make an assessment, but we want to make sure that all business that we're doing is beneficial from a margin perspective.

Thank you. We've got a question around margins. Again, is there a danger that Landscaping and Bricks margins improve? So as Landscaping and Bricks margins improve, we see high margins in Viridian and Marley come under pressure.

Do you want to take that, Justin?

Yes. Yes. Well, we certainly guided to some of that for this year. Perhaps just a little bit of background on the roof tile market and some of the dynamics that have taken place over the last 12 months there. We've seen a couple of new factories coming online. And indeed, we've seen an aged factory coming out of the U.K. supply network as well. And as a result of that, we've seen an increase in concrete roof tile supply of around about 12% in the 12 months to June 2026.

Now that's pretty much fully embedded in the numbers. So with more supply coming to the market, at the same time, seeing subdued levels of the demand because housebuilding is running at lower levels than it was this time last year. That's put downward pressure on the price that can be achieved and because of the increased supply coming into that marketplace. Now that is what we thought would happen. That is what we guided investors to what was going to happen, and we've pretty much seen that flow through.

So there's some degree of reduction in margins that has come through in that business, as you can see in the half-year numbers. We'd expect a sort of similar impact from a profitability perspective in the second half of the year. But then we're pretty comfortable with where we are, subject to any other changes in supply conditions, which we can't see. And so there's nothing that's been announced and bringing new factories online is a 2- or 3-year process.

And I guess the activity levels in housebuilding will play into that as well. But we don't see a material step down from what we've seen at the first half of the year. Marley is a very, very well-run business. It's very, very, very much in tune with its customers' requirements. Its service levels are very good, and it trades from a very, very strong brand. So we're very pleased with how that business is doing. Viridian Solar sells principally into the new build market and has really benefited from the growth in the addressable market that's come from part of the building regulations in 2021. That's pretty much embedded now in new house build.

And as a consequence, the volumes in that business will become more cyclical based on the volume of new housebuilding, certainly for the next couple of years. And then after that, we'll have a new driver of growth, which will result in pretty much doubling of the addressable market. And it's our job to take our share of that and maintain our margins. So we're very pleased with how that business is doing. We have a target margin range for the reporting segment of between 20% and 25%, and we're very confident that we will continue to deliver profits within that range.

[Operator Instructions]

Next question is around pricing. What stops competitors from simply undercutting Marshalls on price? How confident are you that customers are prepared to pay a premium on the Marshalls brand? And how much pricing power do Marshalls brands actually give you?

Well, look, I mean, competitors can always undercut Marshalls on price. And in essence, they are lower priced than Marshalls anyway, we command approximately a 10% premium in the market. And so we should as a market leader, we offer more than just a transactional relationship with our customers and indeed, the products that we have in terms of range and technical capabilities are second to none.

We trade not just on the price of our products, we're trading on the back of our service proposition, the product portfolio, the kind of the range extension, our carbon leadership credentials. And clearly, we've got best-in-class technical and design support. So it's the whole package when it comes to the Marshalls business.

What gives us confidence with our customers? Well, in many respects, we see and certainly have relationships with our customers that are partnership arrangements with multi-year trading agreements and preferred supply agreements. And therefore, that tells us because they've signed up to those for multiyear that they're comfortable and happy with the proposition that we're putting forward. So we are a market leader. And therefore, it's the whole package as far as we're concerned. And as far as we can ascertain, our customers are completely comfortable with that.

Thank you, Simon. Now dividends have increased by 13.6% to 2.5p. Should we see this as the start of a return to dividend growth? Or are you still being cautious?

I'll pick up this one, Simon. So the increase in the dividend is pretty much in line with the increase in the earnings per share in the first half of the year. Our dividend policy is very clear. We maintain 2x cover of adjusted earnings. And therefore, we're paying half of our retained profits to our shareholders. By convention, we pay 1/3 of the anticipated full year dividend at the interim stage and 2/3 at the final stage. So this just, I guess, reflects our expectations on profitability and earnings and paying 1/3 of that out at the interim stage.

So it's not about being cautious or more or less generous. It's really just the application of that policy. As profitability improves, then we will pay higher dividends to our shareholders. And we recognize that our shareholders have taken significant pain in recent years as profitability has dipped, and we want to see that reverses as quickly as we can.

Thank you. Now one final question that's been submitted at the moment is now the business is more operationally efficient. As the market changes, will you be able to pivot and ramp up?

Yes, I'll take this one, Scott. Thank you. Absolutely, we'll be able to pivot and ramp up. Justin alluded to it earlier in terms of the additional capacity that we've got within the network and where we're currently running. So the first thing to say is we've absolutely got the headroom to ramp up in terms of capacity. And the second thing to say is whilst we have been restructuring the business for the right reasons over the last 24 months, we've retained skills.

So quite often in a number of areas that we operate regions, we have twin sites. So we have 2 sites within a particular region. And where we have unfortunately had to shed some labor, we've made sure that we've retained skills so that if we do indeed need to ramp up, we can do so and backfill with semi-skilled labor. So we're absolutely ready to go. And the final thing I would say with that is all the kit that we've got within our network is regularly maintained as a matter of course. So yes, we will be able to pivot and ramp up if the market returns.

Thank you, Simon. Well, that's all the time that we have for today. So maybe I could just hand back to you, Simon, for maybe some closing remarks.

Yes. Thank you. Look, we're really pleased as a team to deliver what we see as a really robust set of numbers at the half year. I was out in March. We talked about the plan and the fact that the strategy is the strategy from a Transform & Grow perspective, that hasn't changed. but the focus certainly has in terms of more tighter and sharper execution in terms of what we're doing. We talked about the plan.

And what I will say today is that we're delivering on exactly what we said we would do. Yes, the markets are subdued, but you can see from the numbers, we've done a good job to the half year in controlling what we can control and putting that out there as what we see as a very, very credible performance. So yes, we're very pleased.

Well, I would like to thank both Justin and Simon for their time today and answering those questions. That concludes the Marshalls investor presentation. Please take a moment to complete the short survey. The recording of the event will be made available in an Engaged Investor. And I hope you enjoyed today's webinar. Thank you very much.

Okay. Good morning, everybody, and welcome to the Marshalls 2026 Half Year Results Presentation. First of all, thank you to everybody in the room for joining us and of course, to those online, too. As usual, I'm joined this morning for the presentation by Justin Lockwood, our Chief Financial Officer.

Now just a quick rundown of the agenda. I'm going to give a brief overview of the group highlights before handing over to Justin, who will take us through the group's half year financial results in more detail. I'm then going to return to share an update on the progress that we are making by way of an operational review, highlighting the tangible metrics to demonstrate the progress that we are making. I'll then return to share -- sorry, I'll then wrap up with a summary and a view on the outlook before opening the floor to questions. And just a quick reminder for our online participants, you can submit your questions at any time via the chat, and we'll read them out in the room before responding.

So before I hand over to Justin to take us through the half year results in detail, just a quick reminder of the priorities that we set out in March. You'll recall, we talked about sharper execution and a tangible delivery that will be evidenced through visible KPIs and profit growth. Well, the message at the half year is simple. We are doing just that and delivering on exactly what we said we would do. Our refreshed operating focus for improved outcomes is enabling us to lead the market. We strengthened our customer engagement, supported by new product development across all of our business units. We're more disciplined with cost and pricing. And alongside our great service and product propositions, we are converting our market position into better financial outcomes.

In Landscaping, we're seeing a recovery as the performance improvement plan starts to flow through into profitability. In this business unit alone, we have launched 6 new ranges to address gaps in the product ladder. And customer confidence is improving. Market share is growing, and our cost reduction program remains on track. Beyond Landscaping, the balance of our diversified portfolio continues to provide resilience.

Roofing remains a strong profit contributor and Water Management being well positioned strategically. The result of this is growth opportunities across different demand trends and multiple end markets. And finally, financial discipline remains a priority for us. Cash conversion continues to exceed target. Net debt is lower than June last year, and leverage is reducing in line with our expectations. So the strategy remains unchanged, and our focus continues to be on sharper execution, and the first half shows that this is beginning to deliver.

And with that, I'll hand over to Justin to take you through the financial detail.

Well, thank you, Simon, and good morning, everybody. So I'm going to take you through the key financial highlights for the period. I'll then talk through the details of the financial performance at both group level in each of our reporting segments and from a cash flow perspective. I'll then give you an update on the strength of the balance sheet before closing with a recap on the capital allocation policy.

So this slide sets out the key financial highlights for the period. And you can see that revenue was broadly flat year-on-year at GBP 380 million. And that's in the context of weak activity levels in our end markets. However, operating profit increased by 8% to GBP 30.7 million, and that reflects an improved performance in Landscaping Products. And those growth rates are amplified as you go down the profit and loss account, such a profit before tax increased by 13% to GBP 24.9 million with the benefit of a lower finance charge. Earnings per share increased by a slightly faster rate of 14% to 7.6p per share and benefiting from a lower effective tax rate. And we've increased our interim dividend by 14% as well, reflecting the application of our capital -- of our dividend policy. And pre-IFRS 16 net debt has reduced year-on-year by about GBP 15 million, and that's driven by our continued disciplined approach to cash and capital management.

So I'll now move on to the performance for the half year at group level. The chart on the left of this slide sets out a year-on-year revenue bridge that illustrates that revenues are broadly flat across each of our reporting segments, arriving at that total of GBP 380 million. Now that's against the context of weak activity levels across the key end markets of new housing and private housing RMI. And with that backdrop, volumes were lower year-on-year, and there was a slightly softer product mix. However, that was largely offset by the benefit of pricing actions that we implemented during the period. The chart on the right of the slide sets out a similar bridge, but this time for operating profit. And it sets out the component parts of the GBP 2.3 million increase in operating profit to GBP 30.7 million. And you can see from the bridge visually that profitability in Landscaping improved by a little over GBP 5 million. And that was partially offset by slightly lower profits in both Roofing and Building Products and slightly higher central costs.

Now the profitability numbers included in this presentation are all stated after adding back adjusting items. And for the first half of this year, it's quite simple. It's a GBP 5.2 million adjusting item relating to the recurring noncash amortization of intangible assets that arise on acquisitions.

So I'll now move on to each of our reporting segments, starting with Landscaping Products. Revenue held steady in Landscaping Products despite weaker markets. We focused on building market share, and we've done that through a focus on our customer proposition and our service levels, and we're pleased to see improving customer Net Promoter Scores as a result of that. However, volumes in this segment were lower year-on-year despite the positive share momentum. And that was offset by pricing actions that drove some P&L benefit. Operating profit increased by GBP 5.2 million in the first half of the year. And that was driven by the Landscaping Improvement Plan, which showed itself in the P&L account through improved gross margins, lower manufacturing costs and reduced overheads. And that was partially offset during the period by surcharges that we start to see flowing through the P&L account arising from higher oil prices and the war in Iran. And as Simon mentioned earlier, we remain on track to deliver the GBP 11 million of annualized cost savings by the end of 2026. So in simple terms, the Landscaping Improvement Plan is delivering better financial outcomes.

So now moving on to Building Products, where revenues were down just less than 1% during the period, and that reflects a mixed performance across the business units with continued growth from Mortars & Screeds, offset by lower revenues in Water Management and Bricks and Masonry. Mortars & Screeds continues to benefit from its strong service proposition and demand for its ready-to-use product, and that's in the context of relatively low build rates on housing developments. Water Management revenues were down year-on-year, reflecting the soft core housing -- new housing market, but that was partially offset by growing infrastructure-related revenues. And similarly, in our Bricks and Masonry business, soft activity levels in new build housing and competitive supply position impacted revenues in that business unit. Operating profit was GBP 700,000 lower year-on-year at GBP 6.2 million. And that reflects the impact of lower business volumes, oil price-related surcharges flowing to the P&L account and a slightly less efficient manufacturing performance. And that latter driver arose from an extended site shutdown that is not expected to recur in the second half of the year.

Now those challenges were partially offset through commercial -- or targeted commercial actions that are set to recover some of that surcharge cost inflation and ongoing overhead discipline across the reporting segment.

Now moving on to Roofing Products, where revenues again were down a touch year-on-year, and that reflects continued growth from Viridian Solar, offset by weaker revenue performance from Marley. Viridian Solar, as guided, the rate of revenue growth moderated slightly during the first half year to around about 7% as the adoption of Roof Integrated Solar driven by [indiscernible] of the 2021 building regulations became increasingly embedded. In Marley, revenues were lower due to increased competitive intensity in concrete roof tiles. And you may recall from our presentation in March that we highlighted that we expected a 12% increase in supply capacity during and the 12 months to June, and that's pretty much what's happened. And alongside that, we've seen softness in demand from new build housing. However, in that -- against that context, we're pleased that we increased our share of the concrete roof tile market, and that's supported by our focus on the more resilient RMI market rather than new build.

Now the challenges around the concrete roof tile market were partially offset by growth in clay roof tiles and improved attachment rates for Roofing accessories. As guided, operating profit reduced by GBP 1.7 million to GBP 23.1 million, and that reflected continued growth from Viridian Solar, offset by lower profitability in Marley. Viridian Solar profitability growth was driven by higher volumes and continued commercial discipline. And in Marley Roofing, the lower volumes of concrete roof tiles and weaker manufacturing efficiency reduced profitability in line with our expectations.

So I'll now move on to the lower half of the profit and loss account from operating profit through to earnings. And as mentioned earlier, group operating profit increased by 8% to GBP 30.7 million. Finance costs were lower year-on-year by GBP 600,000, reflecting the de-leveraging from our focus on reducing net debt. And as a consequence, [ PBT ] increased by 13% to GBP 24.9 million. The effective tax rate was 23% in the period. That's 1 percentage point lower than this time last year, and it reflects the benefit of the patent box arrangement that we have in place. And so take all that up together, we get an EPS growth of 14%, driven by improved operating performance, lower finance costs and the reduced effective tax rate.

