Travis Perkins Stock

Hi. Good morning, everybody, and welcome to the results presentation for the half year for Travis Perkins. For anyone who doesn't know me, I'm Gavin Slark, I'm the CEO, and I'm joined today by Duncan Cooper, who is our CFO.

The agenda for this morning is relatively straightforward. I will just give you one slide of a few headlines. I'll then pass you over to Duncan to take you through the financial review. I will then come back up and just give you a brief overview of where we are with the various businesses, and then that should leave us some time for some Q&A, and I'll talk you through the process for the Q&A as we go through later on.

In terms of the results that we've announced this morning, obviously, you'll see there, revenue at GBP 2.258 billion, down 1.8% in absolute terms. A chunk of that is down to the sale last year of the Staircraft business. And then from a like-for-like perspective, our overall turnover was down just 0.7%.

You'll see there, also on the gross margin line, we've improved gross margins by 100 basis points. And some of you will remember when we announced the full year results earlier in March, we did talk about gross margin expansion being critical for the future success of the business, and Duncan will talk a little bit more about that later on.

In terms of the adjusted operating profit, up by 6.3% to GBP 67 million. And I think one of the standout headlines in terms of the results this morning is where we are in terms of net cash before leases. So you'll see there that we now have net cash before leases of GBP 55 million compared to GBP 103 million at this point last year. So GBP 158 million improvement in 12 months on where we were and also a GBP 51 million improvement on where we were in March compared to the year-end.

So I think one of the things that we've got there is a really strong financial underpinning that should give our colleagues, our customers and our suppliers a lot of confidence in Travis Perkins looking forward.

But to take you through the detail of the numbers, I'll pass you over to Duncan.

Good morning, everyone. Thank you, Gavin. So I'll start with the usual financial overview. Group revenue of GBP 2.3 billion, down 1.8% on prior year in what remains a challenging trading conditions. Adjusted operating profit before property profits, in line with prior year at GBP 62 million and including property profits, up 6.3% to GBP 67 million. That gives an adjusted earnings per share of 15.1p per share, up 13.5% on prior year. And that's a higher relative increase than the profit because of the phasing of the higher property profits in H1 and the lower finance costs incurred in the half as a result of us holding higher cash on deposit balances.

Net cash at the half was GBP 55 million. As Gavin said, a GBP 158 million improvement from the June 2025 net debt position of GBP 103 million and up from the GBP 1 million net cash position we reported at year-end, representing further evidence of the strong cash focus we've had in the group over the past couple of years. Accordingly, leverage dropped 20 bps from year-end and 40 bps from June 2025 to 1.9x and returns to within our desired range of 1.5x to 2x. Finally, the Board is recommending an interim dividend of 4p per share, in line with our prevailing dividend policy and payable on the 6th of November this year.

On the next slide is the revenue walk for the year, and this simply reflects what you can read for yourselves in the latest CPA report or any other widely available market commentary. January and February construction output was impacted by poor weather across all projects. RMI activity remains heavily confidence-linked with the bond markets now forecasting 2 interest rate rises for Q3 and Q4 as opposed to 2 decreases at the start of the year. New housebuilding activity has stalled. New land acquisitions have dried up as housebuilders are seeking to preserve cash, rendering the 1.5 million homes in this parliamentary term redundant.

Finally, infrastructure is generally a little stronger but remains lumpy. And with another cabinet reset and departmental reviews, no doubt underway, there probably will need to be some tough decisions for the Prime Minister to make to fund some of the recent priorities. All of this continues to weigh heavily on volumes and activity levels.

But against this backdrop, pricing has become a critical issue. We outlined to you in March that we have proactively increased prices at the start of this year to protect gross margin. The Iran war then necessitated us passing a further round of manufacturers price increases on, shortly after it started at the end of February. Some of these increases arrived within days of the conflict starting, initially linked to an anticipated increase in freight costs and then later where oil is a principal constituent of the product itself.

Some of these increases have been significant, such as 15% to 20% on oil-based plastic products, and we would expect a second wave of increases to come through in H2 and H1 next year as hedges for natural gas and oil roll off elsewhere. We are inevitably trying to pass on these increases in full and are generally doing so very successfully. But in turn, it is difficult to assess what impact this is having on demand.

Within this backdrop, we're also consciously walking away from low-margin or loss-making transactions and continue to scrutinize credit limits and overdue debt positions very carefully. Nearly 4,000 construction firms became insolvent in the U.K. in the year till April 2026, and that rate is slightly increasing. We could undoubtedly drive our sales line harder by taking more bad debt risk, but this is a constant judgment call as entering into fixed price contract work is too in an inflationary environment.

Notwithstanding my comments on pricing so far and low-margin transactions, we are still steadily recapturing share in the General Merchant, which highlights that with good execution, it is possible to grow share and protect profits in this market, and Gavin will talk to you about that more in his section later. And finally, the disposal of Staircraft, as Gavin outlined last year, also contributes to the bridge on this slide.

So let me now cover the profit walk for the year. And I'll start by repeating something I said at the year-end, if I may. We, along with every other materials distributor in the U.K., employing a large workforce and carrying a significant rent bill need to deliver gross margin expansion to help cover the cost of doing business in the U.K. This is following the past 2 years of higher global inflation and the increased burden of employment-related taxation. The good news is we have managed to achieve this in H1, and it has helped stabilize overall profitability.

Our gross margin has improved because of a variety of factors, but I would pull out 3. Firstly, we had a relentless focus on passing through price increases and not discounting unnecessarily. Secondly, our sales mix has consciously shifted. We've been comfortable to walk away from some lower-margin direct sales and instead focus on higher-margin yard sales where availability and service are more important differentiators.

And thirdly, we've undertaken a huge amount of work in the past 12 months doing what I would describe as good old-fashioned category management to support our COGS position, driving greater collaboration with our strategic suppliers on improved terms, harmonizing purchasing terms across the group, stopping purchasing from our direct competitors and removing nearly 1/5 of our tail merchanting suppliers.

Given our size and scale, we have a huge opportunity to do more here in the future as we continue to professionalize how we buy. For example, how we leverage our Far East sourcing office more effectively across the group. You can see that gross margin improvement has been needed to help mitigate the impact from cost inflation presented on the next 2 bars. I outlined at prelims that we would expect to see around GBP 40 million worth of cost inflation this year and around half of that is in the bar on the graph with the balance subsumed and netted off within Toolstation U.K.

The GBP 6 million cost reduction is a half year effect of the restructuring activity we undertook in 2025 as well as further efficiencies we have identified during this year. All business units and central functions cost centers are running favorable to budget as we look to deliver further efficiencies in the way we operate in tough market conditions. And the final bar reflects property profits, and I'll come back to our property portfolio later.

The next slide is the cash flow for the half. And this is a continuation of the efforts of the past 2 years, focusing on delivering further efficiencies that lie within our Gift and being disciplined on cash outflows. Many of these items are in line with prior year, but I'll pull out 3.

In working capital, we've made further good progress with our suppliers in harmonizing terms and driving procurement gains in the process. Debt collection remains a key focus, and we've done a good job across the group. But as with stock, this will be a key focus for the second half, and I think we can still do more here.

From a capital expenditure perspective, we're clear, the number can and should be lower than it has been in previous years. It also needs to be targeted into different areas and types of spend. Of this year's total forecast, nearly half will go into renewing our fleet and bringing down its average age. The balance sits across investment in the merchanting estate, specifically the older general merchant branches and rolling out Toolstation U.K. stores, which we want to accelerate towards our 650 target.

Small amounts of sensible investment directed at roof repairs, yard resurfacing, colleague welfare facilities, et cetera, can make a massive difference to the customer and colleague experience, and we are starting that refurbishment agenda. The group has historically spent significant sums of money relocating branches entirely. Rarely have the economics of that investment returned in line with original expectations. And in this market context, expensive relocations make no sense.

Finally, we generated [indiscernible] of net property receipts in the first half, and I wanted to talk a bit more about this, how we think about this. As part of the usual housekeeping of a large branch network, we have closed 10 merchanting branches in the first half. Most of these are either benchmarks or managed service specific branches or located in rural communities where regrettably, the economics of extending the lease or making capital investment to refurbish these branches didn't make sense.

The sale of these sites and surplus to requirements development land generated most of the group's property receipts in the first half. We may also see opportunities to realize value from the property portfolio where location is less relevant for product that is typically delivered rather than collected and where our capacity -- where capacity levels are forcing us to look at self-consolidation of our estate.

What we are not looking to do, to be clear, is widespread sale and leaseback transactions of our best sites in the best cities in the U.K. or even outright sales. We don't need to do this to raise cash. We can candidly borrow money more cheaply if we needed to, and it's ultimately value destructive over the medium term. When those lease breaks arise, we would simply lose our prime sites and never get anything remotely comparable to them to replace them.

So let me just very quickly summarize how these cash actions impact the balance sheet. Net debt reduces to GBP 543 million with net cash before leases at GBP 55 million. This brings our leverage, net debt-to-adjusted EBITDA down to 1.9x, which is back inside our desired range of 1.5x to 2x for the first time since 2022. This fulfills the commitment we made in January 2024 to return the group to this range as soon as it was practical and sensible to do so.

A listed group of our size and prominence should be deemed to be consistently investment grade when it comes to raising finance in the public markets and the future rebuild of this group requires the foundations of a strong balance sheet financed by a competitive rate of borrowing.

So let me summarize before handing back to Gavin. We expect the market to remain challenging in the second half, but it is possible to trade smart, take share and protect profitability, and we will continue to keep a tight grip on costs and cash at all times.

In terms of guidance, we expect a group effective tax rate for the year of 28% on U.K. generated profits. Base capital expenditure should be between GBP 60 million to GBP 70 million for the year, and we expect property profits for the full year to be around GBP 5 million, recognizing this has already been achieved in H1. Finally, we are expecting a similar market backdrop for H2 as H1, and therefore, expecting a similar trading performance.

And with that, I will hand you back to Gavin.

Thanks, Duncan. Some of you will recognize this slide from the full year presentation that we gave in March when we started talking about the business in 3 tiers. And it feels appropriate to use this slide again just to sort of steer us through the next few slides.

Just to be clear, going forward, we may not always talk about every business at every presentation. But I think today, it just still feels appropriate to do that. In terms of Travis Perkins Green & Gold General Merchanting, obviously, the biggest business that we have within the group. And even though we don't separate out the individual performance numbers for each of the businesses, what I would say is that Rich and his team in the first half of this year have delivered a mid to high-single-digit percentage profit improvement within Green & Gold.

So one of our key targets in seeing traction within the Green & Gold business, we absolutely have developed as we've gone through the first half of the year. The gross margin expansion through inflation pass-through, as Duncan just talked about, looking at things like sales mix, looking at the way that we procure. And what I would say is, as a group, we're now set up and we're structured in a more sensible way to make this work as we go forward.

Capital expenditure, we would have spent this year something in the region of GBP 30 million in renewing the fleet within the Green & Gold business. And as Duncan just said, also significant CapEx now committed in terms of improving, refreshing and renewing the branch infrastructure that we have across the Green & Gold business. We have streamlined, a more focused management team within that business with everybody within Green & Gold reporting directly into Rich. It gives us shorter management chains. It gives us more agile decision-making processes and I think sets us up as a much more agile business going forward.

