Ibstock plc (IBST) Earnings Call Transcript

Right. Good morning, and welcome to Ibstock's 2026 Half Year Results Presentation. I'm joined today by Simon Bedford, our interim CFO, and I'd like to thank Simon for his support and leadership during his time as Interim CFO. As previously announced, Will Wilkins has also joined Ibstock as CFO earlier this week and is with us here today in the front row. You'll have the opportunity to meet Will after the presentation today. Before I begin, it's also worth recognizing that we've been proudly marking 200 years of the original site of Ibstock and a few industrial businesses can trace their roots back over 2 centuries, and we're really proud of that. With that, let's turn to the agenda. I'll share an overview of the first half of the year and how we're navigating what remains a very challenging market. Simon will then take us through the financials in more detail, including the divisional results, cash flow and balance sheet. I'll then come back to update you on market dynamics and on the progress across our 5 strategic levers, and I'll then summarize our outlook for the remainder of the year before we move on to Q&A. Turning first to the overview. We entered into the year with the expectation that there would be some growth in the market. However, poor weather and macroeconomic events led to more volatile conditions and subdued market demand across our key end markets. Against this backdrop, the business has delivered a solid performance in line with our expectations. Some key messages to point out. The Clay business delivered a resilient performance in the period. U.K. domestic brick deliveries for the first 5 months were down around 8% year-on-year, and our comparable sales volumes were down around 7%, meaning we gained domestic clay market share in the period. While our concrete business has also been impacted by the challenging backdrop, most of our categories have outperformed the market. We've acted decisively to manage capacity, production volumes and inventory, and we continue to align output to demand, manage inventory carefully and maintain discipline on overhead and costs. In parallel, our teams have continued to make strong progress across the 5 strategic levers that underpin our medium-term value creation plan, and I'll go into more detail on that later. Despite not anticipating any meaningful market improvement, we expect to achieve a stronger adjusted EBITDA in H2 than in H1, supported by customer order intake and anticipated stronger performance from our Concrete and Futures businesses and normal seasonal weighting towards the second half. With near-term conditions expected to remain challenging, the full year outturn is anticipated to be around the lower end of current market expectations. And finally, while the timing of recovery remains uncertain, Ibstock is well placed to deliver growth and value creation as market conditions improve. We have a market-leading position, a more efficient asset base, major capital projects largely complete, further and further optionality to generate cash from our land and clay reserves. And with that overview, let me hand you over to Simon to take you through the financials.