So I'll now turn on to our cash flow performance and the result in net debt. The chart on this slide sets out the component parts of the reduction in net debt during the period, starting with EBITDA of GBP 44 million on the left-hand side. And we've continued to focus on working capital efficiency during the period. And as a result, our cash conversion performance has been very good at 98%. And that has restricted the seasonal cash outflow of working capital during the period to about GBP 20 million, which is an improvement year-on-year. Finance and tax cash flows consumed about GBP 11 million during the period, which is pretty similar to this time last year. And net CapEx was GBP 7 million, and that reflects growth CapEx of GBP 8.5 million, partially offset by the proceeds from site disposals of GBP 1.5 million. We continue to take a targeted approach to capital expenditure and the key areas of spend in the period were on more efficient secondary processing capacity in Landscaping Products and increased maintenance capital spend in Marley, which is focused on improving the manufacturing efficiency, which causes some degree of P&L hit during the first half of the year.

We had GBP 2.9 million of adjusting items paid. They are simply related to the restructuring actions that were implemented in 2025. And so take all that together, and we closed the half year with net debt of GBP 137 million. That's GBP 15 million lower than this time last year and GBP 1 million lower than our year-end net debt position despite the usual seasonal cash outflow from working capital.

So now moving on to the balance sheet. So this slide sets out a range of metrics that are focused on working capital management returns and balance sheet strength. And you can see from the table on the right-hand side that debtor days, creditor days and inventory turn are all broadly unchanged, reflecting that focus on working capital management that I touched on the last slide. Return on capital employed was a touch over 7%, which is in line with last year. And we continue to target an improvement in return on capital employed in the medium term as we deliver the benefits from our Transform and Grow strategy, and we see a normalization of market volumes. And Simon will talk through what a pathway might look like for that in his operational review.

The balance sheet remains resilient and robust and strengthened a touch during the period with leverage reducing to 1.7x. And we've got significant headroom against our syndicated bank facility of GBP 125 million. And it's that source of capital along with the cash-generative nature of the business model that will provide the cash and the capital that we need to execute our growth plans going forward.

So finally for me, moving on to a recap on our capital allocation policy. Our first priority remains to invest in organic growth opportunities. And in our strategic plan, we envisage spending between GBP 20 million and GBP 30 million a year. And in 2026, we expect growth CapEx to be around the bottom end of that range. However, we expect to generate between GBP 4 million and GBP 5 million in cash from site disposals, which will reduce the net CapEx to around GBP 15 million or GBP 16 million. We've increased the interim dividend by 14%, and that reflects the application of our dividend policy of maintaining 2x cover of adjusted earnings and paying 1/3 of the anticipated full year dividend at the interim stage. The balance sheet is de-leveraging. We talked about that on the last couple of slides. So we reduced net debt and leverage in the first half of the year, and we expect continued reductions in net debt from the organic cash generation from the business as we go forward. And we continue to target EBITDA -- sorry, leverage to be in the range of 0.5x to 1.5x EBITDA and expect us to be around the top end of that range at the end of this financial year.

And with that, I'll hand back to Simon, who will talk you through the operational review.

Thank you, Justin. Before we go into the operational review itself, I just want to share with you a short video that I think really neatly demonstrates where we sit in the market and indeed why we are winning.

[Presentation]

Okay. So I'm sure you'll agree that video really does capture the diversity of the products and the systems that we deliver, demonstrates why we are winning in the market. So I'm now going to take you through a more detailed operational review step by step. So first of all, despite a tough market and a continued tough market backdrop, delivering on our commitments is the key thing that I want you to take away from our first half performance. The strength of our product portfolio and overall service proposition is certainly key to delivery. However, the greater focus is providing the confidence and the resilience that we need right now. The sharper execution approach that we set out in March is now embedded and beginning to deliver measurable results. And the key point here, and as a reminder, this is not a redesign of the strategy. It is about sharper execution, putting resource, management attention and accountability behind the areas that matter the most. And this is showing itself in three ways.

First of all, focus. We're making clearer choices about the leadership where leadership [ shines ] and indeed capital is directed, which is helping us to prioritize the actions with the greatest positive impact. Secondly, the pace in which we are moving. Accountability for delivery is much clearer across the organization with greater emphasis on outcomes rather than the activity itself. This change in approach is improving our confidence in delivery and helping to strengthen our resilience. And with this more efficient approach, the business is better positioned to convert recovery into profitable growth. And as I walk through the business units later in the presentation, you will certainly see the evidence of this renewed approach flowing through to the results.

Now our diversified portfolio is a real strength for us. The fact is value creation for Marshalls is not dependent on one specific area of market recovery. And across the group, we have three distinct drivers that will create value. We have self-help actions. We have structural growth. And of course, when it comes, we have cyclical upside. In Landscaping and Roofing, the primary opportunity is self-help. And whether this is a recovery or maintenance play, it is all within our control. Improving commercial execution, cost and pricing discipline and of course, operational performance will all enable us to optimize share and maintain market-leading positions. For Viridian Solar and Water Management, the primary driver is structural growth. These businesses are well positioned behind longer-term demand trends, including energy transition, water management and infrastructure investment. And for Bricks and Masonry, the largest driver is cyclical upside. The business is exposed to recovery in new build and RMI markets, but now has a stronger operating base to benefit when demand returns.

So the key message again, this is a balanced portfolio. Some businesses are driven more by self-help execution, some by structural demand and some by market recovery. However, together, they do provide multiple routes to margin improvement and value creation over the medium term. So let's bring this all together to demonstrate how operating profit could progress over time, and we've built this visual to help. If we think about the drivers that I've described as value buckets, you can see clearly how you may bridge back to double the operating profit that we achieved in 2025.

In this model, self-help is worth around GBP 17 million, and this is driven by cost management, by management-led margin expansion and share growth in our mature markets. Structural growth gives us some GBP 14 million, and this is driven from our exposure to markets that benefit from longer-term regulatory tailwinds. And the third value bucket is cyclical upside, which is shown at around GBP 25 million, and this is simply demand normalizing over time, providing benefit through operating leverage. And the result of this is GBP 112 million worth of operating profit. And just as a reminder, that is less than what we achieved on a pro forma basis in 2021 and 2022. And the key takeaway here is the balance of that delivery. Around 55% of the uplift comes from self-help and growth market exposure, both of which are within our control and not dependent on the market turning. And that is giving us some real confidence in the plans that we have got.

And in this model, we do retain downside flexibility. If the recovery in our traditional markets is delayed, further cost reduction actions provide additional optionality. So we are well positioned in either scenario. So I'm now going to take you through each of the business units in a little bit more detail.

You will recall the primary opportunity in Landscape is self-help with commercial excellence and the reset of the cost base, clearly building a positive momentum. If we then underpin this with renewed customer confidence driven by our service and product propositions, you can see clearly why we are confident in our plan. So I'm just going to work from left to right on the slide. Customer engagement has improved materially. Better service performance has helped rebuild customer confidence with Net Promoter Scores up 11 percentage points since 2025. And that is translating into stronger commercial commitment with growth in our share of wallet and overall market share growth of 2.6 percentage points. Commercial excellence focus is driving more value from our specification-led model. We are engaging earlier with decision-makers, improving project support through our new digital tools and strengthening the mid-range offer through new product development. The early indicators here are very encouraging with project quotation activity up by 15%. And this is supported by the Marshalls design and engineering tools that were introduced in June. And from a new product development perspective, Lunar Textured was successfully launched in May. And finally, the cost base reset is progressing to plan. Network optimization is improving efficiency and projects that we delivered in 2025 are driving intra-site journeys down by 19% and complexity is being reduced, including a 30% SKU reduction since 2025.

So the overall program is creating a more efficient operating base with GBP 11 million worth of annualized savings on track to be delivered this year. So the key message here is very clear. These self-help actions are not theoretical. They are visible in customer metrics, operational efficiency and share momentum, and they provide a stronger platform for continued margin improvement and further recovery potential.

Now on to Marley Roofing. Again, the primary opportunity here is self-help. In other words, things within our control. This business unit is being managed with real commercial and operational discipline. We have successfully defended our market share and therefore, continue to deliver a resilient profit contribution. We also continue to push new product development in this business unit, including the launch of Edgemere 2.0 as part of our new low-carbon roofing tile offer. Now I'm just going to move around the graphic. In social housing, RMI, we're maintaining our market-leading position in a much more competitive market, and we have grown share in social housing. Now this is a core resilient end market for Marley and protecting share here underpins the earnings resilience of this business unit. We're also growing value from our Full Roof System offer, increasing the attachment rate across accessories, ventilation and solar, where we have seen an increase of 2 percentage points compared to Half 2 in 2025. And again, this is a really important lever for maintaining margin and customer loyalty as we sell more of the complete system rather than the roof tile alone.

Alongside social RMI, we're driving share in private RMI. And by deepening contractor engagement and making it easier to specify, buy from and indeed install our products, we have grown our specification bank by around 20% on a last 12 months basis. And underpinning all of this is operational excellence. We're maintaining service, quality and cost discipline whilst progressing our capital expenditure plans. We've already deployed 20% more capital to maintain the quality of our products, and that investment program is on track. So the key message again here is very simple. Marley is a resilient profit contributor. We are defending share in our traditional heartlands, growing attachment rates across the system, and we're investing with discipline to keep the business fit for the future.

And now on to Viridian Solar. Now the primary driver in this business unit is structural growth. And this is evidenced by successfully scaling this business unit through the Part L transition, where we've seen revenue increasing 300% between 2021 and 2025. And as we see the Part L adoption becoming largely embedded, our focus is increasingly on optimizing market share and margin and maintaining customer relationships from the platform that we've already built. Now the next regulatory opportunity for this business unit is the future home standard, and our analysis indicates this has the potential to materially increase the addressable market. And in preparation for this increase, our focus today is on being ready for our customers through specification support and capacity planning as the transition develops.

And alongside the core market, the ArcBox product provides a safety-led adjacent opportunity. And half 1 export sales increased significantly, and we continue to develop this opportunity through international partnerships and disciplined validation of demand. And again, a very simple key message. Viridian Solar has already scaled successfully, holding share and margin in a dramatically expanded market. And we also have a clear phase of regulatory growth ahead, and we are building additional optionality through targeted innovation.

And on to Water Management. Again, Water Management will benefit from structural growth drivers, and we continue to pivot this business unit towards infrastructure-led growth. We're focused on demand visibility, specification influence and operational readiness. And this will enable greater conversion of sales and support future growth in this business unit. The objective here is very clear to create a scalable and agile infrastructure-driven business. Looking at demand visibility, the AMP8 investment cycle is now underway, and that is showing up in our numbers. AMP8 sales are up more than double compared to the first half of 2025. Our quote activity is also increasing and the pipeline is improving. And this is supported by broader climate adaptation trends and the adjacent infrastructure opportunities that we see. And just to frame the scale of that, the U.K. physical adaptation market is estimated at between GBP 57 billion and GBP 64 billion out to 2035. We're also starting to influence specification by engaging earlier in project life cycles. We're working with consultants, water companies and utility providers, and we now have framework agreements in place with three water utility organizations.

And when we talk about operational readiness, we are very well placed. Our national manufacturing and delivery footprint supports scale and our technical and engineering capability remains a key differentiator for us. Our investment plans are kept deliberately capital-light within the existing network. So the focus here for the second half of the year is firmly on the development of our infrastructure growth platform to ensure that we unlock those opportunities as they move from design into delivery. And in the meantime, we will maintain a competitive position in our existing markets.

And finally, turning to Bricks and Masonry, and this is very much our cyclical upside story. And in the current environment, we are protecting margins through disciplined execution. Now this is the most challenging market where competitive supply conditions persist and new housing demand does remain subdued and customer decision-making is slow. But against that reality, our first half focus has been squarely on what we can control and how we protect margin. Now that means execution excellence across service and delivery and disciplined management of our cost base, including supply chain, manufacturing and logistics. And of course, staying close to our customers through site support, ease of use and national partnerships. On capital allocation in this business unit, we are being deliberately selective. We have no plans to further convert Landscaping lines to Brick lines, but we do retain capital-light optionality should conditions warrant it.

So again, a very simple key message. We're protecting our market position and strengthening our execution model now so that when demand recovers, the business delivers meaningful operational leverage.

So now let's turn to the summary and the outlook before moving into Q&A. So as a reminder, our strategy is unchanged, and our focus on execution is feeding through to delivery. Self-help actions have driven higher profit, earnings and dividend despite marginally lower revenue. Market leadership is strengthening through new product development, more disciplined pricing and overall reliability. Landscaping is recovering as the performance improvement plan converts to profit with greater customer engagement, new product development and disciplined cost management. And our product and portfolio diversification is providing countercyclical defensiveness. We have more than one value bucket, self-help and structural drivers are within our control. And finally, we have strong financial discipline that has seen de-leveraging track in line with our expectations. So yes, our end markets do remain subdued. However, we are not banking on any material market recovery in the second half.

Our confidence in our ability to deliver on our full year expectations comes instead from what is within our control. I said to you back in March that I was focused on commercial and financial discipline, and that absolutely remains the case. We are delivering against the plan. The GBP 11 million worth of annualized Landscaping savings remains on track. And the operational improvements that we set out in March is translating into outcomes in line with our expectations. And as a result of all of this, our expectations for full year profitability are unchanged. And beyond this year, our Transform and Grow strategy will continue to underpin the medium-term improvement in margin, cash generation and returns that this investment case is built on. With, of course, the pathway to doubling our operating profit over the medium term. So in summary, good progress, a resilient and diversified portfolio and a business that is extremely disciplined on the things that it can control. Our strategy is unchanged, and we remain firmly focused on execution to drive better returns for shareholders.

And with that, I'd like to ask Justin to join me for question and answers.

Aynsley Lammin from Investec. Just two for me on the Landscaping side. Just wondered if you could split the kind of volume and price and component of the flat revenue for Landscaping? And then also just what you're seeing on -- are you still implementing surcharges, what the kind of direction of travel is there? And then secondly, just to cover on the GBP 11 million of annualized cost savings in Landscape, is that a run rate you reach at the end of this year? So there's still some incremental benefit in '27? Or is it all delivered in '26?