And the start of lightside procurement synergies with Toolstation U.K. And I appreciate some of you may look and say, "Well, Toolstation and Green & Gold have been in the business together for quite a long time." Surely, you're beyond the start of this. But I think with where we are now, we're really understanding the strength and collaboration between those 2 businesses, where they sit within the group and the benefits that we can derive from working with both Toolstation and with Green & Gold on those lightside procurement opportunities. And Rich and his team in Green & Gold, Lakhvir her team in Toolstation really understand the power of that collaboration.

I think with the General Merchant business, what I would say is, look, this isn't a silver bullet solution in terms of improving the performance of Green & Gold, but the fact that we're seeing the profit move forward, the fact that we're seeing the gross margin move forward, I think this is now an accumulation of a number of different efforts across that business that gives us a lot of confidence going forward.

In terms of Toolstation U.K., performance remains absolutely in line with where we expect that business to be. We've now got over 900,000 Toolstation club members. Club members are important to us because actually, when you look at the loyalty we get from club members, you tend to get a higher spend, higher degree in share of wallet from those customers. They tend to spend more. The basket size is bigger, the margin is more attractive, but also it gives us access to great customer data, which helps us to shape the business going forward, which is also very important for us going into the future.

As Duncan mentioned, the Far East Sourcing Office, I think this year, we're celebrating 15 years of having a Far East Sourcing Office within the Travis Perkins Group. But I think it's fair to say that all of us collectively across the group leadership team believe we haven't really made the most of that team. We've got some really good people over there. They've got some really good category plans, and I think we can really start to exercise that as we move forward.

Certainly, within Toolstation, which has got some fantastic distribution facilities, that gives us the opportunity to really start to look at how we can benefit from those really good distribution facilities across different parts of the group, specifically when you look at Green & Gold and distributing into their branches and also with TF Solutions, which I'll talk a little bit more about later.

TF Solutions is a relatively small business, only has 14 branches in the U.K. But if we can utilize the branch network of Toolstation for the distribution of that product as well, suddenly, you've got approaching 600 distribution points as opposed to 14. The store number commitment in terms of Toolstation U.K., we expect over the next 3 years to move that branch portfolio from 590 up towards 650.

Myself, Lakhvir, the team, we believe that 650 is the right medium-term target to get to. That will include a few more of our Go branches. The photograph that you can see there is Toolstation Go which is in Battersea. And certainly within London, we think there's great opportunity for developing that Go concept, which has a lower number of SKUs, but really focuses on the fast-moving, higher-margin products that we have.

Staying on Toolstation, just a moment on Benelux. We spoke quite a lot about Benelux when we announced the full year results. We announced that we would carry out a strategic review. That strategic review has been completed. I think it's fair to say now that we're into discussions with a number of third parties relating to the future ownership and status of Toolstation Benelux. I'm sure that you can appreciate those conversations, those discussions are confidential. They are commercially sensitive. And I'm not going to get into any detail around those discussions today. But as soon as it's appropriate to do so, I will give you a further update on where we are with Toolstation Benelux.

In terms of BSS, obviously, as many of you know, a business that I know very well. I think we've got some significant opportunities in BSS and it's a really interesting business in terms of where we're seeing growth come through. The private label opportunity in BSS is real. We have a really strong private label, which is called BOSS. BOSS accounts for about 10% of the turnover within BSS. Obviously, with private label, we tend to get a greater margin opportunity as well.

With BOSS, it's a technical brand. So this is not a low-cost kind of cheaper than everybody else's product. BOSS is a high-quality technical brand within BSS. And it's actually been the private label within BSS for over 100 years, but it's a real opportunity for us as we go forward. We have got 2 separate distribution points within BSS; one at Magna Park near Lutterworth in Leicestershire, one at a place called Crosspoint, which is in Coventry. And we've operated those 2 distribution centers quite separately.

The product is very different. The vehicles are very different. But we have seen opportunities for logistics cross-docking there, and that certainly bring in some cost and margin benefits as we look at BSS as a business. We do see expansion opportunities going into more into the commercial, the industrial and the infrastructure sector, and there are definite growth opportunities as we go forward, along with driving growth in things like commercial air source heat pumps.

So this is a developing and evolving business, but certainly a true specialist. And expanding into collaboration with Tier 1 contractors on to major projects. And when you look at things like prisons, what we've done here, we have an on-site facility in a secure environment that gives us exclusivity on this particular project. This is an area where BSS has got real history of proving that we can make these things work. We did it with Terminal 5. We did it with the Olympics Stadium, and we see this as a real opportunity for us going forward in providing a unique facility for the Tier 1 contractors who are working on those facilities.

Keyline, as you know, is our civils and sort of infrastructure business. Strong inflation in this particular product sector as we went through the first half, as Duncan mentioned, particularly on plastics where you've got oil-based pricing. And I think it's also fair to say that within Keyline, historically, it's been reliant on the residential new build sector, and you don't need me to tell you how difficult the residential new build sector has been.

We are exploring opportunities in the utilities, in infrastructure and data centers. We're seeing some early traction there, really encouraged by how we see that going forward. But particularly in this business, we do need to make sure that we keep that really disciplined focus on costs and on working capital. But I think with the team that we have in this business now, we're really well placed for the recovery.

It's also important to recognize that in this business, over 95% of what we sell is delivered either by ourselves or directly by the manufacturers. So I think in terms of the infrastructure within our own business, we're building a lean business that we believe will be really well placed as and when we see volumes recover within this particular sector.

CCF, I think we have to say that our performance in CCF has deteriorated since last year. It's another business that historically has been very highly reliant on residential new build, but we are holding market share. And as Duncan mentioned earlier, we are being quite choosy here in terms of the margin levels of business that we are prepared to accept and also paying really close attention to the credit limits and the credit viability of some of the people that we're dealing with.

The slowdown in residential new build, particularly in high-rise within the Southeast has been a real challenge within this business. But we have identified actions that we can take. We have decided to look at the branch network, to look at the logistics efficiencies, how we can make the supply chain work better. And I think Chris and the team in CCF were all completely bought into this particular category is critical to U.K. construction in the long term. It's a category that we absolutely should be a major player in. And we just need to make sensible business decisions and evolve the model so that we can participate in this particular sector but make better returns on this going forward.

TF Solutions, our air conditioning and refrigeration business, it's fair to say market conditions have been relatively friendly towards the air conditioning business in recent weeks. In case anybody hasn't noticed, it's been relatively warm. And I think it's fair to say that right the way across TF Solutions, whether it's in the air conditioning specific or refrigeration, gas installation markets, all of these have been really positive as we go forward.

The digital catalog that I spoke about at the full year is now live. And we will also be opening our first TF Solutions branch within the BSS business in Dublin in the first half of next year. And that will be the first move of putting TF Solutions into Ireland. It's the perfect opportunity to do it. We're relocating the BSS branch in Dublin to a much better facility and absolutely lends itself to TF Solutions going into there.

We do believe that the air conditioning and refrigeration climate control market has really strong potential going forward. But please remember, we are building from a relatively small base. But I think James and his team within TF Solutions also are relatively happy and probably come as no surprise that the month of July was an all-time record month for them in terms of sales of air conditioning.

So I think in terms of summarizing where we are, as Duncan said, a very strong cash performance, which kind of underpins both flexibility and resilience in the market going forward. And I personally believe that a really strong balance sheet in a market that still has some uncertainty is a really strong and positive place to be.

We talked at the full year about having a disciplined approach to costs, to margin and to capital allocation. And we will continue to make what we believe are sensible business decisions in those areas to make sure that we retain that discipline going forward. We absolutely believe there are further opportunities for self-help.

There are things that we can do to improve operational efficiency. There are things that we can do to drive productivity. There are things that we can do to manage our supply chain better, both in terms of physically managing the supply chain, but also in terms of utilizing the procurement skills that we have across the group. So recognizing the market being difficult, we still believe there are things that we can do within Travis Perkins to make the business better, to make the business stronger going forward.

As I mentioned in March, we put a completely new group leadership team in place, the majority of whom are in the room with us today. That team is now fully established. It's developing well. I think it's fair to say that we've got a team now that have all of the arrows pointing in the same direction. Everybody understands the part that they have to play and the part they have to play not just in managing their own specific business, but also in developing the group and making the group stronger.

And I think our market-leading positions that we have within those businesses, the vast majority of which are either #1 or #2 in their chosen markets, gives us a lot of confidence as we look forward and say, "We know we're in a strong position. We know we can continue to improve the quality of the business and run the business in a better way."

Although the market has its challenges, we are still operating in a large market. So there is still profitable share that we can go for. We can still build margins. We can maintain the discipline on costs. And certainly, with that strength of balance sheet, I think it's fair to say we feel that we can face anything that the market is going to throw at us going forward with a lot of confidence, and we can make sure that Travis Perkins continues to improve, to grow and to develop as we go forward.

That concludes the presentation for this morning. So we are going to move into Q&A.

As we have got people following on the webcast as well, what I would say is if you've got a question, if you could raise your hand, we'll bring the microphone to you. If you could give us your name and the organization you represent and then ask your question, that will help us to get through the Q&A without too much mayhem breaking out within the room.

So if we come right down to the front to start with Charlie down on the front row, [Technical Difficulty] we can hopefully answer Charlie's questions in an intelligent and articulate manner.

I hope the questions are intelligent and articulate as well. It's Charlie Campbell from Stifel. Just a couple of questions. So, firstly on price, I know there's lots of moving parts. But just to give us an idea of if things stay where they are now, what sort of price component we should be thinking of in terms of the second half, particularly in merchanting, let's say?

And then secondly, on the gross margin and also working capital, it seems to me we could argue looking from the outside that maybe some of the rebate structures have changed. And I guess manufacturers have got lots of spare capacity in a way that they didn't a few years ago. So just wondering if those rebate structures have changed and also whether you think there's more for that to go, where that came from?

Okay. I'll pick up on price. I'll let Duncan pick up on kind of working capital and rebates and so forth. We saw a lot of price inflation early in the year. I think as we said when we did the full year results, some manufacturers were literally putting price rises through within hours of the issue in the Middle East breaking out. I think we've been more disciplined within the business in passing those price rises through. And I think it's really important that we do that.

I would say, literally, Charlie, over the last few weeks, the pricing environment from the manufacturers to us has been a little bit more stable. We haven't seen sort of more price rises coming through. The price rises that are hitting us mid-year were fairly well telegraphed earlier in the year.

So I would expect to see a little bit more of the same as we go through the second half. But obviously, there are so many sort of pressure points in the world that actually I can't rule out that we suddenly get another rise of price rises coming through from the manufacturers. What I can say is if we do get more price rises coming through, we will actually employ exactly the same disciplined approach in passing those price rises through our supply chain.

The difference in the various businesses of the speed of getting the price rises through is also an interesting point. So if you look at Green & Gold, where we've seen significant progress, we can get the price rises at the trade counter through very, very quickly. If you look at businesses like CCF and Keyline in particular, where you are on to much more project-based work and long-term project based, it takes longer for those price rises to work through those project-based customers.

But I think whatever we see in pricing, I think the mindset that we have within the business now, the discipline that we've shown on pricing will continue through the second half.

Yes. And Charlie, on rebates, I think the answer is some and some. I mean, it depends really on which suppliers on which categories. I think there's been a general, but not that fast, drift into more into COGS in terms of less rebate generally over the last few years. I think we've probably just become as well more kind of hungry and focused around closing down and collecting rebates and managing that accordingly. But I wouldn't say it's changed dramatically. In all honesty, I think it's pretty stable in terms of how we're interacting and operating generally.

