Essentra Aktie

Thank you all for joining our Essentra 2026 Half Year results. So I'm Scott Fawcett, Chief Executive and joined by Rowan Baker, our CFO, and we'll take you through the presentation today. So I'll start with a quick summary. Rowan will lead us through the financial performance. I'll give a little bit of color to the 3 regions, and then we'll talk about strategic update, which we'll do together, and then we'll summarize with an outlook and move into Q&A.

So to get going, a strong start to the year. So a very pleasing start to the year. Half 1 revenue in line with our expectations, growth of 9% on a reported basis, 7.8% on a like-for-like basis as well, leading to adjusted operating profit growth of 9.7% to GBP 18.1 million. So good start to the year overall, robust cash conversion of 79%, and Rowan will talk more about full year cash expectations in her presentation as well.

Good focus on our strategic priorities. So broad-based growth in all 3 regions, which is great. Volumes also recovering, which is good to see, but as always, supported by disciplined pricing, which has been even more important than ever given some of the inflationary pressures that we've seen during the first half of the year due to the Middle East crisis. Delighted with another small acquisition completed in June, Boteco, so a machine components manufacturing business, very complementary to our existing manufacturing capabilities. I'll talk more later about some of the in-sourcing opportunities we have there.

Great to see our target markets outperforming the average and actually significantly outperforming our legacy markets, if you like, and Rowan will give some more color there, but 8.5% growth in those target markets. And we've launched a strategic execution program called Growth and Simplification, aiming to help us drive our sales and marketing resources into those areas that will generate greatest returns and also simplify how we run the business and reduce the cost to serve as well to help us drive improved margin expansion.

Rowan will give more details later, but we are talking to a new 14% operating margin target for 2028. So still very much believe in that midterm target of 18%, but thought it was beneficial to bring something closer to home, closer to the current period. So a 14% 2028 target has been announced. And again, we'll talk through that in terms of how we get there later in the presentation. And most importantly, expectations for this year remain unchanged, a good solid start to the year and very much the business is on track.

So with that, let me hand you over to Rowan to take you through the financial highlights.

Thanks very much, Scott. Good morning, everyone. So I'm going to take you through our financial highlights. And as Scott said, we've had a strong start to the year. Revenue grew by 9%, up to GBP 166 million. Our adjusted operating profit stood at GBP 18.1 million, a 9.7% increase there. And we did see a small increase as well in our adjusted operating margin level. So that rose to 10.9%. Now we have a large increase actually to our adjusted earnings per share which stood at 4.3p, and that large increase mainly was created by a lower effective tax rate, which I'll talk about in a moment. Our net debt to adjusted EBITDA was 1.6x, which is exactly as guided, so slightly above our 1.5x usual guidance, but that was because of the acquisition that we made just before the half year. Our adjusted operating cash conversion was at 79%, so slightly below our 85% guidance, but we are confident that that will return to well above that 85% by the full year. And our dividend per share just ticking up slightly to 0.9p.

So let's take a look at the P&L. Now our gross margin importantly, has remained resilient. We saw growth in both the Europe and APAC regions in terms of their gross margins, but that was more than offset by temporary dilution in the Americas, mainly due to the transfer of our Costa Rica operations to Mexico. We are expecting that to unwind in the second half. Our adjusted operating profit, as I've already mentioned, showed a strong increase of 9.7% to 18.1%, and that was really supported by the volume growth, the pricing and some strongly disciplined cost control. We had a lower effective tax rate at 12.9%, and that was mainly due to an adjustment to our deferred tax. So that went through the P&L there, increasing our adjusted basic EPS.

And then also wanted to draw your attention to the strong reported EPS growth, which does also reflect a GBP 1.7 million credit for discontinued operations, which relates to the legacy sale of the Filters business. So essentially, that is actually a GBP 4 million inflow that is due to come into the business in the second half, offset by a tax adjustment.

Now moving on to revenue. So we were at 9.8%, some strong growth in terms of volume and pricing. Pleasingly, that was made up of just about half and half between volume and pricing. But let me talk you through a few of the moving parts in terms of the regional performance. So Europe was up 8.9%. That was made up of about half and half in terms of pricing and volume. Americas, 5.7%. That was about 1/3 volume in the Americas and APAC, 8.2%, and that was about -- 3/4 of that was volume. Now that 4.2% pricing growth year-on-year did also include a specific Middle East-related surcharge. Now we dealt with our pricing response to the Middle East situation in different ways in different regions actually, some that we put through an overall pricing adjustment and some we went with a surcharge approach. So in Europe, we went specifically with a surcharge, and that was 0.4%, but a strong response to the Middle East situation there in terms of pricing. And then on that bridge, you can also see the 2% growth that came from our Device Technologies acquisition that we made just before year-end.

So let me give you a little bit more color now in terms of what has been driving some of that growth. And you'll have heard us talk at various presentations about targeting specific growth end markets. And you can see in the chart on the right-hand side that we've made some really good progress there. So we saw 8.5% growth in those target sectors that does represent 47% of sales. And you can see that there in contrast to the negative 1.1% from those traditional sectors like automotive. So some strong growth, particularly places like digital infrastructure, which is really pleasing to see and is part of the strategy paying off there. And over time, we do also expect this to improve the overall quality of growth, reduce the dependency on cyclical end markets and lead to a more sustainable level of revenue growth with associated margin progression.

So let's move to the operating profit bridge. Now I've already talked a little bit about the volume and revenue side. But important to note on this chart, how clearly we are offsetting the inflationary impact that we have seen with our pricing. So that's a good position that we're in there. But what becomes a little bit more challenging is to be able to maintain absolute margin when we see inflation at this level, but we have been able to cover it with pricing. And indeed, some of the pricing actions are relatively recent, so they should see us through to more positives in the second half.

We then saw the benefit of what I guess I'd say is our usual manufacturing efficiencies that come through. We are always targeting efficiencies in our factories, automation, et cetera. So we saw some benefit of those efficiencies coming through. That was somewhat offset by some of the service investments that was needed to be made in Mexico and will, as I say, unwind as those efficiencies improve. And then we also had planned reinvestment in strategic initiatives, part of this growth and simplification strategic program that Scott will talk more about in a moment. And then we also had as has been well flagged actually, the bringing above the line of some of the D365 implementation -- sorry, D365 run costs. Now we've moved from implementation to BAU. In addition to that, we also have a contribution of the inorganic growth from Device Technologies and all of that brings us to the GBP 18.1 million for the half year.

So just a word on adjusting items. So you can see here that we were at GBP 6.1 million for the first half in terms of adjusting items. But important to note that reduction that you can see in the breakdown of the numbers in terms of the Software-as-a-Service number, which is mainly our D365 implementation, which has improved half-on-half -- sorry, half year-on-half year by GBP 1.7 million. And just a reminder as well that this will be the last full year of those ERP implementation costs. They will continue into the first half of next year, and that will cause a reduction -- associated reduction in the adjusting items for 2027. But this year, we're maintaining guidance at the GBP 12 million for adjusting items for FY '26.

Moving on then to cash. So we have the net debt bridge here, which takes us from the GBP 60.7 million at the opening of the year to GBP 70.7 million and a net debt-to-EBITDA ratio of 1.6x. As I've already said, that 1.6x was a little higher than the 1.5x that we generally guide to, but that was because of the acquisition that we made, and you can see that in the chart. So the main elements in the chart really in terms of the cash outflows have been the adjusting items. So that represents an opportunity clearly for when those do come down once the implementation is complete. So that will -- that cash position will improve. And the M&A of GBP 5.7 million, so that was the Boteco acquisition that took place just before the end of the half. And we purchased that business for EUR 7.4 million at a 6.5x multiple of EBITDA. So that's what's mainly driving the cash outflows.

Now our adjusted operating cash conversion stood at 79%. Now some of that being slightly below the 85% is a matter of timing. So we would expect that cash conversion to improve in the second half to be well above the 85%. We do really focus on this as a business. So both our cash conversion and our net working capital to sales ratio, which you can see there stood at 24.5%. Now for the full year 2025, that was above 26%. So you can see that we've made some good progress there to that 24.5%.

Now picking up the focus on these things. So we are now guiding to a 21% target for that net working capital to sales ratio as a percentage of revenue rather. And that is a target that is in place for 2028. Now some of the spend that we've been incurring on our new systems in the business will help us there. So we're able to see now, particularly through our connected planning software, what improvements we can make in terms of working capital. And there has also been a more recent challenge around working capital through the D365 implementation itself, where clearly, in some areas where we're going live, we have held more stock to ensure that we are able to get over any initial go-live challenges. So once that comes to an end, that will enable us to focus on getting that working capital to 21% and build on the progress that we're already making.

And finally, then for this section, our 2026 guidance. We're seeing total group revenue growth as 6% to 7%. That is a small increase on our previous guidance there. And you can see that evidenced through the strong growth that we've had through the first half of the year, and that's total revenue growth. Our adjusted operating profit margin, now we have a number of activities that are driving margin accretion. And Scott will pick some more of this up later on, but we are being successful with those initiatives, we are seeing improvements, but there is a deliberate build back here of some variable compensation, which I think has been well flagged in terms of the need to add that back in. And as a result, we would expect the margins overall to remain broadly flat year-on-year. This will be our final year of ERP-related adjusting items. So we're expecting the GBP 12 million for 2026, reducing to around GBP 6 million in 2027.

Our effective tax rate for the current year, we expect to be around the 20% mark, and that's really reverting in the second half to that usual level or more of the 26% to 29%. Operating cash flow, we do expect that to be above 85% for the year, including our usual level of CapEx spend at around 4%. And we expect to maintain a strong balance sheet and be in the region of our 1.5x net debt to adjusted EBITDA with an unchanged capital allocation policy.

So with that, then I'll hand back to Scott for the regional update.

Thank you very much. Okay. To take a canter through the first -- the 3 regions. So Europe, a good strong first half, 8.9% like-for-like growth, as Rowan has talked about, very much split between volume and pricing. Again, high single-digit growth in the fast-growing markets, so again, outperforming the base. Some modest recovery in Western Europe. So that's been very pleasing to see. And Turkey continues to perform strongly. Again, that product range in Turkey, very much linked to those fast-growing markets. So definitely a positive trend there. 49.2% gross margin. So strong pricing and good efficiencies being delivered, but some of that being offset by regional mix with Turkey continuing to perform well, but good underlying pricing and efficiencies coming through the region.