Okay. From a price volume mix perspective in Landscaping, you've got volumes down by sort of somewhere between 2% and 3%. There's a little bit of mix weakening within that as well, maybe about 1% and then the balance is price in rough terms. In terms of the surcharge position, so we took a measured approach to the implementation of Iran-related surcharges, let's call them, in the second quarter of the year, we worked with our customers to defer them as long as possible, but we implemented surcharges, which are just designed to recover those increases in costs. They were implemented in most of the businesses in May and in one of the business units in June.

At this stage, we have no plans to levy any increase in surcharges, and we just need to monitor what's happening with our cost base and what our input costs are looking like. In the first half of the year, though, the net impact of, let's call it, the Iran conflict in terms of the direct cost base was about GBP 1 million. I think there was a second question?

Just on the GBP 11 million.

The GBP 11 million is -- that will be delivered in full this year. So there is no incremental benefit after this year. Having said that, as Simon touched on one of his slides, we remain -- I guess, we've got optionality to look at the cost base, we don't see a -- start to see a recovery in activity levels. And indeed, we just see there's good discipline to keep the cost base under constant review, but there's no major program underway.

Rob Chantry of Berenberg. So three questions. So firstly, just on Landscaping competitive dynamics. I think you mentioned 2.6% market share growth. Could you just give us a bit of an insight as to where that growth has been? Is it customer you previously lost? Is it new areas? How exactly is that shaping out?

Secondly, on the Water Management business, I think roughly it's a GBP 70 million type revenue business. Could you just give us a split on what the traditional end market percentage is versus infrastructure exposure?

And then thirdly, Water Management, again, you mentioned framework agreements in place with three water companies, and you kind of put some very large CapEx numbers on the screen. Could you just clarify exactly what a framework agreement is when that starts kicking in? What's the duration? What's the economics of a framework agreement with a water company?

I'll take the Landscaping competitive dynamics. So look, we were very, very transparent around losing some market share previously. So there has been a rebuild there, Rob, as much as anything else, but we've then gone beyond that. So there was a rebuild in those numbers, and then we've taken a little bit more. That's been across the patch. That's been with smaller regional competitors and some of the larger competition. So it's been across the patch. But we took back share that we lost and then we built a little bit more. And that's been through predominantly the merchants and indeed some direct to site work.

Okay. Water management, yes. So water management last year, total revenues were about GBP 80 million, Rob. And the split last year would have been about 2/3 of that would have come from new build housing, and the balance comes from commercial infrastructure end markets. And we've actually seen that shift a touch during the period, continued weakness in new build housing, particularly reluctance of housebuilders to start opening new sites, which is where we really start to supply the big concrete pipes and manholes into them. And therefore, the mix of revenue has shifted somewhat. And it's somewhere probably around about 6 or 7 percentage point shift from new housebuilding into commercial and infrastructure end markets.

And I think there's another question about the framework agreements. The framework agreements are simply that. They are effectively a series of trading terms with water companies that you need to be prequalified to access their investment plans. So they don't come with any specific pound note commitments attaching to them. It's just effectively you need to be -- you need to have those in place in order to be involved in the design activity. So there's no real pound notes that we can put around the value of those, but they are very important to access in the market.

Very similar to a preferred supplier agreement.

Chris Millington at Deutsche. I've got a couple, first of all, just on the profit bridge slide. And firstly, on that GBP 17 million of self-help, one, does it include the GBP 11 million you've already taken out? And what would be the time frame for the delivery of the remainder? And the second question, sorry, this is getting a bit drawn out already. The second question is what volume recovery is assumed in the cyclical part?

So the -- if you think what we've done here is we've bridged from -- we bridge from what we need to do to double operating profit from 2025. And that GBP 11 million of cost savings, GBP 3 million of that was delivered in the 2025 numbers. So you've got an GBP 8 million increment to come through in those numbers. But self-help isn't just cost savings. So self-help is about how you grow your market share, and it's about how you improve the mix of the products that you're selling. So there's a combination of different actions that will be taken in order to drive that, much of which is already underway.

Just in response to one of Aynsley's questions earlier, we talked about the other optionality around kind of continuing to look at the cost base and ensuring that we are going to market in the most efficient way as we possibly can. So in terms of the time lines around that, we'd expect to be doing that in the next 2 to 3 years. And the next part of the question was...

Volume recovery...

And just to build on what is within that self-help, we need to be very clear, it isn't just about kind of cost. It is about things like new product development and building out that good, better, best product ladder is a real key part of what we need to do to drive mix. And so those will be the kind of impact that are all underway. So everything that goes towards delivering that number is already in the plan.

It's probably just worth putting some margin numbers around that. So the difference between -- if you think about the good, better, best product ladder, the difference between the margins on a good product and on a best product can be 20 percentage points. So as you shift the mix, that can have quite a dramatic impact on the P&L account. And the product ranges are now in place to enable us to do that, and we're particularly filling in that gap in the middle in the better range alongside changes in incentive plans and frame freedoms for the sales guys in the marketplace. So the ingredients are in place, but it will take time to drive that through. And in terms of the cyclical recovery, probably around about 12% to 15%.

So would that be what, roughly half of what you've lost, would you say, market volume-wise?

It depends on market to market. But yes, it certainly doesn't assume you back up at 2022 volumes. No.

Just on Roofing, do you think the capacity increase was fully manifested in H1? And do you think there's any danger that more competitive pricing kind of creeps into the RM&I sector?

In terms of competitive pricing, I guess, market dynamics will play. It depends what demand is going to look like. If demand increases, then obviously, discipline around pricing will persist. But we're monitoring pricing regularly. We're not -- we're very aware of our competitive position. As I said in my slides, we're winning. We're kind of defending our position and in fact, gaining share in social housing RMI and indeed private RMI. So I think it's just -- we need to watch it as the market develops, Chris. I don't think you can do anything else.

Clyde Lewis at Peel Hunt. I suppose three, I think I've got. Domestic installers, you don't give us the numbers in terms of that pipeline, but I'm sure you're still collecting the stats. It would be great to get an update as to what you're seeing from that side of the market in terms of RMI?

In terms of the channels, the builders merchants channels, where do you think they sit currently in terms of stock levels? Are they below average, above average? It'd be interesting to get a feeling there? And then I suppose on ArcBox, you flagged the exports and the growth there. Are you seeing still a very healthy growth in domestic usage as well because that's obviously sort of a key part of that business offer at the moment.

I'll take the first two. So I think, first of all, in terms of landscaping, the installer scheme, we reinvigorated that at the end of last year. So in terms of what the market dynamic is like in that space, it's still quite subdued. Consumer confidence is obviously key in that area, Clyde.

But what we are seeing through our reinvigorated scheme is that we're picking up more business. It had been languishing a little bit alongside a subdued market. So we fully expect that to start to form part of the improvement plan moving forward. We're really encouraged in that space at the moment, and we're looking to grow that scheme previously referred to as the register. So that is growing from a domestic perspective. So early signs are positive.

Okay. Sorry, the second part on landscape. Stock levels, I think they're kind of about average at the moment. Certainly, what we are doing now is making sure that our merchant partners are not overstocked. So I've described previously that we're working very closely with merchant partners. In some cases, we've got [indiscernible] to manage stock levels. And so it's all about understanding the end consumer dynamics, making sure we're not pushing too much stock into yard and making sure that we're monitoring what mix we've got through those yards as well. So I would suggest it's about average at the moment.

And then on outbox, the rate of sales growth in the U.K. was faster than the rate of panel sales. So the penetration level is increasing, albeit relatively modestly faster than the panel growth. But yes, doubling of revenues internationally and very excited about that opportunity.

Ben Varrow, RBC. Three as well, please. First is on landscaping. Obviously, some benefits coming through in the first half. Do you expect then a stronger second half as more of those self-actions come through self-help actions? Second point is on Marley. Could you share the price volume split for the first half and a bit more color on the share gains that you've seen there? And the last point on Viridian, just any change in terms of competitive dynamics and the pricing.

Okay. Thanks, Ben. In terms of landscape, more of the same. We've got a number of plays that are underway at the moment. So we'll continue with those. I think we described driving mix. We've already talked about the cost base is bang on track in terms of where it should be at this moment in time, and that will continue to deliver up to the GBP 11 million.

I think in terms of continuing to focus what more we can do in that space. The first thing to say we won't cut into muscle. We'll make sure that, that's supported either by process changes or technology to kind of unlock further benefits moving forward if indeed the market remains subdued. But everything that's underway will continue. So more of the same in the second half from a landscaping perspective.

Roofing. So a question on market share in roofing. So reduction in concrete, this is concrete roof tile volumes, I assume you're talking about? Okay. So in terms of concrete, so volumes of concrete tiles down quite significantly year-on-year in the market, driven by lower new build housing. Now as we've said, our focus really is principally on public and private RMI activity, and that part of the market has been more robust. So naturally, as a result of holding our share in that part of the market, we've built share overall. So I guess that's the key factor there.

In clay roof tiles, our market share has increased quite markedly. And that's got two drivers behind it, one of which was a strategic decision about 18 months ago to reduce the pricing of our tiles to reflect reduced input costs. So as we saw gas prices start to fall, we responded by reducing the price of the tiles. That reduced the premium over -- for a clay tile over a concrete roof tile, and that's enabled us to take back some share. The other thing that we benefited from in the first half of the year, though, is that one of our competitors, kiln has been in an extended -- in a period of extended maintenance and that's meant that we've had a free run at that particular market. We think that market position will normalize in the final quarter of the year as that capacity comes back online. Viridian as well?

Yes.

So the competitive dynamics in Viridian, there are a couple of new entrants in that market in the relatively recent past, and we may well have spoken about these at the full year. So there is a competitor -- a key competitor is a French company called GSE. And there is a new company which has been launched by some former members of the management team of that business, which have introduced the product, which, I guess, is a similar product to GSE in the sense it's a plastic tray rather than aluminum [indiscernible].

And there is another company that's recently got some capital that does a similar product to ours, albeit not a significant amount of volume. And then finally, there's a company that manufactures small format tiles, all of which, I guess, is healthy in the marketplace. But at this stage, not having too much of a significant impact on our business volumes.

Toby from Equity Development. I've got one and two follow-ups. I think I'll give them one at a time. So just based on AGM data, this is the revenue momentum question. So based on the AGM 4-month revenue compared to the 6-month revenue, the last 2 months of the half seem to be about the same, which I was slightly surprised at given conventions be for a wet Q1 and some recovery in Q2. So is there any trend between sort of May, June and probably into July that you can highlight behind that, please?

I think if we think about the year, you're quite right. First couple of months were extremely wet, and that did impact us. And then we saw a bit of a pickup for the couple of months. I think without wanting to create a world of the [indiscernible] my homework, the World Cup was on. I think the fact that the extremely hot weather actually had an impact as well, and we saw that. So I think there's almost like that sweet spot between extreme wet weather and indeed extremely hot weather. I think we saw a slowdown. So I think that is the only thing that we could potentially point to in that regard.

Yes. Look, I mean, I think trying to pick out any discernible trends amongst all that is something that probably leave a clever people in us to try and work out.

Just following up on Chris' question about the -- how much of the GBP 17 million self-help is coming from Landscape products? Did I hear it right, just for clarification that sort of you're going to get GBP 8 million of that GBP 11 million this year, and then therefore, that's GBP 8 million of the GBP 17 million is coming from the Landscape Products self-help plan. Is that right?

From the cost element of it from the restructuring actions, that's right. Right.

And finally, on the -- following Rob's question on water frameworks. Can you just clarify for us, are those frameworks at water utility level? Or are they at individual project level? And are they exclusive, do you know?

Water utility level. In terms of -- you talk about exclusivity, -- if you think about it as a preferred supplier agreement, there will be others that have framework agreements in place. So as Justin said, that is not a prerequisite to you bank the project and you've got that going to flow through to revenue. So that work is still to do.

Okay. And are there either others, no pun intended in the pipeline or others you had to go out and not managed to get on the list?

No, we're working actively too. I mean this is all part of the pivot towards infrastructure-led growth and whether that be water management, energy transition or indeed broader infrastructure, that is the work that's underway. So there's more of that to go.

Charlie Campbell at Stifel. Just one really. It is a general question. But just thinking about the commercial exposure of the group as a whole. I just wonder if there's any sort of color you can give us in terms of order books and how those have evolved over the half?

Look, we're happy with the pipeline of activity we've got in terms of specification-led order books or order books in general. And a lot of the activity we undertake, particularly in the commercial landscaping space or indeed infrastructure is built on building a pipeline of specification. So we're very, very happy with the activity that we've got flow through into the pipeline. And therefore, that is your order book. So yes, we're happy.

And still, I guess, the problem is sort of confidence to start those projects still. Is that still an issue? Is that changing at all?

There's a little bit of that. Yes, absolutely. But I think just in general, commercial infrastructure and infrastructure generally has been more robust for us just in general terms. And you're right, rather than projects being pulled, it's more slight delay. So we're still seeing a little bit of that.

Okay. Thank you very much for your time. Good to see you all

Do we have any online questions?

No. Thank you.

Good morning, everybody, and welcome to Marshalls' 2025 Full Year Results Presentation. Thank you to everybody in the room for joining us and of course, to those online, too. I'm joined this morning for the presentation by Justin Lockwood, our Chief Financial Officer. So just a quick rundown of the agenda. Before I get into the presentation itself, I will outline my thoughts as a new CEO to Marshalls. I'm then going to give a brief overview of the full year performance before handing over to Justin, who will take us through the group's full year results in more detail. I'll then return and share an update on the progress we are making with our Transform and Growth strategy.

And then I'll wrap up with a view on the outlook before opening the floor to questions. Just a quick reminder for our online participants. You can submit your questions at any time via the chat, and we'll read them out in the room before responding. So as a reminder, I've been in the business for over 10 years. And during that time, I have held a number of roles, including that of Chief Operating Officer and more recently, Chief Commercial Officer. I've also been a member of the Board since 2022.

Both myself and Justin are integral in the development of our transform and growth strategy. And as you will see from today's presentation, we firmly believe that it remains the right strategy for Marshalls. So if we're not changing strategic direction, what are we doing? Well, the message today is one of strategic continuity, but with much sharper execution that will ensure that we deliver on the commitments and the medium-term targets that we set out in November 2024. So looking at the left-hand side of the slide, where are we now?