Thanks Charlie. Just the gentleman who's just behind him. We will get across this slide, I promise. We just as well use the microphone over here while we have it.

Shane Carberry, Goodbody. Just 2, if I can. Firstly, procurement has came up quite a lot this morning. Can you talk about the potential opportunity going forward there? Are we talking -- I know you said not a silver bullet maybe, but are we talking kind of low single-digit millions, tens of millions? How should we think about that procurement opportunity?

And the second question then was more so around the balance sheet. Obviously, you've done a great job in terms of getting that leverage back in within the targeted range. How should we think about kind of capital allocation priorities from here?

Do you want to pick up on capital?

Yes. I mean, I think it's funny, isn't it? How you go from a problem where you've got -- you swing very quickly into a different question and challenge. I mean sat here right now, I would give some sort of cautious celebration of the fact we've got ourselves into a much more robust position. We're still sat with a pretty unfriendly market as we look into the first half and as we look into the second. It has got the capacity. I know I'm standing very CFO and black hated on this. It's got the capacity to get worse before it gets better.

So I think, look, from Gavin's bullet said it, mine said it around the resilience piece. I think, first and foremost, it gives us that. And I think that all elements of this sector is probably came through in my script, but in terms of kind of the materials, manufacturers, distributors and end users are under very, very significant levels of stress. So I think that's the way I look at it in the first -- in the first instance.

Do I think we can continue to compound and build on that position and grow that cash position? Yes. And our first obligation has to be to fix and invest in the core businesses in the parts of the business that we've underinvested and neglected over the previous year's unapologetically. That's important for our colleagues. It's important for our customers for them to hear that message.

When we get beyond that and certainly into better market conditions, that's a quality problem to have, and we'll worry about it at that time. But I guess that's how I would see at this stage.

I think on procurement, Shane, I think there's -- I'm not going to put a number on it because I think it's unfair to try and put a number on it. But what I would say is I think we've been behaving more sensibly, like a market leader, with our large suppliers. We have various businesses within the group who share common suppliers, and they didn't all have the same terms, and that just felt like inappropriate.

So we have spent some time just making sure the terms are consistent across the various parts of the group. I think the procurement opportunity through our Far East Sourcing Office, which is part of Latvia's sort of empire within Toolstation is a real opportunity for us. I think if we look at what other people have been doing there, there is absolutely no doubt we have been under-punching on how we've been doing our procurement for some considerable time.

So I think even though we've done a lot of work in 6 months, there's a lot more work to come. And I think it's going to underpin that gross margin expansion as we go forward as well. And we absolutely fundamentally believe gross margin expansion is still critical going forward from where we are now to offset anything that might come in terms of volume degradation in the market.

Just right next to Shane.

Sam Cullen from Peel Hunt. I've got 2 also. Talked a lot about the balance sheet and your relative strength. I'm just interested in your view of the financial stress amongst your competitors and scope for capacity to come out of the industry in the medium term? And then the second one is, you seem to have taken GBP 2 million or GBP 3 million out of central costs in the first half of the year. Is there more to come in the second half and more to come in the medium term?

I'll let Duncan touch on costs. I think in terms of market consolidation, I mean, look, it's always difficult because the vast majority of our competitors now are private equity. They're not publicly quoted businesses. So getting the real quality of information, I think, is very difficult. From my perspective, I think our focus is absolutely on how can we do what we've already got and do it better. We started a journey with Green & Gold in improving the profitability, improving margins. We've got a plan to grow and develop Toolstation. We understand that TS Solutions, all the other businesses have got opportunities.

So I think as and when the opportunities externally arise, fine, we'll have a look. But our primary focus is doing what we do better because I think also if any opportunity comes along for consolidation, it's always easier to buy a business and bring a business in when you're absolutely flying as opposed to when you're just on a recovery path. So I'm not saying never, Sod's law, the phone will ring tomorrow, but it's -- our focus is doing what we do better than how we do it now.

And the only thing I'd add to build on that is, this may not just be our competitors, but it's up and down both parts of the supply chain as well. We got a phone call on Friday to say a credit insurance, a final element of credit insurance have been pulled on a fairly significant national housebuilder, right? So these are things we'll have to take into account and consider it too. So the stress is real, and that shouldn't surprise anyone.

On the cost, look, I think -- when I walked into the group, I think it's fair to say everyone who'd been in the group for a long period of time, characterized our attempts to take cost out over the previous 4 or 5 years as being very much a kind of a big bang in the sort of November or December of each year-end and then cost and headcount would just creep back in and there was this sort of boom and bust, boom and bust, which is not a sustainable way to run the business in the long term, and it also creates a lot of colleague uncertainty.

We have taken a lot of cost out from central functions over the last couple of years. I would characterize us now in a far more calm and sustained place where when we do see people leave the organization or we do see other things happen, we're taking every opportunity to each instance to say do we need to replace that personal head? Do we need to keep that in? Which is a much calmer and more considered way of approaching things?

And I think I hope people in the organization are feeling that. So the answer is never say never that we can't do things more efficiently. Undeniably, technology coming in is going to enable that. If I think about in my own area that all the extra heads we brought in to manage the challenges with Oracle invoicing processing, we're virtually back to the baseline we were before. But in theory, we should be able to do that more efficiently given the fact we've put [indiscernible].

So there's always things we can do, but I think the idea we're into a sort of big bang type restructure in those functions is less likely because I think what -- we've got the ability to be more thoughtful about this at this time.

We'll take one from this side of the room just for a bit of variation. We will come back to you, I promise.

Priyal Woolf here from Jefferies. I've just got 2 questions. The first one was in terms of property profits, et cetera. I think Duncan used the term self-consolidation. There's obviously been a significant downsizing of the branch network in merchanting over the years. So I just wanted to gauge, is this something which will just be around the edges incrementally or something quite significant?

And as a part B, is network downsizing something that you're seeing amongst your competitors yet as well? And then the second point -- sorry, second question is just on pricing discipline. You've talked a lot about this today. What are you doing differently now that you think you weren't doing previously?

Sound like they're both for you, Duncan.

Lucky me. Look, I think on the network, I think I wouldn't say we have seen a dramatic reduction and you sort of led into the second part of the question, Priyal, with versus our competitors. I mean, certainly materially less percentage reduction or decrease versus the competitor set. My comment was more perhaps driven and Gavin made the point around difference between delivered and collected product, for example.

I sort of think that may well be more present in some of those business units where there is less criticality of where we've got location per se, number one. And number two in where we have seen some of our competitors close branches in what we would consider to be really high-quality long-term locations of choice in strong market towns or big urban accommodations, no appetite or interest to want to close those.

So, look, the reality is, if volume performance remains at this level for a period of time, you have to look at the amount of real estate you've got and whether you think you can supply that volume going out. And we would be being irresponsible if we weren't looking at that from a shareholder perspective where we think it can make sense and it's the right thing to do. So that's the way we would look at the network.

But as I say, that does not into we're going to stand up in March and announce a 30 or 40 branch sale and leaseback program. I just think that makes no sense whatsoever. It does nothing to improve our leverage, and we just get to -- wherever you can make really decent returns or yields on those, you just get out of those branches with the first lease break, which is -- which makes no sense at all.

I'm sorry, your question on pricing was -- what are we doing differently? Look, I think -- I mean, Rich is sat in the room and you can ask him the question yourself after. I think we've done a really great job at being -- having a much more effective pass-through of price inflation in the first half than we have historically managed to do. A lot of people ask me the question around why don't you get all of that to stick because we're not a retailer. We don't have a shelf-edge price. There's a discount and there's a commercial negotiation to have it every time someone walks into one of our branches.

But we've done a much better job of focusing on that and putting the clarity of that messaging out there and frankly, as well within our BUs as well, it just happens to be the most material effect in Green & Gold. And as I said, I think the -- that's on the output. On the input in terms of what we're doing on suppliers, I described it as good old-fashioned category management. I mean we have been doing some pretty dysfunctional things over the last few years. I know I don't mind saying that. I mean buying stuff from some of your competitors is not a desperately smart move when you can source it in-house.

So we're just professionalizing, I think, the way in which we're doing procurement. You just get it at both ends in respect of the ability to improve gross margin. And I think there's clearly more still to do.

Take another one down the front on this side, Bailey if we can.

Ben Wild from Deutsche Bank. Two questions for me as well, please. Firstly, there's been a price inflection in H1 that was discussed. To what extent does the 100 bps of gross margin expansion in H1 benefit from that price expansion? And would you expect there to be a degree of giveback in H2?

And then secondly, on the Toolstation lightside synergy with the General Merchant, to what extent do you worry that integrating the Toolstation lightside offer into the General Merchant will be gross margin dilutive for the General Merchant over the medium term?

Okay. I'll pick up on the Toolstation and I'll let you pick up on the first point. Yes. Honestly, Ben, it doesn't worry me at all. So that answers your question. Look, I think we absolutely recognize there are things that we do really well in Green & Gold. If you look around our yard areas, we do bricks blocks, timber, stuff like that really well. Our shop areas, I think it's fair to say, have been poor. And rather than just constantly looking backwards and going, it hasn't been great, it's like what can we do to improve this.

So when you look at ranges like electrical accessories, when you look at ranges like plumbing and heating accessories, we've already got really good category plans and supply chain set up through Toolstation. And the product is basically the same that is going into the Green & Gold merchant business. So genuinely, it doesn't worry me at all. I look forward at this and see this as a really positive opportunity.

And Rich -- we state Rich's career on the fact that the margins and the sales and the profitability of the shop areas can improve going forward because that is a critical part of where we see the gross margin expansion. Sorry, Rich, for banking your career on that one.

On your price question, I mean, look, I'm not going to break out the moving -- the component parts of how it's contributed to gross margin across all the areas aside from the fact that I think it's commercially sensitive. To your second part of your question around how much do I think we need to give back. Look, I'm optimistic, and I'm optimistic because the reality is, as we've -- I think, over the last couple of reporting periods laid bare in terms of the profit bridge in the group is, everyone is facing the same cost headwinds in this industry. And actually, many of our competitors have got to face into refinancing costs at a time when interest rates are set to rise going forward.

There's no secret sauce here to making a turn or making money that we somehow are not accessing. If anything, we've all got the same challenge. You cannot keep discounting unnecessarily on price. in a bid to take share when you're making no money and your net debt position is just getting bigger and bigger. That isn't a sustainable position. So do I think we've reached a tipping point with price rationality? I hope so because the reality is that you just -- that's going to come home to roost, and it's coming home to roost right now.

The question is what does that do to demand though in terms of, does demand become staunched because ultimately, things are just becoming more expensive? I don't think that necessarily means that pricing has to come off. It just might mean that it continues to weigh a little on demand in the second half. And I think that's probably the case at the moment. Our sense is, I think, in terms of RMI activity, for example, we've got a lot of repairs and maintenance activity being done at the moment.

The discretionary improvement activity is probably pretty low and pretty subdued. But that's a much broader economic question around feel good factor and confidence and household savings, et cetera, which we won't go into now. But I'm relatively optimistic we can hold that pricing benefit.

Yes. Just take that one on the outside there Bailey, then we'll switch back over on to this side.

Adrian Kearsey, Panmure Liberum. Two from me. The gross margin up 100 bps at the group level. Green & Gold, where did the gross margin change? Was it sort of in line with that, above or below?