OTIF continues to improve as a result of us having that disruption last year with [ Nettetal ]. We've seen OTIF improvement, Nettetal being the German warehouse, sorry, through the end of last year and through the first half as well. So a much more positive sense around customer service in Europe, even though we've gone live with the U.K. manufacturing site at the start of the year, as I said at the full year results, little disruption from that go-live. It's been, again, another good implementation. And Dynamics, the platform itself is enabling us to start delivering efficiencies. So the finance shared service center has been launched and will be fully up to speed in H2.

Second half focus, so continues to work on the growth markets, think about how we're executing in those growth markets. We've had a strong new product introduction this year, which will also be helpful. The acquisition of Boteco coming at the end of the half, obviously, a big focus for the second half. As I said, there's a lot of excitement in the business about Boteco. Preparation for the final Dynamics go-live. So from a European point of view, that is the BMP, the Italian business in October and then a Q1 go-live in Turkey and then continue to drive operational efficiencies and items such as the shared service benefits as we trade through the rest of the year. But good strong start to the year for the European region.

Americas, again, pleasing to look at positive revenue, so 5.7%, again, a good combination of pricing and volume. Device Technologies performing in line with expectations. So at this point, it's really their core business performing well. Obviously, we've done all of the right things from an integration point of view. We actually launched the products into the rest of Essentra in H2, so that will have a further impact on their performance. Again, good progress in those fast-growing markets led by digital infrastructure. However, as Rowan has mentioned, we have had this temporary hit to gross margin as a result of the migration of manufacturing from Costa Rica to Mexico, which we did through the second half of last year. Again, we're expecting that to improve as we trade through the rest of the year. And we also have a little bit of a pricing lag impact in the Americas with quite a lot of pricing actions happening during June. So again, they will certainly support margin improvement in the second half of the year as well.

And some good self-help actions. We are implementing something called an 80/20 customer segmentation model. I'll talk more about this later to bring that a little bit to life. But again, that's giving us a renewed focus on some commercial effectiveness and continued strong cost control is helping us to offset some of that gross margin dilution. So we do expect those margins to come back in H2 as described. So focus very much on the settling in of Mexico and management of that cost base, driving commercial execution of the 80/20 initiatives, the Device Technologies' synergies, which is the product launch in many ways into the rest of the business and pricing -- actually, the pricing actions have already happened, so they will start to come through even more strongly in the second half of the year.

And then finally, for Asia, again, a good strong start to the year in Asia, so over 8% growth from a good level of new business wins and pricing actions. Pricing has always been more challenging for us in Asia than the other 2 regions, but this has been our best half, I think, in memory for pricing. So again, great to see some progress there and well done to the teams for that. Continued momentum in those faster-growing markets, machine building and automation, digital infrastructure. You may recall, 2/3 of our Asia region really is in China. China continues to have a buoyant export-orientated market, and we continue to see good volumes in that space as well. So gross margins improved, a mix of customer profitability, I say that improving pricing and some ongoing cost control, driving a good level of margin expansion.

The simplification of the Japan trading model. We talked to the end of last year, we've actually closed our direct operations in Japan, moved to a third-party model using a distributor. That actually weakens gross margin but improves operating margin for the region. So again, that's delivering us some benefits at the op margin level. And continue to invest in those growth initiatives and customer mix. So access hardware in China continues to be a big focus for us. The business we bought 4 or 5 years ago, really selling that into the export markets is going quite well. We are going live with the Dynamics ERP into Southeast Asia in the next few weeks. I think I said historically, the Asia business actually largely runs on the European legacy ERP infrastructure.

So we will be migrating that over the next couple of years. And we have an opportunity in the summer to effectively have a small go-live. So we have driven the Southeast Asia go-live into the summer window. And we continue to look at investment opportunities in India. We -- I was actually there with Richard a couple of weeks ago. Business is performing very well, winning good aspects of new business at good gross margin. So continue to add some commercial resources, engineering resources and thinking about our operational footprint as we trade through the rest of the year, but clearly excited by the opportunities that we're starting to see in India as well.

So moving on to strategic updates. Let's remind you of the sort of foundations of the business. So this is a manufacturing business. We make these small cost components that are used by other manufacturers when they're building a piece of equipment. Because our items are typically very low on a customer's bill of materials, our service proposition actually is the most important part of what we do. It enables us to price effectively. It enables us to retain and win more new business. We then look to take that into our target growth markets. Rowan talked about how they're performing.

So focusing our sales and marketing resources in those markets which have got structural growth opportunities. Winning customers initially by having strong product expertise, demonstrating that we're the right partner for their initial inquiry and then growing them because we have this very broad product offer broader than any of our competition from a manufacturing point of view, taking them through our cross-sell into different product categories and keeping them through this hassle-free service.

That then enables us to drive high margins, a combination of this high mix of transactions, so a large number of customers, large number of products, relatively low order value, driving high mix of transactions and constant focus on how we manage the business, the cost in the business, the operational efficiency of the business to enable us to drive those high margins and strong cash generation and then seeking to invest that cash into further growth opportunities, be those organic or inorganically to drive further shareholder value.

So a reminder of some of the items we talked about historically, our 5 product areas. So these are 5 areas where we have good levels of manufacturing expertise that we can bring to the market. And actually, from the machine components, the acquisition of Boteco has substantially improved our depth of expertise from that product category point of view. Worth noting, we've been investing in product category now for the last 18 months or so. We had over 15 new product series go live in the first half in Europe and the U.S. So the biggest launch of new products probably for the last 5 or 6 years. So really stepping up that product focus, relaying that expertise to our customers. We've talked about the growth sectors, so structurally growing markets where we think we have the greatest opportunity, focusing much more of our sales and marketing efforts on the structured end markets to drive growth, reduce that impact of the cyclical markets.

The work we've been doing in the first half of the year has focused on what we talk to as the growth and simplification program of work. And at the heart of this, there is this idea of having a dual proposition. So actually treating customers with high growth potential differently to how we treat customers with lower growth potential based upon the Pareto principle effectively. So how do we really focus our sales and marketing efforts on those customers which offer the greatest returns and how do we simplify how we manage and offer products to those customers who have lower potential, but actually are still profitable to us because of the relatively high level of gross margin that we have as a business? So, bringing that to life a little bit, and this is some work we've had some support on in the first half, looking at how we think about that customer and product mix.

So this is looking at revenue and taking the top 80% of revenue. And to get to 80% of revenue, we actually have 17,000 products that account for that top 80% of revenue. And then conversely, we have 90,000 products almost that account for the long tail of revenue. And from a customer angle, we have 6,000 customers who account for 80% of revenue. And again, this relatively long tail of 59,000 customers who account for the final 20% of revenue. So clearly, where we have high-value customers buying high-value products, this is the heart of the business, if you like, 68% of our revenue there. That's relatively straightforward to manage as an element of business. But there is some good complexity and bad complexity in this model. We have a long tail of products, some of which are purchased by our high-spending customers. Clearly, that's a necessity for us to run the business for us to track those customers to keep those customers in the main. So how we manage that is important.

We also have a long tail of customers who are buying actually fast-selling products. And that's good business if we can manage it effectively, if we can serve it effectively, that's a very interesting business for us to manage. The biggest question mark for us clearly is when we have smaller customers buying the long tail of products, that probably is unnecessary complexity. So let's think about how we manage this area. Let's think about pricing in that space, minimum order values, product range rationalization and then the type of work that we're putting in place as a result of thinking through the segmentation model.

So thinking very differently around pricing and service for our smaller potential customers, looking at much more of a fixed price position, no discounting, no negotiation, obviously, guided pricing, utilizing some of our new pricing tools to drive for larger customers. As with all organizations, because we manage all of this together today, we have got evidence of some small customers actually getting better pricing than large customers, which clearly doesn't make sense. So a clear pricing opportunity by thinking about these 2 customer pools quite differently. Also managing the cost to serve, so rationalizing the product offer to those smaller customers, reducing the working capital and the way we manage those products. And then focusing our sales and marketing resources on to those growth potentials, particularly in those fast-growing markets, really helping us to drive volumes and leverage.

So a simple model on the face of it, but bringing a whole host of actions in terms of how we think we're going to manage the business into the future. Quickly touching on M&A and the inorganic story. So a quick update on Wixroyd and BMP. Both continue to make progress. Actually, in both cases, synergies slightly outperforming the business case. However, we have had a more challenging external market than expected at the time. And therefore, we haven't achieved our 15% hurdle in year 3 in Wixroyd, and we're unlikely to achieve it in BMP. But in both cases, we are getting above WACC with further opportunities as we continue to drive synergies coming through.

As a result of that more complicated external environment, we've clearly had a little reset of our valuations. And you can see the last 2 acquisitions have come through at a lower multiple compared to where we were 2 or 3 years ago. So again, greater certainty of achieving that 15% hurdle rate. We talked about a good start for DTI, and there is a huge level of interest and excitement around the business on the back of the Boteco acquisition, given it really does bring a whole range of new manufacturing capabilities into the organization that we haven't had in particularly in the European region. So I remain very positive and excited about the last 2 acquisitions.

Pipeline remains strong, a number of opportunities, as always, in discussion. Whether we close anything towards the end of this year, uncertain, but we're certainly working on options for the next 6, 9 months to continue to look for those right acquisition opportunities to take the business forward.

As we come towards the end of what's felt like a very long technology investment period, I just want to talk to how this technology is now helping us deliver the strategy. So we have new generation digital platforms being launched around the group at the moment, which will complete towards the end of this year, early into next year, really helping us to think about that dual proposition, how do we manage smaller customers with much more of a digital-led offer, how do we engage with larger customers with much more of a product expertise positioning, and that will come to life through the new digital platforms.

