Earnings Call: H1 2021

Nov 25, 2020

Good afternoon, everyone, and thank you for your interest. Giles and I are very happy to bring to you details and an overview of our first half performance for FY 'twenty one. On our first slide, we will just capture the the highlights from the period and we'll elaborate as we go on. Well, first of all, it's very true to say that the outcome in H1 is significantly better than our immediate post COVID reforecast. Frankly, going into that period, it was impossible for us to know exactly what the outcomes would be. But our strategy of the past has stood us in good stead for this period in time. And in particular, working with the winning retailers, those retailers having remained largely open and designated as essential retailers during the period enabled us to maximize revenues and deliver significant levels of sales with product categories that were in very strong demand. We were also able to operate for the overwhelming majority of the first half. However, I think it's important to consider the first half of the year as quarter 1 where we were most impacted with customer lockdowns and operational challenges. And the second half where there was a resurgence of demand, our ability to respond to that demand became even greater. And therefore, as a whole, sales, profits and cash generation was significantly stronger in H1 than we had forecast and that bodes well. From a COVID perspective, I would say that we became particularly action orientated. And that doesn't mean that we didn't make informed decisions. We certainly did. But it was important that we responded with pace and we certainly did that. And that enabled us to maximize our output during a very challenging period. Now included in the overall dynamics, both in the first half and as we will see in the second half, we enjoyed the benefit of having very significant and earlier than usual commitments from our major customers for our Christmas trading period. And what that meant is that although we were confined and limited in some cases in terms of our capacity and our output as we reconfigured our facilities to make them as best as possible from a health and safety perspective, we were able to execute our orders on time in full. And that bodes well for the Christmas season. What I can also report is not only have we delivered to our customers on time and in full, but consumers are buying our product through our customers' retail outlets very strongly. The early signs of the Christmas trading period are very encouraging indeed. So overall, with a very pleasing first half under our belt and with a strong order book for quarter 3, then we are in good shape to exceed against market expectations. The question we believe is not will we exceed, but by how much. And that will depend to a significant degree on how quarter 4 plays out, and I'll go through that later on in the presentation. I think on to now the overall shape of the business. And as you will see from the slide here, the dynamics have changed. First of all, our business in the first half was 75% based in the Americas, 25% the rest of the world. When we say the Americas, that is overwhelmingly the United States of America, but also includes Canada and Latin America. International is comprised of the United Kingdom, Europe and Australia. But overall, it's around 80 different countries. I would say that from a revenue perspective, the revenue in the United States was the growth was largely driven by the impact of our acquisition of CSS acquired in early March. But the underlying business was pretty resilient as well during that period. Giles will explain later on the other aspects of our international business by territory. From a sales perspective and our product categories on the top right hand side, as you can see, our celebrations business shows from a percentage perspective, those products were 59% of our revenues in the first half as opposed to 76% last year. Actually in value terms, the revenues are up in terms of celebrations of products from $235,000,000 to 2 $6,000,000 The standout story in the first half is that demand for craft product significantly supplied from CSS and our creative play product was off the charts. It was hugely exciting for us, although it had its challenges. Demand was 5 to 6 times the levels of normal demand. And whilst that is good news, we obviously had a time lag from having that demand to be able to respond to that demand. And by the end of quarter 2, we caught up with that and hence our quarter 2 was particularly good. That demand was very much a result of a resurgence of interest in hobbies and craft product in particular and also in terms of creative play for entertaining and occupying and educating kids when they were at home. So we were very well placed to enjoy the benefits of that. Conversely, there were other categories where demand was significantly lower. So it was good that we were able to balance that. 1 of those categories was an area where we had great momentum in the last few years, which is our not for resale consumables. For those of you who know our business well, this is where we created biodegradable paper bags for sale to retail customers who would then give the bags to end consumers. Many of those customers unfortunately were closed