Michelmersh Brick Aktie

Good morning, and welcome to the Michelmersh Brick Holdings plc Investor Presentation. Today, we are joined by Chief Executive Officer, Ryan Mahoney. Questions are encouraged throughout this webinar and could be submitted via the Q&A box. It trades on the panel on the right-hand side of your screen.

I will now hand over to Ryan Mahoney to begin the presentation.

Thank you. Good afternoon, everybody, and welcome to the 2026 Half Year Results for Michelmersh. I know there are quite a few of you on the call. And I just wanted to sort of give you a bit of a on plan and running order of the presentation. I am just going to give a brief overview. I know lots of you will know us very, very well. Then I'll try and cover the half year results in relatively quick order, give you a bit of an outlook and then try and allow lots of time for questions. Those of you who joined very kindly in March will know that there was a lot of interest in terms of questions, both presentations. So we'll try and ensure that, that facilitate never gets a chance to ask what they want to ask of me today.

So about Michelmersh. We are a premium brick and prefabricated brick manufacturer. We operate throughout the U.K. with a further facility in Belgium. We have 4 principal lifetime revenue sources. And really, that's reflective of the life cycle of the nature of our quarries more than anything else. So we start by digging the clay out of the ground to manufacture the bricks, we put those bricks into prefabricated brick components and systems. Once we've consumed what we need or want from the land, that becomes what we call noncore and surplus, and that becomes [indiscernible] investment land. And before that element, if we need to fill the holes back in from digging out the raw materials in the clay, we operate and have licenses at our sites for landfill operations, but they are all dormant because all sites are currently active or in investment land status.

We've got the capacity for 120 million bricks to be made across our manufacturing facilities. We're not quite at those levels at the moment. I'll give you a bit more detail of that through the presentation. We operate 6 market-leading premium brands. And we have about 180 core products within our range. And you can see on the right-hand side there, our areas of operation.

Just turning then to the page on the key elements of our strategy, very much focused on the premium end of the market and very much focused on innovation and sustainability within that space, and that does cover, as I said, premium bricks, pavers and special shape bricks.

We look to address the full market demand and particularly in what has been a very long trough, and those have had the opportunity to read the RNS. Again, you can see that the broader market is circa 25% down from our recent highs in 2022. And the manner in which we try and navigate those markets is very much focused on targeting new builds, RMI, sort of repairs, maintenance and improvements, as well as then a sort of bucket of others, which is architectural specification schools, hospitals. And at any one time where our plan very much is any 1 time of one of those markets is quieter, we look to try and drive opportunities in 1 of the other 2 major pillars there.

We tend to sell through distribution. And again, that limits the sort of the size and the scope of the commercial team. And again, that's been very much the run of how we've sold for many, many years. So as a result of that, we have very long-standing customer distribution relationships, which, again, we see that as a really crucial part of underpinning our resilience. And again, those of you who had the opportunity to see the RNS will see that word resilience in many places.

Fundamentally, our strength is underpinned by a strong balance sheet. That's allowed us to take lots of decisions over the last few years, particularly as I say, the markets have been undulating and unpredictable given the state of the broader construction markets, but very focused on maintaining that balance sheet strength as we look out. And again, I'll come on to talk of that in a bit more detail.

Just in terms of capital allocation framework, we really clarified this first and foremost in September 2024. And those of you who joined calls back then will remember me talking about this and really trying to just be very, very clear with shareholders and stakeholders about how to think about the business and how we allocate our capital. I've talked about the strong balance sheet. It underpins all decisions really. But first and foremost, maintaining safe and efficient plants is absolutely our major priority. You will have seen a few followed results in '24 and '25. We've had an above normal cadence of capital investments. We put GBP 11 million into our sites over those 2 years. And you will have seen if you've seen the results that we're -- again, back to that sort of normal level, normal level what we talk about is GBP 3 million to GBP 4 million investing in enhancing our facility. So that's really the number to think about on a sort of steady state.

Very much focused and respecting regular returns to shareholders. You can see that while the dividend hasn't grown over the last 2 years, we've maintained the dividend. And again, I feel like there are not too many examples of that within the construction sector where that dividend and maintaining that steady dividend yield has been an important facet of what we've been really looking to try to achieve.

And again, sitting alongside dividends is the more flexible share buyback program. And again, you can just see on the box on the right in terms of the target there, very much talking about returning excess. So what we mean by excess is once we're into a net cash position again. So really explaining why, in a lower net debt position at the moment, albeit today, you can see in the morning statement, we flagged our expectation and return into cash next year and the sort of the minus 5% that's on the balance sheet at the 30th of June, we expect that to be at a low point in terms of where that borrowing position is.

Now the important bit really in terms of the interim results and the overview. The key messages, if you leave with nothing this afternoon, it's really about the fact that this is a self-help period of the business and has been really for the last 12 to 18 months. This has really been about managing, adapting and flexing the business model and the manner in which we manufacture and operate to allow us to adjust to the market conditions. And I think, by my reckoning, we probably had 5 full storms since the start where we thought that the recovery was building some momentum only to be impacted by another major macro factor, which you'll all know on the call, what they are.

So in terms of a bit of detail, and why we talk about that resilience. The broader market is now down back again over 25%. And really that's reflective of just how challenging the construction sector is. And we measure that number by U.K. brick dispatches, which is the government statistics. So we know that, that is a good indicator of where we are.

Within that performance, our own revenue, our own top line performance is down 9.5%. But just unpacking that number a little bit, this is really made up of 3 major items. Our own dispatches are down about 2% period-on-period. And again, if you see that, that delta in terms of 9% for the broader sector, that's really where that outperformance has come from and where the indications are of having grown market share against the absolute U.K. brick dispatch volumes.

The second part of that is average selling prices again. If you've known and joined me on previous calls, you'll know that we've really been trying to target stability of selling prices for our end customers. We've had a small 2% drop in average selling prices, and that is in a market which is highly, highly competitive. There are about 0.5 billion, so 550 million bricks on the ground in terms of inventory volumes across all the manufacturers in the U.K. And that has really facilitated a lot of pricing competition in terms of the behaviors of the brick manufacturers as everybody tries to chase cash-generating opportunities and to gain market share in a difficult market.

The third element, and again, we've tried to be really clear on this. This is about a little bit of product mix, London and the Southeast, particularly where our fresh field lane and Michelmersh sort of southern sites, which are both soft month producing sites. London the Southeast has been difficult for about 2.5 to 3 years, and that really started with the legislation changes that came off the back of the Grenfell tragedy. And what essentially that did on the Gateway 2 and Gateway 3 legislation is that pushed forward the need for complete planning applications as opposed to in the old days before Gateway 2 and 3, you would do those plans in stages. And so what that allowed for was more progress to apple on site. What then happened was an absolute period of about 12 to 14 months where the market was delayed and under the Southeast. Now whilst that is alleviated, that has been replaced with challenges around consumer confidence and the changes in the cost base for developers. And therefore, the gross development value of the sites, particularly around London and the Southeast have been under quite a lot of pressure, and therefore, the ability to commit those sites has been more challenging. So there is planning in place for lots of sites, but unfortunately, again, that sort of consumer confidence environment and that sentiment has been impacting progress there in terms of that specific part of the marketplace.

And then the other element just to draw out is where the prefabricated portfolio is quite new build focused. We've been really trying to integrate those assets around our own brick sites on our own freehold sites. But equally, we have also had to move away from lower-margin manufacturing, and that's been a deliberate part of the decision we've taken across the last 6 to 12 months really, which is to start to really try and take this portfolio into the more premium part of it.

Lots of self-help that I talked about there, very much has supported the margin improvement, you can see on the second bullet on the left of the slide there. And again, whilst revenue has absolutely dropped and I've just run through that, very focused on self-help in terms of the cost base, controlling those elements that are within our gift, and you can see that coming through in the margin improvement.

And whilst we are in a sort of a GBP 5 million borrowing position, I've talked about that being the sort of the high point for us in terms of that level of debt, and we see a stronger H2 in terms of cash collections and cash conversion in terms of taking that back towards that cash positive position.

And what have we done, I suppose, with regards to that self-help, and this middle column is really facilitated that. So we've been very focused -- in those 2 years, I talked about in terms of more clear CapEx investment. What we're really trying to do there was pull forward the timing of capital improvement activities to give ourselves time for the market to improve. We've done that and those sites are responded well off the back of that. What we've had to do now is for particularly a fresh field lane, we have had to take a more deliberate and targeted response and we have slowed down production there by 30% of the key sites in the South. And again, that's really because of the unique challenges within London and the Southeast.

Equally Michelmersh, which is the other southern site below the M4 Corridor, that site was closed at the start of the year. We kept our people on who did a lot of the work themselves. They know that site is the best. And then we reopened that site in May, and it moved towards full capacity in August. And again, that's sort of facilitate for prefabricated expansion on that side, but also some facility improvements as well to drive the efficiency of the operation there.

And I think what we'd largely say now is those reorganization activities have largely now completed. And our expectation is in the guidance in terms of the second half in terms of margin improvement, cash improvement, a lot of the hard work over the last 12 to 18 months, we expect to now deliver and start to help the business get back towards a more steady state. But again, we will continue to monitor. We will continue to be agile and we will continue to flex the business if we need to.

And then the last section here in terms of the discipline around capital allocation. You've seen me talk about normalized CapEx and as I say, just repeating that GBP 3 million to GBP 4 million is the way to think about the business. But that visibility of that net cash position again continues to allow us to take the right decisions through our capital allocation strategy as we see them. And clearly, again, today declare an interim dividend, which was in line with last year. And we think that's a really important indicator given the state of the broader sector.

I'll move over the financial highlights that's -- and cover those within the income statement. And with this, I'll try and talk to moments by exception. You've seen me talk about the gross margin improvement there. But within the central costs, again, you can see that there's been a really clear effort to make sure that we're not growing central loss ahead of anything on the top line or indeed coming through from cost of production. So very focused on ensuring that whilst the top line has dropped to 9.5%, you can see that through our own self-help adjusted EBITDA showing that pickup of 1.7%, and likewise, the industrial basic shares at the bottom there. And again, you can see that really is starting to bear out in terms of how we're focusing on the earnings progression through the income statement.

And then just to draw the attention there to the finance costs in a borrowing position and a lot of that was around the time of working capital, which [indiscernible] will talk about on the balance sheet. But again, very focused on getting that back because we don't want the ones so leakage through the income statement. So the balance sheet, generally, again, the shape of this stays pretty consistent. Amortization of the intangible fixed assets, you can see there, [indiscernible] moving down in line with how that we assess the intangible assets within the business.

Tangible assets there, we fair value our assets every year. We do that in December, in line with our full year-end process. So that moves with both depreciation of asset bases and indeed where we're capitalizing costs to where we've enhanced our assets. But the key there you can see is the net working capital. And I just want to talk about this in a little bit of detail.

The really key to think about within the net working capital is the inventory position. We have invested in inventory and really, it was a crucial thing for us to do because, Number 1, over the last 2 years, and allowed us to continue to fulfill customer orders in those sites Floran, Carlton, Blockes at Michelmersh, where we were doing work and ensured unentrusted supply to our customers. But a lot of that inventory is now at fresh field Lane. And again, what this allows us to do is to reduce costs by 30% at that site, but we still have capacity to deliver in line with normal cadence. So in line with the best of times on fresh field lanes. So -- and what we're able to do here with a strong balance sheet is to say, well, we've got -- we brought ourselves here a window of time to monitor the market over a 12- to 24-month period to allow us to re-recruit those 30 people that we sadly lost in April. And really importantly, at fresh field lane, we've maintained a really high core quality of people there. So rather than starting from scratch again if you mothball the whole site, you've got the core competencies and core skills on-site there so that you are trading and embedding rather than starting again. And that was a really key consideration why we approached fresh field lane differently to looking at the timing of capital improvement works.

You can see the net debt moment on the slide there, that's sort of minus 5. The worst of our revenue window is always December, January and February. And again, those collection months, therefore, then fall in January, February and March. So Q1 is always our lowest collection month. So there's a little bit of timing in there. And those of you who've got the chance to look at the full balance sheet in the RNS, you can see that in terms of the quantum of the receivables.

Very little in there is doubtful. We monitor that incredibly closely, as you'd expect us to. So yes, that is a good number in terms of collections.

So at the bottom of the page there, you can see NAV per share, and you can obviously see there's a decent dilution there in terms of current share price, and we hope that, that will improve over time.

Cash flow, very important statement for us. You can see there, again, the time of working capital cycle there at the top of the page. But again, normalizing of property, plant and equipment there, 1.5% against the 3.8% very front-loaded a lot of that 3.8 again. Those of you who joined before will know that we closed Carlton, which is one of our biggest sites for 3 months for capital improvement works.

A few other things on the page there, proceeds of loan drawdown, you can see GBP 4 million borrowed in the first half. As I said, we expect to start paying that number back to expect that proceeds to start to be offset against repayments as we move through towards the end of December. And dividends on the page there, again, recognizing the importance of that, that last year's interim declaration coming through on the page.

Now market outlook. And this is the bit I know lots of you are interested in. I think what I would say in terms of the main takeaway from this slide is, if you look at the gray bars that are now resembling Manhattan now on the right-hand side, you can really see the impact of the budget coming through. The budget last year, if you remember, was a longer process, a further month was added to allow the chance and the Prime Minister more time to look at [indiscernible] plans decision-making. But unfortunately, the impact there, as you can see is by the end of November, by the time that pronouncements came out, really, the impact had happened on our sector. But really pleasingly, since then, disciplined to match deliveries against production has been much closer. And you can see that illustration there in terms of that steady state [ 65 million ] period-on-period change. But as I said earlier, that does come with the risk of highly competitive average selling prices and those people who are very focused on cash, of which we, of course, are one, but we are in a slightly better position with regards to our current level of borrowing and gearing, we need responsibility in the marketplace to continue. But as I say, at the moment, it is highly competitive on the pricing front.

In terms of imports, those of you who are Sun readers or Telegraph readers or Times readers will get different views on imports. My view on imports has not changed. It will represent 20% of the market and will rise and fall. Some of the headlines around British Golders choosing European imports because of brick pricing. I simply don't believe that is true. The bigger part of that story is the need for a level playing field. So a need for a level playing field in terms of the cost of carbon and indeed utilities there is the bigger factor, but we can compete on price. This is about the need for a product.

If I take you back to 2007, we had 89 brick plants in the United Kingdom. We are now down somewhere in the region of 43 to 44 because of sort of mothballing. U.K. capacity is about 1.9 billion. That hasn't changed, by the way, since 2022. The more capacity that's been brought on by my peers has often been replacing capacity where indeed, other sites have been closed permanently. So that 1.9 billion, and therefore, in that number, European brick imports have replaced some of the products that we can no longer make. So that's the reason why European imports are there and there to stay. And you can see at the bottom, highly illustrative. The Belgians exports 60% of their production. We know the market well. We've got a plant there ourselves to importance in the United Kingdom, albeit we work very hard to maintain a strong local market, which for local for us is West Germany, Holland and Belgium itself. But you can see the level of exports in the U.K., very, very negligible, a very small percentage, less than 1% probably of what we do.

So very different markets. And again, very important that the government understands the need for that level playing field, albeit do understand that these products are required to match what has been built before in this country.

Just in terms of market structure, again, I've talked through these very indicative now because it's so difficult to understand in absolute detail on what my peer group are doing. But you can understand hopefully, the clarity that we try to wrap around that in the RNS this morning and indeed what I'm covering with you today. But you can see there 4 market numbers at about GBP 0.8 billion. So you can see normalized numbers, again, that sort of illustrative drop back on the prior period coming through. So we're once again expecting full year numbers at around that GBP 1.4 billion to GBP 1.5 billion. So really staying in the foothills of a challenging market. But again, it's about us having grown our market share within those challenging markets, as I say, and we measure that by our own brick dispatch volumes versus the broader market as reported to the government.