And then the other question, given some guidance on Toolstation U.K. in terms of additional sites. In terms of geography and in terms of the format that you planned for those additional sites, are they going to deliver a similar kind of revenue per branch and EBIT per branch than the existing? Or is there anything in there that we should be thinking of in terms of -- they're in different places, so therefore, they'll have a different financial dynamic.

It's a good question. I mean, first of all, Toolstation, I mean, it's a properly nationwide brand now. I mean we've got very close to 600 locations now across the whole of the U.K. We've got -- there's a two-pronged attack to this, one of which is we absolutely recognize we need to get the branch numbers up from 590 to 650. And if you look at our current average sales per branch, that will bring a level of revenue over the next 3, 4, 5 years anyway. But also part of our plan with Toolstation is to improve and increase the densification of the sales through the mature branches.

So if you look at our competitors, we believe that they do a better job than we've done historically in terms of getting a level of turnover per branch. So I don't think you should try and model anything in that's different in terms of the next 30 -- the next 60 branches compared to what we've done in previous years.

We have got opportunities for some formats in London, but we've also got places around the U.K. that we believe we need to get more locations. And we've got locations around the U.K. that deliver a level of return now. So I don't think you should be building anything different in terms of the modeling for what the Toolstation branches should be going forward.

And on your gross margin question, Adrian, I'm not going to break out the individual BU contributions. But given the materiality to the group of the General Merchant, you can make a reasonable inference around that.

Take one just down this side, please Sara.

Will Jones from Rothschild & Co Redburn. Three, if I could please. The first is within your full year or second half comments in the release, is there a base case there that the merchanting like-for-like move back to small positive? Or is it more or less the flat again of Q2 in thinking?

Second, just coming back to procurement. I think you mentioned you cut out 20% of your tail suppliers. I just wondered if you had a sense for what that 20% would be in value terms. And when you go back to those main suppliers and say, there's a bit business for you potentially to key in a price, what have been the early responses as a general remark?

And the last one was just around depreciation. I think it fell about GBP 10 million year-over-year in H1. Presumably that's a function of the write-downs at the end of last year, but does that play through for minus 20% for the full year?

I wouldn't get drawn into giving you a comment on the merchanting like-for-like. I think we're content with where we are on the outlook statement for -- there may well be some ups and downs across the group as to where we sit. Well, is it possible? Yes, it's possible, but I wouldn't crystallize that as a guidance.

I think on the tail suppliers, look, I'm not going to give you the value per se. Again, it's commercially sensitive other than to say it's a very significant number of a group of our size, as you would expect. What has been the reaction from our larger strategic suppliers? Pretty positive, as you can expect, and as you're right in terms of a -- in a market where volume is tough to come by, they are welcoming and valuing that interaction.

It is not to say that we do not want to have a relationship or a procurement mix that has a full gamut, an array of suppliers going forward. That's not the point. But where we are buying things that, as I said, we're just -- we're not getting any purchasing scale or we've not got any kind of quality framework agreement in place, that needs proper focus, that needs proper attention. So I think as I say, I would just describe it as a good professionalizing of that.

And your last one, yes, you've answered your own question in terms of there is obviously an impact associated with the impairments we took in prior year and reasonable to assume there's a linear impact on that as well.

Thanks, Will. We have any more down the front here, please, Bailey second row.

Zach from Morgan Stanley. Two questions, please. So firstly, on working capital. Where do you think you've made the most progress in the first half? And what are the goals for the second half? And then maybe just in the first half working capital performance, how much was driven by actions taken last year that have carried over versus new actions this year?

And then the second one, just on the dividend. It was down year-over-year while EPS is up and you're back in the targeted leverage range. So in that context, how do we think about the dividend for the full year, kind of assuming stable market conditions?

Yes. I mean, I think on the working capital, look, I'm not going to break out where it's come from. It is multifaceted. I mean it's not actually as big a contribution as it's been in the previous half at the end of last year. And as we talked about in terms of the [indiscernible] of net property receipts, which played into that cash number as well. There are parts of the working capital endeavor, which we're going to start hitting diminishing returns because we've done like we just -- we need further cash enhancement to come from operational cash flow coming from the group re-expanding as we move into better trading conditions.

And how -- and your second part of your question was how much of it carries over into this year? Well, yes, of course, there's inevitably an annualization effect of things that we've done at the back end of last year, albeit I would say we have undertaken quite a bit of activity in the first half of this.

Look, the dividend is -- yes, the EPS is higher because of the property profits and because of the higher interest income we've taken through the course of the year. I wouldn't read too much more into the fact we have a third -- a policy we've historically applied in applying our overall 30% to 40% payout ratio of 1/3 in the interims, which is in line with that at the moment, and we'll obviously correct that at the full year. So I wouldn't read too much into it one way or another.

Down in row 3 please Bailey.

Allison from Bank of America. Just 2 questions from my side. So first, the potential for further gain in the working capital in second half. Should we be expecting the net cash, excluding leases could continue to grow? First one. Second one, I know we don't want to get into too much details in the Toolstation Benelux disposal. But I wonder, do you have any like a target for the timing? Should we be expecting ASAP or maybe just second half or maybe even next year?

On Benelux, these discussions are taking place. They're well advanced discussions. These things take the time that they take, but this is a very -- it's a very active process. But I can't really sit here and say whether it will be 2 weeks, 4 weeks, 6 weeks, whatever. But this is a very active project that we're currently working on.

And your question on working capital, yes, there's a target to improve it further in the second half. I'm not going to put a number on it. We've done a pretty good job, I think, in the last 2 or 3 reporting periods of saying trust us and leave us to it, and we'll deliver some further improvement. I don't know how big that improvement is. I've got -- I've still got quite a sizable dartboard with opportunities on it, and we'll just have to work our way through and see where we get to.

Any more? Brilliant. I think we are done. So, ladies and gentlemen, thank you for coming in this morning. Appreciate it. I know it's the holiday season, but this building is very nicely air conditioned. So it's very pleasant being here today. Hopefully, enjoy the rest of your summer, and we look forward to seeing you when we do the full year results in March next year. Thank you very much.

Good morning, everybody. Nice to see so many people here in the room, and a very warm welcome to everyone who's following us on the webcast as well. I believe we have several hundred people out there watching us on the webcast this morning. For those of you who don't know me, I'm Gavin Slark. I'm the CEO or more correctly, the CEO of 10 weeks. And I'm joined today by Duncan Cooper, who obviously most of you will know as our CFO. And we also have quite a few members of our group leadership team in the room today as well. So very happy for you to badger them with questions at the end. Obviously, they've been well briefed not to answer any of them. But I'm very happy for you to have a go anyway.

I think most of you will know, although 10 weeks in the role here at TP, very well versed with the sector, having been in the sector for kind of well over 25 years, but really delighted to be here as the CEO of Travis Perkins and really looking forward with a lot of excitement to what happens going forward. I think it's fair to say that the business has been through quite a lot of flux and quite a lot of change over the last couple of years. I think as many of you will know, Duncan has been here for 2 years. And during that period, he's technically worked with 3 different chairs and 4 CEOs and also 3 managing directors of our Travis Perkins Green & Gold business. So a huge amount of change.

And what I would just say at this point is just thank you to everybody who was involved in the group last year, particularly the leadership team who got us to the point in where we are today. My aspiration in terms of the business is very simple. It's to build a group of world-class businesses and for all of our stakeholders, whether they be colleagues, whether they be suppliers, whether they be customers, but just to build a great experience for everybody involved in the business. And it doesn't really matter what we do. One thing we need to be sure of is that everything that we do is driven by the needs and the wants of our customer base.

We do have an all-new leadership team in place. And what I would say there is we've got a leadership team in place now that I think is really committed in terms of delivering value in the business going forward in the medium to long-term. I'll talk a little bit more about the leadership team later on. And as I said, you'll have an opportunity to talk to them one-on-one when we finished.

We are and we should be a branch-based sales-led organization. But I think that kind of organization can work absolutely in harmony with a mindset of a disciplined approach to margin, to cost and to capital allocation. And I think particularly with where the macro is now and the construction market, in particular, having that disciplined approach to the balance sheet management is a really important factor that Duncan will talk more about later on.

I know many of you will be aware that we had the Oracle transition in the group last year, and I don't want to underestimate or understate in any way the pain that the business suffered during that Oracle transition. But that Oracle transition is now principally behind us, and we're now starting to see the positive benefits of Oracle in the business starting to come through. I really believe that our success will be defined by what we do. It won't be defined by what happens in the market. Some market growth would be great, and we'll talk more about that later on.

But I think what we can focus on is what we have control over, what we can do in the day job and be really disciplined about the way that we run the business. But I firmly believe that our success is driven by us and not by external factors. The focus right now is to improve what we have. It's to remove distractions, it's to remove background noise and to really give the leadership team the opportunity to focus on the business that we have today and the necessary improvements that we need to make.

I'm not going to go into sort of detail around numbers because obviously, we have a CFO for that, but I've really got sort of 3 numbers that I think I just want to focus on for one moment. If you look at the revenue number there, you'll see that the revenue in total was down by 0.9%. If you look at that on a like-for-like basis, it was positive by 0.3%. So for the sake of sensible conversations, we'll basically say revenue was broadly flat. If you look at the adjusted operating profit at GBP 133 million, I believe that's absolutely right in line with where consensus was for the business.

But I do think that the most important number on that page there is the balance sheet number. And even though it's a relatively small number of GBP 1 million, but on a pre-leases basis, being net cash positive, I think, is a really important place for us to be and gives us an underlying financial strength. And it's the best cash position that Travis Perkins as a group has had in over 25 years. We don't have any significant refinancing to do probably until 2028, and we also have a really substantial level of liquidity headroom in the business. So the financial underpinnings of the group remain really, really strong.

What I will do at that point is pass you over to Duncan, who will take you through the more interesting parts of the numbers. And then I will come back after Duncan's finished and just give you some of my early observations on the group and what I think we can do going forward. So with that, Duncan.

Thanks, Gavin. Good morning, everyone. So I will start with the usual financial overview slide. Group revenue for the year was GBP 4.6 billion, down 0.9% on prior year. And as I normally do, I'll provide some color on the moving parts within that shortly. Adjusted operating profit for the year was GBP 133 million, down 12.5% on prior year and in line with company compiled consensus of the same number. That delivers an adjusted earnings per share of 30.8p per share, down 15.8% on prior year, reflecting the reduction in earnings on prior year and the fixed nature of interest expense between years as well.

Net cash of GBP 1 million before leases puts the group, as Gavin has said, in the strongest cash position for nearly 30 years. And accordingly, despite the reduction in earnings, leverage adjusts down another 40 basis points to 2.1x, and I'll talk more about the good work we've been doing here later.

Finally, the Board is pleased to announce a final dividend of 7.5p per share to make 12p for the full year, in line with the group's policy to pay a dividend of 30% to 40% of adjusted earnings.

Over on to the next slide and our revenue walk then for the year. I'm not going to dwell on this too long as I think Geoff and I covered in some detail at the half year, the challenges we faced in the first half with key vacancies and trying to grapple with the implementation of Oracle. As we move through those challenges into the second half, we were able to be far more front-footed with some key promotions, which drove an improvement in our sales performance.