We talk a lot about the ERP, but part of that Microsoft Dynamics' investment has been in the CRM platform. That is launched globally, being used globally, enabling us to hone our sales and marketing resources globally into those growth sectors will enable us to hone those resources into those larger profit opportunity customers as well. So the ability to have our global hands all over sales and marketing execution, really helpful and the Microsoft CE platform is enabling us to do that.

ERP, as we know, coming towards the end of the rollout with Turkey in Q1 being the last of the sites. But already, we're seeing much better supply chain visibility. So the ability to direct goods around the European regions dramatically better, and it's enabling us to look at shared service opportunities on the back of common process. Behind both of these is also the ability to reduce IT costs, and we'll talk about the cost simplification opportunities, but there is an opportunity to reduce IT costs by removing a number of legacy platforms now we have the new technology in place. And then finally, connected planning, again, Rowan's talked to this, but looking at our global inventory, managing global inventory, enabling us to select the right SKUs for that small customer cohort and effectively rationalize the stock to offer is all being enabled by this connected planning tool, which has been in place for a year or so. So again, coming towards the end of what's been a significant technology investment, but now both starting to deliver benefits and also enabling us to deliver the growth and simplification strategy.

Now final slide for me, thinking about the footprint. We've talked a lot about the footprint through the course of the last few years with all of the supply chain disruptions we've seen. So we're predominantly a local for local manufacturing and distribution footprint. So able to respond to supply chain shocks, able to respond to global trade uncertainties. And we continue to look at this footprint and think about how we simplify and how we manage cost to serve. So we have closed or consolidated 5 sites over the last 3 years, continue to look at that as we buy new businesses, how do they fit into the overall manufacturing footprint as well. Then when we look at the 80/20 methodologies, again, there are options for us to reduce the cost to serve in terms of both larger customers and smaller customers by thinking about those things differently, less or more efficient flow of goods through our supply chain will lead to further cost efficiencies over the next 12 months or so.

So that is it for me. I'll hand you back to Rowan just to conclude what all that means in numbers.

Thank you, Scott. Okay. So just to bring some of this together in terms of what it means for financial targets for the business and what it really delivers tangibly. So the whole growth and simplification program enables us to align our resources, our service levels and our inventory investment to that generation of customer value. And importantly, these activities are principally self-help initiatives that help us with the delivery of our targets. So they include sharper commercial execution, the pricing discipline that Scott has already talked about, particularly when you look at that 80/20 layout, actually, we can think really hard and really carefully about how we price those different quadrants.

And indeed, coupled with our procurement savings as well, and we are able to deliver some margin accretion. The simplification of our operating model allows us to focus on reducing our cost base, particularly looking at that lower cost to serve in with that long tail of customers. And we are looking to initially focus on our IT cost rationalization and the finance shared service center, which the investment in D365 has enabled us to launch, which is now up and running in Poland.

So that's the detail of the benefit. But in terms of what that actually helps us to deliver, it's really the substance behind us being able to have confidence in a 14% adjusted operating margin target for full year 2028. Now those cost savings that I've talked about unlock a 150 basis points of margin expansion, which will initially come through the IT rationalization. That, in turn, unlocks for us a GBP 6 million to GBP 8 million cash flow benefit. Now that cash flow benefit is a little bit more than the 150 basis points because some of that has been going below the line today. And then also gives us confidence in the 21% average net working capital to sales target, which will unlock a further GBP 10 million of cash. And that net working capital, as Scott has mentioned, relates to the connected planning software, but then also the 80/20 methodology that enables us to focus on where and how we are building the inventory to support which products for which customers.

So, pulling that together into a reshaped 18% margin bridge. Now our 18% margin bridge, we have definitely used in the past. A lot of you will know it. But what we've done here is we've separated it out to show the staging point at 14%. But also what we've done is we've put in some significant effort to reduce the dependency on market growth in this chart. So let me just illustrate that by walking you through the first section of the chart. So the first bar is the standard efficiencies bar that we've always had in the chart.

So that is our operational efficiencies through automation and procurement savings that we tend to deliver as a matter of course, in our factories. Now the second bar is the new one. So this is our 150 basis points of cost savings that are going to help us to drive towards the 14% target. Then we have a reinvestment bar. So that is both our D365 and technology run cost that are in business as usual now, but it is also an element of investment in the strategic work that Scott has been talking about the growth and simplification program. And then we have our price delivery above inflation. So this is a net benefit of pricing, which has also been derisked slightly in this chart as a result of the 150 basis points.

And then the next green bar is our market share bar, and that is driven by a lot of the principles that we've already talked about in terms of focusing our products and our marketing efforts and our commercial efforts on growth sectors and those top customers in the first quadrant. And that is then deliberately, as we've already discussed, offset by a reintroduction of variable compensation, which we're intending to get most of the way there during 2026, but there is still a bit more to go in 2027.

And then that is where you can see a significantly smaller market growth bar. There is still some market growth there in terms of what we're expecting in that chart. So it's around the sort of 70 basis points of market growth. But you can also then see in the 14% bar, the hashing, the shading at the top of that bar, which essentially means that actually with M&A, we could derisk that market growth bar entirely. So that is our journey to 14% that the target is for full year 2028. The rest of the chart remains pretty much as was. So I won't take you through that, but it essentially takes those principles on further and enables the journey to 18% and again, provides that potential for derisking market growth through M&A activity. So that's the picture as it stands, and that's our journey to 14%.

So, I will hand back to Scott to finish with outlook. Thank you.

So just to summarize then, trading in line with expectations to date. So sequential improvement in all regions from a revenue growth point of view, new business wins and particularly in those faster-growing end markets, focusing on those highest potential customers. Also, underlying volume trends do remain correlated to PMI. So PMIs have been positive for the last few months, which has been helpful. And then finally, M&A, expanding our product offering, enabling us to target new products and the pipeline remains active. Expectations for this year remain unchanged. Obviously, we remain mindful of the wider geopolitical environment. But as you can see from the pricing, we've offset any direct impact of that and remain -- continue to remain positive of doing that through the rest of the year.

Strong order intake and revenue momentum give us confidence in the full year, supported by the work we're doing on self-help margin improvement plans, so efficiencies, cost reduction activities, simplification activities, and we're confident that this is going to give us underlying margin improvement, enabling us to reinvest in growth and simplification program and reinvest in that variable compensation all in support of us achieving the 14% adjusted margin target for 2028.

So with that, I will hand over to Q&A and invite Rowan to come and take all the difficult questions.

I've got one question. On the 150 basis points of margin benefit that you're talking to from IT costs coming out, so that equates to about GBP 5 million from what I can see. Can you just give us a reminder of how much the group spends on IT and technology today and where these savings will come from?

So, the total spend is a mixture of above the line and below the line because we have the dynamic spend, which is a program spend. And as we've said, it's coming to an end. So about GBP 3 million of those savings are simply that program, GBP 3 million to GBP 4 million of savings of that program coming to an end. We then have another GBP 2 million to GBP 3 million of savings that we're aiming at, which actually is the element which flows into the operating margin because the previous element is only cash. So the GBP 3 million to GBP 4 million that's flowing through the operating margin is coming through the simplification of the IT infrastructure, the turning off of legacy applications.

We're also looking at how we manage IT support in the organization. So we have had, unfortunately, a number of redundancies recently as we've moved away from direct support on larger sites to more of a third-party supported model. So it's just challenging that level of investment and make sure it's rightsized for the organization that we are. So we talked about a 30% total reduction, which that 6 million to GBP 8 million represents the 30% effectively. So.

But it also is slightly broader than that in terms of the broader SG&A because we mentioned finance shared services. So we are -- it's a full SG&A number rather than solely IT, that number.

But IT is the [indiscernible]

IT is the first element. Yes.

So we have a long way with finance shared services, but we're confident of taking that 150 bps of SG&A out of the organization by 2028.

A couple of questions from me. First of all, with the acquisitions of Device Technologies and Boteco, to what extent are those scalable? Are you able to take that manufacturing capability into new markets to help drive additional revenue synergies? The second question, Slide 21, with the sort of the 80/20 split, I noticed that was 2024 data. Has the business been shifting in a particular direction anyway, which will make that understanding and that change easier to achieve? And thirdly, just a modeling question on the tax rate for '27 and '28. Would you expect that to normalize back to the 25%, 26% level?

We'll do that one quickly, yes.

So, coming back to Device Tech and Boteco, 2 slightly different product opportunities. The Device Tech product is very [ nichey ]. It's sort of a Rolls-Royce cable management product suitable for high-end applications. We definitely see good growth opportunity there. They're growing well today because they have exposure to energy transition and aerospace markets. We're launching that product range into Europe and the core Americas business second half of this year. So I think there's a very healthy growth trajectory there, but it's not a product range that's going to be worth tens of millions of pounds. It may double over years, but it's not going to magnify by 10. And Boteco is the other end of the experience.

They've got a broad range of standard products, many of which we are sourcing today, many of which we haven't driven heavy sales and marketing into because we haven't had all the manufacturing capabilities. So there's a really good opportunity to in-source and focus growth coming out of that Boteco product range. So I can see that business scaling at a faster rate than Device Tech. Device Tech is great. It's nichey, it's high margin, it's a really nice product. Boteco's broader and has a sort of longer growth trajectory associated with it. They're probably not overstating, but I don't think I've seen the organization so pleased with an acquisition since we bought [ Methane ] 10 years ago.

So, there's a real sense of this is a great business, great product offer, things that we really want to get our hands on and drive harder. So yes, I think Boteco probably has a longer runway of growth opportunity for us.

And then 80/20, 2024 data because we actually first used this last year in our strategy work. And we have done some work already on things like minimum order values and pack sizes. So we're already squeezing that Quad 4 space, if you like. And the U.S. have been the guys piloting this in the first half of the year. So they're also done some pricing work on Quad 4. They're deploying more sales resources into the Quad 1, the large customer, large product category space. So we're starting to see the business shift a little bit.

But as we come through the rest of this year, we're thinking about how we use methodology in the European business. I had a great session a couple of weeks ago with the European leadership team. And again, just thinking about the setting of fixed pricing in that Quad 3 space, so the fast-selling products to smaller customers, how do we do that? So, we effectively plan to launch that by year-end. We'll do some more work on that opportunistic pricing in the long tail in particular. And then generally, how do we deploy sales and marketing resources in high spend, high-growth customers is underway, but will continue to be refined as we come through the year.