This slide is a -- it's a good slide. And I would cast your minds for the medium term rather than the short term. We know the short-term challenges, and I'll cover those again in a little bit more detail. But in terms of the medium term, there is a critical shortage of new housing. It is critical. You can see in the government's efforts to try to unblock the housing market. But it is difficult to turn, it's difficult to turn quickly. But as I say, the #1 issue we face as the country is the confidence of us is the confidence of yourselves on the call to make decisions around improving your home, moving home. That is the key moment that we've got to look at, and we've got to try and look at supporting and improving that. And that just comes from sentiment and how we all feel in terms of making our own capital commitments against our own balance sheet and how we're feeling about our own longer-term financial security.

We know inflation remains above the Bank of England target, and that has sadly meant that we haven't had the sort of the 3 or 4 interest rate cuts. But I think we can all sort of do business at around that sort of 3% level. But there is good mortgage availability. The banks are being more flexible with regards to interest only. And I think that's an important part where people can make their own decisions for the short term, while we expect things to improve if we get steady state stability. And of course, all of this is underpinned by what we believe is U.K. population expansion, but also for those of you who've joined the call before, you will know that there is a rise in single dwellers as well, which is also consuming the U.K. housing stocks.

The government has committed to a target of 300,000, they keep double down on that. Of course, we'd delight to support them. The number I always talk about is something approaching [ 200 ], something of reaching [ 200 ] we're all busy at 220,000. That's what we did in 2022. By the way, that is the 1.95 fully consumed with 550 million coming in from overseas, for which the absolute lion's share is coming from those sort of Benelux countries. So again, anyone who's read in the ground India or China or Turkey, they are a part of the market, but tiny as things stand. But again, not being complacent.

You can see the government are also talking about improving the planning process, reducing barriers, red take, planning approvals, we don't know what this detail looks like in terms of [indiscernible] decision-making, funding for council housing as well, and you can see that stated commitment to quality social housing as well as rather than just simply being a volume game. And I think there's real recognition that how people live, where they live, really makes a difference to the longer term.

And then the bottom, the one that's very important for us, as I talked about we always target that taking 1/3 of our portfolio as the repairs, the maintenance, improvements. 180 core bricks, nearly 300, so another 120 of other, that is designed to mirror and make sure that, that gap, where we closed the 89 down to sort of 44, 45 plants, we can fulfill that legacy. So when you want to build an extension in an area that no longer has a brick plant, we can assist you by a very broad range of products, and it's a big part of what we do.

I think we are winning the battle in terms of brick, in terms of brick is best. You've heard me before talking about brick being best. Here is the favorable material of choice for high-rise cladding, remedial work as well, as well as specification projects. But the point I really want to get across is, it's the lowest cost for the consumer. And I don't just mean that in terms of -- banks like it, insurers like it, and you all like it because you don't have to spend as much on the facade. And anyone that's got a paint of property, will know the cost of maintaining that is a steady state of repairs and maintenance. But for us, the brick, we see it as having that 200-year lifespan, but it looks better pretty much every day from the day it's laid. So it really is an important part of the market for us. And again, addressing that full space is very important.

So again, trying to be true to my words of giving lots of time for questions. I just wanted to finish n the summary and outlook for us. Again, I hope it's really coming through that the markets are challenging, but our job is to be resilient within our business strategy has and continues to be very tested, but I think we're responding. And again, it's our ability to flex our operations, be dynamic and be agile, which is very much part and core of what we're trying to achieve alongside being so focused on the elements that are within our gift in terms of cost control to support that margin improvement.

Strong order intake. Look, it remains a huge indicator of the demand for our products. And whilst the ability for us to predict the timing of that, and a lot of that is linked to our customers committing to full sites and I'll give you a quick example of what that could look like. If you've got 100 houses through planning, for example, ordinarily, you may build those out in 3 or 4 phases over a period of 12 months, and there'll be a call off cadence from our brick sites to facilitate the build profile. What we're seeing at the moment is some of the uncertainty within the consumer space is meaning that developers are tending to build only the show homes rather than a deeper part of that particular site. So that's what we're seeing. So when we talk about unpredictability of call-offs from our brick sites, really, that's what we're making. But in terms of the longer term or even the medium term, we know that our product is being specified for planning. Our customers are committing to that process, and that's a really important indicator for us in terms of the longer term for our business model.

We have seen improving momentum in Belgium, which is important. And we are trying to build out the commercial team and have built out a commercial team as we look to grow our market share in some of those other peripheral markets at which the Netherlands we believe is a big one in that very rig-centric space. And as I said, in terms of the strength of the balance sheet, look, I believe we're strong as at the 30th of June. On a 12-month basis as a net debt to adjusted EBITDA were at 0.4x. So on anyone's metric, that is low gearing, but I want it to be back towards that net cash position because very much that's what we said is our capital allocation priority. And you can see in the statement again, repeating that fact. So I think it's important, it really does land really targeting getting back to net cash for next year.

We've tried to add and we have added the sort of the consensus trading bandwidth, which you can see on the bottom of the page there. And again, we know that you don't all have access to research materials. So we hope that's been well received in the marketplace that when we say we are trading within that range for full year, that is the range to assess us by. And look, the caveat there on the bottom of the page clearly is, you're all intelligent, you all follow the markets. There are a plethora of macroeconomic uncertainties that we are facing and they change daily. And so whilst we're sitting there today saying that please do recognize there is risk within that second half. But as I said, we are doing what we can to mitigate that and control the controllables within our business. And that, of course, precludes us to say that we are really looking at those stronger H2 margins and that earnings and cash generation being very key to that.

And look, I think it's clear that U.K. demand is difficult to predict. We -- there are lots of catalysts that we could talk about, and I'm sure you will ask questions on. I don't have a clear moment in time when they could come to pass. Lots of these factors take time to improve. I suppose the one I would absolutely talk to us in the near term is stability of policy. That I think could be the moment that to start to help all of us make decisions for the medium term because we understand what the government approach is going to be rather than changes through the budget or an interim budget indeed, and that will be our ask of the government.

But what I'll finish on before I open this up to questions is, we have done an awful lot within this business to position it not for improving markets but for current markets. And I do think we are well placed for those recovering markets. But equally, I have to say to you, I believe we're well placed as well to continue to trade through what are difficult trading conditions. But we've got the right portfolio, I believe, and the right strategy to continue to do that. as we will wait for better times. And with that, I'll pause for questions, if I may.

We've had a number of questions pre-submitted and submitted live. [Operator Instructions] The first question reads, the housing market has been pretty tough. You seem to have held up better than the overall market. you actually winning market share from competitors?

Yes. I mean if you follow the other U.K. listed brick manufacturers, I think everyone's won market share. But look, I think there are many ways of cutting this. The way I simply look at it is, what have we dispatch from our portfolio, not about assets that are of fall or anything else? What have we dispatched from our current portfolio. On that basis, we have absolutely won market share. But the most important part is we continue to hold it because, as I said earlier, the challenge we are facing is, if sites are going to be mouthful because they're full that there is lots and lots of examples of aggressive pricing that's out there because if businesses are going to start to run for cash, they'll start to drive those prices down. And that's the bit I really do watch for.

So my job is to try to hold discipline of average selling pricing and whilst holding on to our core customers. But look, I think the fact I haven't tried to put prices up, I haven't tried to [indiscernible] with my customer base, we try to be really clear and concise on message to them. You'll see the word collaboration in this announcement actually, but we remain so collaborative with our distribution partners. And I do believe that long-term the relationship, but also the manner in which we carry ourselves and conduct ourselves with them that matters usually to really protecting our market share. It can't be just about price because we're at the premium end.

Do you think the government is doing enough to support U.K. brick manufacturers, particularly given the much higher energy costs here compared with Europe?

Yes, it's a good question. I think, look, there's a -- it would be really easy for me to just bash the government. This is a very long-standing challenge within utilities. That is a global issue. There are elements within our own pricing construct that absolutely are related to how the government approach things, chief amongst them, of course, is that the improvements of the networks and everything else is priced in through energy pricing as opposed to through general taxation. But that is swings and roundabouts. So whilst utilities are higher, there will be other ways and means with which the continent does challenge as well.

I'd say again, the point that I really want to make -- really emphasize is, we've asked for a level playing field. So if there are elements within utilities or carbon pricing or indeed people and other costs that are coming through with employment right changes, be fair to us with regards to how those imports are assessed because that's the bit that I think we would need the government to support some because we're there to help them with taxation, with that to help them make sure that we can manufacture the product to help us with the level playing with regards to our cost base.

I think, again, in terms of what they could do, I do come back to that point around stability. You can see that there are other things that we could ask for help to buy, stamp-duty reform, that all of those would be hugely helpful. But as I say, I think we've got to be able to say to them, give us the ability. If their hands are tied in other ways politically, that's the bit that could really support the industry, but do keep an absolute laser focus on that level playing field.

The next question reads, there seems to be a bit of a contradiction between the government wanting to build 1.5 million homes and the U.K. brick industry cutting production. Is there a risk we end up relying heavily on imported bricks when house building eventually takes off?

Yes, it's a good question. And look, I'll answer that with absolute fact. I think if you go back to 2007, we did not import products in any ground volume. So as I said to you, because of the fact that we have gone from 89 brick sites down to 45, 46 now today, that is an indication that we have opened the door to European imports because of the need because we took away the actual manufacturing capability for products that are needed to match the vernacular or whatever channel or village. People are looking to make improvements or indeed put down new housing. So I hope that answers what could come next. It's a long, long trough. And further sites have been closed over the last 24 months and more in May.

So I think the inevitability is that imports may continue to support U.K. housebuilding. And as I said, it is an important part of the model. And you can see that on the Belgian statistics, 60% of manufactured Belgian are exported from their domestic markets. So -- and the other thing just to say about a lot of those European distributes is, a lot of them are family owned, so they can take different decisions than all -- the lion share of about 98% of capacity in the U.K. is either domestically listed or listed via Wienerberger in Austria. So it is important that everyone does think about that. But yes, I do believe there is a risk that imports would grow if the markets don't improve in the United Kingdom.

The next question reads, with competitors cutting production and even mothballing capacity, does that eventually create a better pricing environment for Mickeler, Forterra, for example, has significantly reduced production in response to weak demand?

Yes. I think the absolute keyword in that question is the word eventually. Yes, I'll answer that really in the shortest advances. Yes, eventually, it would help in terms of you've essentially got less demand -- sorry, more demand for a diminished pool of the U.K. manufactured products. I want the whole industry to be busy, let me be clear. If we're all busy, as I say, if we're looking to get towards 200,000 houses, 180,000, 190,000, we are all busy again, I can assure you. And that keeps us all going. We stay out of each other's markets on that basis. and we actually don't overlap hugely because we've all got quite particular amounts in which we sell in the markets we sell into. But it's a key point is the word eventually, near term, as I said, it creates an awful lot of undulation in the average selling pricing because commercial teams become more unleashed in terms of how they approach their efforts to win market share.

The next question reads, your bricks tend to come on a premium price. Are customers still willing to pay that premium when the market is under pressure? Or are you seeing more switching to cheaper alternatives?

Yes. In all honesty, the latter, absolutely, I'm sure that happens, but please do look at the statistics that I quoted today. The market is down 25% period-over-period down 9%. We ourselves down 2%. Now that is, for me, an important indicator that, as I say, the depth of our customer relationships, the quality of our product and service, please do always and service that premium. It's not just about price, it's about how we look after our customers, how we look after delivery profiles, how we help them if they're going to change their own sort of on-site cadence in terms of deliveries. All of that is wrapped up underneath that premium products and service. So that is an important part.

So I would say because of the depth of the quality of our relationships, because of the depth of the quality of our portfolio, because we try to address the full market, we continue to be resilient in what are challenging market conditions.

The next question says, there have been a number of acquisitions over the years. Are there still attractive businesses out there that you'd like to buy?

Bold, I like that question. Yes, so absolutely. Last acquisition November 2022. I think it's probably will go down as the worst moment to buy another business because that was the high point probably in terms of housing activities, particularly the newbuild space, of which that prefabricated asset was really squarely aimed at. Of course, there are good assets out there, absolutely there are. But pleased do look at where the market is at the moment.

The ability to chart an improving market, even if you take the construction activity at brick dispatch levels, it's so difficult. And I'll go back to one of my points I said earlier, the 5 fall storms where we thought we had momentum only for it to be pulled away again. So yes, there are of course assets, but it's a difficult moment for us. And as you can see, I'm really focused on delivering against the capital allocation priorities, really trying to reward shareholders with a steady and consistent dividend. And I think there, the moment for us to assess our capital allocation priorities rather than doing something more ambitious in the acquisition space as things stand.

The next question reads, what is the latest new time line on the Charnwood Ashby Road site? Can you give any indication of potential future value in the site?

No, it's a good question. And look, I think there is absolutely a commercial sensitivity to that valuation. We said -- and again, just reiterating, there are 2 parcels there. The [indiscernible], which hasn't seen actions since 2023 when brick manufacturing ceased on site. And then the actual land of buildings, which have been used for Hathern Terra Cotta for clay production up until the end of last year. And then also in terms of the prefabricated portfolio. So 2 parcels of land. One is about 4 acres the other is about 28s. The point around value is I can't give you an indication because that will compromise us commercially. But what I can say is, it absolutely is under review. And we very much -- we wouldn't have talked about it so openly if we didn't see that as part of the noncore part of the portfolio and going back to one of those 4 pillars I talked about, we will look to convert that into cash in due course indicative timing, I can't do any better than we expect something in the short to medium term.

Do you expect revenue growth to return in the second half? Or is the market still too uncertain?

It's a good question. I think, hopefully, I'll go back to what I said earlier. We aren't expecting change. It is important to note that, that sort of December, January, February time tends to be quiet anyway. But it is also important to highlight that Q4 has been unbelievably difficult to predict for the last 3 years in a row. So I'm focused on self-help. And again, you can see we've done a lot of activity in the first half to self-help. And we expect some of those benefits to come through in H2. And you can still see the bullet there on the page. So we're focused on what we can do ourselves rather than expecting catalysts from the broader market to drive those improvements because I think they're going to take a little while to come through despite everybody's best endeavors.

The next question is, what is the biggest risk hitting your full year expectations?

Macro factors, the elements that are sitting outside us. And again, I'm sorry to keep repeating this point, it becomes down to the consumer. If the consumer pivots to become more cautious again or even more cautious, we see that very, very quickly with regards to the cadence of call-offs from our sites in terms of how many bricks are leaving our factory gates. And that can be impacted by those macro factors. I mean they could be domestically around the budget. There are rumors around elections being called, and you will all have views on those. But there are clearly also some major geopoliticals, as well with regards to Ukraine, the Middle East. And of course, there's scope for any 1 of those 2 things to drive other flash points. So it's really those elements that are outside of our control. that's the bit I really do focus on in terms of that's the bit that makes predicting the forward demand for our portfolio, so very difficult. So that's the bit that really keeps me up.

The next question reads, gross margin increased by 340 basis points and EBITDA margin by 200 basis points despite lower revenue and reduced production. How much of that improvement came from permanent cost savings and efficiency gains and how much from product mix, inventory movements or temporary factors?