Well, Marshalls is a great business with a diversified portfolio, and that does give us a good degree of resilience in subdued markets. The proposition that we have is genuinely differentiated with unique capabilities that our competition cannot easily replicate. We still have great products, and those hold enviable #1 or #2 positions in the market. And our national network gives us the service and carbon leadership advantages over our competition.

And underpinning all of this, we have really talented colleagues with both the capability and the desire to deliver outstanding outcomes. And this certainly shows through with the unrivaled technical and design expertise that we bring to every project. Now these are advantages, real advantages, and these are advantages that our competitors cannot easily replicate. So what are we doing differently? And looking at the right-hand side of the slide, we've already tightened our focus with fewer higher-value activities, both operationally and strategically.

We've intensified the pace in which we operate, and we are improving the commercial performance culture up and down our business. And I'm now going to take you through each of these in detail on the next slide. So we're absolutely committed to the medium-term targets, and we believe in the strategy, but we must sharpen up our execution. And as a result, we've been tightening our focus. We're being much more selective about the activities that we undertake. Strategic investments have now been prioritized, and these are guided by customer insight, financial performance and structural and regulatory tailwinds.

The people-related activities in 2026 will be directly linked to value creation in the P&L. And we are now more proactive in the management of our product portfolios and new product development to make sure that we keep things simple. We've intensified the pace by building an organization that is focused on delivery. So we've got a flatter structure that will improve accountability throughout the organization and clearer frames of reference for trading will enable agile, more confident decision-making at every level in the business.

And this will mean that we can compete more effectively with our regional competitors. We've already seen examples where we are becoming a seamless extension of our customers' businesses, and we're making it easier to deliver value, drive collaboration and reinforce the long-term partnerships that underpin sustainable growth. And finally, we are embedding a performance culture into the business, strengthening our commercial excellence. We now have far better visibility of the commercial levers that drive financial performance, such as pricing architecture, customer and channel profitability and cost to serve management.

We've redesigned our incentive schemes to focus on margin performance, and we're ensuring that our cost base remains aligned to our market opportunities. And all of this has been underpinned by a reinvigorated sales and product awareness training. So as we look into 2026, our focus is simple. It's one of delivery, delivery that is evidenced by improved profitability, not just plans, not just intentions, but results that demonstrate progress.

So before I hand over to Justin, I'm just going to run through a very brief summary of our performance for 2025 and the progress that we're making against the Transform and Grow strategy. So despite challenging market conditions, the group delivered revenue growth and landscape has shown a clear improving trend throughout the year. In terms of profitability, we've seen growth in roofing products and a solid performance from Building Products. Landscaping profitability was in line with our expectations and against our plan.

And finally, our disciplined approach to working capital throughout the year has delivered a very robust balance sheet. So overall, these results demonstrate early but clear progress with regards to our Transform and Grow strategy. We're stabilizing the group, we're rebuilding growth and we're improving our financial resilience. And this is all whilst investing in the capabilities that will strengthen our market positions for the long term. This is a solid foundation to build on, and I'm confident that as we continue to execute the strategy with increased pace and greater discipline, we will unlock further value across the group.

And with that, I'm going to hand over to Justin, who will take you through the financial detail.

Thank you, Simon, and good morning, everybody. So I'm going to take you through the key financial highlights for the period. I'll then run through the detail of the results at both group level and by our reported segments and also our cash flow performance. I'll then give you an update on the strength of our balance sheet before closing with a recap on our capital allocation policy.

So this first slide sets out the key financial highlights for the period. We're pleased to be able to report a return to revenue growth of 2% to GBP 632 million, and that's after a couple of years of declining revenues. However, operating profit contracted by 15% to GBP 56.4 million, and that was due to a weaker performance by landscaping. Profit before tax and EPS both declined by 16% year-on-year to GBP 43.7 million and 13.4p per share, respectively. And our proposed full year dividend reduced by the same percentage to 6.7p per share, reflecting the application of our dividend policy.

And finally, we continued our disciplined approach to cash management. But despite that, we had a modest increase in net debt due to some normalization of working capital and the payment of adjusting items. So I'll now go on to revenue and operating profit at group level. And the chart on the left-hand side of this slide sets out a year-on-year revenue bridge, showing the component parts of the 2% increase in revenue to GBP 632 million. And you can see from the chart that both Building Products and Roofing products delivered growth in the period, and they both increased by 4%.

However, landscaping products contracted by 1%. The slide on the right shows a similar bridge for operating profit. And it's clear from that bridge that the main driver of the reduction in profitability was Landscaping Products with relatively small movements across the other reporting segments. Now as usual, the operating profit numbers are stated after adding back adjusting items. And adjusting items in the year totaled GBP 24.4 million. And they comprise the amortization of intangible assets arising on acquisitions, that's GBP 10.3 million, and that's a recurring feature of our P&L account.

But in 2025, we also had restructuring costs of GBP 14.1 million. And they were split broadly 50-50 between cash costs and asset impairments. More details on those are set out in the appendix of the deck if you have interest in that. So I'll now move on to the performance of each of our reporting segments, starting with Landscaping. So as mentioned on the last slide, landscaping revenues contracted by 1% and that's against a challenging market backdrop where sector-wide volumes are still running below historic norms.

And against that backdrop, we are pleased to deliver an increase in volume growth of 4%, and that was delivered through improved customer relationships and new trading agreements. However, the benefit of that volume growth was offset by deliberate and targeted price reductions, which reduced revenues by 1% and a shift in product mix, which had a 4% impact on revenues. And the impact of those 3 factors all moderated in the second half of the year.

Operating profit contracted by GBP 10.1 million. And as a result, the reported segment was broadly breakeven in 2025. The reduction in profitability was driven through the price investment that I've talked about and the shift in product mix towards lower-margin categories. In addition, we saw cost pressures in the business with pay awards and higher national insurance contributions, and those weren't offset by customer price increases during the period. In addition to that, we saw a significant deterioration in the financial performance of our natural stone processing business, and that resulted in the closure decision in the second half of the year.

Those factors, though were partially offset by the benefit of improved volumes and the early benefits of our restructuring programs. So we responded decisively to that deterioration in profitability in this business and identified GBP 11 million worth of cost savings, which we expect to be fully delivered by the end of 2026. And indeed, GBP 3 million of those was delivered in 2025. And a little later in the presentation, Simon is going to take you through the component parts of how we expect to rebuild margins in this business. And we believe that the decisions that we've taken in 2025 will result in a more flexible and agile business that will underpin a significant improvement in profitability in 2026.

So now moving on to Building Products, where we delivered revenue growth of 4% and that reflects good growth in both Water Management and our mortars business units, partially offset by lower revenues in Bricks. In our Water Management business, the growth was driven through both our core residential market and the wider infrastructure markets, supported by improved stock availability and good customer service levels. Our mortars business benefited from its strong service proposition and relatively modest build rates across housing developments that favors our ready-to-use product.

However, in Bricks, we chose to focus on pricing rather than volumes. And therefore, we saw a reduction in revenues during the period. And we did that in order to protect our gross margins. And in the second half of the year, we saw increased competitive intensity as the rate of housebuilding slowed. Operating profit was 8% lower year-on-year at GBP 13 million, and that reflects improved profitability in our water management business from higher volumes and an improved product mix.

But that was offset by lower profitability in Bricks with lower volumes and reduced manufacturing efficiency. In addition, the reporting segment benefited from lower levels of property income compared to recent years, and that reduced profits by about GBP 800,000. So now turning to Roofing Products, which delivered revenue growth of 4% and that growth was driven through Viridian Solar, where revenues increased by about 1/3 as house builders continued to select its products as part of their response to change in building regulations, which require increased energy efficiency.

The rate of growth of Viridian moderated in the second half of the year as we expected, and that's as the comparatives became tougher. However, we were pleased to see sequential growth in 2025 with higher revenues in the second half of the year than the first half.

Revenue in Marley Roofing, though declined, and that was due to the tough market backdrop and increased competitive intensity as we saw increased market capacity come on stream during the period, which reduced our sales of concrete roof tiles. Operating profit in this segment increased by 2% to GBP 50.2 million, and that reflects improved profitability in Viridian from higher volumes and its disciplined pricing strategy, but that was partially offset by lower profits in Marley due to lower volumes and weaker manufacturing efficiency, which in itself led to product availability issues for certain product profiles.

We've integrated a targeted program of capital expenditure aimed at improving the resilience and efficiency of Marley's concrete roof tile lines, and that will remain a key area of focus in 2026. So now moving on. This slide sets out the profit and loss account from operating profit through to earnings. And as mentioned earlier, operating profit reduced by 15% to GBP 56.4 million. Finance costs were GBP 1.8 million lower year-on-year due to lower base rates and the benefit of a pensions credit.

So as a result of that, profit before tax contracted by 16% to GBP 43.7 million. Our effective tax rate was 22%, and that's unchanged year-on-year, and it's lower than the headline rate of corporation tax in the U.K. because of the patent box arrangement we have in place. So taking all that together, earnings per share reduced by 16% to 13.4p due to the weaker operational performance.

Turning now to cash flow and net debt. And the chart on the right-hand side of this slide sets out the component parts of our movement in net debt during the period and starting from the left-hand side with EBITDA at GBP 85 million. We've continued our disciplined approach to working capital management and delivered cash conversion of 88%. However, despite that, we still had a working capital cash outflow of GBP 12.5 million. We consumed around GBP 25 million of cash in interest payments and taxation, and that was higher year-on-year due to normalization of the timing of interest payments and arrangement fees associated with the new syndicated bank facility that was put in place in November 2025.

Capital expenditure of GBP 15.7 million remains targeted and tightly controlled, but it did increase year-on-year by about GBP 8.5 million. And that reflects increased CapEx on Marley's concrete tile lines, investment in Viridian's office space and warehousing facility, increased investment to increase capacity in water management, and we also benefited from lower levels of proceeds from site disposals than last year.

Adjusting items paid was GBP 10.9 million, and the most significant item of that was the final Viridian Solar contingent consideration payment of GBP 6.6 million, and the balance was restructuring cash costs. So overall, net debt increased by GBP 4 million to GBP 137.9 million.

So I'll now move on to focus on the balance sheet and our capital discipline. And this slide sets out a range of metrics, which look at working capital management, returns and balance sheet strength. And you can see from the table on the right-hand side that debtor days and creditor days both improved year-on-year by day and the average inventory turn was unchanged at 2.8x. Return on capital employed reduced to 7%, and that reflects the weaker operational performance. However, we continue to target to rebuild that to 15% on the back of delivering our Transform and Grow strategy and seen a normalization of market volumes.

Our balance sheet continues to be robust, although leverage increased a touch to 1.8x. And we've got a lot of headroom against our new syndicated bank facility. And at the year-end, that was GBP 125 million. And that bank facility, along with the cash-generative nature of our business provides the capital that we need in order to execute our growth plan.

And finally, moving on to our capital allocation policy, which remains unchanged. Our strategic plan requires us to invest between GBP 20 million and GBP 30 million a year. And in 2026, we expect capital expenditure to be at the lower end of that range. And a couple of slides ago, I talked about the slight increase in net debt during the period, but we do expect in 2026 and beyond to return to annual reductions in net debt, reflecting the cash-generative nature of our business. And we continue to target leverage to be in the range of 0.5 to 1.5x EBITDA.

And with that, I'll hand back to Simon.

Thank you, Justin. So it is very clear against that tough market backdrop that we've delivered a performance that demonstrates the strength of our broad product portfolio. So we're now going to turn to the Transform and Grow strategy, where I'm going to give you a brief update on the progress in each of the business units.

So as a brief reminder, and many of you will recognize this slide, our Transform and Grow strategy is built around our customers and a common set of capabilities that we absolutely know they value. Our medium-term goals along the bottom are clearly defined and they are built on delivering market outperformance across the business and leveraging the financial strength of the group to deliver sustainable growth.

I'm now going to take you through each of the business units in turn. I'll give you a brief overview of the market, the strategic priorities for each and the progress that we are making against those. So first of all, let's have a look at landscaping and a brief market update. In the second half of 2025, we did see a softening in the market. However, overall activities year-on-year were broadly flat. Across the industry, there were no significant changes in overall capacity, although a number of our competitors did scale back their output throughout the year.

And just directing you to the top right of the slide and as a reminder of our near-term improvement plan. We've been busy strengthening the leadership team, growing our strategic relationships with customers and simplifying our offer. We've also made significant progress in embedding a commercial excellence program across the business. And looking at how we're doing against the plan, the team is now rebuilt, and I'm absolutely confident we have that Premier League winning side in place.

Multiyear trading agreements are secured and pricing is agreed for 2026. Our customer engagement scores are improving, and they're up by 15 percentage points, and our share of wallet in yard is growing. And in some cases, that is now beyond 85% -- and overall, we gained just over 4% of overall market share during the year. And this progress with our customers has been recognized through multiple supplier awards, most notably Supplier of the Year from 2 of our major partners.

The product portfolio has been simplified and our pricing architecture is now aligned to that. And most importantly, we now have a very clear new product development pipeline with launches planned for quarter 2 of this year. And these new products are going to rebalance the good, better and best ranges, and that will help us to defend against the competition where customers have previously been migrating. And all of this is underpinned by an improved commercial capability, driving greater value, and this has certainly been evidenced with an improvement in gross margin in H2 of 2025. And let's not forget, we will deliver GBP 11 million worth of cost savings in 2026, and this will underpin and improve our profitability through '26.

So these results demonstrate clear progress and they certainly strengthen our competitive position. And alongside our nationwide network, we firmly believe that we're in a great position to capture value as the demand recovers. So I'm now going to talk you through the building blocks for margin recovery in the Landscape Products business. So I'm absolutely confident we will rebuild the Landscape business and deliver operating margins of at least 12%. We've achieved this before, and the foundations are now in place. So I firmly believe we can do it again.

Starting on the bottom left of the slide, 2025 has very much been a reset year, one where we focused on rebuilding the foundations needed for sustainable, profitable growth. And the key to this was having that Premier League winning team in place to allow us to reinvigorate our relationships with customers. We've reset the cost base and already unlocked around GBP 11 million worth of cost reduction, and that's been done through network optimization and overhead removal. And this has given us a much simplified footprint and lower complexity to improve our efficiency and control.