Just a follow-up from Andrew's on that -- on the default and the sort of -- well, both moving towards these target higher-growth segments and customers and that 68% that is default now, and I know that, I appreciate that's 2024 data, but is there a number that you're trying to get that to? Because it seems to me a fairly reasonable kind of spread at the moment.

Yes, I mean part of our challenges with high gross margins, we don't actually lose money anyway. So there's not an obvious cut. I think there's opportunity to improve margins in each of the quadrants by treating them differently effectively. So I don't think we seek to get that 68% to 75%. I mean mathematically, 64% is where it sits. So we're slightly heavier weighted than the Pareto principle today. I think leaving it there, enabling it to grow, probably reducing the Quad 4 is important and moving that into the other 3 because that Quad 4 is a real question mark. That is complexity that we should be thinking differently about how we manage.

And is that -- can you actively exit those customers easily? Or is that what you're doing? Or is it more a case of just shifting everything or the focus towards [indiscernible]?

See, I think when we increase order values and reduce the product offer to smaller customers, that fourth quadrant of long-tail customers, long-tail products will just start to shrink. So we'll have more barriers in terms of protecting the business. Now it is still profitable, so, it's not that we can just turn it off, but making it more profitable or moving it back towards the core will be important for us.

And just -- I guess, in the target market, a similar kind of question, there are something like auto, for example, currently very weak. But at some point, that could return to being a pretty useful sector. Do you just sort of leave it as is and let it rumble along and then refocus when the outlook is better?

Yes, I don't think I'd ever refocus because auto will remain highly cyclical, and that's never the easiest thing to manage. So I think we'll continue to focus in those structural growth markets. We described that business as maintain. Let's maintain it. We're not running away from it. We have good levels of profitable business in there. But in terms of growing the business, let's look to grow in those structurally growing markets that we think will serve us better over time. So auto will always be a part of this business. It's 8% today. It should go from 8% to 7.5% to 7% over time. It's not going to go from 8% from nothing because we're still making good money there. But in terms of growth and deploying focus and efforts, put those into the structural markets, particularly those that have got growth potential.

It's positive to kind of see volume growth broad-based across the regions. If I could just ask a question regarding APAC and particularly China, kind of from the first quarter, it was broadly flat to now plus 8% and then double digits in the machine building components. Could you just outline with a little bit more detail how you're going after that kind of sector and growth in particular and whether that kind of increase in demand will allow you to push a little more pricing in that area?

Yes. So a few things to comment there. So quarter 1 was, I guess, as we expected, but working off some very difficult comps from the previous year. We actually had some relatively low-margin, high-volume business in Q1 last year that didn't repeat. So it had an impact negatively on volumes, but a positive impact on margin. What you have seen is the sort of trend of revenue continue to make some progress, but actually, the comps are much easier in quarter 2. So I guess it's all known and planned for, but that one nonrepeating large low-volume customer is part of that drive. I have to say when you're thinking about driving after growth markets, there are a few countries around the Essentra Group that I always think do this very well, and we're trying to share those experiences.

China would be one of those markets. They have a very good general manager leading them, a good sales leader, and they're very much focused about taking their resources into those growth opportunities. And obviously, there's a lot of growth opportunities in China, particularly in those export-orientated markets. So we see good growth in solar manufacturing. We won some good business in digital infrastructure, battery storage has been a big driver of growth for us as well. So we've got a good commercial engine in China, particularly in our legacy business, and we've been using those legacy sales resources to drive product sales of that access hardware business the last 18 months or so, which is really starting to bear fruit.

And if I could just ask one more. Looking at Japan and moving to that distribution model, have you also kind of seen a bit of volume growth there as well, noting that kind of [indiscernible]

We haven't -- we planned for a slight revenue decline, and we've seen a slightly less revenue decline than we expected. So it's again, executed slightly better than we thought it would. And then we've given some pricing to the [ distributor ], but taken all of our SG&A cost out to make it overall more effective. So we're not seeing growth, but maybe we are still seeing less decline than we planned for as a result of stepping away from the market.

I've got 2, please. One on turnover split and one on margin progression. So for the 5 identified growth segments, can you give us a sort of rough indication on annualized revenues within them currently, do you think, please?

So total revenue is just less than half of the overall group, so 47%. So... Yes. So GBP 150 million, GBP 160 million total revenue in that -- those 5 categories for the full year.

And which of those would be indexing above 10% and which ones would be indexing below?

So the digital infrastructure is definitely the one which is the most positive right now. Actually, defense and aerospace has the lowest level of growth, is also the smallest market for us. I think machine build has been a little bit mixed, some strong markets, some less strong. Energy, generally pretty good, although that large low volume, low margin, high-volume China order was in energy. So that will have had a negative on that overall mix impact.

Okay. And just on margin progression, so newly identified target to 14% by 2028, should we be assuming that the majority of that comes through the unallocated cost line rather than through the regions?

So the majority of it will come through the unallocated cost line. Yes. So we have unallocated and central costs. So yes, yes. But clearly, as I said to the earlier question, we're looking at SG&A as a whole as well. So -- but yes, the majority of it, you're right.

And the 14% to 18% plus target will be more regionally based subsequently. Is that the idea?

If you look at the 10 -- look at now to the 14%, the efficiencies bar is mostly gross margin because that's automation in factories, procurement savings, the new SG&A savings, more central costs, marketing, IT, overhead. And then pricing actually is gross margin again, volumes will do a little bit of everything, but the [indiscernible]

Yes, the 14% to 20%...

The 14% to 18% will be...

Much more in...

The Yes.

Gross margin.

Despite more gross margin absorption benefits that we're starting to see as volumes are recovering in the business.

Okay. I think we're done. Thank you all very much for your time, and we'll be around if there's anyone else has any further questions. Thanks all. Bye-bye.

Welcome to the Essentra plc Annual General Meeting Proceedings. [Operator Instructions] I'd now like to hand over to the Board of Essentra plc. Good afternoon.

Hello, and welcome to Essentra plc 2026 Annual General Meeting. I am Steve Good, Chairman of your Board, and it's my pleasure to chair this Annual General Meeting. It's now 1:00 p.m. We have a quorum present, so I declare the meeting open. I am joined by my Board colleagues, Scott Fawcett, Rowan Baker, Mary Reilly, Senior Independent Director and Chair of Audit and Risk Committee; Kath Durrant, Chair of Remuneration Committee; and Non-Executive Directors, Adrian Peace and Klaus Goldenbot.

Klaus joined the Board in September 2025 and was recently appointed Chair of the ESG Committee. The format for today's meeting is that we'll first deal with the formal business, then our Chief Executive, Scott Fawcett, will provide a business update. Once this meeting concludes, please join us for a buffet lunch. Before going any further, however, I have to hand over to my colleague, Chris Butler, our Operations Director, who will brief you on what we have to do in the event of a fire or the safety matter. Chris, over to you.

Thank you, Steve. Welcome, everybody. So the most important thing today, while you're on site is your welfare and health and safety. So just a couple of things for you all. Hopefully, everybody has a visitor's badge. So I can remind you all when you leave site today, if you could please return your badge to reception. The other thing is there are no planned fire roll calls today. So in the unlikely event of the fire alarm sounding, please stay calm. Myself and my colleague at the back there, Mr. Ricky Neil, will be here to escort you via the 2 fire exits safely to the nearest fire muster point. Thank you very much for listening, and I'll hand back to Steve.

Thank you, Chris. I will now hand over to the Deputy Company Secretary, Tim George, who will explain how voting and questions will work today.

Thank you, Steve. First, you'll be aware that this meeting is also being broadcast. So we have shareholders who are accessing this AGM online. However, those shareholders cannot vote or speak online, but can submit questions online, which we will endeavor to answer during the meeting. With regards to the resolutions, voting will be taken on a poll to reflect the number of shares held by each shareholder of the company.

More than 50% of votes in favor are required for resolutions 1 to 13 to be passed and 75% of votes in favor are required for resolutions 14 to 17. If there are shareholders present who have already submitted a proxy form, which appoints the Chair to vote on their behalf and they do not wish to change their vote, then Steve will vote as you have instructed. Shareholders or nominated proxies present who have not yet voted will be given a poll card when registering for the meeting. The poll card can be found on the reverse of the attendance card. If you are unable to locate your poll card or require assistance in completing the card, please raise your hand and one of the staff from Computershare, our registrars, will help you.

Please note that all poll cards need to be completed and signed and placed in the black poll box, which is with our registrar. Please note that if you do not sign your poll card, it will be treated as invalid. The figures that we will refer to during the meeting are provisional figures taken from the record of proxy votes cast by 1:00 p.m. on Monday, the 18th of May. We will confirm the final figures for the result of the poll later today, and we'll announce this to the stock exchange as soon as possible. I will now hand back to Steve.

Thanks, Tim. Before I move to the formal business, I would first like to thank all employees of the Essentra Group and my colleagues on the Board for their commitment, loyalty, hard work for the company. Your efforts and commitment are greatly appreciated. I would also like to express the gratitude of the Board and the company for our former Non-Executive Director, Dupsy Abiola, who has stood down from the Board and whom provided wise counsel and great support to the Board and the company over a number of years. We wish you well for the future, Dupsy. We'll now start the formal business of the meeting. Shareholders were sent the notice of this meeting on the 30th of March 2026.

And as all of the agenda items are fully explained in the notice, I propose that we take the notice of meeting as read. Thank you. Resolutions will be taken in groups. Resolution 6, which deals with my reelection, will be proposed by Mary. All resolutions are proposed for approval. Many shareholders have appointed me to vote on their behalf, and I will, of course, vote as they have instructed me. The ordinary resolutions 1 to 13 are proposed as ordinary resolutions and will require a simple majority, over 50% to be passed.