Yes, it's a very good question. And look, I think some of it was from the year before. So let's -- I'm afraid I sadly have fearful lot of people for their contribution to my business over the last 12, 18 months. So some of that is permanent. But again, I think before I go on, let me just emphasize the point again. We can get that capacity back in terms of -- that's prefabrication and that's brick manufacturing volumes as well. So it's not a permanent exit at all by any strategy the imagination. Fresholane is absolutely -- I was going to say permanent, but it's a near-term delivery of cost because [indiscernible] Lane as a site is about the cadence to manufacture. It's not like a long tunnel kiln, which you're either swathing on or swathing off. It's people. It's a handmade process. So you can speed up or slow down on that side. So -- and again, those 30 people that left us are absolute costs Likewise, there could be reductions in raw material reduction in utilities at those sites.

Likewise, the sites that we closed, which are lease hold sites, cost at Charnwood as well. And also, as I said at the very start, that other tranche that is in dispatches ASP and product mix was us exiting low-margin business within the prefabrication space. And so again, so I see a lot of this as being quite permanent. But as I say, again, the revenue performance that we've done within these markets, we still need that to stay there because whilst we can do as much as we can to pull levers on costs, we still need to make sure we're holding that revenue performance. But we're very pleased with the progress, and we've got more to do, and we expect to get more done in the second half.

Are you seeing any real signs of confidence returning from house builders?

Not really, I'm afraid. I think that's just me in terms of conversations with them. That's the narrative we get through our commercial market intelligence. That is also what you can read within their own market reports. You can see there's an awful lot of caution around land banks. There's an awful lot of caution around cash protection. There are brighter pockets. I think for similar being more upbeat in terms of a more clear commitment to improving the volumes within their own spaces. So it's not all doom and gloom at all. But as I say, I think within the London and the South East, particularly, which given the key markets for us, they're key markets for a lot of people, but key markets for us, there's a lot of caution. And again, we watch those markets very, very closely. As I say, the key is we know there's appetite for our portfolio, and that's the bit that really gives me heart that we're not losing our customers. Their caution is impacting them. But again, they are very prepared to take us through planning because they want the product that we are selling. And that's an important indicator that underpins the resilience of that model.

But we will, of course, we watch all of them very closely. But I think they are cautious in terms of the consumer sentiment in the same way as we are.

The next question says, when you backfill a [indiscernible], generally, do you plan to sell as a land bank or hold to maturity and development potential?

So sorry, Josh, do you mind just stating that first part of the question, an sorry, I didn't quite hear that first bit.

When you backfill a spent pit generally, do you plan to sell on island bank or hold to maturity and development potential?

Yes, it's a good question. Generally, the former. So we would generally lead into the expertise of others in terms of how they develop those sites. And you can see if you -- I'm sure lots of you really monitor very closely the timing of the development, the gestation period on them can be enormous. So often, what we're trying to do in the past is make sure that there is planning consent or surplus sites have been adopted within local planning plans for the councils, and that's a good point for us to realize value. So it tends to historically lean towards the former. But I'd say never say never. The whole point of being flexible and agile is you're always asking yourself the question. So we would also always ask ourselves the question what's the right approach for that individual sites.

And they are very different. All the councils, all the sites to where we're operating have got different opportunities based on the environment which we are surrounded. Some are within industrial spaces, some are within housing developments already because lots of towns and [indiscernible] brick sites, somewhere in the villages. So it's not a hard and fast rule. But generally speaking, if you want to clear answer, it is the former that we tend to do in the past.

We are now moving on to our final question for today. [Operator Instructions] The final question reads, you've talked about being more efficient and improving margins. When do we as shareholders actually start seeing the benefit of that in earnings and cash generation?

Yes. It's a good question. I mean I hope for shareholders, you can see that what we try to do is return value as and when we can and consistently. The dividend has grown up until 2024 and it stayed steady in 2025 and 2026. And you can see with the interim declaration of [ 1.6p ] that is in line with last year, but better than any other interim declaration we've had aside from the singular 2.5p in 2019, which was a slight [indiscernible] year. Now that is a long history since we paid our first dividend. So I would certainly answer that by saying, I believe we've been consistent returning value to shareholders and indeed have operated 2 buyback programs within that period as well in 2022 and then in 2024.

So my job, as I see it, is in what is now the worst trough for U.K. construction activity by the sheer length of time that this has been going on is to continue to flex under that the business such that you, as shareholders, do continue to see those returns. And I really hope it's clear in terms of the capital allocation strategy so that you can make any decisions to buy further shares, which we hope is the one that you move towards, and constantly trimming or raising dividends in my view, is something that we've really tried to avoid. And again, I hope you can see from our track record that to date, we've been successful with that.

So I hope you continue to support us. I hope you can continue to see that we're doing all we can within that self hub space to drive and improve those margins back towards that 20% EBITDA margin, and as a result, we'll continue to try to deliver against the capital allocation strategy. I think we've done an awful lot to put ourselves in as good a position as we can to either trade through these markets as they continue or such that we're well positioned for when that market recovers. So look, I thank you for those of you who are shareholders for your support. And please stay with us because I can assure you we're doing all we can to navigate what are exceeding the difficult markets.

We currently have no further questions, so I'll hand back over to the management team for any closing remarks.

Thank you. Look, I think -- hopefully, I've covered all and there are some really good questions in there. So and this is always a brilliant call for that. So thank you for your interest. I know you all look really close on to the market as well as following ourselves very carefully. So -- thank you. As I say, we continue to do what we can. I'm sorry, I can't point to those moments and the time that those catalysts will start to come through to improve our markets. But in the meantime, I can assure you, we'll continue to do all we can to try to restate trade through. And as I said, for those of you who already shares on the call, thank you so much for your support, and we hope to see you again in March for further update.

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

Good afternoon, and welcome to the Michelmersh Investor Presentation. Today, we are joined by Ryan Mahoney, Chief Executive Officer. [Operator Instructions]

I will now hand over to Ryan to begin this presentation.

Many thanks. Good afternoon, everybody. Thank you for joining me this afternoon. I'm delighted to welcome you all to the retail presentation call, which I always think it's wonderful to have on the same day as the actual results have been released.

If I -- I was just going to start with a bit of an overview. So I'm sure that there will be lots of you on the call who know the business very, very well indeed. So apologies if there's a little bit of repetition here before we get into sort of the main subjects of the call this afternoon.

We are essentially Michelmersh Brick Holdings. We are a premium brick and prefabricated brick manufacturer. You can see on the right to the side there our area of operations, but we've got 5 brick sites, 4 in the U.K., 1 in Belgium. And then we've got 4 prefabricated operations, most of which do actually overlap with those brick sites.

We've got ostensibly 4 lifetime sources of revenue. Clearly, manufacturing bricks, prefabricated bricks, landfill operations, which are all paused for the moment. But they tend to get active when we've got spare space in the quarries, which at the moment we don't. And then once we've consumed the minerals in the brick manufacturing process, we then convert the land to investment land and we look to sell that on and monetize the assets.

We've got about 480 acres of land. All of that land or certainly all but 20 acres of that land is valued as brick manufacturing sites, so land is not carried separately. And across our portfolio, in normalized manufacturing claims, and you'll hear me using that phrase a few times during the call today, we've got capacity for about 120 million bricks and capacity to support off-site construction for about 3,000 houses, which is really focused around chimneys and arches that go above, windows and doors as well as brick specials.

The portfolio is split about 60% wirecut and 40% soft mud. And again, there are 2 phrases you'll hear me talking about through the presentation.

Turning over the slide now to our commercial strategy. And another word you will hear me talk about a lot this afternoon is the word resilience. Our commercial strategy is very much focused around our strong core markets.

I think the way to think about the business is that we try and address the full spectrum of brick and prefabrication, which we see very much around RMI, so repairs, maintenance, improvements, new build activity, commercial, urban and specification.

And then, again, in normalized conditions, we try to deliver our products, broadly speaking, roughly about 1/3, 1/3, 1/3 into each of those end channels. And that's really deliberate as we look to try and give ourselves the best resilience as some of those markets can have different peaks and troughs.

We tend to really only sell through distribution. And again, that's a unique proposition in the marketplace. And as a result of that, we have very deep relationships with our own customers. And really that loyalty has been a really key factor over the last 3 years of quite undulated conditions in our end markets.

Premium, very much the thing to think about us in our portfolio. Premium, both in actual product itself, but also as we like to talk about in terms of service as well. And we focus very much on our core assets of about 180 bricks, and we have about another 120 which we term as noncore. So we don't sell as much of those with regularly seeing sales of those. And again, that 180 bricks really does allow us to really address the fullest extent to the market as we possibly can.

And the key elements for you all to think about and focus on is that we've developed the strategy to really focus on earnings progression and a really important part for all of you on the call, shareholder returns. And very much the strategy we look to deliver that on is premium product. We drive that premium product through all of those addressable end markets to support as good a demand as we possibly can, keeping full diversification. And then as I said, really focusing on distribution to minimize the commercial teams by using third parties as well to support the product sales.

And on the right-hand side of the slide here, maintaining a strong balance sheet is really key because we then have 3 areas that we look to allocate our capital to, which I'll talk about on the next slide. But really, the thing to think about us is earnings progression and regular returns to shareholders.

The next slide, the capital allocation framework. We really try to put a lot more clarity around this in the first time we did this and launched the slide was in September 2024. And that was really because our strategy prior to that have really sort of developed over time, and we wanted to really give a crystal-clear way to really think about our business.

I talked about the strength of the balance sheet. And really, that's underpinned by then operational cash flow. And the way to think about that is when we talk about adjusted EBITDA, we look to convert about 90% of that plus or over 90% of that into operational cash flow. We then really use that cash flow to reinvest in our facilities to maintain well-invested and safe facilities for our people and that's really focused on sustainable operations, safe operations and efficient operations.

And then clearly, very important that we are very, very aware of how important this is, is then regular returns to shareholders. And those regular returns are very focused around free cash flow. So what we sort of said is dividends is the most important. And you can see our track record of dividend returns even during these last 3 years when our end markets have been much more challenging. And then anything above that in terms of excess cash, we would look to run buyback programs and announce those separately. And again, I'll come on to talk about that when we get into the year that's just been in FY '25.

So the really important point for today is to talk about what's happened during the year, and I'll come on to talk about the outlook looking into 2026 shortly. So the overall way to think about 2025 is it's a resilient performance, but that performance has been impacted by the broader market conditions, a focus on operational improvements, albeit that's come with a bit of destabilization through our financial returns, but also, as I say, most importantly really emphasizing this point, continuing to commit to our capital allocation strategy.

Group revenue down about 1.7%. And again, the sort of under the skin of that is 3 areas we really want to focus on. Broader U.K. market conditions have seen a sort of improvements around about 5% or 6%. And actually, we broadly track those metrics in U.K. brick sales. So what sort of dragged that number back slightly is Floren for our Belgian operations. The Belgian markets have been particularly difficult. We track the Belgian market by planning approvals, and they've been about 40% below where they were in 2022. And the reason we use 2022 is in both Northern Europe and in the U.K., 2022 was the recent high point that everyone talks about within the construction industry.

And then the other part of that is then our prefabricated operations under our FabSpeed brand. And what we've really done this year is really focusing on trying to drive those operations through our freehold sites. So we acquired some sites on the leasehold terms, one of which was Watlington and it's Watlington, which we closed during FY '25 and then relocated those operations north into our Charnwood facility, which is just by Loughborough.

Thinking back to the map on the previous slides, and then south into Michelmersh, which is our site in Hampshire and that did create a little bit of destabilization in terms of training, bringing new employees into those sites and they're getting those operations up and running.

Just moving then down into the second bullet points on the page then. So our adjusted operating profit of GBP 8.4 million, down 16.8% on the prior period. And the element here which I haven't talked about was the timing of our capital improvement works. We previously were an acquirer of assets. The last site we acquired was in Belgium in 2019. And then shortly before that, the other asset I want to talk to you about was a Carlton, so up by Barnsley in 2017. Those 2 sites were acquired really while we were running those facilities as much as we possibly could because demand was so high in our end markets.

So in 2024, traversing into 2025 as well, we really had the first opportunity where we worked hard to put inventory on the ground, so we could manage minimum interruption for our end customers. We could really then look at improving those assets. What that meant was we opened the year with Michelmersh, Carlton and Floren, all paused for manufacturing operations, and that then had inevitable impact on normalized rhythm.

And the important point, which you may not have had an opportunity to look at. But if you look at our half 1 results from September and then the half 2 results, if you split those 2, you'll see that, as we said in the interims in September, we expected, and of course, those of you who joined that call, we expect a normal cadence to then happen for the next 6 months, which we're very pleased to say today, we have seen. And therefore, we expect some of those margins to continue that normal cadence as we look into 2026. As a result, as you would expect, adjusted EBITDA 12.4% and our EBITDA margin have also been below those expectations from the prior year.

Strength of the balance sheet. We are in a modest net debt position at GBP 0.7 million at the year-end date and we do have our GBP 20 million borrowing facility, which we just renewed in August. So when we talk about our strong balance sheet, it's really about continuing to see an ability to continue to deliver against our capital allocation strategy, which is importantly the next bullet, which I want to talk to you about.

I said I'd mentioned this earlier. Any excess cash, which we did have during the year we said we would look to distribute back to shareholders through buybacks running alongside the dividend. The dividend is on cash flow financial statement later on in the deck, but GBP 4.4 million went out in cash during the year for the interim and the full year dividend, but also, we returned GBP 2 million through the form of buybacks.

And if you look over the last 3 years, thinking about my phrase of earnings progression, that's about a 7% reduction and improvement in EPS dilution over the last 3 years. So again, really setting out and delivering against the capital allocation strategy, which we really provided that clarity on starting in 2024.

And then really importantly, with what is really now a very attractive dividend yield, we are very pleased to propose a 3p per share final dividend for the year, taking it to 4.6p, which was in line with 2024. But again, if you think about where those markets have been challenged, that was a 4.5p dividend in 2024 -- sorry, 4.5p dividend in 2023 and 4.6p in 2024 and 4.6p again in 2025. So I really hope you can see there, that's demonstrating the Board's confidence in our strategic ability to really operate the business even during what are very challenging end market conditions.

Turning the page and some of this I'll sort of scoot over the points that I've mentioned in the overall highlights. But just looking at the operational highlights, you can see that low single-digit increase I talked about earlier and that was in line with our expectations. And importantly, what that means is in the U.K., the market share that we grew in 2023, we've ostensibly held on to, and that's a really important part of the narrative of the note today.

One of the huge elements that we look at in terms of a key performance indicator for us as a business is how orders are converting. And order intake is really how we monitor that. It's a big indicator of the attraction of our portfolio for our end customers. And again, pleased to say that, that did run even ahead of those normalized manufacturing volumes during the year.

The slight caveat, which we put in the statement this morning, was there has been more inconsistency in the call-off rates. So while you've got an order in your order book, what you don't have an absolute, idealized view of is at what point that will get called off and what the call off essentially means is when the developer, when the buildup, when the merchant or stockist when they call in and say, we're ready to take that delivery, that's what we really referenced as a call off.

That has become slightly more uncertain and really, that's about a consumer sentiment-driven, that caution that we're seeing coming through.

Just talking about the overall sort of brick volumes as a U.K. capacity. There is a slide later in the deck, actually, which covers this in a bit more detail. There was a double-digit increase in U.K. brick production. It's running just -- about just under 10%, where production is running ahead of naturalized demand as we've seen it during the year. And that is something we're watching very, very closely, because what that does is indicate pricing pressure which, again, we have seen throughout 2025, and our expectation is that continues into 2026 without the manufacturers really responding in terms of manufacturing volumes.