This saw the general merchants start to reverse market share losses and retake share, a trend we are seeing continue into early 2026. And you see that reflected in the cadence of the like-for-like sales performance in Merchanting that we have reported today as well, minus 3.2% in Q1 like-for-like, improving to plus 2.1% in Q4 as we exited the year. We saw 1 fewer trading day 2025 versus 2024. And finally, the impact of disposing of Staircraft is also presented, which was not material enough to the group's performance to be reported as a discontinued operation.

On the next slide is the usual operating profit walk we provide. The first 4 blocks relate to Merchanting segment only. The first block represents the reduction in gross margin for the year, and this reflects the ongoing competitive intensity in a market starved of volume growth. Manufacturers' price increases have been hard to pass through in full or in some cases, at all. And as we ourselves have demonstrated in the second half, some price investment has been necessary to kickstart a volume recovery.

One fewer trading day is the next block, and then we come to overheads. We saw about GBP 40 million of total overhead inflation in the year, about half of which is represented in the next block and the other half is netted off within the Toolstation bar for consistency of reporting. I'll go into more detail on this in the next slide, including the actions we've taken to reduce overheads whilst facing into these headwinds.

Toolstation U.K. continues its strong earnings growth and remains on track with our longer-term expectations and aspirations for that business. And finally, property profits were in line with prior year. So let me come on to talk about cost inflation and mitigation in a little more detail. So firstly, you will remember at last year's prelims and half year, Geoff and I both talked about the need to reinvest in some frontline predominantly branch-based roles, which were removed at the end of 2023. Most of the 350 colleagues I referred to on this slide were onboarded early in the first half of 2025. A small amount of that increase relates to the opening of 3 new general merchant branches.

At the same time, I think we've also been consistently open with the market that the group had become too centralized and its decision-making and was carrying too much resource in central and regional management roles. Across several ways of activity during 2025, we remove roles from functions such as finance, co-sec, sustainability, HR, corporate communications, group procurement and marketing and IT to ensure that we start 2026 with over 300 fewer heads in these areas than at the start of 2025.

Our total overhead inflation across 2025 was around GBP 40 million, which comes from a part year effect of the national insurance increase, national living wage, property rates and rental inflation. Through our focus on headcount and other discretionary costs, we did a good job of offsetting as much of this as possible during the year, but we cannot offset it in full. It's a similar story for 2026 where cost inflation will be of a similar magnitude. And our ability to offset as much of that as possible will depend on identifying further operational efficiencies across the group.

I would also add at this point that sometimes people ask me why we need to hold over GBP 800 million of property on the group balance sheet. There are lots of reasons I could share around why the flexibility and long-term location security, that gives us is important, but I'm not going to go into those now. However, a positive consequence of our tenure mix is how it helps shelter us from some of that index-linked rental inflation, whilst also ensuring we don't shackle the group with long-term lease debt and leverage.

And I'll close on this slide by offering example of what I mean by tighter controls on discretionary spend and headcount. Gavin now has to personally sign off all roles coming into the group above a certain salary threshold.

On the next slide, I want to cover the adjusting items we've recorded this year. The first thing I will say is all of these are covered extensively in the notes to the accounts with detailed disclosure. The first charge of GBP 111 million could be split into branch level impairments, covering 196 branches in the merchanting segment, where the carrying value of the branches assets was above the value of our forecast discounted cash flows generated from those assets. The total noncash impairment recognized in relation to these branches is GBP 67 million.

In the majority of cases, the branches are expected to deliver a positive contribution in 2026 with the vast majority delivering a positive contribution in the future based on our forecasts. A noncash goodwill impairment of GBP 44 million has also been recognized following the annual impairment review of the CCF business as an entity. Taking into account the structural challenges in its end markets and future forecasts of CCF profitability.

The Toolstation Europe impairment charge relates to the noncash write-down of goodwill, property and right-of-use assets in the Toolstation Benelux business under IFRS accounting rules. The Toolstation Europe restructuring charge relates to restructuring costs in Toolstation Benelux and adjustments in respect of redundancy provisions and lease liabilities related to Toolstation France recognized in previous years. Again, this impairment is principally driven by our recent trading performance in Benelux and our future forecasts of its profitability.

The restructuring charge of GBP 12 million relates to severance payments made as a result of the headcount reductions I referred to earlier on that were made during the year. The majority of these roles were in central functions or regional support teams. The Staircraft business was sold during the year for a consideration of GBP 21 million and resulted in a loss on disposal of GBP 3 million. It had already been impaired in our 2024 accounts.

And finally, the adjustments to prior year items relates to the release of property and stock provisions recognized as adjusting in prior periods. So I want to come on to now talk about cash and the balance sheet. We reported a strong cash inflow of GBP 196 million for the year, and that is set against the backdrop of lower year-on-year EBITDA reflected in the first line of the table. You can see we have a similar level of excess costs associated with restructuring year-on-year, similar levels of interest expense and dividend commitments.

The sale of Staircraft has broadly offset the lower cash receipts from property transactions principally sale and leasebacks. The 2 big controllables here remain capital expenditure and working capital. We've had another year of disciplined capital investment into the group. Our priority over the past 2 years has been to invest in our fleet and bring down its average age. We had allowed that to drift up in recent years. And whilst the useful and operable life of our trucks is around 10 years, based on the heavy usage they get, you see repairs and maintenance costs increase and utilization rates fall past about 7 years. So we want to ensure our branches and drivers can operate efficiently with minimal vehicle downtime.

We're also starting the job of fixing some of the uninvested parts of our estate and the strength of our balance sheet means we can do this in a sensible and staggered way over the coming years. Our big focus though has clearly been in working capital. Stock has increased in line with inflation, but we know we have more work to do here across the group. Trade debtors have reduced by GBP 130 million as we have successfully managed to invoice much of the Oracle related backlog of debt I referred to last year, but also sharpened our disciplines on debt collection generally.

Trade creditors have increased by GBP 26 million as we have harmonized payment terms across the group following the introduction of Oracle. These changes combined to deliver the significant working capital inflow number. In addition, we are targeting further self-help in terms of cash generation during 2026. And I'm not going to put a target on that or provide formal guidance. But I would reiterate what I've said about TP since I joined. This group is capable of generating very healthy levels of cash when it's focused in the right way. I'm happy to bring the obsession, and I'm really pleased to see how others are responding to that. But to affect a real cultural shift throughout the whole organization will take time, but we've made a good start.

The last point I would make to give confidence in our cash generative capabilities is to remind you that we have managed to absorb some significant one-offs in recent years, including the closure costs of France -- Toolstation France, some significant restructuring and severance costs and the multi-year cost of implementing and launching Oracle and still demonstrated some excellent forward momentum. So that brings us on to the balance sheet impact of this cash generation.

Net debt has fallen by GBP 224 million to GBP 621 million, and that leaves us just outside our desired long-run leverage range of 1.5x to 2x. It also puts us at net cash at the end of the year of GBP 1 million. It's only slight, I accept, but we'll take it. And that, as I said at the outset, it's the strongest cash position we've had since 1998. If you're looking for cultural reference points, Michael Owen's scoring wonder goals against Argentina was the first 1 that came into my mind.

That cash profile has compounded steadily and consistently throughout the year as the benefit of the actions I referred to earlier on, have taken effect. It gives us when combined with our undrawn revolving credit facility at year-end, over GBP 800 million of available liquidity, which provides significant resilience in what remains a challenging market backdrop. But also the necessary firepower to underpin our competitive position if market conditions demand it.

Being more optimistic and forward-looking, it also gives us the necessary headroom to invest in areas like inventory when market conditions do improve. The renewed cash discipline we've put in place over the last 2 years has also enabled us to refinance on competitive terms during the year. Across 2 tranches, we fully refinanced the GBP 250 million corporate bond due to mature in 2026 with U.S. private placement funding for both tranches and did so on an investment-grade basis, with a blended coupon across both tranches of 6.27%.

We've also managed to smooth the time line of future tranche maturities, which now run out to 2035. This gives us excellent near-term as well as long-term financial security as we have no immediate significant refinancing events until 2028. And as I touched on earlier, we are targeting further cash generation opportunities and therefore, further deleveraging in 2026.

So let me conclude with outlook and guidance. There is likely to be ongoing uncertainty attached to the economic and geopolitical environment. And therefore, we will remain focused on what we can control. We've started the task of rightsizing the overhead base of the group and implementing a more rigorous approach to expenditure generally, and we'll continue to identify and deliver further efficiencies.

On the balance sheet and cash generation, we go again. From a guidance perspective, we expect the group effective tax rate to be around 30%. Capital expenditure is expected to be around GBP 80 million for the year and property profits will be around GBP 5 million. On a like-for-like basis, our interest expense is expected to be around GBP 6 million higher per annum from switching out the 3.75% corporate bond for the PP financing arrangements I outlined earlier. However, holding the healthy cash position that we currently do provides an offset to this through higher interest income.

And finally, we expect a similar level of loss in Toolstation Benelux this year and Gavin will talk to you more about this when he returns. And with that, I will hand over to him now.

Thanks, Duncan. What I'd like to move on to now is just to really give you some kind of early views of what I've seen within the group as I said earlier, it has only been 10 weeks. I think we've crammed quite a lot into 10 weeks, but really trying to give you some sort of early observations of what I've seen. And working with the leadership team, we've tried to look at this very much from the point of view of all of the stakeholders, so whether that's customers, colleagues, suppliers or shareholders, but really trying to take a rounded view of what we've got and where we go with what we've got. A [ dead clicker ].

So trying to come up with a simplistic way of looking at the group. And what I've done is I've broken the group into 3 tiers, so different businesses in each of those tiers. And we'll talk about the individual businesses more. I've got some more slides after this one. But if you look at Tier 1, what we're really saying in T1 with Travis Perkins general merchanting or Green & Gold, how you want to refer to it. BSS, Toolstation U.K. and Keyline. These businesses are already delivering what I think is a sustainable financial return.

That's not to say that they are at the endpoint, and they're performing absolutely at their zenith, but these are businesses that within the group are already giving us a decent financial return.

The priority here is to improve the businesses and to really exploit some of the synergies that exist there. It's really important, though, not to confuse exploiting synergies with some grand centralization plan. I think as most of you know, I'm an absolute disciple of the sort of decentralized federated structure within distribution businesses, and that is absolutely core. But utilizing the businesses and really recognizing the synergies is about having a leadership team that understand the power of collaboration and what we can do with these Tier 1 businesses.

The Tier 2 businesses being CCF and TF Solutions are in a slightly different position. To put some context around it, these 2 businesses together have revenues of around about GBP 600 million. But in broad terms, these businesses are trading at either side of breakeven. So we do need to make sure as we go forward, we recognize the different challenges within these businesses and how we move these businesses from being around about breakeven to getting into what we would comfortably refer to being Tier 1 businesses but it's a different set of challenges that we have to the Tier 1 business.

And also, as I'll just explain in a moment, both CCF and TF Solutions have different challenges of their own as well. And then in Tier 3, we have Benelux Toolstation. It's fair to say that I think Benelux has been a perennial lossmaker within the group for quite some time, and it's also been a cash burn for quite some time. So what I'm going to commit to you today is, although I've only been here for 10 weeks, I've been across to Benelux, I've spent time with the leadership team, got a really much better understanding of the challenges that they face. But by the time we stand here and deliver the half year results in the summer, I will give you absolute clarity at that point of what the plan for the Benelux business is.