during that period and therefore that impacted that area of our business. We're optimistic that as hopefully things open up, that business which had shown great growth trajectory will get back on track. In terms of the seasonality of our business, it wasn't that long ago where we were overwhelmingly a Christmas focused business. Christmas is still the single biggest season. But what we will see this year is that for the first time every day and minor seasons business I. E. Halloween or Thanksgiving, Mother's Day, Valentine's Day, every day and minor seasons cumulatively will be at very strong levels and bigger than ever before. That therefore means that our quarter four business where it is almost entirely everyday product, will make the difference between this being a good year or a great year compared to our post COVID expectations. And then finally, in terms of sales by source, the sales of our products in the first half of the year were 28% as a result of products that we manufacture as opposed to 20% last year. That's largely as a result of the incremental manufacturing activity from CSS. In fact, our legacy business manufacturing activities were lower than in the previous year. And that impacts on margin, which Giles will elaborate on later. But overall, helicopter view, that is the nature of our business. And we expect those trends to be similar proportionately in the future. So on to our strategy and the 3 strategic pillars, which has stood us in good stead for many years, have delivered again. And the trends of pre COVID have actually continued since COVID. I would say that the pace of the winning retailers has in fact accelerated. So those channels or areas that were having a tougher time have continued to have a tough time. But we have found that in working with the winning retailers, it's given us a tremendous platform, a very resilient platform to grow. And similarly, not only are we working with the winning customers, we also have winning product categories. And we've developed other areas of the business, which is showing great outcomes and great potential. I mentioned that obviously craft and creative play have been great. But we also have developed a gift and home decor type products, ceramics, textiles, photo frames. They have benefited from huge demand during the last 6 months. And we see much of that momentum continuing since the half year. In terms of design and innovation, we've just featured here a trend which we are very pleased with, and that is in demand for sustainable, environmentally responsible products. I've mentioned before that we've had an offering of this nature for years. But the fact is that retailers, not just in the UK and Europe, but around the world are now embracing this. And when consumers have the choice, it's very evident that this is a tremendous commercial success. So this has got real momentum. We are walking the walk. We're not just talking the talk. We take this very seriously and we believe it's a competitive advantage and we're very happy with how that is developing. Similarly, in terms of design and innovation, We have not only created home decor and gifting product on a bespoke basis, we're also now offering our own generic brand, the X and O brand. We are selling that particularly to regional chains around the United States. And finally, the 3rd pillar of our strategic initiatives, efficiency and scale. Not only have we continued to benefit from fast payback capital investment, as you can see here, we've illustrated one of the new printing presses that we now have in the United States. We've invested in our IT platform to give us greater visibility and understanding of all of the various aspects of information around our business, particularly in the United States. But it gives us a platform to grow in the future. Finally, and very importantly, we are, if not the largest buyer of our product categories across Asia. We are, in many cases, certainly one of the major buyers in the world. And we are leveraging that position as best as we can and enjoying the benefits of great relationships with our suppliers in developing new product, in ensuring that we are compliant and meeting all the needs of today's global retailers. So those strategic pillars are more relevant than ever before and they've helped us deliver a strong result in the first half. And on that note, I'll hand over to Giles to explain exactly what those results look like. Thank you, Giles. Thank you. Obviously, you can see on the chart the 3 headline results, and we'll go into detail on the following pages. But revenue up 41% against the prior year and we'll talk about the key drivers of that in a second. That helped drive the adjusted profit before tax up 16%. And probably the highlights of the first half is that net debt position that we are at the half year, which is $83,000,000 improvement year on year. We'll talk about that in more detail on what the key drivers of that also in a second. But it's worth mentioning at this point the numbers that we're looking at now are now being reported in U. S. Dollars and that very much follows the acquisition of CSS in March. And as you saw on the page, customer by destiny revenue by destination reflects the concentration of U. S. Dollar revenues and earnings. But in addition, we