Angling Direct PLC (ANG) Earnings Call Transcript

Good morning, and welcome to the Angling Direct PLC Investor Presentation. [Operator Instructions] Before we begin, I'd like to make the following poll. And I'd now like to hand you over to Steve Crowe, CEO. Good morning, sir.

Good morning, everyone. Welcome to our 2024 financial results and I'm pleased for the first time as CEO to present those results. And also, for the first time, we're going to set out our medium-term ambitions for the company. And again, we're pleased to do that given we've not previously entertained that. And for the first time, we're going to give some transparency over the way we see the future development. The headlines. So for the 2024 results, we delivered record revenues and again, strengthened our EBITDA margins and our cash position and executed our strategy of taking market share and underpin that by continuing to invest in the business. Particularly pleasing is we've reinvigorated the U.K. growth. Last year was relative -- the 2023 year was relatively soft at 1.6%. We're really pleased to deliver 9% growth in the U.K. business in the 2024 year. That was across both channels, stores and online. The online business returning to growth with previous year where we regressed. And again, that was a particularly strong performance at 11% growth. In Europe, we've made tangible progress in a challenging market. We've closed the gap on the U.K. trading metrics and materially reduced the drag on the group EBITDA. In total, for the whole group, we strengthened the margins, the gross and the operating margins. And despite well-publicized headwinds on theft, we've continued to move the overall gross margin percentage forward. Operationally, our key success has been around the deployment of our MyAD, which is our repeat purchase and loyalty offer. Again, at the period end, we had about 220,000 members of that, and I'll cover some more detail of that as we move further through the presentation. As I said, for the first time, we set out our medium-term objectives for the company, and I'll just cover those in a little bit more detail on this in the next slide. The U.K. business, we've now got a clear flight path to move that U.K. business to over GBP 100 million of revenue. We had record revenues in the year of over GBP 77 million in the U.K., and we've got a strong pipeline of opportunity to develop that GBP 100 million progress. Against that -- we're setting out against that GBP 100 million, at least GBP 6 million of pre-IFRS 16 EBITDA. That's over 85% increase in earnings using the 2023 launch point when Sam and I engaged together in the business. A key component of that is the third objective where we are going to create Europe's largest fishing club using MyAD as a cornerstone of that. Again, I'll cover in some later slides how we're developing that further in this year. We've had a particularly strong start, as I say, in terms of membership and engagement from that. Fourthly, developing a sustainable European business. The European business, I said, continues to be a drag on the overall earnings of the group. We still see that as a key opportunity in terms of accessing a scale market that is equally as fragmented as the U.K. And to do that, we'll do that with our omnichannel approach, both stores and online, and I'll cover some more detail on that in a moment, how we're looking to do that. Objective 5, importantly, deploying the surplus liquidity on the balance sheet. Clearly, it's a suboptimal balance sheet as we sit here today. However, we have got some clear plans in terms of deployment of that cash. Crucial to recognize the deployment of that cash is additive to the GBP 6 million ambition that we've set out above in objective 2. Objective 2 can be delivered by a self financing itself over the medium term, the excess liquidity on the balance sheet today in excess of the minimum working capital requirement is there to develop a business beyond the GBP 6 million. And lastly, continuing to grow as the most responsible employer in the fishing tackle industry. We've made good strides in terms of employee progress -- employee engagement and progress in terms of other metrics around carbon intensity and other environmental projects that we're engaging. At the top of the page, just to give a little more color about the U.K., the GBP 100 million revenue, the way we're seeing that is roughly a 60-40 split depending on how the market evolves in terms of that engagement from the customer, be it digitally or physically. We haven't seen a drift towards the digital channel. If anything, the drift is back towards physical retailing, but we retain a flexible model in terms of how we can scale up and scale down relative to those sort of 2 channel mixes. But we do see it primarily being in the 60-40 blend between those 2 channels. EBITDA