I talked about Belgium specifically. And our hope there is that we see a bit of improvement at the start of 2026, and we hope that continues, but that's an important market for us because Floren is such a flexible site, it's almost our most flexible site. It can manufacture U.K. sizes, continental sizes. It's also got differing widths and length of bricks and we really do use it as a real chameleon within our portfolio. So it's important for us that we really do get that back up and running in the sort of the volumes and performances we like it to. And as I say, early signs, not going back to where it was in 2022, but certainly, in Q1, an improvement on where we were in 2025.

That stability in U.K. market conditions is again indicators and all indicators are important to us. That does tell us that our product is in demand from our end customers. And the question I'm sure a lot of you will have, given what we're sadly seeing in Iran, Middle East at the moment, management of input costs, the big 3 for us really are people, obviously, other raw materials other than clay because we largely dig that out of the ground very near to our facility doors but energy. And energy, we've got hedging in and around 75% for the year ahead. We've got 50% in for next year. And the way we really run energy is we look to have 75% in for any 12-month period. You always have to be very careful because if you go above sort of 80%, 90%, that does take away flexibility.

And given our end markets remain fluctuating, we're always quite cautious at the moment, ensuring that we don't have too much hedging. But clearly, that has opened us up to a little bit of risk where last year, that's a little bit of opportunity.

And with regards to the operational reorganization, I've talked to you about Watlington. But the real focus for us is, given our own markets, we're looking to really control our controllables. So we want to drive as much revenue and as much profit through our freehold sites. And therefore, that really is what drove our relocation of our prefabricated operations out of Watlington and into our own sites.

But we're also very sadly, actually, because the Hathern Terra Cotta brand was a, it made a beautiful product. It was very niche in terms of what it contributed for the group, but we love having it in the portfolio. But sadly, its end markets became so challenged during the last 2 years really, we had to take a very difficult decision to close that operation. That closure, of course, did enable us to give us a bit more square footage at Charnwood to be able to relocate those prefabricated operations.

And as I said, we did start the year with Carlton, Michelmersh and Floren. We did close Floren, again, in the summer. We always run a 3-year sort of outlook with our capital program. Maintenance is always ongoing at the site. So do see capital as an enhancement activity rather than maintenance activity. So we closed Floren, again, in the summer, and that sort of GBP 5.5 million to go with the GBP 5.6 million in 2024, really is ahead of run rate at GBP 3 million, GBP 3.5 million. And our expectations are having now done that work that we will really return to that GBP 3.5 million, GBP 3 million over the short and medium term. But again, we're delighted to have completed that work, given the timing of those assets in 2017 and 2019 when they were acquired.

Sustainability, it fluctuates in the media. It fluctuates in the importance. It does not fluctuate with us. We know it's important. We know that we've got to continue our progress. We've got clear decarbonization objectives we must keep delivering against. And we continue to work very hard, and it's a real cornerstone of what we do as a business.

We are innovative. We innovate through our prefabricated operations. We see whilst when we bought FabSpeed, that was almost the worst time to buy it, but almost the best time because we saw the strategic importance of having offsite fabricated operations. So we continue to innovate through our FabSpeed brand. But we've also constructed innovation lab down at our Hampshire site and really, that's to accelerate testing, research, development, decarbonization, raw material changes, recycled material changes to really keep us at the forefront of innovation through how we manufacture bricks.

In the middle of the slide there, compliance. The compliance landscape for us, the business is ever changing. And the compliance that we've really got on the page here are compliance obligations, which have been delivered ahead, not behind. And that's a really important point again here. We don't want to be reactive with our compliance. We want to be compliant ahead of time and really the work we've done this year with it is there's an awful lot of acronyms, by the way, and the ESG while the ESG being one of them. But Double Materiality Assessment is really sort of an assessment of our own sustainability strategy and how it's delivering and how we're monitoring our own ESG key performance indicators.

Likewise, Scope 1, 2 and 3 emissions, and again, getting the right visibility on that ahead of time is so important for us how we make decisions around how we allocate our capital. And one we're very pleased to get, albeit the circumstance of how it came through, clearly hugely challenging for the construction industry. The Code for Product Information was a new code really trying to give more clarity for consumers off the back of the Grenfell tragedy.

So whilst we never like tragedies bringing change through our industry, we were very pleased to get that code so that we think it's so important to give simple guidance on our products to our customers. So again, that was another important milestone for us to deliver during the year.

And then almost underpinning all of that with our sustainability sort of journey is measuring our own decarbonization progress. And we can do that against our 17 KPI targets, which will be published in the annual report and accounts, which I'm always delighted how tight that is to our prelim announcement, so that will be going out on the 2nd of April. So you as shareholders and investors don't have to wait long to see how important sustainability is to us as a group.

I'm going to skip through the income statement, the balance sheet and the cash flow statement really because I think I've covered most of those elements. Probably the only one I sort of wanted to focus on is the net working capital and the operational cash flow, which is over the side, really looking at tightly controlling inventory, really tightly working with our customers in terms of our receivables book and then being very fair to our suppliers, all within sort of keeping a tight control of working capital cycle, really does underpin our ability to generate and operate free cash flow.

So again, even during what would have been undulating and fluctuating end markets, very important for us that we have then been able to just over the side there, still turn just under 90% of our EBITDA into operational cash flows. And again, that really does underpin the importance of the capital allocation strategy for us.

And you can see there actually on the slide there, I've talked about the GBP 5.5 million going into property, plant, but you can see as well the dividend on the page there as well as the purchase of our shares, which was the share buyback program. So you can see that operational cash flow has really been put to work during FY '25.

The really important one then, turning to market outlook. I've mentioned this already, but you can see it very starkly on the graph here on the left, this -- what this graph is really saying to you is, looking at dispatches versus production, and then those big gray bars are the turn in inventory. And there is no surprise there that the lead up to the budget in the United Kingdom, that change in sentiment, and I really can't emphasize it enough, we are really in a sentiment-driven world in terms of the confidence of consumers to commit to projects, to think about projects. But you can see there the impact of production being brought on stream.

My peer group have invested very heavily in what will be, I'm sure, very efficient facilities, but they are also very big facilities with very high levels of output. And given where we've oscillated around 1.4 billion, 1.5 billion against a normalized capacity of about 1.90 billion, 1.95 billion, bringing new assets to market has a big impact in terms of those inventory numbers. So you can see the historic 5-year sort of average at around sort of 500 million. And by the way, even when we're at absolute peaks of just-in-time delivery, that number was about 250 million. So in my view, thinking about inventory about sort of 300 million at the moment.

So actually, you can see if the market does turn with a very sort of half-full positive glass, you can see that actually the supply, the sort of the available on-hand stock given we still want to bring capacity back even across all of us, you can see that there is real potential of that inventory being used up quite quickly.

But at the moment, we're clearly watching that very cautiously. As you can see in that second bullet point there, as I mentioned earlier, production did run ahead of dispatches at about 7.5%. And the point I really emphasize and certainly Michelmersh has always emphasized, European imports are and have been an important part of the U.K. market. Whenever we as a business talk about the market, we always talk about it in terms of U.K. plus Benelux really that's Luxembourg don't really have a huge brick production.

So think about that as a whole. And certainly, with the lower cost of utilities on the continent, which is very well being publicized, those exports, imports into the U.K. have really continued. And that's really a result of the U.K. continuing to favor wirecut and closing soft mud facilities.

But again, as I said earlier, we as a business think it's important that we continue to address the full spectrum of the market through continuing to run our marquee soft mud sites alongside what we see as premium wirecut facilities as well.

The actual market structure has not changed hugely aside from the point I mentioned earlier, where we really maintain that market share. It's been very difficult, really looking through the market. We've always talk about the sort of the older days of 2006, 2007 when there were 89 brick sites in the U.K. You can see on the page that's been dramatically reduced to sort of 45, 46. Over the last 3 years, there have been various oscillations between mothballed, developed, paused for manufacture, which has very much been our approach. So this is a bit of a sort of look through rather than an absolute state of the union, given that, you know, as in today.

But all I can say is we're working very hard to try to look through the market to navigate this all, which has not been easy. Our flexibility of our operations has -- we've approached that quite differently in terms of pausing for manufacturing for 2 or 3 months, making sure we've got the inventory on the ground and then trying to reopen those assets, which we've done very successfully.

But I think the key point there on the slide is just in that sort of middle orange box for the U.K. brick consumption, including 300 million of imports, 1.5 billion. You can see just how far we are below 2022 numbers. So that pickup has been quite slow over the last 3 years. And as you can see in the statement, I'm not expecting that to change certainly in FY '26.

I can talk an awful long time about just how supportive my end market conditions are. All of you on the call will know and read, I'm sure every day, we're short of housing. There's a rise of single dwellers in their households. We've got a north-south move in terms of population movements. And the U.K. is still a highly attractive place for people to live, move to have families and try and build careers. And all of that has manifested itself in a critical chronic undersupply and underconstruction of housing over really what has been probably now approaching a 60-year time span.

Underneath that, I use the word balanced here. It's a balanced mortgage availability. I think if you look back over a sort of 40-, 50-year period, rates of 3.75% to sort of 5% would not be out of the norm. And actually, if you look at sort of the last 4 or 5 years, house prices have sort of actually tracked below inflation. So we are seeing some steadying in there, albeit that's caveated against wage inflation.

The interest rate outlook was looking like we're expecting a steady gentle decline. Clearly, we've got what we hope is a short-term shock with Iran and the Middle East conflict. So we watch that clearly very closely.

I think what I would say is I still stand by the fact that sentiment is our biggest challenge, the lack of Help to Buy, caution within the U.K. households in terms of decision-making. There's been an awful lot of change, whether that's budget-driven through change in government policy, whether that is outside macro factors as well. So it really is. We would love to see just a moment of sustainability to underpin some of that sentiment and to allow U.K. households to make sensible decisions.

Inflation does remain ahead of the Bank of England target, and it seems amazing actually, November seems a long time ago already where the budget was really very targeted at aiding inflation. But look, I think medium term, and I'm talking medium term here, I do think, clearly, there is an awful lot of emphasis for inflation to come within Bank of England targets.

U.K. government itself, hugely supportive of house building, whether that manifests itself through to planning, whether that's purely an articulation enthusiasm to support house builders. A big narrative around social housing, but also social housing with quality external facades as well. And I think that's absolutely right because for too long, social housing has been poor quality.

And actually, the best way, I think, over the long term is the price differential between a premium brick and a non-premium brick is very, very small and actually demonstrating over the long term a strong and attractive facade is the best way for an area to feel just simply better about itself and actually have a lower lifetime cost as well. So hugely supportive government narrative when they're talking about sort of higher quality social housing.

And just to the bottom there, RMI. There's a huge volume of houses, which were built across the Georgian, Victorian and Edwardian era. They are aging. They require maintenance, but also in many circumstances, they can be extended or improved. And our portfolio, make no apology for it, has been focused on copying every town and city used to have and indeed village used to have their own brick sites. For a long time now, Michelmersh is targeted where sites have been closed, providing an excellent copy for products that no longer are in the marketplace. And really, that is hugely focused on this RMI space, which we've always seen as massively important to us as a business.

I could wax lyrical about how good brick is. I sort of went slightly early on a call when I said brick is best, I'm not going to say that phrase again. It's best for lifetime cost. It's thermally efficient. It simply, in my view, looks the best if a good brick has been used or drive past something which has been there for 100 years, 200 years, 500 years in some of the wonderful castle examples and the minimal cost of looking after that facade is, I think, a huge asset to why brick is such a good building material of choice.

And there are substitute products you could use. But in my view, because of many things, and I absolutely start at the top of that, which is cost for the homeowner, the brick is in my view, superior.

Just pausing to really wrap up actually before I open up to questions. Just summing up the outlook, and I always try and do this in 2 ways. So returning to some of those key points around the industry. I know there are lots of short-term macro factors, but longer term, we have a critical shortage of housing. I don't really need to say any more than that. The government is supportive of really improving the volume of housebuilding.

And I really always emphasize this point, the government had put a sort of 300,000 target. We don't need that. If I go back to 2022, our recent high point, that was 220,000 houses. So getting anywhere near 200,000 or above. And so the government can miss that target by sort of 30%, we would still be exceptionally busy. So do keep those sorts of statistics in mind.

I've just talked about brick continues to be the facade material of choice. And whilst construction remains 20% below those recent highs, as I say, we know there is demand, and it's about trying to support the consumer in really sort of unlocking that decision making.

We are watchful of broader U.K. production capacity, as I said, and we will respond accordingly ourselves in terms of where that capacity gets to. But just on the bottom, again, medium and long term, again, the capital intensiveness of our industry and the barriers to entry are enormous. There's been no new virgin sites since the '90s. Even my peer group who rebuilt their assets, they are on sites that already had clay reserves, and they are rebuilding those existing footprints. So there have been no new site for that long a period.

So should we get back to the days of 2022, which I absolutely expect us to at some point and even going beyond that, if the government is successful against its targets, you can really see we as a brick business are not going to be able to address those needs. So there is huge opportunity for us over that longer term.

For us as a business, just returning to some of the key things I opened with. Order intake volumes, we've got good momentum. But as I said, my caution against that is the predictability of the drawdown of that order book is not where it was. And I just want to be really transparent about that. And as a result of where we are as a sector with U.K. production, we are anticipating pricing remaining challenging, albeit we've delivered that stability because in our view giving prices and pricing certain to our customer base has really helped engender and support that long and deep relationship. And so our view and our target this year is to maintain stable pricing and continuing to work with customers in that regard.

We always do watch our cost base, as you can see with some of the site closures that we've had to act on. It's not just about energy. It's about relooking at the operational cadence of our business, responding accordingly. But clearly, energy is the one and you can see that I've just reemphasized that point on the slide about the 75% point.

But look, if this continues, in my view, the Ukraine situation, we had an absolute problem when Ukraine hit Europe and the U.K. in the Gazprom, which is the Russian arm of U.K. gas production, I'm sorry. Europe received 20% of its gas supplies through Gazprom coming through the fabled Nord Stream pipelines. We are in that situation now. About 2% of Russian gas is still coming into Europe, and that's really largely coming down into Hungary and some of the sort of the more supportive states of Russia.

So most of our energy substitution has happened, and that's been supplanted by Norway, the U.S. and North Africa. Qatar has -- supplies some. But really, the Qatari sort of gas is going into Asia. So the problem we face really in regards to the spike in pricing is competition, not necessarily supply. Now clearly, LNG, the boats can turn and go to those areas. So we are hoping we do get swift resolution. But as I say, the supplies are there with regards to LNG, and more and more have come online over the last 3 years. But we ourselves are watching it very, very closely, as you'd imagine. And we will look to put our levers if that continues over the longer term.

Always focused on the strong balance sheet, that resilient platform that we've so harshly tested over the last 3 years. And really, it's about operational cash flow, which as you can see, I've mentioned many, many times, we are very, very focused on ensuring we protect that. And just returning on those 2 bottom bullets on the slide there, our medium-term fundamentals are encouraging. And we are constantly working incredibly hard to make sure we are so well positioned.

And I'm trying to position us well for these undulating conditions to continue. And so I think your takeaway from that point is, we are, therefore, very well positioned when the market does recover on that trajectory of getting back towards those levels that I've talked about in 2022.

So whilst we have got headwinds and they're there with us now on a day-to-day basis, you can see with the proposal of our 3p dividend that we are confident as a Board, and I'm a representative of the Board today, that we see progress continuing within this group. And therefore, I'm delighted to pause there and open for questions.

Thank you, Ryan, for the presentation. We have had a number of questions pre-submitted and submitted live. [Operator Instructions] Our first question is margins are reducing. What's the main reason for this? Is it energy, labor or pricing power?