Resolution 1 is to receive and adopt the annual report and accounts for the year ended 31st of December 2025. This is passed by 99.99% of votes. Resolution 2 seeks approval of the Remuneration Committee's Chair's letter and the annual report on remuneration for the year ended 31st of December 2025. This is passed by 99.92% of votes. Resolution 3 seeks the approval of the final dividend for the financial year ended 31 December 2025 of 1.2p per ordinary share. This is passed by 99.93% of votes. Resolutions 4 to 10 deal with the election or reelection of directors I will now hand over to Mary to propose Resolution 6, which is my election.

Thank you, Steve. Resolution 6 is the election of our Chair, Steve Good. This resolution has passed by 99.35% of votes. The full results are shown on the slide. I will now pass back to Steve.

Thank you, Mary. Resolutions 4 to 10 have passed by over 96% of votes for each resolution. Resolution 11 is to appoint PwC as auditors until the end of the next general meeting. This resolution has passed by 99.98% of votes. Resolution 12 authorizes directors to agree PwC's remuneration, and this resolution has passed by 99.98% of votes. And Resolution 13 authorizes the Board to allot shares in the company and has been passed by 93.5% of votes.

We have now dealt with all of the ordinary resolutions. Moving on to Resolutions 14 to 17. This set of resolutions are special resolutions and require a 75% majority vote in favor to be passed. Resolution 14 and 15 require Resolution 13 to have been passed. As Resolution 13 has been passed, I now propose resolutions 14 and 15 together. Resolution 14 is similar to previous years and seeks authority to disapply preemption on the allotment of shares for up to an aggregate amount of 10% of the share capital.

Resolution 14 has passed with 96.88% of the votes. Resolution 15 gives the company flexibility to make non-preemptive issues of shares in connection with acquisitions and other capital investments. This is sought for 10% of the share capital and is in addition to that sought in Resolution 14. We have currently no intention to exercise these powers, but believe it's important that Essentra has the flexibility that this provides in order to pursue its growth strategy.

Resolution 15 has passed with 94.91% of votes. Resolution 16 seeks authority to buy back the company's own shares up to 10% of the share capital. As the shareholders will be aware, we operate a share buyback program, and this resolution allows a continuation of that commitment. Resolution 16 has passed with 99.98% of votes. Resolution 17 allows general meeting to be called on not less than 14 days' notice and has passed with 95.81% of votes. That completes all today's formal business, and I'm pleased to declare that the resolutions are carried, and thank you for your support. I will now hand to Scott, who will provide us with the trading update.

Thank you, Steve. So many of you have seen the trading update we published this morning, just to give you the highlights from that. So group revenues increased by 7.2% in the first 4 months of the year on a constant currency and trading day adjusted basis. Like-for-like sales within that were up 5.2%, reflecting both a combination of pricing and volume growth. And then in addition, we had 2% inorganic growth from the acquisition of Device Technologies, which we completed in December last year.

Encouragingly, order intake momentum is maintained and is ahead of sales, so continues to drive good performance. We are continuing to focus on growing in the market sectors, which we believe have structural opportunities, and we're seeing still good levels of growth in areas like digital infrastructure and energy transformation, and they are offsetting some of the softness in more traditional areas such as automotive sector, which continues to be more challenged.

Across the 3 regions, EMEA has had a good start to the year with high single-digit growth driven by both volume and pricing and early but modest signs of recovery amongst Western Europe, which we know has had a particularly difficult trading period in recent years, supported by the continued strength of our Turkish operations. Americas, in line with trading towards the end of last year has continued with low single-digit growth and again, heavily driven from pricing. And APAC trading was broadly flat compared to the prior year.

Again, that is as expected and a slight improvement from how we exited the year as we have some tougher comps. But generally, pleasing to see all 3 regions performing well and at least in line with our expectations. Having said that, we remain really focused on operational efficiencies, automation and cost control, recognizing it is somewhat of an uncertain macroeconomic environment at this point still. Particularly, obviously, the conflict in the Middle East is driving concerns. To be clear in terms of the impact on Essentra, we have very little direct trade in the Middle East, so very little direct revenue impact.

And the breadth of our customer base and the fact that we're predominantly manufacturing locally does protect us from some of the supply chain disruptions that are happening as a result. We are seeing some cost inflation through the business as a result of the inflated oil price. That's coming through raw materials, through energy and through freight. But given our strong pricing capabilities, we've been able to offset that with pricing agility and managing to protect margins as a result. So bringing all that together, we sort of remain conscious of the external geopolitical events.

But think we're well positioned to continue to deliver in line with expectations for 2025 -- 2026, sorry. Balance sheet remains robust. Net debt at the half year is expected to be around c1.6x, and that obviously is including the acquisition that we have announced this morning, which we expect to complete before the half year. At this point, we have a signed agreement with some pre-close completion activities undertaking in the next few weeks. So we continue to be in a good position to drive progress through the year and maintain momentum to those midterm targets as well.

Just to quickly talk about Boteco as the acquisition that we've made today. This is a business we know very well. It's a business we have had a level of dialogue with for 7 or 8 years in terms of looking at the potential opportunity for us to acquire the business. Over the last 12 months, we've been actively engaged in that dialogue and conducting our diligence and getting to know the business and the leadership team even more closely. They are an existing supplier of ours. So we do already have a trading relationship and sell some of their products, but they also have a much broader range of products that we can now start to bring into the Essentra offer.

It's very well positioned to support our machine and automation product and end market sectors and really adds a strong set of manufacturing capabilities to the European region. So it's in line with our disciplined approach. So taking that product expertise, helping us drive manufacturing capabilities. We believe there are strong both revenue synergies and in-sourcing gross margin opportunities for us as well, and we do expect it to be accretive in the first full year of ownership. The initial consideration was EUR 7.4 million, and there is a deferred consideration based upon performance over the next 20 months effectively. And that has been paid for on -- so that is on a cash-free and debt-free basis.

The multiple was 6.5x EBITDA based upon the performance at the end of last year, and it will generate a 15% return on invested capital in the third year, which is our typical hurdle rate for acquired businesses. So we have some small number of pre-close conditions to meet in the coming weeks, but we expect the acquisition to complete before the half year and we'll start the integration activities and welcoming the business into the wider Essentra family at the start of the half year. So that's it for me. I will hand you back over to Steve.

Thank you, Scott. Tim, are there any questions from shareholders?

No questions, Steve.

So if anyone in the room would like to ask a question, please raise your hand and let me know who you are. Okay. That's the end of question time. As there is no further business, I will now call the meeting to a close. And for those able, please do join us for lunch. Thank you.

That concludes the formal business of the meeting, and I declare the 2026 AGM closed, and thank you for joining us today. Thank you for updating to attend today's Annual General Meeting.

All right. Thank you all, and welcome. I'm Scott Fawcett. I get a slide to remind me, Chief Exec of Essentra, I'm delighted to be joined here today by Rowan Baker, our CFO and to take you through the results for last year of 2025. So pleasing that we have got a set of results in line with expectations, really demonstrating the agility and resilience of the business, continues to be an interesting time to run a global industrial business, choppy waters, lots of challenges emerging, but the business has responded very well to those challenges and come through with a respectable set of results.

So most pleasing, I think, is the return to revenue growth in the second half. So all 3 regions in growth by the end of the year. Gross margins remaining robust at 43.7%, and we'll talk a little bit more through that in terms of the color by region as we progress through the presentation. And again, operating profit, as we expected at GBP 32 million which does include a partial build back of variable compensation, which we totally removed in the prior year. Balance sheet in good shape, which Rowan will talk to more later.

So as headline numbers sort of represent, I'd say, respectable outcome for the year, a heck of a lot going on inside the business to enable us to get there, both in terms of the operational activities. So work on footprint. We have closed a couple of facilities during last year. Lots of work at driving manufacturing efficiencies. I'll talk to some of those through our regional slides as well and actually good progress on pricing and good to see pricing coming through even more strongly as we exited the year. And again, some of that's very much necessary as a result of the tariff implications that we saw through the U.S. as well.

Strategically, some good investments coming into the business as well. So we are establishing a clearer focus on product expertise, and I'll talk about that in some of the strategy slides. We've put a new team in place to help us drive that expertise across the 5 product categories that we manufacture and also enabled us to deliver a small bolt-on in December, Device Technologies. And again, I'll touch on that in more detail towards the end of the presentation.

So well positioned to deliver further progress this year. Lots of work on the foundations, business is in good shape. Lots of opportunity for growth, both growth that we can drive ourselves through pricing and our own market share work and also ready when the markets do become more cheerful. However, timing of that remains as uncertain as ever. However, we're pleased to say our expectations for this year are very much unchanged, and we'll sort of reinforce that as we go through the presentation.

So with that, let me hand over to Rowan to give you some more color on the numbers.

Thank you, Scott. Good morning, everyone. So turning to financial results for 2025. So our revenue stood at GBP 302 million, which was flat year-on-year on a reported basis. Adjusted operating profit was down at GBP 32 million, very much as expected, in line with all expectations there. Adjusted operating margin at 10.6%, again the decline year-on-year, well flagged and in line with expectations. That gave us an adjusted earnings per share of 6.1p. Our net debt to adjusted EBITDA at 1.4x remains strong and within our guided range of below 1.5x. We had an excellent adjusted operating cash conversion of 137.5%. And a dividend per share, we're announcing a final dividend of 1.2p, total of 2p for the year, which is at a dividend cover of 3x.

So looking at the income statement, just a word on the gross margins here. You can see gross margins remained robust at 43.7%. Now that gross margin was in line with expectations, and we had a number of things going on there in terms of that year-on-year variance. So that was predominantly led by geographic mix both in terms of the 3 regions themselves, but also Turkey within Europe. Turkey is a lower margin than the rest of Europe. So that mix affected things. The Turkish inflation and also a temporary investment in service recovery following our ERP implementation of Dynamics 365 and that was predominantly in Nettetal in Germany.

We had significant focus in the second half on margin improvement. We optimized the footprint closure of Japan and Costa Rica, and we improved our pricing performance and our gross margins did tick up ever so slightly in that second half. Another thing to mention on this page is our effective tax rate. Now we benefited for 2 years now in a row of deferred tax asset recognition. So that's why that effective tax rate is lower at 15.8%. So taking a look then at revenue in a bit more detail. So although we were flat year-on-year on a reported basis, on a constant currency basis, we were up 2.5%, which is obviously pleasing to see. EMEA was up 2.6%, Americas 2%, APAC 3.1%.