growth, the GBP 6 million, we see that sort of substantially indexing over the sales growth. Again, I'll let Sam talk later on about how we view that in year, but it's important to recognize how the EBITDA ambitions will substantially scale above those of the sales growth ambitions. Overall, that should deliver ex-cash, a compelling sort of U.K. return on capital employed that moves us comfortably into double digits. Europe, as I said, it's about delivering a breakeven position for Europe as quickly as possible. In 2025, we will have opened our first store in Utrecht. We need to take the learnings from that store, deploy MyAD into that store and then review the capacity to roll out that physical store and omnichannel offering more quickly alongside the progress we're making in our digital business, which again, I'll cover a bit more in detail in a moment. Lastly, the surplus cash above the minimum capital -- working capital requirement. Again, we got GBP 15.8 million on the balance sheet at the year-end. Our house view is we need around GBP 5 million of cash for a sort of flexible approach to our working capital, which leads over GBP 10 million of excess liquidity that we need to deploy materially into the U.K. business. That deployment needs to primarily focus on how we're going to move our own brand participation, be that within our own brand or more importantly, partnering with other brands from working capital restructuring and/or at the extreme paying goodwill to exclusively access those brands. Finally, we will retain a small element of flexibility around European deployment as the test and learn on the omnichannel approach develops over the next 18 to 24 months. For the first time, now we published those objectives. We've set out how we're tracking against those and we'll continue to do that at each of the meetings moving forward, so folks can see how we're reviewing our progress against each of those 6 objectives. You can read there on the screen how we're viewing it. We have got a strong flight path towards the GBP 100 million. As I said, our revenue CAGR, 12.6%, and a good pipeline of opportunities to continue to develop that. I think it's worth recognizing that won't be a linear journey. There are some things we're working on operationally that may accelerate that, and we may see some flat spots that then move up again as we develop those opportunities. EBITDA, again, 15.6% improvement on an adjusted EBITDA basis and an improvement in the EBITDA ratio, 550 bps improvement over the last 5 years. Again, we see a good flight path in terms of how we are moving towards that ambition. MyAD, 220,000 members, as I said. And again, 75% of our revenues are now being transacted by those members through that club. I've got a slide over the page where I'll just explain a bit more about MyAD in terms of what it is and how we're developing it. European business model, headline growth, 36%. We are pleased with that. We continue to balance sales growth with improvement in profitability. The contribution ratio, i.e., sales less variable costs improved 750 basis points, and we're closing the metrics on the U.K. business. And most importantly, the scale of the losses relative to the EBITDA profits of the group continue to move in the right direction with those dropping down to 35% of the group EBITDA from 53% a year before. Cash, we've continued to review how we're going to deploy that. I'll talk later on when I come to the FY '25 priorities, how we're spending some of that in the U.K. on an automated packing solution, that's a 7-figure commitment. And post year-end, we've completed 2 small-scale acquisition of single-site stores. Again, we continue to review in detail the supply chain opportunities in terms of working capital or goodwill deployment, and we'll look to report further on that as we move through the interims into this time next year. And Angling retail's largest responsible employment, good engagement in terms of store colleague. We've reduced our lever rate by over 3x year-on-year as we continue to focus on that employee engagement and a particularly pleasing point is the improvement in our carbon intensity ratio where we're continuing to focus on usage. And actually, we've dropped 14% despite continuing to roll out the physical estate. Sam? On this slide, we sort of pictorially set out where we are on MyAD. MyAD is a free-to-join subscription. It enables anyone who subscribed to access over 600 daily deals where there is preferential pricing relative to what a non-MyAD member would pay for that product. Some particularly pleasing statistics around how we've deployed that with sort of 70% uplift if a product within MyAD in terms of sales revenue and similarly around a 60% uplift in the cash margin we generate as the retailer. I think that's a pretty compelling proposition to the suppliers, and we