Yes. Good question. Look, it's really about the point that I talked about, certainly, if I compare year-on-year. We started the year and we were disappointed enough to get our facilities up and running as quickly as we'd hoped. That was a big impact in H1. So that's going back to the Carlton point, both Floren and Michelmersh also closed and we've also had all the reorganization coming through with our prefabricated operations. So I'd really put that front and center.

And when we launched our capital allocation, we talked about EBITDA margin of plus 20%. And certainly, if you look at H2 versus H1, you'll see those numbers starting to come through. So I think it's really about us looking to make improvements, not getting the timing absolutely right, I've got to be honest and clear on that. And that's really the biggest part because certainly, in my view, trying to drive that pricing stability, looking longer term through the order book is something we are very, very focused on. So yes, so it's really been through the operational cadence more than anything else.

Our next question is, do you think temporary shutdowns are likely to be required in 2026?

Yes, potentially, sadly, and that's really about where we are literally today with what has been another macro uncertainty, which is -- which we're now facing. We did start the year with Michelmersh paused again. Michelmersh at this time has paused really focus on -- I talked about the innovation lab. We've also done some work on the drivers there. It is one of our smaller sites. And again, we had lots of inventory on hand. So we're not expecting destabilization at all in the manner I've just answered the previous question.

I think flexibility has been our strength. And look, I think I've said this a few times during the presentation, we will respond if the market stays where it is, and clearly, we're faced with another major unsettling sort of global condition and we as a business must respond to those if they stay for longer term.

Look, I'm not expecting anything at the moment. Again, I want to keep everything open, and our people have been brilliant actually over the last 2 years while we've -- and we do a lot of work ourselves by the way. I should have said that point earlier on. But I think flexibility and adaptability are the 2 words that I would always use with regards to answering that question.

Our next question is most competitors have increased prices early this year by 5% to 8%. Do we have any plans to increase prices?

That's a great question. The reason I'm smiling is if I'm going to answer, I'd say, they've announced price increases. I'm sorry to be so specific on the sort of the words there. Landing those price increases with customers is a very different proposition.

Our view is, I would much rather have stability, to be clear around the stability with our customers rather than announcing and then looking to grow back on those price increases. Look, I wish them the best of luck. I am only 6% of the market, as you can see on one of the previous slides. I need the rest of the market to be responsible on pricing because it's been very, very competitive. I just -- I really do exercise caution over their ability to land those prices when they actually get to customer agreement.

Are you seeing any pickup from infrastructure or commercial projects to offset weaker residential demand?

Yes, another good question. I mean I think again earlier when I said that we try and look all the ways, actually, in terms of addressing the full spectrum of market is exactly for that question. Any opportunities we see, we try to move on.

I think the big one for us where we've got most potential is London and the South East. The Gateway 2, Gateway 3 legislations, which again, was very sadly as a result of the Grenfell tragedy. We see that as a real opportunity for us because we've operated and really that's Freshfield Lane and Floren, by the way, just in terms of those 2 key sites, that look to address that sort of market particularly.

If we can get that sort of up and running again, I think we'll be in a good condition. But I think there are pockets that we pick up in other areas. But I mean, London at the moment, there's an awful of scaffolding around. A lot of that is retrofit. It's glass. It's sort of they are commercial premises. The areas that we need unlocking, as I say, we should really be on hold are the sort of the high-rise, which you see if you leave the Paddington Basin, particularly, where you see a lot of that brick construct going in that sort of 80 meters plus. That's the area that we're excited about the potential.

As I say, whilst there was a moment last year of what we hoped was a one-off delay with Gateway, we are now being impacted again by some of the uncertainty with regards to the Iran conflict. So we just need to try and get through some of these moments. But you can see that ability to address the full market has underpinned that sort of market share stability, but we've got to work very hard to continue it.

Our next question is, would you still do acquisitions in this market?

That's good. I like positive questions as we look to improving markets. I think at the moment, being really honest, you can see when I've talked about trying to expand our prefabricated operations, I would very much like to get those operations into Freshfield Lane. I'd be so excited to do that because as you can see, that's a brilliant launch. I used the word gateway earlier, gateway into London but it's poor use of words.

But it's an excellent launch into London and the South East to have prefabricated operations on site there. If I could put a pin in a sort of timetable or sort of chronology, acquiring that asset in November 2022 probably would have been the worst time to have made that acquisition. Caveat that against my predecessors buying Carlton and Floren in great times.

So no, I think we've got enough opportunity for us at the moment organically. But we stay close to the market. We stay close to, certainly what the Europeans are doing with regards to a lot of the family-owned businesses. We know them very well. But I think at the moment, given all of the uncertainty, we've got the right asset base for us at the moment that we can still improve.

Next, we have how underutilized are your factories right now?

Yes. Another very good question. There is no hard and fast look-through really because as you can sort of say reading in the statement and where I talked about where we paused operation at the various times in the year. If I do a general look-through, I'd probably say we're about 10% below our sort of some normalized cadence of operations. And that's really as a result of Carlton was paused for operations between November '24 and January '25. Floren was paused for Jan and Feb and then over the summer, both 2025 and Michelmersh paused in January, February. And now it's again paused for January and February in -- at the start of 2026.

So wrapping all of that up, it's about 10%. But we've also got very strong stocks on the ground. And again, the theme if you joined me on previous presentations or read any of our previous materials we've released, we also do have very strong inventory on the ground. So if you take that 10% plus what is probably 20%, 25% of inventory on the ground, there is a lot there in terms of the tailwind that we could utilize. But at the moment, a strong balance sheet has allowed us to invest in those inventory stocks. And again, we've always thought that's the right thing to do albeit viewed in the lens of could we and should we pull forward that sort of 3-year rolling program with capital announcements that I've talked to you about.

Next, we have if demand rebounds, how quickly can you respond?

Yes, that's another good question, another excellent positive question. So thank you for asking it. Immediately is almost the shortest answer I can give you. Immediately because we've got stock on the ground, and stock on the ground gives my commercial teams absolute flexibility. If I can take you back to the heady days of 2022 and just up to the summer of '23, having no stock, you can't then take advantage of near-term orders because what you're essentially doing is running an order book and then using your sort of manufacturing cadence to fulfill that order book. And that can often mean you've got sort of 10-, 11-, 12-week lead times.

With stock on the ground, you can then with a phone call that comes in and says, I need bricks tomorrow, you can say, of course, and deliver it. And that is our very, very best price. So I can dream of getting back to those days. But we're there, and we're absolutely ready to do that because the stock is on the ground, we invested in that stock and the facilities are in good condition, are in the right condition, given all that I've said. Carlton, we haven't been able to pause since '17. Floren, we haven't been able to pause since '19. We've tactically been looking at Freshfield Lane. I'll talk to you about Michelmersh as well. and Blockleys is almost our newest site with regards to its sort of -- its plants and equipment.

So we've done all we can within our own sort of controllables. So yes, absolutely immediately. I could have answered that question shortly actually looking back on it, finishing on the word immediately.

Our next question is, where can you still take costs out and what are fixed?

Yes. Good question. So it really does depend on what you take as fixed. We -- if you think about what we're digging out of our ground, our biggest raw material is our clay. So the elements of the fixed cost within that is when we do what's called a clay win, which sounds quite strange because it sort of attaches a lottery to that number using the word win. It suggests you can lose clay as well, but that's not the case. So we -- depending on the site, we sort of do that every 6 months, sometimes further afield than that and for longer term. So for us cost would be raw material.

We tend to do get our other raw materials to be used. You can imagine things like sand. They tend to be on a regular cadence. And then, of course, we have our people on sites as well as our energy and the energy points are really a key one. You've got to be careful in your fixing of those costs because you're then committed to buying that gas, whether you use it or not. I'm sorry, I should have said electricity as well within that regard.

So they are our key fixed costs. And then, of course, we have our overheads as well that reside in those sorts of back-office functions. Where can we cut, I would say where can we look to drive efficiency. You can see we've looked at with -- as I said earlier, very sadly closing our Hathern operations. We've got one more lease site left, but it's a lot smaller lease site than our Watlington operation. It's in a part of the country which is good and it makes an excellent sort of niche product.

So it'll be about things that I've talked about earlier. We would look at manufacturing cadence, maybe looking at slowdowns, those sorts of things would be the element we would look at, as I say, all within the confines of those elements of costs which should, to a degree, are fixed, and as I said, the key one there is really people and energy.

And how are you dealing with competition from abroad?

Yes. No, it's a good question. It's funny because I always -- when everyone asks this question, I always, cognizant of fact, we ourselves look to export into the U.K. with our Floren product. But that's really soft mud. So that is our Freshfield Lane and Michelmersh sites, which competes against excellent products actually come out of Europe.

And London, a lot of London has been based and used that over many years actually. We compete by really go back to our core basics of premium products, premium service, and I can't really emphasize that premium point enough for you because that's the biggest demarcation, if you like, that we have as our gift is that we know our end customers. We stay very close to our own customers. We're reliable. We do what we say. We deliver what we say we'll deliver. We make a good product, quality product. And those are the sort of really key outlets.

And we've also got to be proud of our product. It is different. The Freshfield Lane, the actual product itself, there's hardly anything left now that really looks like it and feels like it. Likewise, Michelmersh is very distinctive, absolutely gorgeous orange. If you look through the presentation, you'll see some pictures of it, very unique sort of appearance and facade.

So very proudly taking those products out to the market, commercially fighting and we are fighting, but really being proud of that sort of customer service element. And as I say, that starts at the factory gate when the clay materials arrive and making a great quality product. But look it's hard work, they are being very aggressive on price, but we are delighted to take them on and we'll continue to take them on.

Our next question is, at what point would you reduce or cut the dividend?

Yes, that is a very good question. When you see where the yield is going to, we as a Board are clearly mindful of what shareholders are telling us given where our share price is. I think if we really got to the point where this was going towards fourth, fifth year, potentially, if we look into 2027 and operational cash flow despite all of that resilience over a really long period of time, I think we would have to have a hard look at the dividend at that point because operational cash flows could come under more pressure.

But as I said, we had a unique window with regards to the 2 years of significant investment through our plant and equipment. We're not expecting that to return. And equally, the buyback is almost a flexible element of our shareholder returns, which we are committed to. But as I said, at that point when we're cash positive again.

So we watch it very, very closely. And as I say, it's really about the strength of the operational cash flows. But you can see that window is there again with the proposal for our shareholders, which the AGM window is the right window for that to be voted on. We watch it carefully, but we do believe in the fundamentals of the business.

The next question is, what do you think is the most surprising thing that could happen to the company during 2026?

That's a good question. The surprising thing, I don't know. I could answer that hugely positively given everything that we wrote in the statement this morning. We get an absolute bold turn. We get Help to Buy from the government. We get stability on our macro markets. We have no more shocks. That would be my most surprising element because I think the demand is absolutely there. The consumers want to move house. They want to improve their homes. We know there's so much pent-up demand in terms of even government supporting social housing. We want to help build good quality housing.

So I think sadly, my answer would be a very swift resolution to all of those sort of macro uncertainties and just steady state. I think that sadly, that will be my answer to that question.

Just follow-upping up from that. I really want to emphasize the fact that we are operating this business in uncertainty, and we're operating this business with a resilient mindset. So -- and I'm really -- the way I sort of answered that question is really just reminding you our expectation as uncertainty continues.

Our next question is, given the Middle East uncertainties, what impact do you see on the Michelmersh business and how are plans changing?

Yes. I don't know when that question came through, but I hope that I've answered that, but I'll try and give a sort of a summary again.

I think it's about time scales now for the conflict. I think we're watching this with a lens of short, medium and long term, and therefore, then have plans in place to adapt and adjust based on each of those elements that whatever comes to pass.

So I think you'll all, I'm sure, watch news events and narratives unfolding as closely as I do. It is a hard navigation in terms of looking at the interpretation of political announcements with regards to planning through this. So as I said, my 2 words of adaptability and flexibility are really the ones, again, I would finish and reemphasize.

Next, we have what would be the normalized sales and profit levels for Michelmersh assuming a recovery in construction activity in the U.K. and Northern Europe?

This is a very good question. Yes, normalized, I suppose the best way of thinking about normalized is sort of almost looking back at history. We've talked about EBITDA margin. If I go back to what we used to be a sort of 24% EBITDA margin, we always talk quite openly about that being diluted off the back of our prefabricated operations, and therefore, that new number became plus 20%.

So I think what I'd say at the moment is think about the world in that sort of plus 20% world. And then with regards to revenue, I hope I've been open and honest with regards to where we are in terms of our manufacturing cadence. And you can see that with regards to trying to match supply and demand as well with regards to, as I say, trying to sell what we're making.

So I would sort of think about it in those sorts of terms with regards to plus 10%, 15%, 20% in terms of revenue and thinking about that in terms of those EBITDA margins. But as I say, that is a very sort of idealized view.

What I'd really point you back to is those highs in 2022, look at what the business has tried to do in '23, '24 and '25 and even how I've talked to you about in terms of '26 in terms of looking to deliver growth in the statements in the prelim today. That is amongst a tremendously uncertain and changing world in those last 3 years.

So what I'm really trying to point you to is, even in those circumstances, I think we've got a strong track record of financial performance. So I can't necessarily give you those heady days. What I can give you is, as I hope, us trying to deliver that capital allocation policy as we have done over the last 3 years, given all of that uncertainty.

Next, we have 3 questions in 1, so just bear with me for a moment. What was the level of housing starts or competitions in 2025, so starts or competitions in 2025. And then what needs to be done for the U.K. to reach the 200,000 newbuild level? And finally, what is the psychological interest rate level, which can warm up the market?

I love that. It's a great last bit of that question. So there's nothing quite like down lines of statistics with regards to houses or homes. So that's the one I always point you to see, first and foremost. Always look for houses and homes as 2 distinctions.

Whenever I'm talking about this statistic, I want to talk about houses, homes, lots more get sort of put into that categorization. I think houses is at about 130,000 to 140,000 houses. By the way, the comparable number in Belgium, I think it's around about 40,000, 41,000, 42,000. Against what I've talked about in terms of '22, '23, that was about 220,000 houses.

The 200,000, what we need to do to get back there? There's a myriad really. I think it starts with the consumer. It starts with consumer confidence. It starts with stable government policy. I think it starts with stable wage inflation and salary inflation. I think it starts with more stable macro, just a reduction in shocks in the end markets.

And the one element I really look at is planning. That's the one that the government, I know are working very hard on really getting through. I've talked to you about Gateway 2, Gateway 3. Simplifying the planning process, simplifying some of the hurdles that planners and developers have to go through. Being fair and balanced on the portion of the side, which is -- which needs to be termed as affordable and certainly in London where we are today, is a big part of that.

Interest rates is an interesting one in terms of the psychology. I think there's probably a slightly different answer for everybody, depending on where you are age-wise. I think I said this earlier, where we are at the moment 3.75% to 5% depending on where you are with LTVs and those sorts of impacting factors.

I think if you look at the sort of the long-term interest rate environment, that is not unusual at those levels. I think if you bought a house in the last 5 to 10 years, I think something probably at a low 3%, maybe a number of that you are more used to.

So I think there is no sort of one size fits all to that answer. But as I said, and I think I said this earlier, consumer confidence, the narrative, how we talk ourselves, about ourselves as a country, how we describe ourselves politically, all of us on the call as well have got a duty to try and think about talking more positive about the country because all of that underpins, all of you on the call and your enthusiasm to commit to RMI improvements or moving out or committing to a newbuild whatever stage in your housing evolution you're in. So I think it's a slightly nuanced answer there, but I hope that gives you a flare of how I'm feeling about that.

Next, we have over and above market recovery. What do you see as the growth opportunities for the business in the medium term?