Thanks, Joe, and good morning, everybody. I will now take you through the financial performance for the first half. As Joe said, the market backdrop remained challenging, but the business has performed in line with our expectations with focused execution across pricing, cost, capacity, inventory and cash management. Turning first to the financial summary. Group revenue for the first half was GBP 164.2 million compared with GBP 193.4 million in the prior year. On a reported basis, this represents a reduction of 15%, reflecting both the market backdrop and the sale of our non-core Forticrete roofing sites at the end of 2025. On a like-for-like basis, revenue was down around 10%. Adjusted EBITDA was GBP 25.7 million compared with GBP 35.5 million last year, with the reduction driven principally by lower volumes, the fixed cost absorption impact of deliberate production and inventory management actions and continuing cost inflation. This was partially offset by the benefit of around half the GBP 5 million annualized cost savings from the rightsizing action taken in 2025 as well as ongoing efficiency actions. Adjusted EPS was 0.7p compared with 3p in the prior period. Net debt-to-EBITDA leverage was 2.5x on a banking covenant basis at the half year compared with 1.9x in June 2025. This reflects lower earnings and a small increase in net debt. Net debt and leverage are expected to reduce in the second half as cash generation strengthens. While ROCE was disappointing in the period, we expect to return to our target ROCE of 20% as the market recovers. The Board has proposed an interim dividend of 0.5p per share. Moving now to cover the revenue bridge. Group revenue reduced by GBP 29.2 million year-on-year from GBP 193.4 million to GBP 164.2 million. The first quarter was particularly challenging given subdued demand and weather impacts, but we saw improving volume trends during the second quarter. Clay revenues were 10% lower on a reported basis with core clay revenue down 8%. That reflected lower volumes in the first half, partially offset by positive pricing. We implemented annual price increases in February and introduced a temporary surcharge in June to help mitigate additional energy and fuel-related inflation. Concrete revenues were down 26% on a reported basis and around 11% on a like-for-like basis. The reported decline reflects the Forticrete roofing sale, while the like-for-like movement reflects continued weakness in residential and RMI markets, partially offset by improving demand for rail and infrastructure projects, albeit from a relatively low base. Overall, the bridge reflects the reality of a difficult market, but also the actions we are taking to protect value through pricing discipline. Turning now to clay. Clay delivered a resilient performance against a challenging backdrop with market share gains in the period. Total revenue was GBP 119.9 million, down GBP 13.6 million year-on-year. Core clay revenue, excluding futures, was GBP 118.1 million, down 8%. Volumes were lower in the first half. However, as Joe mentioned earlier, that was better than the wider domestic market in the period up to the end of May. Headline pricing remained marginally positive. The February price increase and the temporary fuel and energy surcharge introduced in June helped to offset part of the cost inflation in the period. In terms of mix, we continue to see stronger performance in new build housing and wire cut bricks, while demand for soft mud bricks remain more subdued, particularly in RMI in the South-East and London market. Adjusted EBITDA for clay was GBP 23.4 million compared with GBP 32.8 million last year with a margin reducing -- with margin reducing to 19.5%. The reduction reflected lower volumes and the temporary fixed cost absorption headwind from our deliberate management of capacity, production and inventory levels. Those actions reduced EBITDA by approximately GBP 5 million to GBP 6 million in the period, but they are the right actions to align output with demand and manage cash. Within Clay, the Ibstock Futures cost base increased as Nostell ramps up with net costs of GBP 2.5 million compared with GBP 1.5 million in the prior year. As Joe will cover later, customer engagement around Nostell was encouraging, and we remain confident in the long-term opportunity. Turning to Concrete. Concrete revenue is GBP 44.3 million, down 26% on a reported basis and 11% on a like-for-like basis. The reported movement reflects the impact of the Forticrete roofing sale in Q4 2025. The market backdrop remained challenging across private residential and RMI with flooring products particularly affected by the subdued activity. However, infrastructure demand provided some support with rail-related sales improving during the period and most other concrete categories declining less than the market. Adjusted EBITDA was GBP 3.7 million compared with GBP 6 million last year, reflecting lower volumes and continued weakness across key end markets. EBITDA margin was 8.3%, down on the prior year. During the period, we saw continued strategic investment in selected manufacturing sites. That temporarily reduced production capacity as lines were taken offline for upgrades, but it positions the division to deliver operational and efficiency benefits in the second half and beyond. So while the near-term market remains difficult, we continue to see medium-term opportunities in concrete, particularly as rail and infrastructure activity improves and as our investment in selected sites begins to deliver benefits. Moving now to cash flow. Adjusted free cash flow for the -- adjusted free cash flow was an outflow of GBP 22.3 million compared with an outflow of GBP 9.6 million last year. The principal driver was the reduction in adjusted EBITDA together with seasonal working capital movements. Working capital was an outflow of GBP 17.2 million (sic) [ GBP 17.3 million ] compared with GBP 12.4 million in the prior period. The outflow reflects the normal seasonal pattern. Inventory levels did increase modestly against the comparative period as trading volumes were softer than expected. CapEx reduced to GBP 15.2 million compared with GBP 20.9 million last year. Of this, around GBP 4 million relates to organic growth investment and GBP 11 million relates to sustaining CapEx and improvement projects. The important point is that our major organic growth programs are largely complete. As a result, we would expect an acceleration in free cash flow generation as CapEx normalizes and as trading conditions improve. Turning to the balance sheet. Net debt at the 30th of June was GBP 151.3 million. This was in line with expectations and reflects the normal seasonal increase in working capital, lower earnings in the first half and the broader trading backdrop. Leverage was 2.5x at the half year compared to 1.9x at June 2025. We expect net debt and leverage to reduce in the second half, supported by stronger cash generation with leverage moving towards 2x by the end of 2026. We continue to manage cash carefully with a clear focus on liquidity, cash generation and maintaining financial flexibility through the cycle. For those looking for the technical guidance for 2026, this is included in the appendix section. With that, I will hand back to Joe to cover our market drivers and strategic progress.