continue to work with the supply chain to get them to engage in this. And we've had a real success this year, and for the first time, we've generated around sort of 6 figures of value from our brand partners paying for physical and digital space to support the MyAD proposition. Alongside that, we continue to deploy monthly money can’'t buy prizes, which are particularly engaging for the customer base, monthly giveaways and the exclusive MyAD deals and bundles, where we're primarily now running all of our promotional activity through MyAD as the test and learn on that has helped get the engagement in terms of the increasing numbers of customers who are looking to sign up to MyAD. How we're going to move that proposition forward later in the year is we are looking at how we personalize the offer of MyAD in terms of using the data points we've got from existing customer transactions and look so that we can actually target individual customer cohorts and then more laterally, individual customers with offers that are sort of contemporary to the way that they're approaching their angling. We're also looking at how we add, what we call sort of round benefit package beyond the free subscription item we partner with other organizations in terms of them accessing our database in terms of that number of customers and ancillary and products that they look to access as well. '24, we've set out the key things that we've delivered in '24. I'll not repeat. I've covered a number of them. On the left-hand side, the customer was primarily around the MyAD proposition that I've just talked about. And the bottom bullet there, we are increasingly focused on this development of new commercial marketing revenues by selling that digital and physical space and joining that up with MyAD. In the U.K. retail estate, we've had a very successful year in terms of maximizing any customer that comes to us. Our conversion rate in the stores increased by 250 basis points year-on-year. That was driven by a number of factors which we set out on this slide, the key one being how we've approached our on-shelf labelling, consistency of promotion and consistency of merchandising in the store through a technology solution that we've deployed, and we'll continue to leverage that in 2025. We're also particularly pleased to roll out the first time in-store services, where again, we've delivered a 6-figure number that is very supportive to the gross margin progression in terms of customers being able to access some services, reel spooling for any anglers out there. It's been a real success for us. The bottom point, retail theft shrinkage has been a challenge for us. That's widely publicized. It's not just a feature that's sort of only impacting Angling Direct. We've taken a lot of action on that in terms of the sort of protocols in term of shop layout, CCTV, customer protocols in terms of having a basket, but we also approached it from the flip side, which is ensuring that we pick up the gaps from shrinkage very quickly such that we can replenish and not have empty pegs where our stock system may have been telling us we still had one in stock, so we don't lose on both sides of the coin. U.K. digital, really pleased with the return to growth with a number of factors supporting that. We've had a point upgrade of our Magento platform, site speed and search capability. We've moved into some more sort of technology space where we've looked at our recommend and also bought where we worked with a third party to bring that in, in the second half of the year to look to drive items for basket progression. And finally, as the digital business in terms of the market, the digital market isn't scaling as we perhaps thought it might, there is more aggression in competitors who are digital only in terms of the way they approach their marketing spend. We've again deployed some technology solution, whereby we look to optimize our -- real-time optimize our paid advertising bidding campaigns. For Europe, it continues to be a challenging market. That's primarily from a consumer pricing aspect. There is more intense price competition. And so we've continued to balance our sales progression against our profitability and looking to maximize the metrics that we know that we can work on from our experience in the U.K. business, and again, deploy all those technologies that we've successfully managed to embed within our U.K. digital estate back into our European business. For instance, the German conversion rate is now within 2 basis points of the U.K. and NL and France is only 50 basis points behind. Average basket in Germany is now only EUR 1 behind where the U.K. is and the items per basket are broadly approximate with each other. About a 35% increase in unique customer numbers, so we'd look to scale our customers at the same time we're scaling our revenue ambitions. And