Predominantly, that is pricing, but there is some volume in APAC. It was a game of 2 halves, though, in that the -- you'll recall at the half year, I said that we were down year-on-year on a constant currency basis, but that recovered to 6.4% in the second half. That is a combination of pricing and the easing comparatives there because as you will recall, half 2 2024 was tough.

So a little bit more information then as to how the margins have been moving. Now there's quite a lot going on in this chart. So I'll talk you through it. So the first bar you can see there is volume and regional mix. It is mainly regional mix. There's only a tiny bit of volume in there. So regional mix, as I've said, that mix between the 3 regions and also Turkey within Europe. And then the 2 bars that are grouped together there being inflation and pricing. Now at the end of the first half, we were seeing a net impact of inflation. So we weren't able to cover inflation with pricing in the first half. But we've stepped up those pricing activities significantly in the second half, and our pricing impact was about double where it was in the first half, in the second half. And in the second half, we have more than covered inflation with our pricing. But net-net, overall, that still gives us a little bit of a net impact of inflation.

Now cost efficiencies is the next green bar, and that's an important one for us. There's a lot of activity going on in terms of cost efficiency. We've optimized that footprint. We have a number of operational footprints, sorry, operational improvements, I'm sorry, going on, which Scott will talk you through a little bit more of later on, and that is underpinned also by rigorous cost control within the business. So there should be more of that to come as we go into the coming years.

And again, as Scott mentioned earlier, we've been able to bring back importantly some of the variable compensation into the business this year. Again, this was well flagged and important because we did take out all of that variable comp in 2024. So really important that we were able to bring some of it back. We've got investment in the service issues in Nettetal. So that's freight and staff costs and then FX and the like, and that brings us to the 10.6% for the year.

Moving on then to adjusting items. Now consistent with the prior year, this is predominantly our ERP rollout, which you can -- for which you can see the costs coming down nicely year-on-year and a total of GBP 12.5 million of adjusting items. We are on track with the ERP. Again, Scott will talk about this in a bit more detail, but we do still have more of it to go and we'll be completing that by Q1 2027.

Moving on then to cash. So this chart shows our net debt movement year-on-year. So going from GBP 68.2 million in 2024 to GBP 60.7 million in 2025, so that's a GBP 7.5 million reduction in our net debt. Again, a number of things going on here. We had an excellent adjusted operating cash conversion of 138%. Now that does include the sale of our Kidlington Warehouse Building Block B. And if I were to exclude that, though, that would still give us a cash conversion of 120%, so still very, very strong. A number of other areas to draw your attention to. So adjusting items of GBP 16.6 million. That is higher than it is on the P&L slide, predominantly because of some P&L credits that don't have a cash impact, but also the settlement of some balance sheet items.

The green bar relating to legacy business. Now this is a couple of items that, again, were well flagged through the course of last year, the GBP 10 million of consideration -- deferred consideration for filters, the filter sale and also the sale of a legacy property up in Nottingham. So those have come in there. And the M&A, GBP 5.6 million outflow. Just as a reminder, this is the acquisition of Device Technologies, which took place in December. We got that at a very attractive multiple of 6.6x EBITDA with a total cash cost of $6.7 million, a further [ $1.2 million ] of deferred cash outflow to come dependent on performance.

And then to finish there, the shareholder returns of GBP 9.3 million, which also includes the share buyback of GBP 2.6 million in that number. Only other thing to draw your attention to on this slide is CapEx to sales of 3.6%. That's slightly below our guided range. Again, it's just us being very cash conscious and controlling of the spend to make sure that we are fully seeing the return for everything that we are investing in. So that's cash.

Moving on then to capital allocation. Our capital allocation policy remains unchanged. A couple of things to draw your attention to. Organic investment remains the most important one there. Clearly really important for us to be investing where we can to drive future efficiencies in order to grow the business. We're keen to continue to invest in innovation. That's mainly digital and sustainability there. Acquisitions, again, should be becoming more of a key feature for the business.

Going forward, we do have a strong pipeline. We're really focused on achieving the benefits through cross-sell and compounding those earnings over time. The guardrails that we have in place, nothing new here. You should expect to see from us a greater than 85% cash conversion. So return on invested capital of 15% for any of those big cash investments. And then just a word on the net debt to EBITDA, we would expect to remain within that 1.5x range. But just a caveat to that, which again, I've said before, which is if we were to see an acquisition that would tip us ever so slightly above that. Then we would do that on a temporary basis as long as we could see a path right back to that 1.5x again.

Okay. So finally then from me, 2026 guidance. All of this is against the backdrop of a highly uncertain macroeconomic evolving situation, but we don't see ourselves as having direct impact due to that. It would be more the indirect elements that we need to watch. Group revenue growth of 3% to 4%, we'll see a modest level of margin expansion. We are very, very focused on gross margin improvements on our pricing, on our cost efficiencies. But in 2026, that will continue to be offset by a further -- partially offset by a further build back of variable compensation, obviously, dependent on performance.

Final full year of ERP-related adjusting items. So we'd expect our adjusting items to be around the GBP 12 million mark. Effective tax rate, I would expect to see normalize more to that 26%. You can continue to expect an excellent operating cash flow from us. We have that greater than 85% guardrail there. And we continue to maintain a strong balance sheet, which will enable us to invest in key areas going forward. So with that, I will hand you back to Scott for a regional update.

Thank you very much. So just to bring a little bit more color into the 3 regions. So starting with EMEA. So again, returning to growth in the second half, actually, strong growth, somewhat driven by Turkey. So Turkey performed very well, again, hyperinflation market, but also the markets that business exposed to are typically good growth, structurally growth market. So that helps as well. But even excluding Turkey, the core European business back into mid-single-digit growth in the second half, which is great, admittedly on some weaker comps in the prior year, but still positive impact to growth.

Overall, we are seeing growth in those faster-growing end markets. We'll talk more about this later, but showing that we're focusing the business on the right path of the organization, right path of the market opportunity. Margins diluted due to 2 issues. One of them being this overperformance of Turkey relative to the core business and Turkey does come through at a lower gross margin versus the very high gross margins we have in core Europe. And then secondly, we invested into effectively protecting service as a result of the German ERP go live. That went live at the start of last year, and we had a higher backlog than we'd expect pretty much right the way through to late summer.

So we spent money on freight and labor to manage that impact on service on customers. That did come down by year-end. We didn't see any repeat of that through the Italian, Swedish, Finnish, South African go-lives. I'm pleased to say the go-live of the ERP in the U.K., which we did on the 2nd of January, has gone very well. So we're now at 90% of the region trading on the ERP. Two core sites left, which are the Italian acquisition, BMP in Milan, which we'll do in Q3. And then the Turkish business, which we'll do again right at the end of the year. So we'll enable ourselves to close this year, but be ready to turn on, on the 2nd of January, which you'll see us then completing the rollout as soon as we take Turkey out of the early life support process.

Lots going on in terms of improving the performance of the businesses as well. We talked about Turkey and hyperinflation that has had an impact on the cost base in Turkey over the past few years where you're seeing the dilution of the lira, not matching the inflation rate. So fundamentally, labor has become more expensive over time. It has led us to accelerate the investment in automation in the site. We did a couple of projects in the last year. This is a cylinder assembly line, which is a multistage process, bringing together a complete cylinder unit. Between those 2 projects, probably taking 30 to 40 heads out of the organization as a result of that.

And I said, we've actually now accelerated the next 2 automation projects with Turkey as well, so they'll come through during the quarter of this year. So process automation is an important part of our opportunities we drive an efficient organization.

Moving on to the Americas. So again, good -- pretty much consistent growth through the year. What we did see is -- and we talked about the half year is a slowdown around Liberation Day. So it took the wind out of our sales, what was a good start, but came back to a sort of more normal level of growth through the second half. Great work on pricing by the team. Bizarrely somewhat helped by the tariff situation leading to a more inflationary market, but they did a great job of being agile to react to those pricing changes because they changed quite frequently, and we managed to offset that with the pricing activities.

Distribution channel, which is over 1/3 of the business, almost 40% of the business in the U.S. remained stable. So we're not seeing any great destocking or stocking up through distribution, I think, in line with what's a fairly flat market overall. We are seeing some good growth in those growth end markets, again, though, which is, again, pleasing to see. In terms of efficiencies last year, Costa Rica operations were closed to and moved into Mexico in the second half of the year. So that's enabled us to save some overhead and some complexity in the business as well. And overall margins remaining stable given that pricing performance that we had.

Again, lots going on underneath the surface in terms of automation. This is a robotic multistage process that we put in place in Erie for our dip molding, replaces quite old technology. Again improves the cycle times of the throughput, uses less energy, produces better quality, generally helping us drive up a little bit of gross margin through that investment. So pleased to see that come fully online and start producing goods in the second half.

Moving on to Asia. So as -- again, as expected, we knew that the second half in Asia was going to be less strong than the first half. We had won some very large one-off business at the end of '24, which flowed through to the first half. But overall, the underlying business in good shape. In particular, looking at the China business, export-orientated customers were performing very well. There is some weakness still in the domestic China customer set, and that trend is pretty much continued throughout the second half and into the start of this year. Again, seeing some good growth in those growth markets, which is great. And then we talked about this at the half year, but we've now fully exited from direct operations in Japan.

Japan was really the only country in the group where the P&L wasn't massively positive. It was always a border line business for us. And effectively, we've now transferred that business to distribution. We've given those distributors some gross margin benefits, but we've taken all of our SG&A costs out of the market, enabling us to overall create a greater return for that. So gross margins in good shape, a little bit of pricing and pricing pressure in China. China is always the most difficult place to do pricing. Other areas of Asia like Australia are doing a good job on pricing, but overall holding that margin stable, which is pleasing.

The image doesn't show everything, but this is a multistage automation project. The team we have in Ningbo, which is our legacy site in China are great at automating relatively complicated technical processes. So this is sort of a 2-part manufacturing process, insert molding, and they've got a great set of pick-and-place robots in place. So another great example of using some local automation to take cost out of a product and actually quite a technical solution in this case, which was great to see. So that's it from a regional play.