Yes, it's a good question. I mean I think certainly short term, I talked about capacity, I've talked about inventory. Certainly, there's enough there to keep us busy over sort of a 1- to 3-year time line. Look, I think the off-site construction is an area that I think has got tremendous potential. As I said, it's been gummed up really by lots of the planning constraints. They tend to be -- it does get used in low-rise as well. Don't get me wrong, but it does get tends to use in high-rise. So it's been held up by a lot of the Gateway 2 and 3 legislations. But I am still maintaining the strategic sort of rationale behind that was a really good strategic investment.

Over and above that, I think we're back into the world of potentially thinking about additional capacity again. But if I take that 1 to 3, given where we are now in 2026, that takes us out to 2029, and that's 7 years on. So I think we really do need to see what is steady state in the United Kingdom, what is steady state in Northern Europe because I just don't think we've got that view yet.

And as I say, our own sort of U.K. production capacity has been so fluctuating, so undulating, we've all been doing so much to it. I think we've got to see what that looks like. But I think one thing that is clear, we do not have enough current capacity in the U.K. should demand get back to and over and above those levels we saw in 2022 that we will be absolutely relying on imports again. And clearly, that is an opportunity.

Are you seeing differing market dynamics across your different end markets, newbuild, MRI (sic) [ RMI ], commercial and specification?

Yes. Yes, we are. The RMI space actually has been okay for us. And I'm sorry if you forgive me if using those 2 letters together. But it's been okay for us at the start of the year.

Developer-led is very susceptible to some of that uncertainty. But again, that's been okay. And actually, I'd say, there's sort of a regional split in terms of how that's looking.

Likewise with regards to commercial specification. I think you can see that sort of market share dynamic. You can see that we've stayed competitive. So I think the only consistency we've had is that it is inconsistent. So yes, different behaviors, they change regionally. And it does change as well through wirecut and soft mud as well with regards to how our end customers are sort of behaving. But what I would say is we stay close to them and it's a very important part of how we operate the business.

Our next question is, what level of CapEx are you planning in 2026 after 2 years of investing above depreciation?

Good question. I like that link, actually. So we think we'll be back to sort of normalized levels, which we always term at about that GBP 3 million level. That's really the right way to think about us now that we've sort of looked to complete and bring forward. And again, how we obviously faced '24 and '25 is bringing forward to sit alongside planned capital announcement. So normalizing as we look out in the short to medium term.

Our next question is, given the valuation of the company as well under net assets, are you concerned that MBH could now be a takeover target from a peer or competitor? Or would you like to instigate some M&A with another company?

Good question. I think that we are a listed business. I hope some of you are shareholders on the call. But virtue of the fact that we are listed on the London Stock Exchange, my view is we are always for sale. My job is to be as clear as I can with investors, with shareholders about how I see the outlook for the business. And look, the volume of questions here, I take that as hugely encouraging that there's a great deal of interest in the business performance and the mechanics of how it operates.

So look, my job is I'm here to maximize shareholder both returns and value. Should that be an opportunity for someone else that thinks has a great opportunity to buy the business, that means we're attractive. But in the absence of that, my job is to carry on running the business. And I've got a great team around me, a very good Board, a very good leadership team and talent throughout the organization. So we are here to run the business to the best of our ability and to be clear with how we see the business in the short, medium and long term.

The next question is, what is your NAV?

What is our NAV? Quite literally it's 102.6p per share. That gets derived from dividing the number of shareholders, excluding treasury shares, by the net asset values on the balance sheet. So that's how that mechanically works.

So to the previous question, you can see where the shares are trading at the moment, we are at quite a significant discount to the net asset value of the business.

Our next question is, you appear to have taken on debt of around GBP 2 million, which is the same figure as your share buyback in the year. Is that a good use of debt facilities?

Yes, I can see the link. That's an absolute fair conclusion to draw. I think what I would say is that utilization of the RCF is really about just the significance and the conflation of sort of the year really. So I would say that's much more about the capital activities as well as, look, we were at near 90% conversion of adjusted EBITDA. But going back to the point that I sort of really said earlier, we wanted a better H1 and we expect a better H1.

So I would say that's really more about the timing of the operational changes we made. We clearly had some one-off exceptional costs as well that we laid out in the business. And again, we had a pretty significant year in terms of pulling forward capital activity. So I can see the link in the round, I'm sure part of that was a reason for it. But as I said, I think there are other reasons that were more integral to the utilization of the RCF.

We are now moving on to our final question for today. [Operator Instructions] Sorry, I think another one has just been put through actually, 2 more. Wirecut demand seems to be running much stronger than soft mud demand recently? Could this be a structural shift?

No, I don't think so. I think what it screams to me is that we've got an inconsistent improvement, I'm deliberately using the word improvement rather than recovery. Any of you who follow sort of 10 or 11 major U.K. housebuilders will see that they've all ticked up where they are with regards to their own volumes. Looking through all of them, you're probably looking at sort of 5%, 6%, 7% in terms of volume improvement. And I think a lot of that, given they're listed, given their volume, tends to utilize wirecut products.

So I think it's just an element of where that sort of better market conditions have been. The sort of the regional house builders, London markets, there is still a need to build that sort of matches the local sort of vernacular in the environment where those are houses and development opportunities are being constructed.

So I think it's just time more than anything else because going back to my previous point, look, I believe that the U.K. population want to live in attractive properties. I still think there's a space for it. Whilst there actually is a space for wirecut facilities, and we've clearly got 3 of our own, I do think the market needs soft mud products as well just because of all those points I've mentioned just now.

Thank you. I can confirm the next question is our final question. Does the company have spare warehouse capacity for additional inventory if required?

Yes. I mean just to be very clear on that answer, actually, we don't tend to, the beauty about bricks is you can store them outside. Any time you drive past your local sort of Travis Perkins or Jewson's branch, you will see bricks outside.

So the way to answer that question is do we have brick yard capacity? And look, across the group, yes, we do largely. Look, I think we're always monitoring it. And you can see with -- there are lots of inputs into decision-making around pausing or slowing down if we need to. And one of those factors is, of course, our own brick storage that we've got on site and some are tighter sites than others. But that comes back to my point, which is flexibility and adaptability. Operational cadence is very important for us as a business. And you can see when you do to stabilize that as hopefully you've been really clear about today, the repercussions come through all lines of your sort of earnings statement.

But look, we watch, we are cautious and we respond accordingly. So yes, we've got some space, but we do absolutely take decisions that we think are the right decisions, and we watch all of those very, very carefully over the short, medium and long term.

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

Thank you very much indeed. And thank you for fielding what were an excellent array of questions. So mostly, thank you for listening to me for now a long -- a very long call. I think I'd really like to leave you with the fact that we as a business are doing all we can to focus inwardly, making improvements during difficult and unpredictable end markets. We have stayed resilient. We've stayed resilient through holding market share, working closely with our customers to hold price, making the right products, investing in inventory, taking the right decisions within that regard.

And brick is -- as I said earlier, we absolutely believe that brick is best, we've got another short-term shock with Iran. But as I said, I think the right way to think about this is that our adaptability, our flexibility has been a strength, and we've proved that over the last 3, 4 years.

So whilst we do have headwinds, I hope I'll be very clear about the challenges that we faced. We are very, very focused on earnings progression and very focused on continuing to look to return value to shareholders.

And as I say, just finishing, thank you ever so much for your attention. I know it's not always easy listening to one voice for so long. So thank you so much for your time this afternoon.

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

Good afternoon, and welcome to the Michelmersh Brick Holdings plc Investor Presentation. Today and we are joined by Ryan Mahoney, CEO; and Rachel Warren, CFO. [Operator Instructions]. I'll now hand over to Ryan to begin the webinar.

Thank you, Harry. Good afternoon, everybody, and thank you all for taking the time to join us today to run through the presentation. As Harry said, today is my first morning as CEO and -- today is really about an introduction to Rachel, who joined us also at this morning as CFO and replacing my role, and I've been in the business since 2021. So there's still a good deal of continuity on the Board, Rachel, please.

Good morning -- sorry afternoon, everybody. Nice to join Ryan and the team. I'm really excited about the new role and really happy to be here supporting and I -- my background is I was at IAG for about 20 years. So international airline groups -- so the background in sort of that industry, but most recently, I was the Group FD at Wincanton. So great to have joined, and great to be supporting.

Thank you, Rachel. So look, I think it probably goes without saying that given Rachel's very short tenure, you will -- I'm afraid, have me for all of the presentation -- and I'll also take any Q&A that we have at the end. In terms of the running order of the presentation, I'm just going to start on Page 3 of the deck, which is just a run-through of who we are. I'll then run through our strategy and then touch on the capital allocation framework, which is important at the moment.

I'll then run through all the highlights by which stage I pretty would have covered most of the financial statements. And then I'll turn to the sector update and then importantly, the outlook.

So lots on the call, will know us well, but we are Michelmersh Brick Holdings plc, we are a premium brick and building products manufacturer, and we operate throughout the U.K. and Belgium, as you can see on the right-hand side of the page infront of you.

Very much focused on four lifetime revenue cycle sources, bricks, which makes up about 90% of our revenue streams, prefabricated bricks, so cutting brick operations and we've got a dormant landfill operation. And then at the bottom there, on the left-hand side, any surplus land and really we deem surplus land to be land that is not being used within for quarrying for brick manufacturing purposes.

Capacity-wise, GBP 120 million, give or take, normalize GBP 105 million in the UK and and GBP 15 million in Floren, and then our prefabricated brick operations gives us the capacity to cut about 17.5 million brick slips. We very much prioritized being well-invested manufacturing facilities. And we've got 480 acres of land which gives us very strong clay reserves across the brick making sites. And as I said, once we consume those, we tend to spin those off as land sale assets. You see at the left there, about 60% of our portfolio is what we would call premium wire cuts and then around 40% is soft mud.

And the right bottom there, you can see, and those of you who know us well, will recognize we've got a very long track record of being recognized by the industry as you can see on the page there, really recognizing the quality of the partners we work with and through those awards. If I can now turn to our overall commercial strategy on the next page. Very fundamentally, we've got a very broad portfolio of products, roughly about 180 in our core range and another sort of 120 plus, which we deem to be noncore -- and really -- that breadth is really aimed squarely at targeting the full market.

So for us, we talk about that being RMI, housing, commercial urban regeneration specification. And we try and ordinarily, in very broad terms to sell 40 million units, in-- 40 million bricks, I'm sorry, into each of those sections of the marketplace.

And really, that's because we get different pricing, different average selling prices across each of those end markets. And very simply, what we target traditionally as a business is to sell everything we manufacture. Uniquely in our sector, we sell almost exclusively through distributors. So that is brick factors like Bookability and Taylor Maxwell, EH Smith, but then also the national and then also the national merchants and regionals and local in terms of family owned as well.

And again, we see that as being the best model for us in terms of being able to reach that sort of full market coverage. That model allows us also to really look at our key performance indicators, which is order intake, and their order intake through that distribution model allows us to really take some short- medium- and long-term decisions around the direction of the business.

As I talked about earlier the extensive premium product portfolio is really focusing on high-quality bricks and premium centric products, but also underpinned by what we see is our best-in-class service levels. And finally, albeit as I'll come to talk about because pricing has been very, very competitive, certainly in the first six months and actually in last financial year as well. We still do see ourselves at a premium to the market. And what that really means is our average selling prices due to the nature of our portfolio where it's aimed, we try and keep it as a premium to the broader market.

Just turning the page, we do target long-term sustainable growth, and we've got the sort of the 8 pillars just in front of you on the page that we really utilized to target that. I talked about our diverse end markets and the broad customer base. We talk about our order book and our -- and that opening proposition at both the interim and the full year. And really, it's that quality, the breadth of that book, which underpins what we're talking about as our guidance at each of our announcement cycles.

You'll have seen if you had a chance to read the RNS this morning, -- we talk a lot about appropriate pricing to support customers and order intake. And really, what we're saying there in a very competitive market environment, we look to do what we can to help our customers. We do what we can to help our customers as well in terms of protecting that order intake and that cadence of the order intake, which allows us to have that broad order book, which allows us to then give us the visibility over the short to medium term in terms of the likelihood of the call off and the dispatch volumes and how that then converts to revenue.

Below the top line in terms of our cost management, always have been and we'll continue to focus on the risk management, risk managed approach to our input costs. Again, those of you who follow us very closely will know, that the biggest number for that, certainly since 2022 has been our utilities proposition. We have got 70% hedging in for this financial year. And we've got positions in for next year.

And if you joined the call in March, you'll know that we deliberately targets at a slightly lower profile as we saw some more opportunity in that day-ahead pricing, which has been coming through so far this year. But we stay very, very close to that as you can imagine in terms of the utilities position. And actually, this is one of the things we're seeing is a little bit of an opportunity because broadly speaking, FY '23, '24 and our expectation of '25 are that actually because of the nature and how we hedge we've managed to insulate ourselves from the real upper end of that risk profile, certainly in the sort of 2022, started in February. And that's been a successful approach.

But we're finally starting to see a little bit of stability potentially in the market with pricing settling at a new norm based on a sort of stable production coming in from the U.S. from the shale gas industry as well as some of our partners in Africa and Qatar. Ordinarily, and I will come and talk about this operational leverage -- operational leverage in terms of ensuring we focus on our normalized cadence of manufacturing output to deliver the $120 million bricks is a chief importance to us, and that remains so.

And alongside, you would have seen that we focused again on further integration of our prefabricated fast fee business. And again, really generating more from our own sites is very much a singular part of the strategy. All of that, and a lot of that decision-making gets underpinned by the strength of our balance sheet. That provides us with the flexibility to pursue the capital allocation framework, which is on the next slide, which we first launched in September, and we really did enhance our commitment to that in March.

And that strength of the balance sheet is really underpinned by delivering stable cash flows. And overall, look, we fundamentally believe we do have quality fundamentals in our business, which is and has been severely tested by a macro market, which remains 25% below its peak. So this strategy is being very heavily tested by a broad 25% decline in brick dispatches since the end of 2022. Having talked about and reference capital allocation framework, if I now take that as the next slide to talk to you about.

Very sort of top of the page, you can see the capital investments to deliver our strategy is hugely important, and that really does start with maintaining well-invested and efficient manufacturing sites. And for 2024 and certainly, we're expecting to do the same in 2025, we will be ahead of the run rate that ordinary run rate we look to deliver is broadly in line with our depreciation cadence, which is about GBP 4 million of reinvestment through our sites.

And please do remember as well, we have a significant cost, which we take through the P&L, which is the repairs and maintenance. So we only have to talk about these items when they are capital enhancing, either improving efficiency, sustainability or output. The singular aim, as I said earlier, is having the right facilities to maintain a premium product. And as I say, that has to go hand-in-hand with a premium service. Middle of the page, we've really simplified the narrative that we talk to our shareholders, and we absolutely recognize the importance of regular returns. You'll have seen this morning with the declaration of a 1.6p interim dividend.

It was in line with last year. We have taken the word progressive off our dividend, but that's because we want to recognize also that some of our shareholders are also highly supportive of the buyback program, which we first launched in November 2022, and we ran through September '23, but we were very pleased to relaunch that in April following the feedback that we had from our shareholders, some of whom gave feedback on this very call back in March. Underpinning all of that, again, is that maintenance of the strong balance sheet.

And really, the key point to take away here is that we're using the focus on the working capital cycle, not really to build up cash to the same levels we did in 2023 and 2022, but to utilize that either through enhancements of our facilities but also to support those regular returns to shareholders. Right. Turning to the main part of the call really, which is the coverage of this morning's RNS. In terms of the interim highlights, we've talked about this as being a resilient performance. And look, I can see from the headline numbers on the surface, it may not appear as such.