our advertising ratio in Europe is down by 200 basis points year-on-year again, looking at how we deploy technology, look how we take the learnings from the U.K. business back into the European business. In 2024 January, we signed the lease on the Utrecht store, as I mentioned earlier on. We're now trading that store, and we're looking to do a grand opening of that later as we move through this month. The key on the European store is to look at the way what we can develop the gross margin of the business to ensure that, that gives us a sustainable platform to get confidence to trade out from that store and more widely develop the omnichannel proposition. Again, we see MyAD being a key lever of that. We'll deploy MyAD into the Dutch store and the Dutch website later this month. Commercially, we've done a good job in terms of -- a great job in terms of developing our own brand proposition. We've increased the gross margin on our own brand, around 16% year-on-year. We've increased the SKU count. And we're looking to engage in more categories where we're confident we can take share and provide a more compelling offer in terms of price versus value and economics back to our own business. Outside of own brand, we've made some particularly impressive progress in terms of how we've managed the working capital, focusing on availability through reducing the core SKU count down by about 16%, but at the same time, developing the [ bought-in ] margin. I'll let Sam talk to the margin bridge as we come through the financials in a moment. And finally, we are seeing more alignment with some of our key supply partners, where we continue to trade together to maximize the returns of both organizations. Communities and sustainability. We've covered the sort of the colleague aspect of that. Outside of that, we're continuing to work with Tackling Minds who are an organization who look to support folks who have some challenges in life through the past time of Angling. We sell all of their merchandise through our web offer in 14 of our stores, and that's returned about GBP 26,000 back to them. And again, we're looking at all the work we're doing with some of our brand partners around line recycling and other aspects of packaging, where we see we are able to sort of lead the charge in terms of having a more environmentally sustainable offer around the packaging of Angling equipment. I'll hand back over to Sam for the financials, and then I'll cover the FY '25 key priorities after we've done the numbers.

Thanks, Steve. Good morning, everyone. So just starting on the first slide there in terms of some financial headlines. You've got a bit more segmental detail on the next couple of slides. There are a few headlines just to pull out on this slide. Firstly, the U.K. revenue with growth up at 9% versus the previous year at 1.6% (sic) [ 1.7% ] in the U.K. So really reinvigorating that U.K. growth alongside the European sales growth of 36.3% with the standouts in there being Germany of 48.6% and the Netherlands at 52.2%. From an EBITDA perspective, we're seeing strengthening EBITDA margins with U.K. EBITDA growth on the adjusted basis in the blue box. And just to be clear, the adjusted basis there, the FY '23 numbers have been restated to remove the cyber claim insurance money out of FY '23 because it related to an FY '22 event. So you can see that we've grown U.K. EBITDA at 15.6% over indexing and against that U.K. sales growth at 9%, and that's driven by both the gross margin progression, which I'll come on to on the next slide, but then leveraging the lean cost base as well. And European EBITDA has also improved by 19.3%, reducing our losses whilst we continue to take market share. We've also generated cash in the period despite the continued investment in CapEx and working capital. And as I'll come on and explain, that's through more optimized use of working capital and also building an interest income stream as well. So as Steve talked about the medium-term targets, I hope this shows kind of we're already delivering against those ambitions in the FY '24. So just moving then on to a bit more segmental detail. We've introduced here a 5-year picture just to show really that we continue to grow out of COVID in terms of sales and gross profit. And you can see in the top chart, particularly shows the reinvigorated U.K. growth I was just talking about. In terms of U.K. revenue growth in the year, that's obviously underpinned by both new space, but also conversion, which is up 250 basis points in the year. U.K. online was up again, underpinned by ATV growth at 7.3%. And that's through optimization, search functionality on the website through the -- as Steve said, the upgrade of the Magento. And we've also seen an improving IPD picture over H2 as we deployed additional recommend functionality. European growth is underpinned by growth