So just moving on to some of the individual businesses. And forgive me if some of you really know this very, very well. But obviously, Travis Perkins Green & Gold #1 in the U.K. builders merchant market, 579 branches trading today. Within Green & Gold, we have the sub-brands as well of benchmarks. We have Hire and we have Managed Services, all coming under the remit of the new MD, Rich Lavin. Rich was formally appointed as MD, I think, in my second week in the business. So that was great to be able to do that.

Rich had been running the business as the interim MD since the middle of last year. He's actually been in the business for over a decade and held a lot of sort of a senior finance and operations roles. So although brand new to the Managing Director role of Green & Gold, a huge amount of experience coming into that particular role.

We do believe we've got opportunities that we've already identified in ranging, in sourcing, logistics and the way that we take the product to market. And I think when we're looking at how we can utilize the facilities that we already have in the group, we'll talk later on about how we can make some of the assets that we've got like the Toolstation distribution center, just sweat a little bit harder and bring value into the other parts of the group.

One of the areas that we've identified that we think there's a greater degree of collaboration between Toolstation and Green & Gold, is in what we would call either the shop or the self-select area, where there was a real margin opportunity if we can be a little bit slicker at how we bring that product to market. Green & Gold is the largest turnover business within the group. In broad terms, it's around 50% of our turnover. So it's a really high potential business for us and a significant platform for growth as we go forward. recognizing that Rich is brand new into the MD's role, but what we've also done is strengthen the spine of the team around Rich.

We've got a really experienced commercial director in Paul in there now and some of you will know Matt Worster, who was our Group IR Director. Matt is now the Finance Director in Green & Gold, which I think speaks volumes about, a, what we think about Matt; and b, the significance of getting a really high-class management team within Green & Gold.

Just moving on to Toolstation in the U.K. Toolstation in the U.K., #2 market position, a 590 stores. There's a regular theme coming here that you're going to recognize. So Lakhvir was appointed Managing Director of this business in around about September of last year. But Lakhvir has been with the group, I think I'm right in saying for about 14 years. She's held very senior commercial roles. She's been a Pricing Director. She's been a Commercial Director. She's been a Finance Director, so brings a huge amount of experience to the role of Managing Director of Toolstation.

And I think 1 of the things that you'll see from the leadership team that we're putting in place we're bringing through here the next generation of leaders within the group to give us real longevity and a long-term view of how the group should be operated. Within the 7 operating businesses within the Travis Perkins Group last year, Toolstation U.K. was the #1 profit earner within the group. So it's a really very significant business within the group and should be viewed absolutely as part of our core offering.

As I mentioned earlier, we do believe there's opportunities to work better between Green & Gold and between Toolstation in utilizing the Pineham distribution center that we have in Northampton. To give you some context around that. Pineham is a 0.5 million square feet high bay distribution center that we believe can actually work harder and give us better value across the group in distributing for more than just the 1 business. We have got a new demand planning and forecasting software coming into this business, I believe, around August, September time of this year.

One of the areas, I think we've been less efficient at in Toolstation U.K. is inventory management and this new demand planning and forecasting software will enable us to manage that inventory with a greater degree of diligence and really make sure that we're sweating the assets that we have. And as I said earlier, it's another growth platform along with Green & Gold, very significant turnover, largest profit maker that we have within the group and should be seen as really important as we go forward.

Also in a Tier 1 business is BSS. I think some of you who've been around a long time will recognize this is a business that I used to know very well, having been the CEO there from 2005 through to 2010 and actually selling the business to Travis Perkins in 2010. It's #1 in its market. We've got 54 branches. Josie has been appointed as the MD in the middle of last year. I think it's fair to say when I was the CEO there in 2010, I think I'm right in saying that Josie was in her first year of branch management in BSS Peterborough. So again, although a new Managing Director has got huge experience, not only within BSS, but also across the whole of the Travis Perkins Group.

We have got quite a unique distribution model within BSS. We have a superb central distribution center in Magna Park in Leicestershire, but we also have quite a unique big pipe national tube distribution center in Coventry, which is a facility that we have that none of our competitors really do have. So we have got some real unique characteristics within BSS that I think enable us to drive that business forward with quite a lot of vigor.

We've also developed, over quite a number of years through the national accounts team, a real skill in what I would call significant projects. So when you look at airports, when you look at stadiums, when you look at prisons, when you look at these kind of secure environments in which we operate, we've now got a great deal of experience operating on-site facilities that, again, I think is a differentiator for BSS going forward. And just to be clear, while we're in the spirit of openness in the group last year, BSS was the third largest profit maker that we had behind the top 2.

And lastly, but by no means least, within Tier 1, Keyline, our specialist civils distribution business, again, #1 in the civils distribution market in the U.K., 41 branches, a new Managing Director in Huw Jenkins. Huw joined the business. We could do this as audience participation, but in September of last year. I think it's also fair to say Huw's background is in logistics and distribution. That is wholly appropriate for this business because well over 90% of the business through Keyline is delivered either ex-yard or from our suppliers. So having someone whose expertise is in moving product from point A to point B in the most effective and the most efficient way is absolutely appropriate in this particular business.

Huw and I have been working on this for a little while now in terms of growth opportunities for this business. We do see particularly in infrastructure. If you look at the areas like power and like water, we think we have got real growth opportunities here. And that also opens up new markets and new product opportunities. So it gives us really a very positive outlook for Keyline going forward as being 1 of our Tier 1 businesses, again, with that new leadership team.

Just moving into Tier 2. So these are the businesses that predominantly have been trading at around about breakeven. CCF, which is our drylining and insulation business, is a structurally challenged business, but more importantly, operating in a structurally challenged market. Drylining, which is over 65% of the revenue in this business is very much about high volume, low-margin commoditized high cost to serve. And we really are going to have to look at how we operate this business and make sure that we can find a more efficient route to market, utilizing the assets that we have right the way across the group. I mean it's fair to say in terms of leveraging margin in this particular business, over 50% of the business is with one manufacturer.

So our opportunities even to leverage margin on ex-yard sales are still a little bit challenged. 37 branches across the U.K., new Managing Director, the summer of last year, Chris. Fair to say Chris has got over 20 years' experience in CCF and has basically done every single job in CCF from working in a branch, getting through to be the Managing Director. And it shows how much we think of Chris as the MD of this business. For those of you who know me well, he is a Newcastle supporter, that would ordinarily be a challenge in my book, but I think Chris is bang on the right guy to be running this business going forward.

We do believe we've got synergy opportunities again with Green & Gold looking at that from a distribution point of view, just reiterating, don't look upon that as some kind of like centralization move. But in the categories of plasterboard and insulation, Green & Gold also have volumes in that particular category that run into hundreds of millions of pounds. So I think there's just some opportunities there for us to do what we do a little bit better so that we can find the most efficient and effective route to market for CCF and again, get that to a point where we believe it can be a Tier 1 business.

TF Solutions, which is a business some of you may not know very well, is our specialist distributor in air conditioning and refrigeration. Refrigeration being a relatively new sector that we've gone into, but one that we see with a real opportunity for growth and development. James is the MD of TF Solutions. He is the longest-serving MD that we have in the team, having been in place for 14 months. So in terms of like getting on a bit, he's the one that's been there, seen it and done it during the whole of 2025.

To enable us to get the maximum benefit out of this business, we do believe we need to give it greater support in terms of logistics and distribution. We've identified what we need to do to make that happen. But to get to that point, we have to make some systems and processes upgrades. Those systems and processes upgrades are already in train. They will take place later this year. That will then enable us to move into a more efficient distribution model for TF Solutions.

And I think for the first time, it will give us the ability to react to customers as opposed to just having what I would see as a more inefficient stockholding within the business. But I think TF Solutions intuitively, it's a business that ought to make money. I think the plans that we have in place will enable us to move that business forward as we go through 2026.

And finally, in terms of Tier 3, the Benelux business, as I said, my commitment to you is to stand here at the half year results and give you absolute clarity over the plan for that business. We don't actually have a permanent Managing Director in that business as we stand here today. It's still an interim, but I have been over and spent time with the management team, getting to understand the magnitude of the challenges over there. And I think all I would ask for is, look, having only been in for 10 weeks, if you can give me that little bit of forbearance through to the half year, but we'll then give you some absolute clarity on where we stand on Benelux.

So in summary, we've got a new leadership team. We've got a simplified structure. All of the managing directors now report directly into me. We don't have any intermediary level there, which I think just gives us a more efficient and more effective communication chain across the whole group. We've identified business improvement opportunities in every business. Don't get me wrong. Some market growth would be great and we would absolutely welcome it with open arms. But we absolutely can improve the business without that reliance on market growth. And I think making those improvements now will put us in a great position for when the market does turn.

The leadership team is very focused on doing the day job, removing distractions, removing the noise around, let's just focus on what we do within the business today. There's a lot of noise outside in terms of the economy, in terms of the market, in terms of even the global macro situation now, but we will absolutely stay focused on what we can do, which is running the business the best that we possibly can.

As we mentioned earlier, we're in the best financial position in terms of balance sheet that the group has been in for over 25 years. And I think in any kind of uncertain market that is a great place to be. And I think a lot of our suppliers, a lot of our customers and a lot of our shareholders will take a lot of faith in the business that we're starting here with a very, very strong financial structure. As I mentioned at the very beginning, culturally, we absolutely see ourselves as a branch-based sales-led organization that can work in harmony with a disciplined approach to cost-to-margin and also to capital allocation.

And very, very simply and primarily around our customers, who are the main drivers in us being in business, it's about can we just be brilliant at what we do? And if we're brilliant at what we do and focus on the simple tasks, then I believe that everything else will follow through. And financially, we're in a great position to support all of the businesses in the group to develop and to recognize their potential.

That's the end of the formal part. We're going to move on to Q&A.

[Operator Instructions] If you could ask your difficult questions first, so that Duncan can answer those and leave your easy ones for the end, and I can bowl in there, that'd be a great way to run it. So I think what we'll do, Sarah, if we start at the very front down here, and then we'll work our way backwards.

Ben Wild from Deutsche Bank. Three questions for me, please. Firstly, Duncan, you mentioned delivery of '25 in line with consensus forecasts. You haven't given a quantitative guidance for '26, but are you happy with where consensus is?

Secondly, in terms of pricing in the group and particularly in merchanting, and it sounds as though there's been a slight change of policy at the start of 2026 as compared to 2025. Given the inflationary backdrop, can you -- and the demand environment, can you make a comment on the price elasticity of your customers and how your attitude towards pricing?

And then thirdly, you made a lot of the leverage in the presentation and have delivered an exceptional year of cash generation compared to your peers who are highly levered, you have significant balance sheet headroom to deploy maybe related to the pricing question, how do you think about deploying that balance sheet to drive competitive advantages? And is there a temptation given the market environment to push extremely hard on pricing given your competitor set probably can't follow?

Okay. So I think -- well, we'll work our way backwards, and I'll certainly pick up on the pricing point. I think in terms of deployment of the balance sheet that I think everybody recognizes, we proved last year that we could increase market share by being more price competitive. But I think when you look at the overall financial performance as we go through this year, we absolutely need to have a slightly more balanced approach. So I think in terms of, can we still deliver great prices for the customers and improve the margins that we have within the business, it is a fine balance, but I think that is the right thing to do.

If I'd have been in place last year, going aggressive on the prices is probably exactly what I would have done last year. But I think with where we are right now we need a more nuanced approach and making sure that we're balancing what we're doing on pricing and balancing what we're doing on margin. And that does drift into your sort of second point, which is when you look at the pricing models that we have within the business, the price -- the elasticity that our customers have, there's quite a lot of moving parts here right now.