Our commercial excellence is now starting to show, and we've introduced clear product and pricing architecture, and this is supported by a robust pipeline of new product development. And all of this is going to enable us to improve our margins through specification-led sales. And service and availability has also improved, and that's helping us to protect mix and retain our customer base. And finally, as demand normalizes, we can deliver incremental volume with our existing footprint. And we've seen this historically, and it does result in significant operational leverage.

So in summary, we've rebuilt the foundation. We've reset the cost base, and we have strengthened our commercial capabilities. The plan is very clear. The actions are in motion and the impact is beginning to come through. Now turning to Marley Roofing. In terms of a brief market update, underlying demand has remained broadly stable. However, the competitive dynamic in concrete roof tiles has seen a shift. New capacity was introduced across the market in 2024 and 2025. However, some older assets will be retired this year.

So we do expect competitor intensity to persist in 2026. So against this backdrop, we've assessed our strategic priorities that we already have in place, and we're confident that we have the right plan. We will, of course, continue to monitor market dynamics very closely. And as a reminder, and directing you to the top right of the slide, repairs, maintenance and improvement in both social and private markets remains a priority for us as does leveraging our full roof system offer to drive share in private new build housing.

And of course, we will continue to focus on boosting availability in categories where supply has held the market back. And if we look at the progress and response against those actions, we're absolutely protecting our margins by continuing to invest in the Marley brand and in our specification and full roof system capability. And from this, we've seen specification-led growth. We've secured pilot deals with small to medium house builders for full system offers, and this includes solar.

To support in that, we've invested in new software to strengthen lead generation and maximize our margin per tile. And to further support, we've got dedicated capital expenditure plans to improve operational efficiency and quality. And this investment will be dedicated specifically towards those concrete tile lines that are subject to increasing competition. Therefore, our plan is very clear. We will continue to strengthen our heartlands through targeted investment, and we will continue to drive share in adjacent markets.

So moving now to Viridian Solar. 2025, industry demand increased significantly, and that was due to the Part L regulations. Alongside this, there were no changes in competitor dynamics, and we maintained our market share throughout the year. The demand for our ArcBox Fire Protection product continued to grow strongly and the introduction of the future home standard remains a long-term growth driver for us.

In terms of our strategic priorities on the top right, they remain unchanged. We will continue to leverage regulatory tailwinds that drive solar into new build housing. And alongside that, we will continue with new product development and innovation. We'll continue to increase the attachment rate of our ancillary products, and we're going to accelerate the growth of ArcBox in European markets.

So we look at the progress against the plan. We in 2025, we delivered an outstanding performance and protected our market share, and this is reflected through very, very strong customer service metrics. New product development has been a continued focus for us, and this has resulted in the launch of our most powerful panel to date. We've strengthened our supply chain due diligence, and this is increasingly becoming a deciding factor with regard to contract award.

And finally, we've expanded our international sales team with a specific focus on the potential for ArcBox across several European markets. This product has seen significant volume growth over the year and has resulted in over GBP 2 million worth of revenue in 2025. So this year, we will continue to innovate. We're going to launch the Viridian Solar mobile app, and this will give our customers greater control across the installation journey and will further enhance the ease of doing business with Marshalls.

So whilst growth in 2026 is expected to moderate, the future remains highly attractive in this area. Regulatory tailwinds will provide leverage and new product development will accelerate growth. So now let's look at Water Management. In 2025, again, demand remained broadly flat, and there was limited growth revenue in regards to AMP8. However, design activity in this area is increasing, and I'll come to that shortly. Finally, we did not see any significant change in competitor dynamics. The priorities on the top right of the slide are unchanged. We will continue to strengthen our position in new build housing, and we will look to access new markets in commercial and infrastructure.

And to underpin this, we're going to invest in new capability and capacity. So how are we doing against this? Well, our actions in 2025 delivered really strong results. We scaled up our production on existing assets, and that improved our stock position and indeed our responsiveness. And the result of that was 15% revenue growth, and that was in new housebuilding, and we improved our customer service scores despite overall market flatness.

In readiness for major commercial infrastructure growth across water, energy and transport, we've strengthened our engineering and design capability. Now this is going to ensure that we can engage earlier with customers. We can shape project specifications and secure higher value work. And it's already paying off. We've seen design activity in this space increase by around 25%. And finally, to further support, we're evaluating capital investment options at the moment that would enable us to scale up our existing network.

The aim is to finalize the business case and indeed the capital expenditure case in the first half of 2026. And this investment will be within the existing capital expenditure numbers that Justin reported on earlier. So in summary, we'll continue to compete in new build housing and surface water markets, and we will reposition to access growth in commercial and infrastructure.

And so finally, let's look at our Bricks business. In terms of the market update, 2025 industry demand again remained broadly flat with no recovery in new build housing. At the same time, several of our clay brick manufacturing competitors brought back capacity online, and this was in anticipation of a market upturn that did not materialize. And what this did do was create oversupply in the market and indeed put pressure on pricing. So although activity in this business unit remains subdued, our strategic priorities remain unchanged.

That said, our responses in a subdued market have been very selective. We prioritize value over volume, and we focused on price realization, protecting our unit margins rather than cutting prices to chase volume. Now this approach has cost us a little bit of market share, but it has limited the negative impact on the P&L. We reduced marketing activity, and we slowed down new product development to avoid incremental pressure, and we reallocated those resources to areas of the group with stronger near-term returns.

We've also paused capital expenditure programs that were allocated to converting lines to brick manufacturer. We will restart those programs once volumes recover to a level that will support the investment case. Now pausing these activities shows real focus on the P&L and cash performances.

So in summary, we'll continue to drive market share in new regions and accelerate concrete adoption. New product development will be accelerated as the market picks up and not before. And we will still have the opportunity to increase our capacities to meet demand in the future.

So I'm now going to turn to the outlook before opening up for Q&A. So demand has remained consistent with that of quarter 4 of 2025, and the weather is certainly not helping us. And although we don't know the full impact of the Middle East conflict, we are mindful there could be an effect in the future on energy prices in the wider economy. But all of that supports my view that we need sharper execution of our strategy. And as I've outlined before, that means tightening focus, intensifying the pace and improving our performance.

And with that, therefore, the outlook for this year has not changed. The fundamentals of the business are solid. Our proposition is unique, and this certainly gives us a competitive advantage. And because of this, we also remain confident in delivering a material uplift in profitability and returns over the medium term. We now have the foundations in place, and we are committed to unlocking the full value and potential in this business. This year will be a year of delivery.

Thank you for the presentation. We have had a number of questions pre-submitted and submitted live. [Operator Instructions] Our first question is, are you seeing any real recovery in demand for house builders yet? Or is it still early days?

Thank you. I'll take that one. It's Simon here. It is still early days. I think that we haven't seen any significant uptick. And clearly, we're not seeing any reports from any of the full year results that say there's going to be a significant improvement anytime soon. That said, you often get pockets of regional performance, but it is too soon to say.

And a follow-up question on that. What leading indicators do you watch internally that give you confidence that demand is turning?

Yes. I mean the first thing that we look at or a good indicator for us is our mortars business when it's in relation to housebuilding. We have a ready-to-use mortar business. If we are going to see a pickup in house build, what we find is that the house builders will move to silo-based mortar, and therefore, we would see ready-to-use mortar business ease a little bit. So that will be the first indicator that we would see.

In other areas of the business, landscape, for example, we can see our customers' sales out data, which would also give us a good indicator. And from a commercial infrastructure perspective, it's all about the specification pipeline and the health of that and how that is flowing through. So there's a number of different things that we look against across all of the different business units.

Thank you, Simon. And our next question is, the results look good, but why should we believe this is sustainable rather than short-term bounce?

Justin, would you like to take that one?

Yes, sure, Simon. It's Justin Lockwood here, CFO, and good morning, everybody. Look, we were really pleased to return to revenue growth during the period. And we delivered growth across both Roofing and Building Products and a materially better performance in landscaping. We do believe that's sustainable. In landscaping, we've done a lot of hard work, and we were particularly pleased to deliver an increase in volume growth during the year.

So volumes are up in landscaping by 4%. And that's just winning back market share. It just reflects all the hard work that Simon set out in the presentation and those enhanced customer relationships in that business will help to underpin future growth there, both from taking market share and also benefiting from any market rebound when it comes, although in our assumptions for 2026, but we're just not -- we're not trying to factor any of that at this stage.

We think we've got some fantastic regulatory drivers, which sit behind our revenue numbers, particularly in areas such as solar and water management, and we're really focused on how we execute against those. So look, we are dependent on what happens to our end markets. But really, what we are focused on is winning in the markets that are in front of us and ensuring we've got the right strategies and actions in place to enable us to deliver that.

Thank you, Justin. And are your growth areas like roofing strong enough to make up for weaker parts of the business?

Yes, I'll start that in terms of response, [indiscernible]. Well, look, I think the answer to that is, yes, they have been doing. If you look at over the last couple of years, certainly, the Roofing division has propped up the poor performance in landscape. So the short answer is yes. Clearly, we don't want to rely on that moving forward. We're very confident in the plan for roofing. So that will continue, albeit we've seen some shift in competitor dynamic in traditional roof tiles. But we're very confident in the recovery in landscape and the plan that we've got there.

And going back to some of those early indicators, certainly regaining market share, share of wallet increasing beyond 85% in landscape and strong customer service metrics and improving gross margins in H2 tell us that, that recovery plan is working. So yes, Roofing can support. But no, we don't want that to be the case in 2026 and moving forward.

Thanks, Simon. I'll ask the next 2 questions together. So we've got, is the road map to low carbon production still a priority? And what are the commercial benefits versus economic cost to the business? And also, are customers really choosing you because you're greener? Or is it still about price?

I think it does ebb and flow. Sorry, it's Simon again. It does ebb and flow. I still think it is a criteria that customers look at. And when I look at the economic kind of backdrop, some of the carbon drivers for us are actually around carbon miles. So there is a benefit to what we do. So what I mean by carbon miles is making sure that we've got products that are in close proximity to customers and therefore, reducing the logistics distances that we're traveling.

So there's not only a carbon benefit, there is also an economic benefit. So they go hand in hand. Price has certainly become more prominent over the last couple of years. We've got to acknowledge that. But carbon credentials still remain one of our fundamental and competitive advantages. So we're still focusing on that. And there are some economic benefits of doing it as well.

Just to add to that. So the -- one example of an economic benefit is an exercise that we've done to change the mix design of a lot of our -- well, our concrete block paving products. And this is all focused on reducing the amount of cement that goes into the mix and adding other materials, which are less carbon intensive and indeed less expensive.

So this is a product which we've called Tri-Blend. And we've invested a little bit in silos in some of our factories to enable us to use this different mix, but it's had some very, very strong economic and carbon benefits. I think -- so I completely agree with Simon that it is a purchase criteria that is applied by customers and probably more so on public sector schemes than private sector schemes. But there are other aspects of the business, which are -- whilst not carbon related, are ESG related where decisions are being taken on the basis of credentials.

And a really great example of that is in our solar business, of Viridian Solar. And that business has got a very, very clear picture of its supply chain. And its supply chain is in -- it's principally in China. And we've been able to track back through 8 tiers of supply for the production of solar panels. So where that starts is in quarries in China, where the silica is mined right through the production process.

And being able to give customers and particularly major house builders confidence around the provenance of those products and comfort around there being no human rights concerns within that supply chain is definitely an important discriminating factor when we're choosing what products to select and certainly has helped us win business.

Our next question is, how do you decide where to allocate capital when end markets are moving at different speeds?

Yes, I'll take this one again and feel free to add, Justin. I think it's clear to us, we've got a couple of areas of our business that have got very, very clear structural and regulatory tailwinds, and they are certainly areas that are attracting investment. at the moment and a kind of bigger and broader opportunity. So if I take water management would be one of those. It's regulatory driven. We've got an AMP8 cycle coming. We feel there's a great opportunity for us to kind of broaden our scale in the commercial infrastructure market and get on the kind of right on the coattails of AMP8, and we will be doing that.

So that's a very clear investment opportunity for us, and we'll be building the case out to be signed off by the end of H1. So that would be the best example of that. But we monitor what's going on across all of the business units, the capital investment that we've got allocated at the moment will be inside the numbers that Justin reported on Monday. And if we believe that, that can be scaled up even further, we'll make a separate business case for it. But yes, regulatory and structural drivers will be areas we're looking at immediately. Justin, I don't know if you want to add anything?

Yes, just a few other thoughts on that. So if you look across our portfolio of businesses, then I think it's probably fair to say the most well invested part of the portfolio is landscaping. And we've got significant capacity within that business to recover volumes and certainly to comfortably cover the volumes required to get that business back up to a margin of 12%.

So that part of the business should not be capital hungry. But other parts where we see the opportunity and Water Management is a great one that Simon has just talked through is where we would look to deploy capital. The other area that we are actively deploying the capital in -- we started this in the second half of '25, and we are continuing into '26. And it's -- it's really extended maintenance capital going into our concrete roof tile lines in Marley, where we're seeking to improve the efficiency and the resilience of those lines as part of our response to shifts in competitive dynamics within the traditional roofing business. But really, our capital allocation and our CapEx is really driven by where we think we can generate the best possible returns for shareholders.

Thank you. Our next question is, what's the right balance between reinvestments, deleveraging and returning cash at this stage of the cycle?

So I give that one Simon again.

You can do. But what I will say just from the outset, we've got a very, very clear capital allocation policy that we adhere to. If you want to get into a little bit more detail, Justin, then yes, feel free.

Yes. So first priority amongst -- within that is to invest in organic growth opportunities. And we have -- our CapEx, I'd split simplistically between maintenance type CapEx, which is maintaining our existing capital base and CapEx, which is going to give us a demonstrable return. We keep the former very, very tightly controlled. The latter, if we have the cases to invest and we can make a good return on our shareholders' money, we will certainly do that.