in both active unique customers alongside also improved customer frequency. Moving on to the gross profit. The margin in the U.K. is up 10 basis points. And so just to kind of talk through the constituent items of that 10 basis points. So first of all, we moved up progression of 70 basis points being own brand at 20 basis points, seeing some upside from the FY '23 and early FY '24 range review work that was undertaken adds another 20 basis points. We've got improved supply terms from the kind of autumn 2022 annual review with suppliers, adds on another 10 basis points. And then we've got 2 new elements in the margin bridge related to kind of service-based revenue. Firstly, the commercial marketing, which Steve has already touched on, adding 10 basis points. And then similarly, the new in-store service model, the example being reel spooling there, adding on another 10 basis points. So that takes us up 70 basis points, but then it's partially offset by higher out-of-season promotional activity in H2, reduced the margin by 30 basis points when trading was tougher primarily driven by the weather and higher levels of retail shrink in FY '24, again, eroding by 30 basis points to leave us up at 10 basis points year-on-year against the sales growth of 9%. Europe progressed 410 basis points, and that was driven by range optimization and a more gross margin favorable mix. So the growth in both revenue and gross profit on a pound note basis to record levels demonstrates we continue to win market share, both in our core U.K. business, but also as we continue to build our European presence. Moving on to a bit more depth on EBITDA. And again, you can see here we've introduced 5-year picture to show as well is continuing to grow sales and growth gross profit out of COVID. This has also resulted in a delivery of an increasingly robust and sustainable EBITDA return. U.K. EBITDA growth has over-indexed against sales growth in both the U.K. trading segments as set in the slides, and that's a really important feature as we move forward against the medium-term ambitions to make sure our bottom line growth is overindexing against the top line growth both -- as discussed before, both through the margin progression but also continuing to have a focus on leveraging on the fixed costs. And also, again, on a -- excluding the cyber claim, U.K. Central overheads have reduced as a percentage of U.K. revenue, again, as we stay really focused on leveraging our cost base to support the growth in the business. In Europe, losses improved, as I said before, year-on-year. And the key measure for us being then how much of our group EBITDA, and we've reduced that by 1,800 basis points to 35.8%. So continuing to make some good progress in there, both through the margin, as I've already talked about, but also through improving the variable operating costs as well as reducing the fixed overheads within the business. So at group level, the growth in sales, gross profit is being complemented by the careful cost management and a strong focus on leveraging the existing cost base to grow the EBITDA margin in the year and underpin a sustainable forward pattern for EBITDA towards our medium-term objectives. And finally, just in the financial review section just on cash flow. So alongside the shrink in the EBITDA picture, we continue to generate cash despite continuing to also invest in CapEx and working capital, particularly around new space with key generators within that cash being the increasingly efficient use of working capital as well as, as I said before, building interest income stream of around about GBP 0.5 million in H2, which is negated in the bridge by the IFRS 16 interest charge. The GBP 1 million of working capital generation is largely driven through stock efficiency with our stock holding at year-end being GBP 800,000 lower, which actually, when you adjust on a like-for-like basis for the new space impact is actually a GBP 1.3 million improvement year-on-year. And that's whilst at the same time, improving the availability by circa 200 basis points year-on-year. So we've got a stable improvement to working capital. You can see we also continue to deploy CapEx investment, most notably in FY '24 in terms of new space with the 2 new stores and 1 refit. But included in the GBP 2.6 million in the bridge there, we've also got around GBP 1.1 million of CapEx where we'll really see the return in FY '25 in terms of the early commitment to our store rollout plans for FY '25 alongside the initial CapEx deployment on the automated packaging solution for the U.K. So alongside the improved EBITDA picture, our strong cash management has delivered an even stronger balance sheet from which to execute our medium-term objectives as well as giving us a good position from which to deploy the surplus liquidity to go beyond those medium-term objectives.