I mean, even in the last few days, literally over the last week, we've started to see communications coming in from manufacturers, talking about energy surcharges, talking about surcharges on transportation. I think we need to react to that really quite carefully in making sure that we're not being disadvantaged by what's happening in the sort of global environment. If you look at diesel, as an example, just as a one-off, we spend about GBP 15 million a year on diesel within our merchant businesses. So if we've got a 20% spike in diesel that lasted for 6 months, it's GBP 1.5 million, we need to make sure that we're not being disadvantaged by what's going on.

So I think last year, pricing was quite aggressive, and we proved that we can take market share. I think the trick for us this year would be can we maintain and grow market share while still improving the margins that are within the business and making sure that we get the right level of return. So hopefully, that kind of gives you a skirmish around pricing. I'll let Duncan talk about '26.

Yes, we're not making any comment on consensus today.

Will Jones from Rothschild & Co Redburn. Three, please. Perhaps we just have a quick runaround of the end markets within the construction sector as it were? And whether you think the combination can deliver a kind of flat market picture for '26 or realistically, should we be expecting market volumes to be slightly down?

Second, maybe coming back to overheads. I think you mentioned a similar rate of inflation, about the GBP 40 million mark underlying in '26 with then the challenge to be the extent to which you can offset that, perhaps you could talk about that ability to offset?

And then maybe last 1 just on the businesses. Perhaps you could just expand on your thoughts with regard to Benchmarx. Obviously, sits inside Green & Gold, but a somewhat different business to the standard Green & Gold offer.

Okay. Yes. So if I pick up Benchmarx, and again, we'll kind of work our way backwards. Look, Benchmarx is a brand within the Green & Gold business. We've got a good management team in Benchmarx. We've got a really talented Managing Director in that business who reports into Rich. because it is part of that overall business offering. I think we need to work out with Benchmarx exactly where it's placed in the market is, who is it trying to compete with? Who will its target audience?

And I think there's improvements that we can make in Benchmarx. Is it a -- is it one of my burning issues as I sit here today, the answer well is no. I mean I think we've got other things that are sort of like better for us to address, but I think we spent some time with the Benchmarx leadership team. We've got a view on where Benchmarx will go over the next 12 months. But it is and will remain part of that overall kind of Green & Gold merchant model as opposed to being pulled out and standing alone.

Do you want to do the overheads, one?

Yes. It's about half, well, I think, is where we start the year at GBP 40 million, we think we can offset through some of the actions we've taken at the end of last year, but that doesn't include further actions we may then take in this year as well, which also help contribute to it. It comes back a little bit to the Gavin's answer to Ben's question earlier on, which is for all of our peers and all large multisite organizations in the U.K., which are also very highly labor-intensive based on the inflationary pressures, cost inflation pressures of things like NI and national living wage, et cetera.

We're only going to get to margin expansion if we can start to expand gross margins. Either or we are trying to take out so much cost that we would, in my view, fundamentally impair the business and really hobble it in terms of its ability to sort of face into any recovery as well. So it's a careful balance. We've -- I don't think anyone could say that 300 heads isn't a meaningful and significant reduction in terms of the challenge that's out there. And we are also going to strong hand on every other element of discretionary cost. But I come back to my comments in the presentation, we can't offset that in full, but then I don't think anyone else can either.

And just back to your point on the markets, I mean, look, we're sitting here sort of like middle of March, the world is in a very different place than what it was in the middle of January, who knows where it will be in the middle of April. So I think I'm just looking around the room, actually, the number of analysts in the room, we've probably got greater analytical brainpower sat out there rather than up here. So maybe ask some of your peer group when you're having a coffee after you might get a better answer.

Annelies Vermeulen from Morgan Stanley. I have 2 questions, please. So you've mentioned ongoing competitive intensity and touching on some of what you said earlier, given the state of the world at the moment and what that implies for consumer and business confidence. Are you seeing any change in that competitive intensity in terms of some of your competitors? Any less discipline on pricing, not only as a result of the actions you've taken, but also given what the end customers are seeing?

And then secondly, on the headcount reductions, do you expect to make further headcount reductions this year or are you happy by the businesses today? And as part of that, could you comment on your expectations for the exceptional charges and restructuring costs, how they -- how you expect them to stack up in '26 versus '25?

Do you want to take the exceptionals?

Yes. I mean, look, the first thing to say is we don't have any live and significant programs. And as you would expect me to say, the first people we'll communicate those to appropriate or our colleagues and then the market. However, I think we'd be reasonably open to say that Gavin's just arrived. So we are clearly lifting up every single rock in the business and looking around how we're resourced and how we're structured and whether we're appropriately set.

Look, I'm not going to get into giving forward guidance around whether we would have an exceptional charge associated with that quantum or not. I mean you can backsolve analyst, the kind of number that we've got for what has been a very large reduction last year. If we end up having some further reductions, it may or may not qualify for an exceptional item, but it doesn't -- that wouldn't concern me in terms of either the profit impact or the cash if it was the right thing for us to do as a group.

I think the other thing on cost, I would say is, it isn't just about the absolute level of cost. It's making sure that you've got the cost focused in the right place. So I think there's been quite a lot of work done in terms of -- as Duncan mentioned earlier, some central roles taken out, but making sure that we've got the appropriate level of cost in customer-facing roles, which is more important. So it isn't just about cost out. It is about the rebalancing of the cost and making sure the cost is in the right place as well.

In terms of market behavior, I mean, look, we have hundreds of competitors across the whole country in different sectors. So it's really difficult to say whether people are behaving more or less rationally. What I would say is having been in this market for 25 years, it's always been a competitive market. You've always got competitive pricing. But I wouldn't say intuitively now I don't think people are behaving less rationally now than they were a year ago, 2 years ago or so on. So I don't think there's been a significant change.

Aynsley Lammin from Investec. I think I've got 3 as well, actually. Just first of all, on the kind of backdrop, I think we've heard last year that maybe some companies and particularly the independents are struggling a bit more. Just interested to hear your thoughts where you think any more capacity will come out of the market? And given your strong balance sheet, would you consider any M&A if it's even smaller bolt-on deals interested in that?

Secondly, Gavin, in your various previous guys, as you always had very clear margin targets, just interested in your early thoughts on where do you think that merchanting margin could be over the medium term? I think we've heard 8% in the past and similarly for Toolstation U.K., is that still kind of reasonable, do you think? And then last question is just on the working capital. If we do get kind of flat sales, is there more efficiency that can be squeezed out of the working capital or actually, are we kind of broadly there?

I think in terms of the backdrop and kind of M&A, I think at the very beginning, let's not get distracted by things. Let's focus on the day job and do what we need to do and do it really well. As you know, M&A has been a huge part of my career over the past 20-odd years. So as and when the time is right, there's also things that you can look at. But fundamentally, it's not about looking at distressed businesses in a market where there's overcapacity. Anything that you buy is going to be a really good business and bring strategic and financial value to the group.

So I don't think it's a case of just saying, do we think some independents will be finding life tough and therefore, hoover them up. I mean we've got well over 500 locations in Green & Gold. We've got pretty good coverage. In fact, last week, I discovered some towns in Scotland, where we have branches that I've never even heard of. So I think our coverage is pretty good. In terms of margin targets, I don't -- I think it's far too early for me to give like a long-term margin target of where it all sits. But just a couple of points that you made. Do I think in the medium term, an 8% margin target in Toolstation U.K. is a reasonable target to have? Yes, I do.

I think everything that I've seen so far, I think that's reasonable. In terms of Green & Gold rather than setting long-term targets there, let's just -- let's see some margin movement and start moving back towards the 5% level and then we can determine where we go beyond that. But I think there is definitely margin improvement to be had. But I'm not in a position, Aynsley, where I can sit here today and say, right, in 3 years, I want to be here in 5 years, I want to be here. We need to make sure we understand all the moving parts in there as well.

And on your working capital question. Yes, I mean not just working capital, I mean, just generally cash opportunities I've got a metaphorical dartboard up, and it's -- there's a big number we're going at this year. I mean just to give you some examples, our relative percent of sales of our credit is still higher than it was pre-Oracle. We've still got, as Paul will attest when you speak to him afterwards, firmly under some pressure around payment terms elsewhere with other suppliers. There's loads we can go at within the group.

What we've got to -- but the problem is or the challenge for me is I can't and won't see all of those sat in my seat. We have got to create a culture where everyone is forging for these opportunities across the group. And I said in a bit earlier on, we've started that, and I think that's really encouraging. I'm actually quite pleased and excited to see what starts coming back because I'm starting to get more things come back organically to me around suggestions around what we can do differently. So yes is the answer to your question. I think there's plenty still to go out.

Clyde Lewis, Peel Hunt. Three, if I may as well. Firstly, on incentives and you stress the brand-focused, sales-led sort of structure you really want to push hard on. Are you happy with the current incentives for the team or do you need to tweak that and if you -- or if you have, which -- what have you done on that front? That was the first one.

Second one, Gavin, you sort of talked about, again, very much focused on the day job. Where do you think the biggest noise is still within the organization that's stopping the team from doing the day job?

The third one was probably following, well a little bit on Benchmarx. So I want to ask about managed services, similar sort of question -- well, it may well be, may well be, but slightly different business, obviously, the Benchmarx, so those are the 3.

Okay. I think in terms of incentivization, we have tweaked some of the incentives this year. We have made some changes I don't think it's right and appropriate to sit and sort of go through details of incentive plans here today. But I think Rich and I, particularly in terms of Green & Gold, we believe that what we've put in this year gives a greater emphasis on driving sales and also driving profitable sales. So we have made some tweaks.

We'll see how those incentives play out during the year, but it was something that very early doors I kind of looked at and thought, I think there's something that we can do better there. So we have made some tweaks there.

In terms of the biggest noise in the day job, God, that's an interesting question. So I think it's -- from my perspective, I think the leadership team that we've got now, the newness of the leadership team in terms of being MD, I think, has taken a huge amount of noise away because what we don't have sitting in the room, when Duncan and I with them together, there isn't any kind of tendency of or 3 years ago we did this, 5 years ago we did that, 10 years ago we did this.

I think we've got a sort of a young, hungry leadership team that I think have really got a new focus and actually looking at the business in a slightly different way. So I do think a lot of the noise in terms of the internal noise is gone. Now that needs to filter through hundreds of branches and areas and regions and make sure that we get down to a branch level and people understand it there. But I just want people to think, look, very, very simplistically, if we give people 3 or 4 things that we just need them to do, focus on the customer, sell more product, protect the margin those very simple messages.

I think that's what we need to get down right to branch level so that people really understand what it is that we need them to do. So I think there's -- I'd like to think what we're bringing is a simplicity and a clarity of the messaging that I think takes a lot of the noise away. And the response I've had from that new leadership team has been really good in terms of, okay, we understand this, let's start getting that messaging through and we're having some really good dynamic conversations between us as a leadership team in terms of how we want to move the business forward.

And in terms of managed services, I do refer the honorable gentlemen to the answer I gave some moments ago.

Shane Carberry, Goodbody. Just one for me. Just to dig a little bit deeper into that kind of exploit synergies point and particularly in the Tier 1 bracket. And I know you've made it very clear, you don't want us to think about that as centralization. So maybe just a couple of live examples of what you're kind of getting at there would be helpful?