At the core of our capital allocation policy is our dividend policy, and there are no plans to change this. In very simple terms, we pay half of our earnings to shareholders. And that, I think, has served the business well. I know that some shareholders won't like that because it does result in dividends reducing when the performance dips a little bit. But our view is that we don't want to start the business of capital. We want to be able to deploy that capital in a way that generates returns, but we also want to reward our shareholders.

And just in terms of the deleveraging point, look, this cash -- this business is really cash generative. Typically, if you look on a long-term average, we're converting around about 90% of EBITDA into operating cash flow. And if on that basis, you're maintaining your dividend policy at 2x cover and you're keeping a tight control on working capital as we do, then the business will throw off cash. So in 2025, we had a modest uptick in net debt, and there are a couple of specific reasons that are set out on the presentation as to why that was the case.

But for 2026 and beyond, we expect net debt to be reducing. A combination of lower net debt and our view that we will deliver more EBITDA in 2026 means that leverage will start to fall, and we'd expect to be, give or take, within our target range of 0.5 to 1.5x EBITDA. So in terms of capital returns beyond that, we've got no plans at this stage. We want to maintain flexibility.

We want to reduce that leverage to, I guess, give us incremental balance sheet optionality around targeted M&A if we think that's the right way to deploy our shareholders' money. But no plans to do any share buyback, special dividends at this point in time. We would only consider that if we couldn't deploy the capital in the business, and we were dipping below that target range of 0.5 to 1.5x EBITDA.

Thank you, Justin. You mentioned realigned incentive schemes. Could you expand on the impact from a management team perspective?

Yes, I'll pick that up. So it's Simon here again. So we changed the incentive schemes at the beginning of the year for our commercial colleagues, and we're reviewing what we do operationally as well. But this is alongside making sure that the guys out in the field have got very clear frameworks commercially to operate in. The change in scheme is to make sure they're focused on driving value into the business. So they are incentivized on margin performance.

But they've got a very, very clear framework and got the right tools to do the job in the field. So we've given them a very clear product portfolio, pricing architecture to be able to trade customers up and down the product ladder to drive margin performance, and that is how they will be incentivized. What we're looking at operationally is to make sure that we're all over our cost base and our efficiencies internally to support our commercial colleagues -- and again, those changes will be implemented this year, but they're not quite finalized.

Thanks, Simon. And at what point would buybacks be considered a good use of capital?

Yes, I've probably covered this on my last response. I think at the moment, our priority is to reduce net debt to get back into that range and deploy capital into the business to generate a return for shareholders. And I think we consider buybacks if EBITDA drop below that 0.5x.

Thank you. Our next question is, what impact do you expect from the Middle East issues? And is this reflected within your projected numbers?

Yes, I'll start this one, and then I'll hand over to Justin. Well, clearly, we see this in first order and second order impacts. First order will clearly be around energy, oil price. We're most affected from an oil perspective, translating into diesel and the impact of that, and that's all about moving our products from A to B and indeed moving products around our facilities. We're pretty well hedged on energy. I'll let Justin touch on that in a second. So that would be first order.

And then second order would be what is the impact to the consumer and consumer confidence. And we just don't know how that's going to play out at the moment. It's probably a bit early to say how we will be impacted. We've run some models and some numbers. It all depends on how long this goes on, how kind of the duration and how that then impacts the oil price and then translates into diesel. Justin, in terms of hedging?

Yes. So gas and electricity for the rest of the year, we're hedged at a little over 80%. So yes, we've got some exposure there, but it's not enormous. As Simon said, the bigger deal for us is oil prices and how that feeds into diesel, where we don't have a hedging in place. And to give an indication of the scale of this for every -- so our central planning assumption at the time we did the budget was an oil price of just under $80 a barrel. for every $10 a barrel over that, then the cost to us is about GBP 120,000 to GBP 130,000 a month.

So that gives you a scale of the potential impact. Now we reserve the right to implement a fuel surcharge on our dispatches. But we haven't done that at this stage, but we're monitoring it. And the longer this goes on for the more chance has actually taken some action to do that. But as I said, no action at this point. I think the second order impacts are more troubling from my perspective and the more they're just [indiscernible]. And it's the impact that the increase in oil prices has on the inflation trajectory, and we saw from yesterday that -- the Bank of England held rates, which I think everybody expected.

But 3 weeks ago, everybody was expecting a 25 bps reduction in rates with probably 1 or maybe 2 more to come this year. I think all bets are off on that now. And the next move may be down, it may also may be up. And it's the impact that, that has on our end markets, which is probably more of a concern, but it's -- at this stage, it's unknowable. Our response is that we'll keep a very tight control on costs, and we'll keep our commitment short, and we'll be focused on navigating our way through whatever is.

Thank you. Our next question is, could you give us your view on FP McCann and the impact of their entry to the market?

Yes. Again, I'll kick off with this one. FP McCann, look, they're a good business, privately owned, family-owned, probably around GBP 400 million business. They're clearly a major player in commercial infrastructure and concrete pipes, and they've got a really kind of solid business and operating in that channel. They've obviously moved into the concrete roof tile market and put new capacity in. And they also purchased the Ibstock roof tile business at the back end of last year.

So look, they probably took a look at the roofing market a couple of years ago, seeing that the margins and the kind of business in that space is healthy. They've entered that market as it's come off a little bit, and therefore, it's created a little bit of excess capacity. But look, they're a solid business.

They're a good business. They're credible. As they come into the roofing market, they're not doing anything silly with regards to pricing and they are looking to move volumes towards new house builders at the moment, which is not putting directly up against our heartland, which is social and private RMI.

But what we are seeing is a little bit of jocking along where they are putting up against other competitors and those other competitors are starting to move into our space. And therefore, we did see a little bit of market share loss. But yes, solid business, very credible. Yes, nothing more to say on that. Justin, anything to add?

And I would just say that I completely agree and great business FP McCann. We've got a lot of respect for that business. They're taking their commercial decisions to deploy their capital and where they think they'll deliver a return. What we need to focus on is our business and how we respond, and that's what we're getting on...

We are now moving on to our final question for today. If you have any further questions, please e-mail the team, who will respond to any questions that weren't covered this morning. The question is, what does success look like for Marshalls in 3 years' time in measurable terms?

Great question. Clearly, improving revenues, improving profits in line with our expectations and if not beyond. We've got a very, very clear plan. I'm happy with the foundations of that. We've just got to get that springboard from here on in. The numbers are out in the public domain for '26, '27 and moving into '28. And it's about hitting that plan and outperforming it. We made it very clear back in November 2024 in terms of what our medium-term targets are, and we're sticking to that. And it is all about market outperformance and getting to that 15% returns from an operating margin perspective.

And within that, I would say, landscape in terms of recovery is the main part of that, and we want to see that return to a 12% business. So that would be my criteria for success, Justin.

I think that's probably enough, Simon. Absolutely. I completely agree with that.

Thank you. That's all the questions that we have time for today. So I'll hand back over to the management team for any closing remarks.

Okay. So yes, Simon here again. I think for me, it's been a challenging couple of years as we come into 2026, change in approach, but not a change in strategy, sharper execution, tighter focus. I am really happy with the team that we've now got in place. There's been a complete rebuilding landscape. I'm happy with the executive team that I've got around me. And I feel we've got a really strong foundation as we move into this year. And I absolutely believe that we're poised for accelerated strategic delivery and delivering the numbers. So yes, really happy with the plan. No change to outlook for 2026, no change to medium-term targets as we go beyond that.

Thank you to the management team for joining us today. That concludes the Marshalls investor presentation. Please take a moment to complete a short survey following this event. The recording of this presentation will be made available on Engage Investor. I hope you enjoyed today's webinar.

Good morning, everybody, and welcome to Marshalls' 2025 Full Year Results Presentation. Thank you to everybody in the room for joining us and of course, to those online, too. I'm joined this morning for the presentation by Justin Lockwood, our Chief Financial Officer.

So just a quick rundown of the agenda. Before I get into the presentation itself, I will outline my thoughts as a new CEO to Marshalls. I'm then going to give a brief overview of the full year performance before handing over to Justin, who will take us through the group's full year results in more detail. I'll then return and share an update on the progress we are making with our transform and growth strategy. And then I'll wrap up with a view on the outlook before opening the floor to questions. Just a quick reminder for our online participants. You can submit your questions at any time via the chat and we'll read them out in the room before responding.

So as a reminder, I've been in the business for over 10 years. And during that time, I have held a number of roles, including that of Chief Operating Officer and more recently, Chief Commercial Officer. I've also been a member of the Board since 2022. Both myself and Justin are integral in the development of our Transform and Growth strategy. And as you will see from today's presentation, we firmly believe that it remains the right strategy for Marshalls. So if we're not changing strategic direction, what are we doing? Well, the message today is one of strategic continuity, but with much sharper execution that will ensure that we deliver on the commitments and the medium-term targets that we set out in November 2024.

So looking at the left-hand side of the slide, where are we now? Well, Marshalls is a great business with a diversified portfolio, and that does give us a good degree of resilience in subdued markets. The proposition that we have is genuinely differentiated with unique capabilities that our competition cannot easily replicate. We still have great products, and those hold enviable #1 or #2 positions in the market. And our national network gives us the service and carbon leadership advantages over our competition.

And underpinning all of this, we have really talented colleagues with both the capability and the desire to deliver outstanding outcomes. And this certainly shows through with the unrivaled technical and design expertise that we bring to every project. Now these are advantages, real advantages, and these are advantages that our competitors cannot easily replicate.

So what are we doing differently? And looking at the right-hand side of the slide, we've already tightened our focus with fewer higher-value activities, both operationally and strategically. We've intensified the pace in which we operate, and we are improving the commercial performance culture up and down our business. And I'm now going to take you through each of these in detail on the next slide.

So we're absolutely committed to the medium-term targets, and we believe in the strategy, but we must sharpen up our execution. And as a result, we've been tightening our focus. We're being much more selective about the activities that we undertake. Strategic investments have now been prioritized, and these are guided by customer insight, financial performance and structural and regulatory tailwinds.

The people-related activities in 2026 will be directly linked to value creation in the P&L. And we are now more proactive in the management of our product portfolios and new product development to make sure that we keep things simple. We've intensified the pace by building an organization that is focused on delivery.

So we've got a flatter structure that will improve accountability throughout the organization and clearer frames of reference for trading will enable agile, more confident decision-making at every level in the business. And this will mean that we can compete more effectively with our regional competitors. We've already seen examples where we are becoming a seamless extension of our customers' businesses, and we're making it easier to deliver value, drive collaboration and reinforce the long-term partnerships that underpin sustainable growth.

And finally, we are embedding a performance culture into the business, strengthening our commercial excellence. We now have far better visibility of the commercial levers that drive financial performance, such as pricing architecture, customer and channel profitability and cost to serve management. We've redesigned our incentive schemes to focus on margin performance, and we're ensuring that our cost base remains aligned to our market opportunities. And all of this has been underpinned by a reinvigorated sales and product awareness training.

So as we look into 2026, our focus is simple. It's one of delivery, delivery that is evidenced by improved profitability, not just plans, not just intentions, but results that demonstrate progress.

So before I hand over to Justin, I'm just going to run through a very brief summary of our performance for 2025 and the progress that we're making against the Transform and Growth strategy. So despite challenging market conditions, the group delivered revenue growth and landscape has shown a clear improving trend throughout the year.

In terms of profitability, we've seen growth in roofing products and a solid performance from building products. Landscaping profitability was in line with our expectations and against our plan. And finally, our disciplined approach to working capital throughout the year has delivered a very robust balance sheet.

So overall, these results demonstrate early but clear progress with regards to our Transform and Grow strategy. We're stabilizing the group. We're rebuilding growth, and we're improving our financial resilience. And this is all whilst investing in the capabilities that will strengthen our market positions for the long term. This is a solid foundation to build on, and I'm confident that as we continue to execute the strategy with increased pace and greater discipline, we will unlock further value across the group.

And with that, I'm going to hand over to Justin, who will take you through the financial detail.

Thank you, Simon, and good morning, everybody. So I'm going to take you through the key financial highlights for the period. I'll then run through the detail of the results at both group level and by our reporting segments and also our cash flow performance. I'll then give you an update on the strength of our balance sheet before closing with a recap on our capital allocation policy. So this first slide sets out the key financial highlights for the period.

We're pleased to be able to report a return to revenue growth of 2% to GBP 632 million, and that's after a couple of years of declining revenues. However, operating profit contracted by 15% to GBP 56.4 million, and that was due to a weaker performance by landscaping.

Profit before tax and EPS both declined by 16% year-on-year to GBP 43.7 million and 13.4p per share, respectively. And our proposed full year dividend reduced by the same percentage to 6.7p per share, reflecting the application of our dividend policy.

And finally, we continued our disciplined approach to cash management. But despite that, we had a modest increase in net debt due to some normalization of working capital and the payment of adjusting items.

So I'll now go on to revenue and operating profit at group level. And the chart on the left-hand side of this slide sets out a year-on-year revenue bridge, showing the component parts of the 2% increase in revenue to GBP 632 million. And you can see from the chart that both Building Products and Roofing Products delivered growth in the period, and they both increased by 4%.

However, Landscaping Products contracted by 1%. The slide on the right shows a similar bridge for operating profit, and it's clear from that bridge that the main driver of the reduction in profitability was Landscaping Products with relatively small movements across the other reporting segments.

Now as usual, the operating profit numbers are stated after adding back adjusting items. And adjusting items in the year totaled GBP 24.4 million. And they comprise the amortization of intangible assets arising on acquisitions, that's GBP 10.3 million, and that's a recurring feature of our P&L account. But in 2025, we also had restructuring costs of GBP 14.1 million. And they were split broadly 50-50 between cash costs and asset impairments. More details on those are set out in the appendix of the deck, if you have interest in that.

So I'll now move on to the performance of each of our reporting segments, starting with Landscaping. So as mentioned on the last slide, Landscaping revenues contracted by 1%, and that's against a challenging market backdrop, where sector-wide volumes are still running below historic norms. And against that backdrop, we were pleased to deliver an increase in volume growth of 4%, and that was delivered through improved customer relationships and new trade agreements. However, the benefit of that volume growth was offset by deliberate and targeted price reductions, which reduced revenues by 1% and a shift in product mix, which had a 4% impact on revenues. And the impact of those 3 factors all moderated in the second half of the year.