Thanks, Simon. So at the full year presentation in March, we set out 5 strategic levers that will help us to drive shareholder value over the medium term. These are market leadership, growth in new market sectors, product innovation, efficiencies and strategic options. We've made some good progress across each of the 5 strategic levers in the first half of 2026, and this is strengthening the business today as well as building additional sources of value and diversification for the medium term. Before sharing progress across the levers, let's start with an update on the market. If we turn to the core markets, you can see from the chart that there's been a big swing in industry forecasts related to housing starts and completions. For us, housing starts are a key indicator and the CPA have moved from forecasting an 8% growth in 2026 in their winter forecast to a 9% decline now in their summer forecast. There's a similar picture for heavy side RMI, but a more encouraging picture for infrastructure output, which is showing low single figure digit growth. The macro environment is not helping with the evolving situation in the Middle East and the U.K. changing political landscape affecting consumer confidence. Housebuilders are experiencing build cost inflation and margin challenges, and it's difficult to see this changing meaningfully in the short term without some sort of targeted intervention from the government, such as a support for first-time buyers. The longer-term fundamentals are still positive. The U.K. continues to face a significant housing shortage. We have also an aging housing stock that requires ongoing investment and renewal. Planning reforms and the recent announcements about building council housing are very interesting, but this will all take time, and we need a short-term action to improve the pace of recovery. So while we remain cautious about the near term, we continue to believe the medium-term opportunity is significant. Turning to the brick market. Clearly, there's a strong correlation with the housing and RMI markets and brick dispatches. Domestic brick deliveries for the first 5 months of the year were down around 8% year-on-year. As I've mentioned, Ibstock's clay volumes were down around 7% for the same period. Imported products were stable at around 19% of the overall market. At the same time, there's been discipline on production and inventory. U.K. manufacturing inventory levels were broadly in line with December 2025, reflecting the actions we and others have taken to align output with demand rather than allowing stock to build. Looking at our own clay capacity. As stated, we've reduced our production in H1, and our plan for the year will continue to align production with market demand. Managing production and stock to recent volatile market conditions is a challenge, and we need to balance the short term with the need to supply a market that must see some recovery in the midterm. At this stage, we expect to see some improvement in volumes from H1 to H2. Should that not happen, we will flex our production down further. And as Simon explained, this would create a margin headwind in the short term, but would be the right approach for cash discipline and longer-term value. Okay. Let's turn to our first strategic lever, market leadership. With more than 200 years of trusted knowledge and expertise, the breadth of our offering, the strength of our customer relationships, our national footprint and technical capabilities gives us a very, very strong brand position. As customer requirements continue to shift, our expertise in product performance, durability, technical specification and sustainability are important differentiators. And while many of our customers are looking increasingly -- are local, increasingly larger players are looking to have national offers across a range of clay, concrete and facade products and solutions under one unified Ibstock proposition, and we're definitely benefiting from that. During the first half, our focused commercial strategy has gained market share, along with further deepening customer relationships, improved service and using insights more effectively to inform future growth priorities. Turning to growth in other sectors. I mentioned in our last market update that we see significant medium-term opportunities in the areas of social and affordable housing, mid- to high-rise buildings, along with a huge pipeline of public sector buildings and infrastructure projects. We know the government's GBP 39 billion affordable homes program provides a strong foundation with additional discussions on council housebuilding expected to drive further activity in the years ahead. While we've yet to see funding fully translate into a meaningful increase in delivery, our focus on end-user relationships and housing association engagement is helping to build share and strengthen our pipeline. Several strategic relationships are tracking double-digit year-on-year growth, demonstrating the value of this more targeted approach. Although building safety issues have constrained recent activity levels, mid- to high-rise is an important long-term opportunity, especially for facade systems. Alongside this, the remediation market remains a sizable opportunity with thousands of buildings still needing recladding. The third area is public sector investment. The government has committed to GBP 718 billion to infrastructure and public sector buildings over the next decade across areas, including education, health care and justice. This chart shows the anticipated spending splits, and we are increasingly targeting these markets. You can see on this next slide an example of our proposition within the education sector. The range of Ibstock products that align to the Department for Education's construction framework is very broad and is enabling earlier engagement with customers. As a result, we've seen strong engagement from notable Tier 1 contractors with millions of pounds of pipeline opportunities. As with the education example, we also see similar opportunities in health, social care and the recently announced defense infrastructure spend. The third strategic lever is product innovation. Innovation remains central to our growth strategy. It helps differentiate Ibstock, supports the evolving needs of our customers and opens new routes to market. Revenue from new and more sustainable products now represents around 25% of our group revenue. Looking at the first half of 2026. Within clay, Atlas is now making 12 products, including the first from our carbon-neutral range. That's an important milestone, combining efficient production with enhanced product capability. Atlas will continue to benefit