Thanks, Sam. I'll talk a bit more now about FY '25 in terms of how we're developing our plans for this year and what the balance of the year is left to do. So again, starting on that front side, the U.K. customer. Clearly, MyAD remains a focus for us. We continue to grow that proposition as we've moved post year-end. We've got around 270,000 members as we sit today, so a further 50,000 from the year-end. And that continues to go from strength to strength. Outside of that, we're going to look to develop the capability for our customers to shop our full range of products using the store as that medium to do that. That requires a technology solution deployment. We're reviewing those options today. The key for that is we can optimize our working capital deployment of store versus web and catch to what continues to be our strongest channel, our physical footfall channel. For U.K. retail, the GBP 100 million is clearly supported by growth in our physical estate, and we've made some good early strides in FY '25 with 3 catchments open post year-end, 2 of those being acquisitions, one being a greenfield site. And we're currently reviewing a concession offer where we're working with another retailer to potentially access their space for Angling Direct to bring its offer inside their store portfolio. That is going to be reviewed on a test basis later in the year, and we continue to work on that to ensure we can update folks further on that as we move to the interim. The key for the concession phase is it gives us access to those smaller format catchments where we need GBP 650,000 to GBP 750,000 revenue from a catchment as opposed to where we target usually around GBP 1 million sales catchment through our physical space. Alongside that, the further focus on technology in the stores, the living wage continues to be a challenge for our operation. We've made some good work in FY '24, sort of phasing into that headwind. The sign posting of that living wage to continue to increase, we need to get ahead of the curve in terms of taking out store, task and ensure in colleague time is available to spend with customers. U.K. digital, again, we've got some more technology deployment to do in the year. We'll refresh the checkout experience, including tagging real-time customer incentives alongside MyAD or outside of MyAD as well as looking at our merchant charge options, how we put those in front of the customers in terms of ensuring that we get the least drag on our sales basket from those more frequently used checkout options. Deployment of the automated packing solution, as both of us have referenced earlier, that is GBP 1 million commitment. We spent around GBP 300,000 of that GBP 1 million in FY '24. The balance is to pay this year as we physically locate the kit into the U.K. That is around a 4-year payback on that. That is obviously taking our colleague time [ cardboard ] pay. And that full year is net of the increased cost of energy we'll need to run that solution. We've got the capability to put around 75% of our U.K. volumes through that capability, and that will increase as we move forward. That's not the capacity of the machine. That's the capacity based on the size of the parcels we actually ship today, i.e., for anyone familiar with the fishing rod, a 6-foot parcel won't fit into that automated package solution. And again, we're going to look at further technology AI retail technologies in terms of how we conflate our real-time pricing with our real-time digital advertising bidding. There's some more we can learn from others around that outside of the angling industry and continue to look at the gross margin through the deployment of that technology. In Europe, as I said, the key is commencing and learning very quickly around the omnichannel model. We have said that Utrecht will be our trial location. We remain committed to that. We're very clear what success looks like for the team in terms of the metrics we need to see coming out of that store. And we're stay very, very close to that as we continue to trade that hard over the summer months. Outside of that, we're going to continue to review the digital business in terms of mix, range, pricing to continue to bring those losses down. And alongside that, we're looking at a different fulfillment option for our European business. Currently, we ship from our own distribution center. But now, it's the time to rereview whether we can use some third-party logistics to unlock some value. We're continuing to work on that currently and through into the second half of the year. Commercially, our own brand, we have a strong start to FY '25 again, leveraging those plans we developed at the back end of '24. We've got more work to do on that, and we're excited about what that can deliver for FY '25. Alongside that, we are committing to some more physical space to enhance that own brand proposition. That isn't going to be in our home county of [ Norfolk. ] That's going to be somewhere more centrally in the U.K. We'll ship straight from the port to that location, which will enable us to have more frequent distribution to our store network to ensure the availability of our own brand is optimized where we sort of index 3x that on the digital offer in store with our own brands. So that's how the availability is a critical metric for that offer. We've done a point upgrade of our ERP system again that we are now fully cloud-based in terms of our infrastructure. That was a key step forward for the business to ensure we're on a contemporary footing from a resilience and security perspective. And we're going to evaluate -- continue to evaluate those opportunities for that scale brand partnership or goodwill model, which we know is crucial to developing the gross margin of this business to drive towards that GBP 6 million ambition. Again, that does lead back to we need to develop that to ensure we can deploy the cash to deliver beyond the GBP 6 million. Communities & Sustainability. We continue to work with the Angling Trust and more closely with them in terms of ensuring the health of the sport, the engagement with particularly lapsed anglers as well as new anglers. And again, Tackling Minds remains forefront for all our colleagues in terms of supporting the work they do. We're going to work even more closely in terms of the amount of waste we sent to landfill that is particularly important as we roll out our store ambitions whereby it becomes a challenge in terms of building refit. And also, our own brand, focusing on the packaging aspects of that, continuing to review best practice and influence the widest supply chain on how we engage in that. The outlook for the numbers, I'll let Sam cover this.