Operating profit contracted by GBP 10.1 million. And as a result, the reported segment was broadly breakeven in 2025. The reduction in profitability was driven through the price investment that I've talked about and the shift in product mix towards lower-margin categories. In addition, we saw cost pressures in the business with pay awards and higher national insurance contributions, and those weren't offset by customer price increases during the period.

In addition to that, we saw a significant deterioration in the financial performance of our natural stone processing business, and that resulted in the closure decision in the second half of the year. Those factors, though, were partially offset by the benefit of improved volumes and the early benefits of our restructuring programs.

So we responded decisively to that deterioration in profitability in this business and identified GBP 11 million worth of cost savings, which we expect to be fully delivered by the end of 2026. And indeed, GBP 3 million of those was delivered in 2025. And a little later in the presentation, Simon is going to take you through the component parts of how we expect to rebuild margins in this business. And we believe that the decisions that we've taken in 2025 will result in a more flexible and agile business that will underpin a significant improvement in profitability in 2026.

So now moving on to Building Products, where we delivered revenue growth of 4%, and that reflected good growth in both Water Management and our Mortars business units, partially offset by lower revenues in Bricks.

In our Water Management business, the growth was driven through both our core residential market and the wider infrastructure markets, supported by improved stock availability and good customer service levels.

Our Mortars business benefited from its strong service proposition and relatively modest build rates across housing developments that favors our ready-to-use product.

However, in bricks, we chose to focus on pricing rather than volumes. And therefore, we saw a reduction in revenues during the period. And we did that in order to protect our gross margins. And in the second half of the year, we saw increased competitive intensity as the rate of housebuilding slowed.

Operating profit was 8% lower year-on-year at GBP 13 million, and that reflects improved profitability in our Water Management business from higher volumes and an improved product mix. That was offset by lower profitability in bricks with lower volumes and reduced manufacturing efficiency. In addition, the reporting segment benefited from lower levels of property income compared to recent years, and that reduced profits by about GBP 800,000.

So now turning to Roofing Products, which delivered revenue growth of 4%, and that growth was driven through Viridian Solar, where revenues increased by about 1/3 as housebuilders continued to select its products as part of their response to changes in building regulations, which require increased energy efficiency. The rate of growth of Viridian moderated in the second half of the year as we expected, and that's as the comparatives became tougher. However, we were pleased to see sequential growth in 2025 with higher revenues in the second half of the year than the first half.

Revenue in Marley Roofing, though declined, and that was due to the tough market backdrop and increased competitive intensity as we saw increased market capacity come on stream during the period, which reduced our sales of concrete roof tiles.

Operating profit in this segment increased by 2% to GBP 50.2 million, and that reflects improved profitability in Viridian from higher volumes and its disciplined pricing strategy, but that was partially offset by lower profits in Marley due to lower volumes and weaker manufacturing efficiency, which in itself led to product availability issues for certain product profiles. We've instigated a targeted program of capital expenditure aimed at improving the resilience and efficiency of Marley's concrete roof tile lines, and that will remain a key area of focus in 2026.

So now moving on. This slide sets out the profit and loss account from operating profit through to earnings. And as mentioned earlier, operating profit reduced by 15% to GBP 56.4 million. Finance costs were GBP 1.8 million lower year-on-year due to lower base rates and the benefit of a pension credit. So as a result of that, profit before tax contracted by 16% to GBP 43.7 million. Our effective tax rate was 22%, and that's unchanged year-on-year, and it's lower than the headline rate of corporation tax in the U.K. because of the patent box arrangement we have in place. So taking all that together, earnings per share reduced by 16% to 13.4p due to the weaker operational performance.

Turning now to cash flow and net debt. And the chart on the right-hand side of this slide sets out the component parts of our movement in net debt during the period and starting from the left-hand side with EBITDA at GBP 85 million. We've continued our disciplined approach to working capital management and delivered cash conversion of 88%. However, despite that, we still had a working capital cash outflow of GBP 12.5 million.

We consumed around GBP 25 million of cash in interest payments and taxation, and that was higher year-on-year due to normalization of the timing of interest payments and arrangement fees associated with the new syndicated bank facility that was put in place in November 2025.

Capital expenditure of GBP 15.7 million remains targeted and tightly controlled, but it did increase year-on-year by about GBP 8.5 million. And that reflects increased CapEx on Marley's concrete tile lines, investment in Viridian's office space and warehousing facility, increased investment to increase capacity in Water Management, and we also benefited from lower levels of proceeds from site disposals than last year.

Adjusting items paid was GBP 10.9 million, and the most significant item of that was the final Viridian Solar contingent consideration payment of GBP 6.6 million, and the balance was restructuring cash costs. So overall, net debt increased by GBP 4 million to GBP 137.9 million.

So I'll now move on to focus on the balance sheet and our capital discipline. And this slide sets out a range of metrics, which look at working capital management, returns and balance sheet strength. And you can see from the table on the right-hand side that debtor days and creditor days both improved year-on-year by day and that average inventory turn was unchanged at 2.8x.

Return on capital employed reduced to 7%, and that reflects the weaker operational performance. However, we continue to target to rebuild that to 15% on the back of delivering our Transform and Grow strategy and seeing a normalization of market volumes.

Our balance sheet continues to be robust, although leverage increased a touch to 1.8x. And we've got a lot of headroom against our new syndicated bank facility. And at the year-end, that was GBP 125 million. And that bank facility, along with the cash-generative nature of our business provides the capital that we need in order to execute our growth plan.

And finally, moving on to our capital allocation policy, which remains unchanged. Our strategic plan requires us to invest between GBP 20 million and GBP 30 million a year. And in 2026, we expect capital expenditure to be at the lower end of that range. And a couple of slides ago, I talked about the slight increase in net debt during the period, where we do expect in 2026 and beyond to return to annual reductions in net debt, reflecting the cash-generative nature of our business. And we continue to target leverage to be in the range of 0.5 to 1.5x EBITDA.

And with that, I'll hand back to Simon.

Thank you, Justin. So it's very clear against that tough market backdrop that we've delivered a performance that demonstrates the strength of our broad product portfolio.

So I'm now going to turn to the Transform and Growth strategy, where I'm going to give you a brief update on the progress in each of the business units. So as a brief reminder, and many of you will recognize this slide, our Transform and Growth strategy is built around our customers and a common set of capabilities that we absolutely know they value. Our medium-term goals along the bottom are clearly defined and they are built on delivering market outperformance across the business and leveraging the financial strength of the group to deliver sustainable growth.

I'm now going to take you through each of the business units in turn. I'll give you a brief overview of the market, the strategic priorities for each and the progress that we are making against those. So first of all, let's have a look at landscaping and a brief market update.

In the second half of 2025, we did see a softening in the market. However, overall activities year-on-year were broadly flat. Across the industry, there were no significant changes in overall capacity, although a number of our competitors did scale back their output throughout the year.

And just directing you to the top right of the slide and as a reminder of our near-term improvement plan. We've been busy strengthening the leadership team, growing our strategic relationships with customers and simplifying our offer. We've also made significant progress in embedding a commercial excellence program across the business.

Now looking at how we're doing against the plan. The team is now rebuilt, and I'm absolutely confident we have that Premier League winning side in place. Multiyear trading agreements are secured and pricing is agreed for 2026.

Our customer engagement scores are improving, and they're up by 15 percentage points, and our share of wallet in yard is growing. And in some cases, that is now beyond 85%. And overall, we've gained just over 4% of overall market share during the year. And this progress with our customers has been recognized through multiple supplier awards, most notably Supplier of the Year from 2 of our major partners. The product portfolio has been simplified and our pricing architecture is now aligned to that.

And most importantly, we now have a very clear new product development pipeline with launches planned for quarter 2 of this year. And these new products are going to rebalance the good, better and best ranges, and that will help us to defend against the competition where customers have previously been migrating.

And all of this is underpinned by an improved commercial capability, driving greater value, and this has certainly been evidenced with an improvement in gross margin in H2 of 2025. And let's not forget, we will deliver GBP 11 million worth of cost savings in 2026, and this will underpin and improve our profitability through '26. So these results demonstrate clear progress and they certainly strengthen our competitive position. And alongside our nationwide network, we firmly believe that we're in a great position to capture value as the demand recovers.

So I'm now going to talk you through the building blocks for margin recovery in the Landscape Products business. So I'm absolutely confident we will rebuild the landscape business and deliver operating margins of at least 12%. We've achieved this before, and the foundations are now in place. So I firmly believe we can do it again.

Starting on the bottom left of the slide, 2025 has very much been a reset year, one where we focused on rebuilding the foundations needed for sustainable, profitable growth. And the key to this was having that Premier League winning team in place to allow us to reinvigorate our relationships with customers.

We've reset the cost base and already unlocked around GBP 11 million worth of cost reduction, and that's been done through network optimization and overhead removal. And this has given us a much simplified footprint and lower complexity to improve our efficiency and control.

Our commercial excellence is now starting to show, and we've introduced clear products and pricing architecture, and this is supported by a robust pipeline of new product development. And all of this is going to enable us to improve our margins through specification-led sales. And service and availability has also improved, and that's helping us to protect mix and retain our customer base. And finally, as demand normalizes, we can deliver incremental volume with our existing footprint. And we've seen this historically, and it does result in significant operational leverage.

So in summary, we've rebuilt the foundation. We've reset the cost base, and we have strengthened our commercial capabilities. The plan is very clear. The actions are in motion and the impact is beginning to come through.

Now turning to Marley Roofing. In terms of a brief market update, underlying demand has remained broadly stable. However, the competitive dynamic in concrete roof tiles has seen a shift. New capacity was introduced across the market in 2024 and 2025. However, some older assets will be retired this year. So we do expect competitor intensity to persist in 2026.

So against this backdrop, we've assessed our strategic priorities that we already have in place, and we're confident that we have the right plan. We will, of course, continue to monitor market dynamics very closely.

And as a reminder, and directing you to the top right of the slide, repairs, maintenance and improvement in both social and private markets remains a priority for us as does leveraging our full roof system offer to drive share in private new build housing. And of course, we will continue to focus on boosting availability in categories where supply has held the market back.

And if we look at the progress and response against those actions, we're absolutely protecting our margins by continuing to invest in the Marley brand and in our specification and full roof system capability. And from this, we've seen specification-led growth. We've secured pilot deals with small and medium housebuilders for full system offers, and this includes solar.

To support in that, we've invested in new software to strengthen lead generation and maximize our margin per tile. And to further support, we've got dedicated capital expenditure plans to improve operational efficiency and quality. And this investment will be dedicated specifically towards those concrete tile lines that are subject to increasing competition. Therefore, our plan is very clear. We will continue to strengthen our heartlands through targeted investment, and we will continue to drive share in adjacent markets.

So moving now to Viridian Solar. 2025, industry demand increased significantly, and that was due to the Part L regulations. Alongside this, there were no changes in competitor dynamics, and we maintained our market share throughout the year.

The demand for our ArcBox fire protection product continued to grow strongly, and the introduction of the future home standard remains a long-term growth driver for us.

In terms of our strategic priorities on the top right, they remain unchanged. We will continue to leverage regulatory tailwinds that drive solar into new build housing. And alongside that, we will continue with new product development and innovation. We'll continue to increase the attachment rate of our ancillary products, and we're going to accelerate the growth of ArcBox in European markets.

So we look at the progress against the plan. In 2025, we delivered an outstanding performance and protected our market share, and this is reflected through very, very strong customer service metrics. New product development has been a continued focus for us, and this has resulted in the launch of our most powerful panel to date. We've strengthened our supply chain due diligence, and this is increasingly becoming a deciding factor with regard to contract award.

And finally, we've expanded our international sales team with a specific focus on the potential for ArcBox across several European markets. This product has seen significant volume growth over the year and has resulted in over GBP 2 million worth of revenue in 2025.

So this year, we will continue to innovate. We're going to launch the Viridian Solar mobile app, and this will give our customers greater control across the installation journey and will further enhance the ease of doing business with Marshalls. So whilst growth in 2026 is expected to moderate, the future remains highly attractive in this area. Regulatory tailwinds will provide leverage and new product development will accelerate growth.

So now let's look at Water Management. In 2025, again, demand remained broadly flat, and there was limited growth revenue in regards to AMP8. However, design activity in this area is increasing, and I'll come to that shortly. Finally, we did not see any significant change in competitor dynamics.

The priorities on the top right of the slide are unchanged. We will continue to strengthen our position in new build housing, and we will look to access new markets in commercial and infrastructure. And to underpin this, we're going to invest in new capability and capacity.

So how are we doing against this? Well, our actions in 2025 delivered really strong results. We scaled up our production on existing assets, and that improved our stock position and indeed our responsiveness. And the result of that was 15% revenue growth. And that was in new housebuilding, and we improved our customer service scores despite overall market flatness.

In readiness for major commercial infrastructure growth across water, energy and transport, we've strengthened our engineering and design capability. Now this is going to ensure that we can engage earlier with customers. We can shape project specifications and secure higher value work. And it's already paying off. We've seen design activity in this space increase by around 25%.

And finally, to further support, we're evaluating capital investment options at the moment that would enable us to scale up our existing network. The aim is to finalize the business case and indeed the capital expenditure case in the first half of 2026. And this investment will be within the existing capital expenditure numbers that Justin reported on earlier.

So in summary, we'll continue to compete in new build housing and surface water markets, and we will reposition to access growth in commercial and infrastructure.

And so finally, let's look at our Bricks business. In terms of the market update, 2025 industry demand again remained broadly flat with no recovery in new build housing. At the same time, several of our clay brick manufacturing competitors brought back capacity online, and this was in anticipation of a market upturn that did not materialize. And what this did do was create oversupply in the market and indeed put pressure on pricing.

So although activity in this business unit remains subdued, our strategic priorities remain unchanged. That said, our responses in a subdued market have been very selective. We prioritize value over volume, and we focused on price realization, protecting our unit margins rather than cutting prices to chase volume.