Let's just step back and think about the wider group and where we are and where we're going as an organization. So just to remind you what do we do as a business. We're a manufacturer fundamentally, we're a manufacturer of what you described as relatively low cost items that are on our customers' bill of materials. And what we've done over the past decade or a little bit longer is grow those manufacturing capabilities to an ever broader set of products.

So we now have 5 product categories that we're able to manufacture. The thing that ties them together, they're typically used by customers in their manufacturing processes, but they're typically right at the bottom of the bill of material when it comes to a cost point of view. So that gets you to a situation where actually the service of those items, those items are arriving on time and being good quality is far more valuable than the actual physical cost of those items. So service differentiation is the key to our success and enables us to command a reasonable price position, have strong margins and actually react to pricing challenges such as tariffs when they occur. So not totally price inelastic, but certainly one of the more elastic areas that you can see from a pricing point of view.

So global service led because of the nature of products we sell, business with this breadth of manufacturing expertise. And I'll talk about the next slide, nobody else has brought those 5 product categories together under one roof. That's a unique position for us at Essentra. We're focusing on the end markets. You can see from all 3 regions. Our growth in those end markets is outperforming general industrial performance, which is great. So we're focusing on the markets, which have got structural growth, and we can help win with the winners. The way we win effectively, we're winning customers through product expertise, so we can help them find the right product.

We have a real depth of knowledge given our manufacturing capabilities to help customers in the identification of the right product. But then uniquely, we can take them from that initial product across our product range and cross-sell to them into the other product categories. And then we keep customers because we make it hassle-free. We give them peace of mind so they don't want to shop elsewhere. The real magic in many ways is the high volume of transactions. So tens of thousands of products, tens of thousands of customers flowing through hundreds of thousands of transactions. That high mix is where the margin lies. Anybody can manufacture relatively simple plastic components like the way we do. If you are making 1 component in huge volumes and selling to one customer, anybody could do that in reality. You just wouldn't command the margins we command from producing single volumes of high-volume SKUs. That high mix is really where the magic lies and managing that data through the organization to bring those products to those customers in an effective way is how we make margin.

And then that margin is reinvested in the business organically or inorganically. I have talked about product expertise and our investment in greater product capabilities this year and into new product introductions, but also through the acquisition of bolt-on businesses that help us grow that product range even further.

So a little bit bringing each of those together and some evidence of the unique position. I have lost the header. The quick note is gone. Obviously this is going to be [indiscernible]. So there are headers here.

This effectively is machine and component automation space, then coming into digital, then energy, special vehicle and then defense the last one. Thank you, Claire. So what you're seeing here is typically our growth markets enjoy a hot spot into a particular product technology. So machine component is going to machine automation is pretty common. Protection products going into specialist vehicles, again, lots of masking products going into production of specialist vehicles. Access hardware coming into energy and then cable management coming across a lot of them.

But the compelling thing here is each of these customer sectors is buying more than just the 1 product where they start. They're able to come across the product range and by a broader set of products from us, hence, demonstrating the value of that cross-sell that we bring to the market. And what we're doing is constantly looking at new products and new product opportunities, to help us to drive these markets and drive that cross-sell even further. And typically, that's where acquisitions play for as well, really helping us to expand that product capability.

If you look at those end markets and where they are and how they're growing. So they represent just under 50% of the business now, mid-single-digit growth last year from high single digits in the Americas to low single digits in Europe. Again, a good spread across. Relatively light in defense and aerospace, although the acquisition of Device Technologies will help us boost that a little bit. They have more aerospace exposure than we do as an overall business. And again, we're doing more and more work to focus ourselves and marketing teams onto these growth sectors. So regular marketing campaigns focused on these sectors and promotional activities into the sales teams. As well as thinking about how we identify prospects and really highlight those prospects into the commercial teams as part of the onboarding process.

And then very much the new product agenda driven by thinking about what these customers are buying, what are their challenges, how do we help them overcome those challenges from a new product point of view. How that then translates into sales. So that 12-month rolling costs, so you can see peaking towards the end of the year. So driving good growth from cross-selling items, which is including new products. We've talked to the half year, good performance coming through from the last couple of acquisitions we've made, helping drive that product extension and new business wins.

Service remains good, 40 NPS is a very high number, slightly down on last year. And within that number, there are 2 moving pieces. So Europe has fallen as a result of those challenges we talked about in Germany despite our offsetting of that. The U.S. actually increased well last year, which was good to see. But 40 still a very strong NPS overall and demonstrates that we've got good level of customer satisfaction behind us. Should never be forgotten that it's very difficult to have high levels of customer satisfaction without a highly engaged workforce. So 81 continues to be a strong level of employee engagement, again, slightly down, but we are on the third year of a difficult market environment. We're in a year where we come off paying no bonuses in the prior year.

I continue to be amazed and grateful for the commitment of the energy around the organization. We have some absolutely committed superstars in the business always wanting to try and do the right thing for customers despite challenges that might get in the way. So great to see that level of engagement still remaining so high, well above a normal industrial metric would be, so probably 10 points ahead of an industrial average.

Moving on to driving the foundations and driving our margins. So manufacturing and cost efficiency. We've given some examples around the automation that's in place, continues to do a good job on procurement. We continue to look at opportunities to in-source manufacturing, probably the best example last year. We moved some insulated spaces from being a bought item to a manufactured item out of our Thai facility in Rayong. So continue to look at those opportunities to in-source footprint always under review. These were the 2 most obvious opportunities for us. We still have a lot of capacity, but we also recognize at this point in time, reducing that flexibility in an uncertain world is not the right thing to do.

So we're very much set from a footprint point of view right now, but we'll continue to monitor that. And whenever we acquire a new business, that question also comes on to the table. And then technology, driving into EMEA now 90% of the sites on D365, 2 large sites to go, so helping us to get over the legacy risks. Process is improving. Price optimization is starting to come through, starting to provide some much better data to help us run the business, which is great to see. And so that pricing is probably the key one in the short term, but also opportunities around supply chain.

We've also started launching a new generation of websites. So 3 of those launched last year, a big rollout this year into a number of countries and also some product-specific websites that we'll talk about probably at the half year, and that will complete into 2027. So lots of things helping us drive the business forward and manage more efficiently.

A little bit on DTi. So we acquired DTi, I have my sample in my pocket. So lovely niche product. It's a flexible grommet edge. So a flexible piece of metal, which effectively snaps onto the edges of metal, which has cable running over it to make sure cable can't snag as it's moving through anything. So on aero planes, on trains, but also originally came out of HP server. Anywhere you have odd shaped metal that you want to protect it against cables, this grommet edge solution is a premium product, but a great quality product to help you do that.

Clearly, market leaders in that space, great gross margin. Business is actually growing very nicely -- growing so nicely. I can't yet drive my synergies at it because it has too much order book. So we're going to work on how we do drive greater manufacturing capacity out of the site, but nice problem to have as you acquire a business, so it's got a fundamental growth behind it. So progress underway, lots going on integration-wise, safety and compliance always our starting point, but we'll start to drive through the commercial opportunities and cross-selling to the rest of our customer base as we come through the year.

So a nice bolt-on into the wider organization. Then bringing all that together, it leaves us in a position where we maintain confidence in that midterm target of 18% operating margin driven from those efficiencies that we've talked about, including the automation and the procurement activities. We have got some reinvestment, which again, we've been clearly flagging, there's more variable compensation to come. We've done around 1/3 of it, so around 2/3 yet to come in the next year or so. Some investments still into technologies and marketing to come as we end the ERP rollout. Some of that cost will flow to P&L at a smaller level, clearly. However, positives coming through pricing. We've always had a good pricing performance. We're getting better at it and more intelligent with the work that Rowan is leading, market share through our product efforts into these growth markets.

And then fundamental market growth assumptions. Now this is clearly the area we are dependent on what the external market does. We have assumed a 2% market CAGR. That's in line with history. It hasn't been in line with the last 3 years. Clearly, that's been 0 or negative. But I don't think it's an unreasonable assumption that at some point, fundamental markets will start to recover, and there'll be an element of growth. However, if that growth doesn't come, we can still achieve our 18% margin through our own actions and through more M&A work, again, maintaining a sensible and conservative balance sheet position.

So moving on to the outlook, which is all anybody cares about. How do we feel about the world right now? So to date, '26 has started well, trading in line with expectations. However, we are mindful of recent geopolitical events.

Clearly, we've had a good start to the year, carrying the momentum we saw out of the second half of the year. Margin is working well, pricing working well, new products coming through, helping us drive growth. I'd say, DTi from an M&A point of view, working well and more in the pipeline that we'll be hopeful to land this year. But we are mindful that recent events are going to have some impact. Just to be clear, we have about GBP 2 million sales in the Middle East. So negligible direct sales, and we're seeing a little bit of slowdown there, but that's thousands of pounds at this point in time. So nothing to report. Clearly, we process plastic materials, plastic resins, which are predominantly oil-derived, recycling being the other aspect of those. We have started to see in the last few days some requests for raw material price increases.

Now we would be able to -- expect to be able to offset those in the same way we did with tariffs. It will just be work, but we'll need to understand that in the coming days to get that positioning right. And we're also seeing some inflation around freight costs. So again, we've seen this in various points of history. We have surcharge mechanisms to enable us to offset those freight costs. So the agility and the skills in the organization to manage those things are there. They don't really worry me. It is work and it's distraction from doing things that perhaps create more value in the long term, but we can definitely protect the P&L through that distraction.

My real concern is the wider economic one and what it does to what felt like a more certain market coming into the year. I suspect PMIs will drop a little bit at the start of next month, recognizing that level of uncertainty. So we'll watch through that, but still lots in our own control, lots of things we can do ourselves to help us drive through the rest of the year. So at this point, I remain -- expectations remain unchanged, very much managing through that situation and very much committed to achieving those midterm targets. And that is the end. Over to Q&A, and I'll grab Rowan back up and shuffle. I'm a bit like ChatGPT, I can only do one at a time, though.