Yes. Q1 growth was at 4% versus the prior year, which is within our kind of planning corridor. Store trading has been stronger than online with much higher pressure on the high ticket items, and they have a high propensity in the web. The key trading period for us, as in previous years is really the June, July, August period. So we kind of don't win or lose it in Q1, but we certainly do we win or lose over that key trading period. So our focus has very much been on kind of having the right range availability, et cetera, both in-store and on the web business for that key trading period.

Thanks, Sam. I think the key part of the '25 outlook for me is we are well placed. We have a very strong balance sheet. We've got very clear plans. There are consumer headwinds we've observed in the first quarter, but we're well placed to sort of stretch out beyond the competition in terms of that space, and we've got some clear objectives that we're working on to deliver that we think underpins an exciting proposition in terms of value creation beyond where the business is valued at today. That concludes the formal presentation for the '24 annual results.

Steve, Sam, thank you very much for your presentation. [Operator Instructions] I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed by your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give us responses where appropriate to do so, and I'll pick up with you at the end.

Thank you. I'll read out the question, take that, and then I'll hand over to Sam as and when it's appropriate. So first question, can you identify the leading U.K. retailer that you were saying you're trialing space in? Can you expand on what this opportunity entails? I'll start with the second part first. So we are of the belief that you need a smaller footprint in terms of square footage to enable a sub-GBP 1 million sales catchment to deliver some sort of compelling high 20% incremental return on capital. That's much more efficient to do that within someone else's space where they can effectively concede space to reduce their headline rent without damaging their overall sales capacity of their operation. We've been working on that for a number of months. I'm not able to, today, say who that retailer is, but I am able to say that we are relatively well advances with those discussions where both parties recognize the benefits to each other from being able to partner with that. That will perform part of our GBP 100 million ambition. It isn't accretive to our GBP 100 million ambition as we stand. It will be a trial operation to make sure it works for both parties, but it certainly opens up the potential for sites that we bring forward into FY '25 at the back end of the year to grow beyond our ambitions. In terms of our consensus numbers that are out there, there's around 7 new stores built in for the U.K. in those consensus numbers. If it were to go to 5 from this opportunity, that may move us beyond that 7 number. Clearly, we've already done 3 year-to-date. Next question, thank you for outlining your midterm targets. Can you please provide a time frame delivery of this guidance? So the Board is of the view this is a 3- to 5-year medium-term plan. We're very confident that is an appropriate time frame, whereby 3 would be over delivery, 5 would be the outer sort of regions of our ambition. So we'll update on that as we move through, but I'd encourage folks to think about it on a 3- to 5-year basis. Conflated with that, that joins up with where we're at on the dividend policy. So clearly, right now, we are not recommending the payment of a dividend. We've reviewed the benefits or otherwise of paying a small dividend. Our view is we still need to utilize the cash and the earnings capacity of the U.K. business to generate that GBP 6 million and deliver beyond it. Linked to that, again, a number of questions around buyback. Buyback isn't something that we've contemplated previously. We continue to review that. We'll again have a review of that post our AGM this year. As a Board, we remain committed to deploying the surplus liquidity and review the buyback policy subsequent to any outcomes in that medium-term strategy. Next question, Sam.