from investment in hydrogen, subject to the forthcoming HAR2 government funding round. In concrete, we brought to market the Anderton Gen3 Cable Trough in June with Network Rail approval. This product is designed to significantly improve installation efficiency and support the demands of critical rail infrastructure projects. And across our facades range, the new Nostell facility is creating a strong platform for growth with good customer engagement and specification activities. Taking a closer look at Nostell. This site will deliver some truly differentiated ceramic products and manufacturing capabilities unlike anything else in the U.K. Factory acceptance testing is now completing, and we've seen a strong customer response in both the new IBricks and FastWall ranges. Orders for the core ranges are already in the low millions with inquiries in the specification pipeline in the tens of millions. FastWall has also already received industry recognition as Housebuilder's Best New Product of the Year. We look forward to hosting investors at Nostell, showcasing its capability firsthand, and this is currently planned for early October to get your tickets. Our fourth lever is in driving efficiencies, and this is focused on 3 main areas. Firstly, our manufacturing estate. Over the last 8 years, we've invested over GBP 3 million (sic) [ GBP 325 million ] to modernize our network. That investment has created a safer, more automated, efficient and more sustainable asset base, which will return significantly as our utilization levels improve. As Simon mentioned, we've completed improvement projects on our concrete flooring, walling, masonry and lift shaft factories. We expect to see improving performance as some of these investments ramp up from H2 and into the future. And we've also used the current market conditions to extend shutdowns in targeted clay factories and invest in high-return upgrade projects. An example of this is one of our largest wire cut factories in Nottingham, where we're now seeing higher output and energy savings of between 15% and 20%. We've also launched an operational excellence program, which will deliver long-term efficiencies and cost reductions across all locations. This has now started with key pilot sites and will extend more widely into 2027. The third focus extends beyond manufacturing. We continue to drive efficiency through process simplification, systems improvement and digital enablement. During the first half, this included the implementation of a new customer relationship management platform alongside a number of initiatives using AI tools designed to improve the effectiveness across the group. And the last area I'll touch on is further strategic optionality centered on our land and clay reserves. Just to provide a sense of scale, today, we manage over 2,700 acres of land across the U.K., spanning our factory estate, clay quarries where we have unrivaled clay reserves as well as a much wider natural estate. We see increasing value being realized through several complementary routes. Firstly, the commercialization of calcined clay; secondly, a program of land development and sales; and thirdly, land-based income streams. Looking at these 3 routes, starting with calcined clay. Calcined clay is growing to become a key area for cementitious materials and Ibstock has invested to develop a major project of scale in the U.K. This is an important foundation in decarbonizing the construction industry using a lower carbon, lower-cost cementitious replacement material. During the first half of the year, we've concluded further geotechnical work and investment to maximize the potential of the asset. We also continue to progress commercialization during the period. With an exclusivity period with one counterparty now ending, discussions may broaden to include alternative partnership opportunities as we seek to maximize long-term value from this strategic asset. We will continue to update the market on this initiative given the current live conversations taking place. Moving to look at land sales. Again, further work has strengthened our view of the opportunity, and we now expect our well-established land development and sales program to deliver from a previously expected GBP 25 million to GBP 30 million to around GBP 50 million over the next 5 years. The final area is in our land-based income streams. Today, we already generate around GBP 2 million of annual income through inert landfill and energy. However, we see growing opportunities to create additional value with increased restoration and biodiversity net gain and believe this could more than double. A good example demonstrating this opportunity is our former Dalton Quarry in Lancashire, which is being transformed into a biodiversity habitat bank, generating around GBP 1 million per year. We see the potential for possibly 2 or 3 more of these as well as the need for increased inert landfill projects. Taken together, these opportunities demonstrate the breadth and quality of the asset base and the optionality it provides for long-term value creation. So bringing that all together, we continue to take all the necessary actions to manage the near term whilst keeping the long-term potential of the business intact. Despite not anticipating any meaningful market improvement, we expect to achieve a stronger adjusted EBITDA in H2 than H1, and that's supported by our customer order intake and anticipated stronger performance from our Concrete and Futures businesses and the normal seasonal weighting towards the second half. With near-term conditions expected to remain challenging, the full year outturn is anticipated to be around the lower end of current market expectations. Net debt and leverage are expected to reduce towards 2x by the end of 2026, supported by stronger cash flow generation. We expect pricing actions to broadly offset cost inflation, and we'll continue to actively manage production and inventory levels. Our major organic growth projects are now largely complete, and that gives us a more efficient manufacturing network, a strengthened platform for growth and greater optionality as free cash flow improves. Over the medium term, we remain confident in the fundamentals in the business. The long-term drivers of demand remain sound. Our market position is strong, and our 5 strategic levers provide clear routes to value creation in addition to market recovery. And with that, Simon and I'd be very happy to take your questions. As normal for the record, I'd be grateful if you could state your name and institution before asking your question. And if you're in the room, you can press the button on the microphone on your seat so people can hear.