But it really is -- and I'm repeating myself here, but you can see in that second bullet on the page that being 25% below our peaks in terms of brick dispatches is a significant change. And we've now been there approaching our third year because I don't see that gap closing hugely by the end of this financial year based on the RNS statistics that we receive. So that's why we talk about resilience.

It's really about continuing to focus on our strategic initiatives alongside manufacturing high-quality products, looking after our customers, but also being very mindful of those returns to shareholders. So within the numbers, 1.1% increase in revenue, that was really underpinned by a 3% increase in U.K. dispatch volumes. And offsetting that number is what remains a challenging market in Europe and really for our European operations for Floren. What we normally look to deliver is half of that product that's manufactured would ordinarily go to the U.K. market and half of that product would go to our continental market. So two things really here. The architectural specification space, really thinking about the high-rise in London and the Southeast, that's really been greatly impacted by what we're obviously not disputing the rationale behind bringing in the new regulatory environment.

But the sort of Gateway 2, Gateway 3, if you've heard about them, they are the new compliance regulations that move forward the [ ONS ] on specifiers architects to do a lot more work ahead of construction in terms of really going to much greater detail about what they're using within their expected build profile. And what that's done is essentially it's gummed up London and the Southeast.

And we are seeing a little bit of that unlocking as we look out into Q4 and into FY 2026, but that's been a significant impact for Floren. And then Floren itself has declined again in terms of planning approvals -- and we watch that space very, very carefully as we move forward. So our ability to sort of outperform that market and what do we mean by outperformance? If you joined in March, you would have heard me talk about dispatches being sort of 12% below their peak.

Those dispatches are now sort of 8%, 7% below their peak. So you can see we are holding that market share and continuing to sort of try and steadily improve our own position within what remain very difficult markets. So that's really where that narrative around outperformance comes. But if you pass down into our gross profits, you can see that those metrics have declined below that sort of modest uptick in revenue. And really, what I want to be very clear about here is that's sort of as a result of an extended shutdown at our Carlton facility.

And just to remind you, we started the year with Floren, Michelmersh and Carlton all closed for planned capital enhancement works. The challenge for Carlton was we had a 2-week extension beyond our expectations. And unfortunately, that did knock our ability to manufacture and then dispatch those products and also then delayed that recommissioning phase, which absolutely is part of the course for such significant improvement works. We talked about when we released our AGM trading statement and our expectations then as well were that we'd be able to claw that back. But we haven't been able to get the outperformance that we were targeting.

But really looking into H2, our expectations and our guidance has very much been built around normalized cadence returning really largely across the group, apart from Floren, which I'll come to talk on in due course. So as you'd expect, that has gone down into our EBITDA metrics as well. So EBITDA of GBP 5.9 million below the last half year comparison of 7.2%. And look, we do expect those margins to strengthen. As I said, we very much see some of those impacts as one-off in the first half. So despite these challenging markets, we are still in a net cash position of GBP 1.5 million.

And look, I'm delighted to -- delighted to announce this morning that HSBC have once again renewed their RCF facility with us for a further three years with two 1-year extensions. And their support is hugely appreciated and they can -- it's clearly testified-- testament to the fact that they remain hugely supportive of the business. But most importantly, that financial capacity and reach continues to underpin our financial resilience and decision-making as we look to deliver against our capital allocation policy.

I've talked already about the highly competitive pricing environment. I'll come on to talk about that in the context of what that means for production volumes, but it is competitive, and our job is to continue to respond to that, making sure that we do also very closely monitor that premium market position, which is very important to us. Bottom of the page, delighted to declare a 1.6p interim dividend. And again, I really hope this does demonstrate the Board's confidence in the outlook of the business.

And again, reiterating that real importance that returns to shareholders are a singular importance to us. Turning the page to operational highlights. Just that top bullet there, when we talk about sort of normalized manufacturing volumes and order intake running ahead of that, what we're sort of saying is if you take that GBP 120 million of normalized manufacturing, anything above that number, we would talk to order intake being ahead of that. Now ordinarily, we would expect to get 10% degradation in that order book.

So we build that in. And so this is -- what this is saying to me is that there is opportunity there. People are keen, but there are lots of other reasons why there are some of these delays in the market, some of the conversions, some of the delays in call-offs. And so it's an important metric for us that says, look, there are green shoots in the market, but we are still exposed to some of the sentiments, which I'll comment to talk to in a bit more detail later.

I've already talked to that second bullet there in terms of the mid-single-digit increase in U.K. dispatch volumes. And again, that was within our expectations given the visibility we had in our order book. And look, that stability in our market share, again, really does demonstrate the quality of our customer relationships and really how our products compete in the marketplace. The Carlton works, if we think when we acquired the site in 2017, whilst we had done capital improvements works, nothing like the extent to which we ended up doing Carlton.

And again, if you have dialed in for the full year, you'll remember me talking about the fact that we pulled this forward from 2026 because we had an opportunity with where the market was, with some of our inventory on the ground to try and get this done in a nice moment of time that could work very well for the business. It is just disappointing we did have this delay that has unfortunately dragged on H1 profits. I've talked about the active management input costs and those other elements within the fundamentals of our cash flow really supporting those manufacturing investments.

And then just at the bottom of the page, just to reiterate, we actually recognize there have been some change in leadership in the organization. Peter Sharp has stepped down from the Board this morning. But listen, Peter has been a huge supporter of mine. He's been a great support to the Board. He was joined CEO from 2016. And the most important element that I see in the announcement this morning with regards to Peter is that given his 40 years of clay industry and clay experience, we're very pleased that he's staying on with us as an industry adviser to the Board.

You'll know about my own change stepping across from CFO to CEO. And then clearly, we've had the opportunity to welcome Rachel today on her first day, which is a great opportunity for her to meet shareholders, and we'll continue to do so in the coming days of the roadshow. Moving on to our sustainability highlights. Look, we don't get as many questions on our ESG metrics at the moment. But look, I'm here to tell you that we still see these as hugely important.

We continue to very actively monitor our 17 nonfinancial KPIs, which those of you who read our annual report and accounts will know and will know well, and we are very conscient about delivering them and delivering against our net zero 2050 goals.

And we once again really focused on that incremental process in the first six months this year. And a lot of that has been now gearing up and sort of supporting our internal talent with critical third-party external consultants, who can challenge the business, but also to add critical independent thinking with regards to some of the major decarbonization projects that we're looking to prioritize over the next decade.

And we'll have much more to talk about with that as we move forward to the annual report and accounts in March 2026. But the very first bit of the project that we're focusing on is really optimizing the data that we are getting from some of the capital improvement programs that I've mentioned earlier. So it hasn't just been about thinking about the throughput of raw materials and making bricks more efficiency. It's also about information we're getting from the kilns as well to work as smartly as we can and really work on efficiencies through our cost base as well.

And then at the bottom, you'll know that we install solar panels of Blockleys. We installed solar panels at Floren and quite naturally, Freshfield Lane on the South Coast, lots of lovey sun. We are also now going through the planning process, and we expect to hopefully get that all over the line within our next financial year. And we continue to see renewables as an important part of our decarbonization strategy. I was really now proposing having given quite a lot of time to the specifics of the financials.

I'm sure we'll have some more questions on those. But in the interest of trying to make sure I give plenty of time for questions, I was just going to sort of sweep through to Slide 18. So if you're following separately on the screen, which is the sort of starting with the slide that talks about our U.K. housing dynamics. You'll all read a lot of the narrative, and you'll hear a lot of the sort of the thought leadership that's in this space. But the fundamentals of our business and our sector do remain highly supportive. And I really must include Belgium in this.

Whilst everyone knows about the 300,000 new home targets in the U.K., Belgium has its own 70,000 new home targets in its own country as well. So in both of our domestic markets, we are somewhere in the region of half to 60% of those targets. So that is a huge growth area for us to move into in terms of really helping and being in the right place with the right sort of manufacturing cadence with our facilities optimally positioned that when that does really start to turn, we're in a good position to do that.

Mortgage availability remains good. We would have wanted interest rates to reduce more quickly, but mortgages are available. And look, the inflation is remaining ahead of Bank of England targets. And look, we are all watching some of those key indicators. And look, the sort of the inflationary dashboard is looking amber again in terms of potentially, certainly in some sectors, potentially going out 6% again. And really, I'm thinking there about food prices. And of course, all of that feeds into cost of living and some of the decision-making that some of our end customers will be making.

But set against that, again, if you look longer term, if you think about the south to north, and I'm really talking about this globally, immigration, the rise of single dwellers in homes, the population aging, it really, it does all point to the fact that we must need to build houses. Underpinning all of that, as you would hope, is the U.K. government and the Belgian government, which are committed to reversing those declines, and they are.

There's not many days that the government are not really verbalizing their focus on this. And I think this is very keenly felt through trying to improve the planning process, which from our perspective, we see as a big part of this. A lot of the delays at the moment are certainly in London and the Southeast, as I mentioned earlier, that we are just gummed up and we've got to get through this phase of the change in regulation before we can start seeing some of those developers, which are keen to move forward those projects, to start to get those happening.

But that also is in many housing developments up around the country where there are a lot of special interest groups who are able to slow and control. And I think the government are very focused on ensuring the challenge when it's appropriate is afforded, but also looking at trying to smooth some of those processes. The other interesting bit that we really are following quite closely is there's an awful lot of talk around really focusing on the quality as well and the facade and the feel of the built environment.

And a lot of that we see ourselves with our premium offering, and I really am focusing the premium now on aesthetics, really playing very well with a lot of the narrative and you think about a lot of the new towns that are being mooted.

So we're watching that with interest as a great opportunity. And just at the bottom there, RMI remains a very important space for us. Brick is still a hugely favorable material of choice for high-rise cladding, remedial work, specification projects, but it also works very well for our built environment. And you look back to Georgians, the Victorians, then the Edwardians, we've got 200 years of brick representing a hugely important part of our built environment, and we very much see the importance of that continuing.

Turning over the page, current trends. And this is where we remain watchful. Those of you who've seen the presentation will really know the importance of supply and demand. Those top two lines of the light blue, I know that's sort of quite difficult to see and the orange. The light blue has just moved ahead again of the orange, which is it suggests that production has indeed moved beyond dispatches. And what that really does is you can see on the top right there, inventory volumes on the ground at or around GBP 500 million.

And at the moment, we've seen that sort of GBP 10 million increasing each month. So we've got to be really watchful there. And that's why I'm trying to be very clear and transparent with you that headline pricing is where I see our focus and really staying very close to that as the competitive position stays very active amongst our peer group who are equally trying to keep their own order book in good shape. So we are -- and can't hive the construction activities remain below the 2022 levels. And as expected, and as we've always been really clear, European imports are again staying at that 20% level.

So as we've always said, the U.K. market is still keen to bring in those soft mud products from the European Union, and they remain a competitor for us, certainly from our South Coast facilities. But look, longer term, as I've just said on the previous slides, the fundamental market drivers really are encouraging for us. Turning over the page and still very conscious of time and trying to leave good space for questions. We haven't updated this because we try and update this annually when we've got a clear picture. Otherwise, I'm extrapolating on sort of half data at a half year point.

But if I do extrapolate, we are looking at a modest pickup to that GBP 1.4 billion of dispatches in the U.K., and you can see some of that coming through within our own first half improvements. But I think it remains a competitive market. And whilst there are some green shoots, the market is just quite unpredictable and quite undulating. So I can point some positive elements and some more challenging elements. And again, really that is a London Southeast focus for us.

And brick works wise, we're in a period again where some of our peer group are bringing capacity back into the market. We don't have total clarity around all of those. But as you'd expect, we stay very close to them in terms of some of the more impactful to us than others. So -- and really, that picture is the same in Europe. We know factories have been closed, factories have been mothballed. So we are going to be in another period of time before we get real clarity about what that new steady state looks like in terms of U.K. and Benelux, both manufacturing and then normalized dispatch volumes.

So we'll sort of move on from that slide given that context. And then just finishing on the outlook. Yes, look, starting -- the summary really from our industry perspective is it remains very, very competitive. The market remains challenging. We remain 25% below our recent highs of 2022, and we remain very watchful of consumer sentiment and caution. But -- we are critically short of housing here and on the continent. And then sat alongside that, brick continues to be that facade material of choice. And then with my brick making side and my brick making hat on, there are very significant capital-intensive and complex barriers to entry.

So our dashboard is mixed, but I'll come on to now talk about Michelmersh. And for us, as a group, it's about diversity. It's about diversity of end markets. It's about diversity of our product base. And that really continues to underpin our expected performance. We really are very focused on maintaining a well-balanced forward order book. We are, as I said earlier, taking difficult decisions around pricing in a very competitive market to support that intake. But we are seeing resilient momentum in our order intake.

And as I said, we are seeing that still running ahead of our manufacturing volumes, trying to derisk some of the major cost base elements, which I've talked about with utilities. And that strength of the balance sheet is singularly important to us as it does, as you can see, continue to underpin our investments in our facilities and as well that planned cycle of returns to shareholders through the interim dividend announcement this morning for January next year, but also the share buyback program, which continues to run at the moment.

We have taken that decision given where Europe is to temporarily close manufacturing for Floren in Q3, and we very much hope that, that and expect that will open in Q4. And as ever, we have inventory on the ground and plan for very, very minimal disruption for our customer base in terms of the timing of those call-offs. So in terms of those closing points, the absolute point of inflection for our macro market, I can't give you that certainty and that point today. But as I say, those medium-term fundamentals are positive.

And for us, it's really been about making sure we are again using the last six months, really well positioned such that we can be in the right place to respond well, and that's with inventory on the ground. That's with all capital improvements completed. That's with our operational cadence within our expectations. That's within -- with fast speed further integrated into our business and with a real focus to commercially integrate that as well so that we start to take that away from that new build focus across our traditional end markets from the brick side.

And so with all of that and with some of the half 1 challenges and notably really around focusing on Carlton within that, clearly, the Board has focused around guidance being in line with FY '24. And we have said today, we are then looking to return to growth for FY '26. So with that, and thank you so much for your patience. I know it's a long time just to listen to one voice. I'd like to very much open up to questions, which I know we've had some through already, which have been presubmitted.

Thank you all. We've had a number of questions presubmitted and submitted live. The first one being, is the dividend safe? And do you plan to increase it?

Is the dividend safe? Yes, I mean, we absolutely know that dividends are hugely important, which is why we have once again announced to 1.6p it will be the last thing that we would want to compromise on. But as you can see, we are also putting our resources to the share buyback program, which we equally know is an important dynamic of the shareholder returns.

I think what we did was the capital allocation framework is what we did, we took were progressive of dividends because we wanted to give both of those options to shareholders and where we can do both, as you can see, we absolutely will. So whilst we don't want to reduce that dividend at all, it may well be that it's in a steady state while we look at buybacks -- but equally, the Board stays very, very closely attuned to our shareholder base, and all feedback is always very much appreciated. And which is very much why we deliver the targets in September as a sort of softer launch and then March to really critically commit as a group to that strategy.

But yes, we absolutely know it's hugely important to our shareholder base -- and so as I said, we are very pleased again to commit to January's dividend with the interim declaration this morning.

Has there been any change in customer payment behavior given the wider economic backdrop and is bad debt risk increasing.

It's a good question. I mean first and foremost, going on the longer lines of what I said about really monitoring the risk base, we do credit insured. So that's a really important point that and that please don't take that comment as bad debt risk is rising. We have always credit insured even during what we can talk about is very good years for brick dispatch volumes. We are very, very fortunate that we stay very, very close to our distributors, many of whom have got strong balance sheets themselves in the manner in which they run their own operations. So no, I mean, look, I'd never be flippant to say that we're absolutely agnostic of the risk to bad debt.