So the question is you've referenced M&A being more of a feature going forward in the use of the balance sheet. Please, can you provide guidance on an appropriate level leverage for the group on an IFRS 16 basis? And how do you weigh up cash returns versus M&A from a valuation perspective? Well, to take the first part of that first. So obviously, there are 2 sides to that leverage equation. So first, from a cash perspective, I think Steve said out before that in terms of the delivery of those medium-term objectives, we expect to fund those out of cash we generate. Obviously, that may not and probably won't be a linear journey but kind of by the time we get to, hopefully, having delivered those, we will be back up about having self-funded those -- self-funded that growth. From a leverage perspective in terms of the IFRS 16 lease liability, we are at GBP 11.6 million today. If you look at one of our -- what we would consider a traditional kind of catchment, that sort of GBP 1 million catchment, and also alongside what our usual lease model is, which is a 10-year lease in a 5-year break, based on our normal rent, you'd expect in terms of the additional lease liability on the balance sheet to go up by around about GBP 400,000 per shop. Obviously, that changes depending on the mix of traditional format versus small format. And then as Steve has just touched on in terms of when we start hopefully working with this retail in terms of utilizing some of their space, that should also help that picture as well. From an M&A valuation perspective, Steve and I think we've got a good frame of reference from what we think are true medium-term multiple is for our business. So when we're looking at M&A opportunities through that lens, we'll be also then looking at where the synergistic upsides come through and then where we see that being a compelling return for investors. The next question is, please, can we discuss the 4% revenue growth in Q1 2025? Presumably, given store openings, this means like-for-like U.K. store growth is negative and ex pricing volumes are significantly negative. You referenced a weakening anticipated finish to 2024 in the prerelease. Please, can you help us understand whether this is economically driven or how meaningful is the competitive behavior currently? So I think we probably covered some of this in the outlook statement. But just for clarity, the like-for-like U.K. store growth is not negative in Q1. Again, similar to the 4%, it sits within our planning corridor obviously, alongside new stores that we opened in FY '25 in terms of Canet crew and [indiscernible]. They obviously augment that overall stores' position. The end of 2024 did see a more challenging trading environment, and the weather certainly having an impact as we put in the trading statement. And that's been, I would say, probably a challenging read through to the consumer. But as a reference point, the transaction volumes in Q1 have not gone down year-on-year. There is some growth there. So they are proven to be resilient. But as I said before, higher ticket items are under pressure.

Thanks, Sam. Next question, congratulations on the store opening in the Netherlands. Please, can you help us understand the investment in CapEx and working capital is entailed? How you balance these investments you made against the revenue opportunity? You see -- the opportunity you see, it didn't seem like you have another store started for FY '25 on the continent. So again, from a European store perspective, we target a full year payback in the U.K. in terms of the model when we look to go into new space. We followed that approach again in the Netherlands. In the U.K., we usually see fit-out costs around GBP 220,000, something of that magnitude. And then a stock number slightly below GBP 200,000. In the Netherlands, we tried to follow that model. We've given it a little bit more oxygen in terms of stock in the early years. And again, just to review the CapEx spend, it was an existing Angling location, and therefore, we try to optimize what was in situ against what we wanted to spend. The key to this operate -- delivering that full year is the gross margin. We're very clear on the gross margin metrics it needs to deliver and hence, the ranging of the store is particularly important to that. Again, we do believe it's GBP 1 million catchment. It was an existing Angling catchment. So when we're reviewing the trial of the store, we're confident that it should have the footfall that supports the sales volume. Again, the mix, the range and the margin is the key to understand that. Interesting point about the -- you don't have another store lined up for '25. We've consciously not done that at this stage. We really do want to see the development of that store quite quickly, what we can learn for that. And again, at the back end of the year, if we feel like we've got some compelling metrics, we'll rereview that. We have got an operation that can bring these stores to market quite quick in terms of fit-out and ranging. Obviously, location can be a challenge, but we want to make sure we've got it right before we replicate it. Next one, Sam, do you want to take that?