Aynsley Lammin from Investec. Just 2 for me, please. When we think about your guidance for the full year, are you assuming any more kind of lack of fixed cost absorption in the second half, I think GBP 5 million, GBP 6 million in H1. Is there any in H2 expected? And you mentioned you might kind of review capacity and stock. And then the second question, just on pricing, I guess, just the way to think about that, you obviously had the price increase in February, and you're still sticking with your surcharges and you're confident they kind of cover the cost increases? Or are you thinking about another proper price rise in kind of coming into the summer and into H2?

So I'll take pricing, if you want to take the cost one. We've obviously implemented a price increase in February and then given what was happening with the inflation-based geopolitical stuff. We put one in June. We would expect that to flow through fully for the rest of the year. At this stage, we're not planning on any other price increases. I think we've been really trying to work very closely with our customers. We ate the cost for some time to see what was going to happen. And then we communicated very effectively with them, and we're not looking to have any more. Now we'll have to wait and see what happens with the macros. But at this stage, we're not planning on any further price increases.

And on fixed costs, our aim is to balance sales demand with production demand. And with us -- with our outlook moderating on our view of demand in the second half of the year. If I just talk bricks, we'd expect probably to produce about between 45 million and 55 million less bricks in the second half of the year versus the second half of last year. So we will get, like Joe was alluding to, really that fixed cost absorption headwind in the second half as well.

You will get the full view of the full year of our cost improvement actions pulling through the second half as well.

Max Hayes from Cavendish. Just on imports, with the share holding steady, what's happened again on pricing versus domestic? And also, has there been any shift in the regional mix? Or has it been fairly consistent across the U.K.

Yes. So imports have remained fairly flat and held their share, I think. some of the importers have been quite aggressive on price. You would look at some of the pricing points and say, is that variable cost and freight and you're just trying to get cash. Some of the markets overseas are not great as well. We are going to need imports when the market comes back because the U.K. capacity is below the normalized market volumes. And so I think a lot of customers want to keep a bit of a foothold. And then some of the incumbents have taken more capacity off in the U.K. and are flexing their wider European capacity to bring things in. So I think that's the main reason for it, but they're flat. I mean they haven't really changed in the last few years. I think regional splits-wise, the South-East and London have been really challenged in the last few years. We're starting to see some improvement, and there's a little bit more support for making the London market move, but it hasn't really meaningfully changed at this stage. It's still a fairly similar pattern.

Ed Prest from Berenberg. On the balance sheet, you talked about working towards 2x EBITDA at the year-end. How dependent is that on market recovery? And how dependent is that essentially on achieving H2 EBITDA greater than H1? And do you have levers at your disposal that you can use to reduce debt without the market recovery coming through?

Yes. So our -- we naturally delever in the second half of the year just by how our weighting works on trading. So it is linked to our view of the market. It doesn't include any sort of strategic action to improve the balance sheet or net debt position. It is based on trading. But we're confident in what Joe said around the indicators we've got around. It's not a massive improvement in brick volumes. It's a small improvement on the first half. We see improvement in the Concrete business and also we see further sales in futures, and that gives us confidence around our net debt just naturally coming down. And particularly, the first half was particularly difficult. So that gives us a view that we'll approach 2x leverage.

Priyal Woolf here from Jefferies. I think I've just got 3 questions. The first one is on clay. So you talked about market share gains. I think that was a similar message from your other main listed peers. So I just wanted to check where do you think those market share gains are coming from? Second question, just on Nostell, you talked about tens of millions of revenue potentially from inquiries. How should we sort of phase that in our forecast over the next sort of couple of years? And then the last question is just in terms of the exclusivity period ending with regards to that calcined clay, all those conversations. What were the sort of main points of attrition that led to that exclusivity ending without a contract being signed?