James Beard from Deutsche Numis. I've got 2 questions, please. Firstly, can you talk through the reasons that you've made the management change at the head of the EMEA business and when you expect to have a successor appointment in place, please?

Yes. So as we came through effectively 3 years of a difficult market environment and most difficult in Europe and lots going on with an ERP point of view. I guess talking to Hugues at the end of the year, we came together and concluded it was the right time for us to refresh management in Europe and think about that next chapter of our evolution. So Hugues has been excellent in working with me through that transition and helping me step back into the role. The European business is where I started in the organization. I've taken it as a caretaker in 2019. The team are very familiar to me and very strong as well. So yes, great support from Hugues in terms of helping me just pick up. We are in the process of starting to look for a permanent replacement. So that will take as long as these things take, but we will bring somebody clearly back in to run the business, but we'll make sure it's the right candidate as well.

And then second question, if I look at the notes to the accounts, I noticed that within the revenue by customer segment note, there's been a marked increase, 500 basis points in proportion of your revenue coming from large consumer manufacturers, which feels intuitively slightly contrary to the message you've given about wanting to sort of pivot away from consumer products exposure historically. So I wonder if you could just talk through the circumstances there.

I'll have to double check. I imagine it's certainly not in automotive or consumer electronics. So it will be in one of those growth markets, which is touching on consumer, I expect. So let me double check that. If you look at the automotive and consumer markets, they're both down and consumer electronics are both down in the year. So can I come back and just verify, but I suspect it's linked to one of those growth customer sectors, I can't think which one right now.

Andrew Nussey from Peel Hunt. A couple of questions as well. Pricing action agility was also an important theme through the second half. Do you think there was any volume impact from your actions that you've undertaken there or more market share impact? And is generally pricing a little bit easier in some of those growth segments as opposed to what we'd consider more traditional segments? That's the first one.

Yes. So just picking up that pricing and volume. So it's obviously something we watch very carefully, what impact is the pricing action having. And just when looking at half-on-half. As I said, there is significantly more pricing impact in the second half, but not significantly more impact on volume in the second half. So ultimately, kind of the volume impact sort of remained as was and indeed Europe pricing impact doubled and the volume increased overall. So it was somewhat more of a symptom of the underlying market in terms of the volume rather than the pricing action that we're taking.

But it is something that we watch carefully. And part of the reason that we make sure that the decisions around pricing are taken by those closest to the customer to ensure that we've kind of got that visibility and got that under control.

I think the dynamic, which is contrary to what James is making, but the dynamic in those growth sectors are typically, they're not making significant volumes of products such as the automotive or consumer electronics market. So our pricing power tends to be a little bit stronger because there is this sort of more mid-volume market. That's why we chose them partially as being focus areas for us. So pricing is definitely easier there than it would be versus a large Tier 1, Tier 2 auto, but again, a little bit geographically dependent because pricing in China in that sector remains difficult, whereas the European pricing is probably a little bit easier.

And second question, when we look at sort of all the Turkish margin, clearly, you've invested hard in automation. And without, say, material benefit from operational gearing, would you expect to continue to push on the margin in Turkey and close the gap with some of your more mature European markets.

I think there's always opportunity for us to push and close the gap somewhat, but it will always remain a lower-margin product area versus some of our very low-cost simpler plastic products. Though effectively the manufacturing of the access hardware is same in Turkey and in China, there's a 2-stage process. You're making component parts and then you have an assembly process. The assembly drives a lot of labor, which drives a lot of the automation benefit, but there's still a higher cost involved in that product. And there's probably a less margin opportunity to achieve because it's slightly higher on the bill of materials. So I think we can always continue to optimize it, but it's never going to be -- we have aspects of our more simple cable management products that have 70-plus percent gross margin as a product line. This is always going to be in the 40s as a product line.

It's Henry Carver from Singer. Just a couple from me as well. Improving the customer mix and driving into the higher-growth markets, obviously, you talked a little bit about sort of how you do that. But I just wondered if you had any kind of practical examples of sort of what has worked last year or anything that's ongoing that sort of is actively driving that?

And then the second one was just around the robotics and automation and investment in that. Going forward, if you're doing more than that will that still sort of fall within the 4% to 5% revenue or sort of will ever need to exceed that? Or any sort of help there would be...

Yes, let me make a start. I mean we're winning good business across those growth sectors. Probably the one most noticeable movement since the start of the year has been into data center cooling systems. So my understanding is latest generation data centers and chips, data centers require water cooling rather than air cooling. There is a whole subsector now arriving around cooling systems into data centers. And we sell protective caps that will be used on cooling pipes effectively in transit. We've actually generated a new material for these because they have to be perfectly clean and can't leave any residue. So we've engineered a new material that's helping protect data center pipes. Now there are a lot of them. So these contract wins are into the tens, if not hundreds of thousands of dollars and euros of small plastic pipe and caps effectively.

But great that we've engaged with customers and engineered a solution, particularly for this application. But we've won business in U.S., in China and in Europe on that in the first half of the year already. So in the first 3 months of the year. So that's an example of us being focusing on a growth market with a slightly bizarre essential-like application, which I love.

And on CapEx, 4% to 5% is our assessment of what is required in order to keep on top of that. And just to describe the way it works, I mean, these investments are very incremental. They're done sort of certain specific areas, small areas of each factory where we take them sort of almost one at a time. So it's very sort of controllable and it's done more of piecemeal rather than a kind of complete revolution of one factory overall. So I think we'll be fine within the 4% to 5%. Yes.

It's Andrew Douglas from Jefferies. Three questions, please. Can you talk about the M&A pipeline? Clearly, DTi is a nice little bolt-on. Just thoughts on how that's progressing, whether the current turbulence in the market is throwing up interesting things and I guess broad comments on pricing and quality of assets.

Let me start there. So pipeline remains active, probably more active than average, which is encouraging. Whilst we've been working on DTi, we always had a second opportunity that we're running in parallel. It has taken us longer to progress that, but it's still live and active. Again, very much in the sweet spot of those product and customer categories. So hope to be able to see that through to completion in a relatively short period of time. Behind that, though, a number of interesting opportunities. We have one of our longer-term targets, which is about to come to us effectively, is something we've been working on for a number of years. We have an inbound process opportunity, which we're currently assessing, which is would be a different product category, but feels very adjacent to where we are.

So probably slightly larger scale, but again, worth doing the work on that. And then finally, I've talked about this a little bit. We are interested in acquiring an Indian manufacturing asset because currently, we don't manufacture in India. They are -- they have high import tariffs and we think to grow that Indian market, manufacturing would be a helpful thing to do. We won't find something which is perfectly ready for Essentra, but we have found a couple of assets that look interesting that we're doing work on. So there's a lot going on at this point in time with one pretty progressed, a couple early days and 2 which are under reasonable consideration, but more busy than usual.

We've got another year of ERP. It seems like from a professional pontificator, who's never had a real job. It's getting a lot easier. Europe was a bit tough. U.K. has gone really well, fingers crossed and rolled there. How complex is what's left in terms of Turkey, TAPPI in Italy or is it a straightforward progress?

Yes, ERPs are never straightforward, I think, is my starting point. So BMP process-wise is an exact copy of Kidlington, but it comes from a different starting point because it was an acquired business. Their data is not the same quality as the data we had in Kidlington. So we're working on BMP data right now. The actual processes are a carbon copy of Kidlington. So the ERP system will work fantastically well as long as the data is good enough. So that's the current area of focus. Turkey is slightly more complicated. It has a 2-stage manufacturing, say, component manufacturing and assembly, but nothing really to write home about. And the manufacturing implementation of Kidlington has gone so well that we're pretty confident that we'll do Turkey.

It probably is the most complicated manufacturing site we have though. So again, always on high alert. But you're right in terms of building confidence, the go-lives in the middle of last year went very, very well. Kidlington -- and these things will never be perfect, but definitely upper end of expectations. So confidence is building. We have a really good team rolling out. We've also got a really good process of ensuring the local teams understand and build knowledge to help them -- help themselves as well, which has definitely been the case in the U.K.

And then last one is a slightly different pricing question following on from the others. It feels like there's a lot of opportunity for you guys in pricing, notwithstanding putting things of tariffs and energy costs. It also feels like the U.S. is ahead of Europe. Is there a structural reason why Europe can't catch up in terms of making the material, I guess, progress from a pricing perspective, being a bit more agile? Or is it largely a function of the underlying markets just stopping that from happening? Or is there something you can do internally to kind of properly rev it up?

I would say that there isn't a structural reason why it can't. I think what you saw from us during 2025 was the fact that we were rolling out an ERP system and the one thing you can't do clearly is put your prices up when customer service isn't exactly as you would want it to be. So I think there is scope, I think U.S. has sort of benefited from the environment that helps to create the time for those conversations and the kind of impetus for those conversations. But fundamentally, no, there isn't a reason why they can't go in tandem, and we are getting better at the data. We are getting better at being able to use ERP system to help us there. So there's still plenty more to go up.

I would say historically, Europe had the greater pricing muscle. Now it was the unsophisticated, put your list price up and see what happens, pricing muscle. But over time, they've done that very well. They benefit from having a longer tail of smaller customers where there's greater elasticity. So I think structurally, there's probably reasons to think Europe will do increasingly better over time. Last year was a bit of a blip for us given we were waiting for service to stabilize, but end of the year came through quite nicely.

Tom Fraine from Shore Capital. Are you able to quantify the price increases at all, the percentages, just so we can work out the potential impact on this year as a whole and even the split between H1 and H2 on the margin from price increase?

The price impact for half 1 was just under 2% and for half 2 was just under 4%.

Now we are deflating a little bit from that. So I wouldn't expect 4% this year, but I'd still...

Don't get over excited.

Between those numbers for this year, I think, would be our expectation. So again, Rowan shared guidance. We're not expecting great volume recovery during the year, which I think is a reasonable place to start, especially given news the last 10 days. So the majority of that expected revenue growth will be pricing driven in reality.

Perfect. No more questions, then I'll thank you all very much, and we are around, if anybody has anything else they'd like to raise. But thank you all, and we'll bring the meeting to an end. Thanks.