Now this approach has cost us a little bit of market share, but it has limited the negative impact on the P&L. We reduced marketing activity, and we slowed down new product development to avoid incremental pressure, and we reallocated those resources to areas of the group with stronger near-term returns. We've also paused capital expenditure programs that were allocated to converting lines to brick manufacturer. We will restart those programs once volumes recover to a level that will support the investment case. Now pausing these activities shows real focus on the P&L and cash performances.

So in summary, we'll continue to drive market share in new regions and accelerate concrete adoption. New product development will be accelerated as the market picks up and not before, and we will still have the opportunity to increase our capacities to meet demand in the future.

So I'm now going to turn to the outlook before opening up for Q&A. So demand has remained consistent with that of quarter 4 of 2025, and the weather is certainly not helping us. And although we don't know the full impact of the Middle East conflict, we are mindful there could be an effect in the future on energy prices in the wider economy. But all of that supports my view that we need sharper execution of our strategy. And as I've outlined before, that means tightening focus, intensifying the pace and improving our performance. And with that, therefore, the outlook for this year has not changed.

The fundamentals of the business are solid. Our proposition is unique, and this certainly gives us a competitive advantage. And because of this, we also remain confident in delivering a material uplift in profitability and returns over the medium term. We now have the foundations in place, and we are committed to unlocking the full value and potential in this business. This year will be a year of delivery.

And with that, I'll ask Justin to join me for the Q&A.

Adrian Kearsey, Panmure Liberum. Two questions, if I may. On bricks, we've seen in recent years, sort of fairly elevated levels of imports. Are you continuing to see that in terms of a headwind? And then in terms of Building Products, within water, you talked about investing in the business there in regards to infrastructure type projects. Is that about capacity or capability or a bit of both?

Okay. I'll take the brick ones, Adrian. So yes, imports continue. That doesn't change our kind of focus on the plan and our view in terms of what we're facing into. Nothing changes as far as we're concerned with regards to the imports market.

In terms of water in terms of investment, it's both capability and capacity. We will need both moving forward. And as I've already said, we're evaluating the proposal at the moment to be able to deliver that. And that investment is both in people and indeed equipment.

Aynsley Lammin from Investec. Just two for me, please. First on Roofing, if you could just provide maybe a bit more color of who's increasing capacity and who intends to increase capacity going forward as well? And are you losing share there? Does it impact the clay roofing products? And I guess on that margin of 26%, what would that kind of be as a normalized margin in the context of what's happening in the wider market?

And then just on landscaping and obviously invested in price last year, interested to hear where you are in terms of price increases this year. Do you think you can capture that and still hold the market share? Any thoughts there would be interesting.

Okay. So in terms of roofing, increased capacity, FP McCann have entered into the market, and that's where we're seeing capacity increase in Wienerberger. In terms of what that means, well, clearly, there may well be some pricing pressure in the market, and we need to monitor that closely.

As I said in the presentation, it doesn't change our plan and the strategic focus that we've had. We can't control the capacity coming into the marketplace. We're very mindful of protecting our margins. And overall, we're still expecting the Roofing division to be delivering margins of between 20% and 24% in the medium term. So the plan hasn't changed, Aynsley. We reviewed the strategic priorities, and we believe they're the right actions for that area of our business.

Landscaping. Remind me what was the second part of the question? Pricing. So pricing has gone into the market. I mean that comes in 2 parts. There's pricing into yards and merchants, and then we've obviously got spot pricing in terms of commercial infrastructure projects. As far as we're concerned, we're on plan with our pricing plans at the moment. Those have gone in. They've been accepted for 2026. We'll clearly monitor market dynamics when it comes to spot pricing.

And the price increase just to cover cost inflation? Or do you want to get a bit more that you lost maybe the last year?

No, this is about inflation.

Chris Millington, Deutsche. First one just about energy. You mentioned Middle East, it's difficult to ignore. Can you just talk about exposure and hedging in that regard? I'll do one at a time actually.

Okay. So across our utilities, we are hedged for the rest of the year at a little over 80% on both electricity and gas. So we're pretty well protected there. The other energy-related cost that we're mindful of is oil prices. And every $10 per barrel increase in oil prices beyond about $80, which is our central planning assumption, costs about GBP 1.2 million. Now clearly, if this becomes a prolonged issue, then we have to look at how we recovered that. But the increase isn't enormous based on the kind of oil prices that we're seeing at the moment.

That's very helpful. Next one is really about the 12% margin in Landscape. And I appreciate it's some way off from where we are at the moment, but would you need to see a full volume recovery back to the levels we saw back in 2019 to attain that? Or can it be attained a little bit lower given the cost savings you've done?

I think in terms of volume recovery, Chris, it's probably around 15% to 20% volume recovery to get that additional operational leverage. Obviously, the 3 building blocks below that are all within our control, and that's what we aim to deliver first and foremost, and then it will be about 15% to 20%.

And then just one on Viridian and kind of the process it goes through with regulation changes and the future home standard coming in. And one, can you just give us a feel of kind of that near-term movement in revenue but also what potential uplift could the future home standard do for the division?

Okay. So yes, clearly, Viridian had a very, very strong performance in 2025. But we think that as we got to the closing months of 2025, pretty much all new homes, we believe, have been built out under the Part L regulations, which means that in 2026, we should see some growth in the first part of the year until you sort of catch up on a monthly basis. And then really, the business becomes more cyclical on the basis of housebuilding rates.

The future home standard still hasn't been published. But interestingly, the Welch version of the future home standard was published a few weeks ago. That makes solar a functional requirement as part of new builds in that country. And that would result in a substantial increase in the amount of solar that goes on each home as well as an increase in the number of homes that have solar.

So it's difficult to be precise about what that would look like, but it could be up to a doubling of the market. And we don't know what the implementation time lines will look like around it. But hopefully, the future home standard will be published in the coming weeks, and we'll get some clarity around that. And certainly, the noises from the government in last year indicated that we would see solar becoming a functional requirement. So we're optimistic, but until it's published, we can't be definitive.

Ben Varrow, RBC. I'll do two as well. I'll do them one by one, both on landscaping. Just on the competitive landscape there. Last year, there was some talk of overcapacity in some segments. Could you chat through the dynamics there and how you see that evolving?

Yes. I think in terms of the competitor landscape, there was overcapacity. We did see some of our competitors scaling back and indeed switching assets into other areas, predominantly bricks. That still remains. But again, I'll go back to what we've presented. It doesn't change the plan. We're confident in the plan. We're delivering against the plan. The metrics are showing that and we'll continue as is. So there's no change to that competitor dynamic and no change to the plan there.

And also, we're not seeing any incremental capacity being installed across that market, which is perhaps not surprising given the degree of surplus capacity in it.

And next one on landscaping as well. Just on the -- obviously, the price premium versus competition narrowed last year. In your 12% margin assumption, do you need to get back to that level of premium to get to that margin? Or what's your thinking on how that evolves?

The price premium that we've now got is back inside the range that we talked about previously, and that will be maintained as we move forward. So it's about being inside that range while still keeping that premium against the competition. And the reason we command that premium is for the proposition, the service, the offer and everything that goes with it. So we're comfortable with the premium. That premium will be maintained. What we will make sure is that we don't drift away from the pack like we did before.

Clyde Lewis at Peel Hunt. I think I've got three, maybe four. In terms of the Mali CapEx, could you say a little bit more about what you're planning to do there on the concrete lines? That would be sort of helpful to understand whether you're adding capacity or whether it's very much aimed at improving the cost performance of what you're producing.

It's the latter, Clyde. So it's making sure that we are improving existing assets. We need to make sure that we maintain the quality and the efficiencies, both from a customer perspective and margin performance perspective. So it will be on existing lines. And it will be on specific lines that are subject to increasing competition in the marketplace. So that's where we're going to concentrate our efforts.

Sticking with Mary, in terms of the -- I think you said the overall market is sort of flat for roof tiles. And obviously, you've got new build, you've got private RMI and you've got public RMI in there. Was there much difference in terms of those end categories in terms of how they performed? Because obviously, your market share is probably stronger in certain categories and probably new build is probably the most competitive certainly as far as the concrete tile side are concerned.

Yes. We're seeing the most activity is in that new build area. So the new capacity coming on stream is targeting that area, and that is the area that we're monitoring very closely. You're completely right with that, Clyde.

Last one was on Viridian, just in terms of the sort of route to market or routes to market sort of either direct or via the sort of Mali sort of full offering, any real change sort of with regards to sort of that shift in the still very much sort of 2 streams.

Yes. So yes, the growth that we've delivered has come through new housing, and that's principally a direct sell from Viridian, either directly to housebuilders or through electrical wholesalers or through installers. The growth rates of solar in Mali have been more modest than the new build because it doesn't have quite the same regulatory driver behind it.

Last one, I promise. Any change in the competitive environment in those in-roof solar systems? Is it still very much just the 2 of you that are dominating that market?

So there is a new entrant into the market. So if you recall, there are 2 basic products, which is ours, which is an aluminum flashing system, which fits around the panels and the panels and the flashing go together. And then the competitor product is a plastic tray and the roof tiles are attached to the plastic tray. There is a new competitor, which has introduced another plastic tray product, which is, I guess, probably more in direct competition with the other player. And I think it's been launched by a group of ex employees from that -- from the company, which is called GSE. So at this stage, yes, I mean, it's out there in the market, but it's too early to say what impact it may have.

Toby Thorrington from Equity Development. A couple really, I think. First of all, on debt, I think you managed to refi last year on the same terms. Just remind us what your average cost of debt is. Also, if you could clarify within that, I think you mentioned that working capital metrics normalized over the course of the year, but the metrics presented in terms of days appear to be pretty stable. Can you just explain that? That's the first question, please.

Okay. So in terms of the -- just remind me the first question on the terms.

Cost of debt.

Average cost of debt. So the facility at current leverage levels is priced at 180 basis points over SONIA. It does ratchet down when leverage is below 1.5x by 15 basis points.

And in terms of the working capital, you may recall last year that we talked about -- actually the -- sorry, when I say last year, back in 2024 that we closed the year with a stronger cash flow performance than we expected. And it's because we've received a gift from one of our customers that paid us twice, and that's reversed in this year.

In addition, there was also some timing of interest payments, which were accrued last year and not this year. So the underlying payables position on the credit is unchanged, but it's just some specifics around the year-end numbers.

And just on the medium term, I guess we're a year on from the -- I'm getting on for a year on from the Capital Markets Day, when does the medium term become the point. So 15% margin target, I guess most of the writing analysts in the room have rolled forward to 2028. Are you expecting to hit 15% by 2028?

I think it depends on underlying market.

It's the market tailwind. We need the market to recover. We do need that. But that said, we're confident in the plan that we can control, and we will see incremental improvement as we travel, but we need the market to recover.

It's just we've talked a lot about kind of commercial end markets. We've not really talked about RM&I. I know it's not as big a part for you anymore. But look, just recent trends, any regional stuff, any kind of commentary around price point, whether the premium or more value end of the product range is doing better there? Just a quick overview.

Well, I think things are still subdued as we know. I think interestingly, we did get a number of installers together last week. Over 200 attended an event to look at the new product development pipeline that we've got going. Look, it's subdued, Chris. And again, it's another market backdrop point. But again, premium, we're happy with the premium. We're not looking to kind of squeeze margins or move that price point because we believe we've got the best products. We've got the best offer. We've got the right installer base to be able to deliver that certainly in the domestic end consumer space. So we're happy with the plan. It's just the market backdrop is tough at the moment.

Just one for me. It's Flory O'Donoghue from Davy. Just going back to your comments on the flatter structure. We know what you mean by it, but how does it work in practice?

But look, I've got much more direct line of sight in terms of what's happening on the ground, both commercially and operationally. So I'm heavily invested in that. As I said from the outset, I've been in that space as Chief Operating Officer and Chief Commercial Officer. And I believe that if we're going to continue to get traction and indeed continuing to improve and be all over that transmission into the P&L, I need to be closer to the commercial and operational side of the business. So that's how it translates is that I'm not completely hands-on, but certainly very, very close to what's happening on the ground. Do we have any online questions?

Yes, we do. The first one is from Vishal from Jo Hambro. Given the intensified competitive landscape, economies of scale become more important, would you ever look to release capital from asset sales, reinvest in areas of structural strength?

Well, yes, I think, is the answer to that. We've been doing a little bit of that over the period that Justin can elaborate on.

Yes. So we've been looking at our portfolio of surplus assets and turning them into cash where we can. As I mentioned in my presentation, there was a smaller cash generation in 2025. We continue to focus and look at how we can realize those assets going forward.

In terms of the broader portfolio of businesses, we're broadly happy with the portfolio that we have. If there are opportunities to do something which will result in improved shareholder value, we would certainly look at that.

This next one is from Jesper from bank. How do you assess FP McCann's long-term strategic commitment to concrete tiles? Is this a permanent structure shift in competitive intensity? Or do you expect rationalization as older assets are retired elsewhere in the market?

I think from an FP McCann perspective, I would expect -- and I can't comment in terms of what their business plan is, but I would expect that they're in it for the long term.

In terms of assets in the roofing channel itself, there's a lot of old equipment out there and some assets through 2025 were retired. We expect more to be retired in 2026. So we think overall, the net effect of that will still be increased capacity in the market by low single-digit percentages. And that's our view at the moment. And as I said in the presentation, we need to continue to monitor what that means for Marley, but our plan doesn't change.

Brilliant. And then last question, has FP McCann's entry cause you to lose any specific customer relationships or contracts? Or is this the impact permanently on pricing rather than volume?

No, we haven't lost any customer relationships. The impact, again, we need to monitor what the overall impact is. It's a competitive market out there and the dynamics are tough in terms of market backdrop. But no relationships have been lost with FP McCann coming into the market, absolutely not.

Brilliant. Thank you. We have no further questions. I'll hand back for some closing remarks.

Okay. I think my closing remarks will be we have a plan. We're confident in the plan, and we're confident in the delivery for 2026. We've got the right team in place to be able to deliver that, and that's what we will do. So thank you for your time. I appreciate all the questions. Thank you.

Thank you.