Okay. So Shane, I think as a really good example, so our electrical range in the shop in Travis Perkins Green & Gold, I think, left quite a lot to be desired. And this is not about targeting electricians, but this is about looking at jobbing builders and the electrical product that they buy that currently they buy from somewhere else. We looked at the range that we have in Toolstation. And basically, Rich's response, I'm paraphrasing was, well, if we just take the top 50 selling SKUs from Toolstation and put them into Green & Gold, distribute them through Pineham, which is already going out to hundreds of locations on a daily basis, that's a really quick win.

We don't need to go back and start reranging and rethinking and sort of reinventing the electrical range in Green & Gold because actually, the top 50 SKUs are very much fit for purpose in terms of Green & Gold and Toolstation. So it's just like it's those kind of examples, but it isn't -- it absolutely isn't centralization. And I think the -- utilizing the sort of Pineham distribution center, as I said, it's 0.5 million square feet. It's a very high bay. It's got a couple of mezzanines in there. And I think there's just efficiencies that we can utilize from there on distribution.

Again, that distribution center is going out to hundreds of locations already. So it's just things like that, that we've just looked at very early doors and thought, no, no, we can do this a little bit better if it makes it more effective, makes it more efficient, takes a little bit of cost out, then it's just those like knocking these small things over one day at a time. That's the kind of viewpoint, Shane, really.

Arnaud Lehmann from Bank of America. A few from my side. I mean, Gavin, you're quite recent in the business. We've been around a long time, and I guess we all had enough of talking about Travis Perkins' IT systems. That being said, do you think it's in good shape now? And do you see opportunities related to AI? It's a bit of a buzzword at the moment, but I'm sure there could be some improvement going forward.

Secondly, I think a follow-up to some of the questions on the balance sheet. Could buyback be an option or are you just going to see it on your strong balance sheet for considering market uncertainties?

Travis Perkins, thirdly, is in Tier 1. That's great. We've seen branch closures in the past, especially the smaller ones. Do you think if volumes continue to decline, would you consider that? And lastly, for Duncan as a trading day impact for 2026, please?

Can you repeat the last one?

Trading days and impact this year relative to '25. I think it's a small positive maybe.

Okay. All good points. So in terms of branch closures, we have seen some branch closures. We're not sitting here right now with a mass branch closure plan. I think one of the things that we're doing already, we're looking at individual branches based on their P&L. Sometimes there's a lease impact, sometimes there's a property sale impact. But overall, I think the branch infrastructure that we've got gives us pretty good coverage across the whole of the country.

And I'm -- what I certainly haven't done is coming with a mindset of let's reduce it by 100 branches. So I think every single branch that we look at is looked at on an individual basis. We looked at 1 or 2 with Rich last week where we thought, okay, is this border line? Do we keep it open? If we extend the branch that's 3 miles away, can we cover it from a transport point of view? But it is absolutely on a branch-by-branch basis as opposed to a program branch closures, that really isn't part of what we're trying to do.

I'll touch on the IT systems because I know Duncan spoke a lot about IT in the last couple of years. So I'll try and kind of give you an outsider view of it. I think there were obviously -- there was a lot of pain last year from the Oracle implementation. It was very clear when I turned up that pain of the implementation was behind. And we were genuinely having conversations even down at branch manager level with people saying we're starting to see the benefits of that coming through. So I think with any big ERP implementation, there's always a lot of pain.

But I think Oracle was particularly painful, but it's really good to sit here now and say Oracle is a reason to be positive now as opposed to a reason to be negative. And I would also say, in other parts of the group, we've done other stuff that has kind of gone under the radar. So like in BSS changing over to carriage from the system that, that was on. That went really smoothly. The team did a super job on that. So I think it's something that we are constantly looking at to make sure we have got the right systems.

We're not sitting here today with any plan of another significant ERP change in any of the businesses. By virtue of just evolution of time, there'll always be some work that needs doing on the systems, but I'm looking at the next 2 years and thinking we haven't got anything in the next couple of years that's sort of a magnitude of what the group has been through over the past 2 years.

And just in terms of things like AI, I mean, look, it's always easy to say that -- I appreciate it's a great buzzword. I think we're still some time away yet from an AI truck driver in TP who can drive a 36-tonne truck, operate a crane and lift a pallet over Mrs. Jones hedge and get it in the drive. But there are areas within the business. So when we're looking at things like credit management, when we're looking at inventory management, we're very alert to the fact that those developments can bring some value to the group. So it's not lost on us at all, but I think there are some quite specific areas, probably more so back office rather than front office.

Yes. I agree entirely. So I think your 2 on buyback and on trading day -- one more trading day in Q4 this year than the Q1 to Q3, the same. And on your buyback, I mean, somewhat rhetorical question in terms of you answered it at the end. We will come back with some more developed thoughts on strategy and thinking. And as you would expect me to say, capital allocation should follow as a logical extension or accompaniment to that in -- when we come back in the half year. So right now, we're just basking in having a relatively strong position, and it is pretty uncertain out there. So I think we'll sort of enjoy the resilience that affords us.

Zaim Beekawa at JPMorgan. The first is just on the CapEx. How sustainable is it to have CapEx at this level? And at what level do we see that reinvestment cycle come back? And then secondly, on Toolstation GO, just how that's been trending? And what's the opportunity set there?

The Toolstation GO. It's a new format store that we've opened up in Battersea. It's a physically smaller branch. It has about 4,500 SKUs in it as opposed to a full fat Toolstation that would get close to 10,000. SKUs. It has literally been open for a matter of weeks, but the early trading is really encouraging. I think it's something that lends itself predominantly to the London market rather than elsewhere. But it -- I mean, literally, it's been open for like 3 or 4 weeks. So we just need to see how it goes. But early indications have been really good.

And yes, on CapEx, look, I mean it's -- at the moment, we are -- we say we've managed to move our way through what we need to fix fairly carefully. I think where we've been historically is we have made a number of large relocations or new branch investments, which are very -- which come with a higher CapEx bill. Mindset-wise, we are starting to move into a world where we've got great sites and great locations, didn't have our heritage, where we need to move into a mindset of effective refurbishment at a much, much lower cost, but ultimately still giving branch colleagues a better working experience and customers a better experience when they come in. So I think we can manage it at around this level.

I think it's more, frankly, the previous number perhaps, which acts as a precedent has been too high. And as I said, we're nutting into and replacing our fleet and bringing down that average age. I think Ben asked a question earlier on around price to Gavin. I was thinking as he was making a point around that cash doesn't necessarily have to be deployed per se into price in terms of taking on. You can also create competitive differentiation by investing that capital into assets and equipment in the business, which also is a point of differentiation. And so there's nothing stopping us doing that.

Adrian Kearsey, Panmure Liberum. Two for me, if I may. On Toolstation, on the distribution center you talked about sweating the assets and then provided the example of the electrical range within Green & Gold. Are there any other examples where you can use the Toolstation DC to sweat and provide service elsewhere?

And then the other question sort of follows on from Duncan's comments about points of differentiation. I'm drawing on the point that you made about having the cost in the right place. Do you think you have the right number of people in different branches or is there something that you need to evolve over time to make sure that you can actually differentiate on service?

So I think in terms of Toolstation DC, are there other examples? And the answer is yes. I mean -- and I can't sit here and list them for you, but I think we've had very grown-up conversations around the leadership team in terms of how we can utilize the assets that we have. The Pineham distribution center is the most modern distribution center we have, there is undoubtedly efficiencies that we can bring across the group by using Pineham more. And when I mentioned earlier about the logistics support that we can give TF Solutions as an example, we will be doing that through Pineham. So -- and Pineham is the Toolstation DC. So the answer to your question is yes.

I think in terms of how we got the right number of people in the branches as a point of differentiation, we're always looking because also branches change. So if you look at certain branches, they can land a very large contract. That very large contract may require extra manpower in one branch, but actually 18 months down the line, that contract could be gone and you then have to realign.

So -- can I sit here and say, well, I'm absolutely confident we have got the right number of people in every single branch across the whole of the group? I mean, the answer is no because it's a very kind of fluid playing field, but I think the work that the guys did in the second half of last year before I started in January, there was quite a lot of work done in making sure that we have the right resources going in the right place. That was part of the changes in the center that Duncan spoke about earlier. But it's a constant area of focus, as is productivity, as is utilization of people, utilization of vehicles, that is very much part of what we need to be on top of as a top class distributor.

[indiscernible] from [ Applied Value ]. A couple for me, but mostly in and around the whole of the IT system, whether it's actually giving you now the data that your decentralized structure will allow you to manage properly as well as get some of the benefits of centralization, for example, say, from procurement? So you've just spoken there about electrical products. I mean you can now go back -- can you -- does your IT system give you the data to be able to go back to manufacturers and argue properly for a group discount or group deals in and around those product areas?

And just on the branch networks, quite clearly, I get your point about centralized management, but there's got to be centralized understanding of what's going on, plus not having those individual units in silos such that they can work across customers. So there's 2 questions there. One, really about procurement, centralized buying and the other one about centralized management of customers that might use both Green & Gold and Toolstation such that you can help them perform better, but also help you get more out from them as well?

Okay. I'll let Duncan pick up on your first point around the IT system. In terms of the decentralized structure, a decentralized structure does not mean it's a free for all. So there are parameters that we have people working within. We've got a lot of experience in making this work. One of the things that I would say actually is an opportunity for us and back to a point that was made about managed services earlier on, I think there are opportunities with Toolstation in the U.K., and we haven't really fully maximized what that can do perhaps with some of the managed service customers and those are still opportunities that we've got going forward.

But do I think we've got the right level of communication and understanding of how that can work? The answer is yes, but there's still some implementation that we need to go. We had the guys together last week in Northampton. And one of the things I was very conscious of is make sure that we actually manage these initiatives in a well-managed way. You can't just pile everything in, in month 1 because that will just result in chaos.

So I think there are improvements that we can make across the group in utilizing both inventory and in utilizing the branch network. We need to make sure that the backup systems are right for those. And I think as we go through the year, you'll start to see some of that come to value, Stephen.

Yes. I'll delight and disappoint you in equal measure and the response on kind of Oracle, particularly. I mean -- so look, on the one hand, things like stock visibility, stock valuation, branch level reporting, highlighting process issues around where we're not following process correctly and getting that right because Oracle is more sophisticated and because it's a closed box, it's flushing a lot of that stuff out. Just gone through a year-end audit, unsurprisingly, second largest ERP platform on the planet. Our auditor can come in and plug in and get a lot -- so there's a load of efficiencies and things started to come out of that.

What I'll disappoint you in equal measure, though, is we didn't need Oracle to address some of the other things you addressed in your answer around can our group commercial function go and have a conversation around the fact that we're not getting the best price on the supplier. That was never a data issue. That was a will issue. And actually, we don't lack information in this organization. We are swimming in data and information in this organization.

And as Rich will talk to you afterwards, we need -- you need 5 reports to run a branch. The challenge is, what insights is it giving you and who is holding that branch manager or any other person in the organization to account around why the KPIs don't tell you what they're doing. So for me, it's -- I don't think Oracle has necessarily addressed that. That's around better performance management, and that is a journey we're on and making good progress into.

We've got any more questions in the room. I'm going to look at Bailey and say we've got any questions coming in off-line or not?

Excellent. Well, that's it, ladies and gentlemen. So thank you for your time. Thank you for your interest. I look forward to seeing you all in the summer, and I hope everyone stays well. Stay safe. Thank you very much.