Good. Yes. So I mean, we've given some numbers here to show the first 5 months market share on clay. So -- and I can't really comment on other businesses and what they're saying. If they have taken share, there's not that many players in the market, so someone lost some share. So it's pretty simple math. I think the main thing for us is really the range of products we have and the close customer connections and the strategic nature of the relationships we have deepening over time. We supply a broad diversity of the market, and that's housebuilding, RMI and other. And I think the team has done a really good job engaging our customers and working with them. So I'm pretty confident that our brand will continue to maintain and drive share. Nostell is really interesting. I mean this is truly a differentiated factory. It's still building up. And the thing about specification products that link to the facade market is they've got a lead time. Typically, a specification project, a mid- to high-rise building will be planned in and it will be between 12 and 18 months. So we are getting -- but they're already in the pipeline with architects and developers at Stage 1, for example. We see that and we've had inquiries come in. The real thing for us now is to see how fast we can translate those inquiries into physical orders, which I mentioned that we've got in the low millions now and then how quickly they get called off, but there's no doubt that mid- to high-rise buildings with space constraints, speed, labor shortages really need these types of products. So we're very excited about it. And we think that the versatility of our Nostell site and the innovation, we've had lots of customers visit already, and they're getting very, very excited about it. So this is definitely going to change the market. It's not going to cannibalize the brick market. We still are going to have lots of traditional building going on in the U.K. But we think in the mid-high-rise space and in certain sort of government infrastructure projects, this is going to be a flyer. And I think it will ramp up over the next 2 years. It's not going to ramp up fully this year or next year, but we definitely see it ramping up within 3 years, it will be to the business case that we've talked about before. Look, when you have discussions and complicated negotiations, there's always -- it's always quite complicated. I can't go into any detail because these conversations are confidential. We are still talking to a key counterparty. But I think given the fact that the exclusivity period is ending and in order to maintain the maximum value creation for the longer term, I'm open to broadening those conversations to other partnership potentials. Christen?

Christen Hjorth from Deutsche Bank managed to find the mic at the end. First question, just to sort of maybe help make it really simple for us. I think the full year guidance, in essence, is like a mid-single-digit EBITDA increase versus the first half. So how should we think about you sort of given the areas, but in terms of the quantitative piece, how should we think about bridging that gap? And the second one, I think, Joe, you mentioned for the full year, you expect price and cost to broadly offset. I assume that's in absolute EBITDA terms, the way we should think about it rather than margin terms. And also, I assume that -- was that the same for H1 as well where price and costs broadly offset at the EBITDA line? Or is there a bit of catch-up to come in H2?

I'll take the second one. Simon can take the guidance one. I mean we had some benefit in the first half from pricing, but we only put the, I said we ate some cost with the inflationary-based environment, and we waited to see is this a temporary thing? Is it going to change? We didn't want to rush to sort of just put the inflationary-based environment. we waited to see, is this a temporary thing? Is it going to change? We didn't want to rush to sort of just put price increases straight away. And I think that was fair for our customers. So we ate some cost. But now that we put it in, in June, you will see that cost largely offset inflation at its current levels for the second half.

So yes, in terms of guidance, if you just talk H2 '26 versus H1 '26, we see -- just alluded to really, we see some catch-up in pricing as the sort of difference between pricing and cost is a lot more normalized in the second half of the year. So we see that. We don't -- we see some growth in clay volumes, but only low single-digit increase in clay volumes H1 to H2. So we get a little bit of benefit there. We do see improvement in the 2 other areas of the business, one being Concrete and the other being Futures. Concrete is -- yes, we have done several investment projects in the first half of the year, which will be finalized and therefore, we'll deliver product into the market, which the market needs. And also, we expect some gain from rail infrastructure a bit more in the second half of the year. And also as the sort of inquiries around Nostell and Futures increase, that will translate into sales and cover the fixed cost. What we're suffering from a bit in the first half is the fixed costs are in but the sales are just gaining momentum. And therefore, we have a net cost in the first half year. We see that moderating in the second half. So you get a few of those improvements through. And therefore, that's why we believe, EBITDA in the second half, slightly better than the first half and therefore, getting to that sort of range number we've guided on.