But all I can say at the moment is the experience and the narrative and the terms in which our customers are paying us, there has been no change in behavior and look at that deep and lower relationship it is hugely important to us. And it goes right from us delivering and doing what we say right the way then to our customers paying in line with the terms that we've agreed with them.

Thank you. Are rising energy and labor costs hurting profits?

So there are two very different questions, actually. I understand that the overlap really with cost of production. Utilities our experience costs within our sort of cost of production through '23, '24, '25 has actually been quite static because if you think about the way that we layer our sort of strategy to derisk utilities pricing. What we do is we tend to look out over four years, and then we lay out in forward positions against our expected demand curve.

What that does is, it derisks the outer limits, but it also then removes particularly when we're at very high levels of hedging because we have to be because the market was just so volatile. So what I was saying earlier about the utilities, where there is quite rightly, a lot of narrative around the thought leaders who are guiding towards the consumer pricing, what we're seeing as a business because of that forward demand, we're actually seeing a bit more opportunity.

And if you remember when I talked to you in March, we deliberately kept open some of the day-ahead pricing because we saw a bit of an opportunity there. And actually, some of that opportunity has come through across the first sort of eight months of trading this year. And we've got what we see as steady state pricing in for next year and the year after. So actually, we're seeing that as a bit of an opportunity.

On the other side of it, with labor, I think the cost of living allowances are they are something we've been very focused on, you'll know that we put through two mid-single-digit increases for our people. You'll know that the national minimum wage has been really running ahead of those numbers for really quite a few years now. And look, it goes without saying, we absolutely do pay everybody above that level. But what that does is it puts pressure further up the wage and salary structure.

So we stay very, very close to it, which is why we as a business are focused on other areas that we can deliver cost savings, hence, the focus on rapidly trying to integrate elements like fast speed, reducing some of those external overheads through lease structures through some of the efficiencies you lose with stand-alone sites through leveraging of our high quality initial structures that we have in parts of the business and then they come with difficult decisions for people who aren't able to relocate with us, and we're very aware of that.

So the cost of living allowance increase is something we're very focused on utilities. We're seeing a little bit of opportunity.

Thank you. Are your factories running at full capacity? Or do you have spare room for growth?

Yes, good question. And I think for you can see, I've done my absolute best to answer quite a lot of that. If I look back into 2024. And really, we've got a 12-month program, a very significant investment, which will be probably GBP 3 million to GBP 4 million ahead of normal run rate, if you think about that GBP 3 million to GBP 4 million that we're known for in terms of the annual investment cycle.

So Floren last year was closed for three months. Carlton, two months and this year, we started with Carlton and closed for another month and there's a recommissioning period, which I talked about at the beginning of the call. Floren, again, was closed in January. And as I talked about Q3 with the expectation of reopening for manufacturing in Q4. And then Michelmersh was closed for January and February, again, a very much planned improvement activity. So we haven't been at the GBP 120 million really since looking back into 2023.

So yes, we have got growth against that really because we're targeting getting back to that normal cadence. But also, what I would say is that strength of the balance sheet has allowed us to invest in inventory. And so that inventory also gives us that opportunity to take advantage of that near-term opportunity as we see it.

And so we still see that as the right investment to have those rigs on the ground. And the other side of it is that then helps nice long runs for our production facilities to minimize some of the changeover because 180 products there's quite a lot of changeover if you're doing that over a short period of time. So having nice long runs, well-powered production runs, all helps the efficiency of our operations.

So yes, there's opportunity. And we are very much targeting that steady state as we look forward.

How has stock management evolved given softer markets? And is there a risk of excess inventory building up?

Yes. And I think this is where the point I was making, when we planned for having stock on the ground, it was very much because we wanted to minimize the interruption for our customer base and largely, and I've been very open and transparent around Carlton. And largely, we were quite successful with that. Certainly, at Floren and at Michelmersh they were very successful.

We do have -- the sort of the recovery in the market has been more skewed towards wire cuts actually, which is probably the first time that's been the case. So our wire cut stocks are actually quite low, and that probably helps to explain some of that ability and challenge for us to meet some of those opportunities certainly in -- and actually, in Q4, if you look back on our half year -- our full year materials, I'm sorry, last year, but also in Q1 this year, where we've had a bit of a missed opportunity because we didn't buy up the stock on the ground as we hope to.

And planning over a 3-month period is very, very difficult. So at the moment, we've got more stock in Floren, a Freshfield Lane. And again, I'm going to cite the sort of the impacts of the planning through London and the Southeast. But as I say, we monitor it. We monitor it very closely. It is something we take very, very seriously, but we think still is the right thing to do, to have that product on hand. Because we know that if that does loosen up and free up, there is a demand there to want that sort of almost next-day delivery.

And I've always said that we've been very, very clear, the best price we get as a business is on the short-term order fulfillment because they tend to be more relaxed around pricing structures. So yes, we stay very, very close to it. It's been a challenge managing around. We are very aware of the risk. But as I said, at the moment, we still think it's the right thing to do to continue to invest in those specific plants where we do have a bit more stock on the ground.

Thank you. You've mentioned challenging market conditions in Europe. Could you expand on whether that refers to volume, pricing or macroeconomic pressures and where you could see traction or recovery?

Yes. I'm afraid it's all of the above, actually. The Belgium market is a different market because they don't have the same national volume housebuilders that we do in this country. And they are all listed. So they're all on that 6-month cycle and more often, if they're doing trading statement updates. So you as active investors who monitor the market, you will be very live to the dynamics there.

Within our Belgian space, they tend to be smaller architecturally specified, lower volumes, more individualistic. And so our ability to look through the market there is more challenging. And as I say, for Floren, please do bear in mind that we do target exporting that product into the U.K. as well to try and drive that best price for our Floren portfolio and as well because it's a very desirable portfolio for our U.K. customers.

And we've done well to build in ordinary circumstances, a good customer following for it. So yes, I'm afraid it is macro. They themselves talk to, as I think I said earlier, 65,000 to 70,000 homes newly constructed latest [indiscernible] statistics give them a run rate of just below 38%.

So you can see that they are also macro challenged. But the same read across in terms of integration, new homes, aging population, South to North, all of that applies to Belgium as well.

Thank you. Following the share buyback activity, specifically the purchase of 30,000 shares at 101p, does the company expect to accelerate buybacks or retain flexibility?

Yes, a very good question. I mean we'll retain sort of flexibility. And again, if you are able to turn back and look on the website, the presentation materials, we've always said that where the board see opportunity and of course, we've got the availability of surplus scratch to do so. So they are still important ratchets. But we want to show all very closely.

And also, please worth bearing in mind that we are hands off. You will see in the RNS announcement that went out in April. We do hand over responsibility to Canaccord to run the buyback program on our behalf. They are capped at daily volumes and look at day like today with much higher volumes. But you think about the normal cadence for us as a group, we'll see anywhere between 50 and 200,000 on an ordinary volume day. So when you see 30,000 going through, often the cases, we may have reached our daily capacity.

So it's really dependent on a number of factors. But please do bear in mind, I'm not the one controlling that. The Board are the ones who have said, we are happy to go up to GBP 2 million if investors are looking to sell. It's a room to exit the market for them. So do try and put all of those factors together when you see those daily announcements.

Thank you. How exposed is Michelmersh to new build housing compared with repair, maintenance and improvement activity and which segment is showing more resilience?

Yes. So those are two buckets are the ones we talk about most readily and really a little bit different. I'll come on to the RMI space, it's an interesting one, but we try and do 1/3 and 1/3. So we do have a lot of new homes that we do and sort of regional house builders who we work with as well as the merchant market [Audio Gap] the brick factors, they remain hugely important to us, and they remain hugely important to us.

And RMI has been okay. And with 3% dispatch increases, I hope you might mind me using okay. It's okay, and it sort of held up all right across the country, but we just are still really close to it. It's still really very careful to monitor it because it's the one area which can get turned off again as quickly as it can get turned on again in terms of a lot of that customer sentiment, and the new build market, again, I'll separate London and the Southeast because more of the activity has been in the other regions.

And a big totally transparent if you follow some of the other announcements, some of the sustainable housing, which we do -- do some work with. And those of you who follow us closely will know that and also some of the volume housebuilders have been the parts of the market who have seen a bit more activity.

So while we, as I said, talked about our performance, and I'm really measuring that in terms of bricks dispatches, our end markets have been okay in support of that outperformance. And it's really around some of the foreign markets, some of the developer space in and around London and the Southeast. Other parts of the market, we've managed to continue to be resilient through.

Management notes that order intake is ahead of normalized manufacturing volumes. Can they quantify how much the order book exceeds typical volumes and whether that implies H2 revenue will exceed H1 levels?

Hopefully, you can see on the guidance that was released this morning. I hope we've been very clear around our expectations at the end of this year. And you can see what we've done in the first half. So I'm not going to address the revenue question ever more directly than that sort of mechanical process. Look, I think, again, there's a commercial value to us being to open with regards to where our order book and order intake are, which is why, look, it's not guarded, but I hope you can see with the clarity in which I talked about the business in and around the GBP 105 million of manufacturing cadence and the GBP 15 million in Europe.

That's how we're measuring that metric. So see it as ahead. But as I say, we are in a critically competitive market space at the moment. So we don't really talk about it any more than saying ahead or behind?

Thank you. The gross margin contracted from 36.2% to 33.6%. What were the main cost pressures contributing to gross margin decrease?

Yes. So again, this is really around top line pricing. Think about Floren and the impacts there. It is still 10% of the group Floren, and we've had some questions through the day about how important Floren is? It is very important in terms of being able to move some of those numbers. And if you look at it in terms of the gross margin, it's 800,000 that explains some of that margin drop off.

But look, the element here is really around some of that shortfall in Carlton and carrying some of those additional costs. But we've also got some of those other elements, which we talked about there with regards to cost of living allowance increases and also some of the specific one-offs around national insurance contributions, which, again, we try to cover when we're coming through.

And really, where we try to put through that price rise. And look, we didn't do that portfolio wise at the start of April. Some of that has gone through, and customer -- our customers have been very understanding. But there are other elements that looking at that sort of appropriate pricing we've had to take some decisions on. So it's really a factor of quite a few outcomes, which I hope you can see, I'll really try to address through the presentation.

Given revenue edged up only 1.1% year-on-year to GBP 35.8 million, while adjusted EBITDA fell 18.1% to GBP 5.9 million what specific market dynamics in Europe versus the U.K. drove this divergence between top line growth and margin compression?

Yes. And look, I hope I've addressed that point. A sort of further 20% decline in our burden activities. That's a very decent number for us to manage around. And as I say, we are still trading in very competitive sort of top line targets.

So look, please do see the impact of some of those one-offs in the first half. I do expect margins to strengthen across H2, and as I say, our attempt this morning with the RNS has really been to try to explain where Carlton, which I hope again, and I would emphasize again, has been the most material impact for us, but also the fact that Floren, a 20% drop-off is meaning for us on that if you look and read across that 10% revenue and profitability across the group.

Thank you. Have you fixed energy costs to avoid price spikes?

Yes. Again, I hope you will agree that I've covered this in a lot of detail, that fourth bullet on the sort of Michelmersh outlook on the page there. As I say, it's about trying to take the opportunities for the day ahead and again, taking opportunities where we see them in the forward market and that we really try and stay and continue to stay very close to that. So yes, hopefully, you feel that's been well asked.

Thank you. Are customers asking for more eco-friendly bricks -- and can you charge more for them?

Yes. It's our own hybrid project, which was very successful in terms of proof of concept and a full substitution for gas in the market and utilizing hydrogen. That was an excellently successful case study. And if you've been to the science museum and hopefully sat on the bench there, you'll see that it's there as a very successful example of what we're capable of as a group and to be honest with you as an industry as well.

Yes, we do get questions around that. But equally at the moment, the market is very focused on price, and that is really what is driving a lot of the narrative with -- certainly with our end customers. But as I said on my sustainability slide, I'm not going to turn my back on us really focusing on our carbon and decarbon initiatives, I should say.

And so yes, we expect those questions to become more full again. While some of those fundamentals that we've talked about at length really do start to come through to fruition. So for us now, it's about making sure that, that sort of that hydrogen project and proof-of-concept is sat alongside other initiatives that really help us to take forward meeting some of those niche, but they are there, and I'm sure we'll be growing customer queries.

Thank you. Could government housing plans boost demand for your products?

I can answer that in one word and just say yes, but I won't be that flipping. We would like to see Help to Buy. We see there's an awful lot of consumer enthusiasm to get on the housing matter. I think Help to Buy as -- the right use. It often has had a back rotation, with some executive incentive schemes. But look, it's really very helpful because there are an awful lot of responsible first-time buyers who will approach to taking on their first mortgage with a really high degree of responsibility.

And so we think there's a lot of value there for them. But I think in the absence of that, it is all about trying to improve the stability of the planning environment our sector needs just that consistency. And I think that's really where the government can help us by having a stable regulatory environment, which we can all work to, but also the planners can work to. And then I have no doubt that we are going to be in the right place to step up to help them, which is all we want to do.

Are you actively looking at acquisitions to grow the group further?

As part of the capital allocation strategy, we were very open and said that M&A was noncore for the group because we were prioritizing those shareholder returns. And again, just to play back the sentiment that we said there, I don't think that's turning our back on. And it is very much about if the Board sees opportunities, the Board will act -- but as I say, we can see that there's a lot of opportunity for us to continue with their shareholder returns and prioritizing those alongside what we see is still an exciting growth story for our prefabricated business.

We acquired that with a very new build focus, and we want that to be a business that can really address the full spectrum of the market. So we see a lot of our sort of organic opportunities. But as I say, just finishing the Board would, of course, act if it sees something that's interesting to move on.

Thank you. The next question is, congratulations on the CEO appointment. What are your priorities now?

Thank you very much. Yes. I mean look, I'm a huge support of the business. I was delighted when I was asked to take the role and obviously delighted that Rachel is now joining and taking over from me as CFO. I think -- I hope it's coming through very, very clearly that we've been very busy in terms of leadership, in terms of really looking to deliver some of those capital improvement programs, focusing on integration. And we have actually, which we haven't talked about usually really been focused on leadership throughout the group as well.

And so for me, at the moment, my steady status is getting us to that steady state to deliver some of the fundamentals, which you can see, and hopefully, you can think that I'd be very open about this presentation. We want to get that steady state to give our people the right opportunities because growth in FY '26 only gets delivered by us doing the basics well.

And then alongside that, we then focus on the commercial opportunities really taking further steps for fast speed and then really delivering those cash flow fundamentals to really then prioritize some of those shareholder returns. So the capital allocation framework is really one that the Board is very comfortable and me as CEO today, standing behind. And look, we are, as you can see, committed to delivery against that.

Thank you. That's all the time we have for questions. So I would like to hand back to the management team for any closing remarks.

No. Thank you. Look-- thank you so much. I appreciate it which very difficult to talk to a presentation without seeing any faces. But look, thank you for your time today that we were really very keen that we really did prioritize this opportunity to speak to retail holders, nonholders people are interested in the story. And for us, the market has been difficult for quite some time.

And really the resilience of our business model, it is and continues to be severely tested we have very much focused on doing the right things to put ourselves in the right position to not just continue to be resilient, but to be in the right place to take advantage when the markets do improve as well.

So strategically, we focused on doing the right things. We have focused on really making some of those decisions that can improve our cost position. And look, I'm very proud of our commercial team to continue to really work very, very hard to deliver on that dispatch our performance.

And look, I just want to finish by saying thank you for your time. It means an awful lot to me and to Rachel. And we hope to see you again in March.

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