also now have summarized our reporting into DG Americas and DG International. And I'll show you those results. Now here on the profit and loss, you can see that there's that 41% increase. The main driver of that increase is CSS. And actually if we were to strip out CSS, the revenue impact of COVID was would have delivered an 8% decline or did deliver an 8% decline. And as Paul mentioned, really that was driven primarily in Q1, with Q2 being a much stronger performance and is a much bigger period as well for the organization. So if splitting it down into the individual segments, the Americas obviously where CSS is based, so that saw a significant growth 75%. But if we were to strip out CSS, we saw a 6% decline, again COVID driven. And in international, revenues were 10% down. And the dynamic there is interesting in so much that within Europe, we actually saw revenues broadly flat. Paul mentioned the success we've been having around working with the winners and certainly in Europe we saw that particularly in those categories around photo frames etcetera, good high margin categories for us. Australia was down but not as down as much as the U. K. Which remains one of the most challenging retail environments for us and therefore reflected that in the results. If we then move down to the operating profit, so the operating profit was up 13% year on year with growth both in the Americas and in international. But it's important to note that the margins are down and that's why you're seeing absolute margin growth being at a lower level than the revenue growth. But why are the margins down? It really relates to a number of factors. One is really a combination of mix of category, channel and customer, all of those having a slight impact on the first half. But more importantly is the impact of COVID on the reduced volumes that are going through our business. We have quite a substantial, as Paul mentioned earlier, quite now quite a substantial manufacturing base. And it's important that we obviously have high levels of volume going through that as much as we can. And this year, first half, we saw lower volumes. That means that we're absorbing less overhead into inventory, which means that those overheads stay in the P and L and are a drag on the gross margin of the business. Clearly, as volumes return to the business, which we would obviously expect in FY 'twenty two and beyond, then that factor is no longer an important it wouldn't be a drag on the margin. 2nd factor to bear in mind is that we do have a fixed cost base within our organization. We set that fixed cost base to a level of activity. And that level of activity in the first half is lower than we would want it to be, COVID related obviously. So that creates a negative operational leverage within the P and L and again now is dragging down the net margin of the business. So overall, our operating margins as a group have been down and that's particularly prevalent within the U. S. As well. So just so that sort of tells the story of the main areas of the top half of the P and L to some extent dealing with the other areas. Our finance charge, well, we'll see in a minute, but the strong cash performance meant that we had less debt, less debt, less interest charges. So our interest charges were down and actually the only offset to that was the fact that we've got the IFRS 16 charges associated with the CSS acquisition, which otherwise they would have been better. Our tax rate has risen slightly in the first half versus the prior year. And the reason for that is we've now got more U. S. Business. And U. S. Tax rates, most people will remember that the U. S. Tax federal tax rates fell to 21% or probably 18 to 24 months ago. Well, that's great. But you also have to add on the state tax. And when you do that, that takes the overall blended rate for the U. S. To about 25.5%. So what you're seeing there in terms of the tax rate is very much representative of, again, the concentration now of U. S. Revenues and earnings within our group. Finally, we have the adjusting items and those adjusting items are up about €7,500,000 year on year. Primarily, the main driver of that is the costs that we're incurring as part of the integration of CSS and the restructuring that we're doing within the U. S. And those costs are reflected in that increased adjusting item. In addition though, we also have $2,000,000 of direct incremental COVID related costs. These are costs that we're incurring, which are directly attributable to COVID and will go away. We will no longer incur once we're through the pandemic. So that's the story in relation to the P and L. So we flip on to the story of the cash flow. Obviously, as I said earlier, significant improvement in the half year net debt position. It's important to remember it's a seasonal net debt position reflecting the build of working capital during our annual cycle that we have. We've had lower volumes going through the business. We have lower requirements for working capital build. Therefore, we have lower debt build as well. And we've seen an element of that and you can see that in the numbers and in the chart in the top right hand corner. The first half outflow has been significantly lower than in prior years. And when we strip out CSS which wasn't in the prior year numbers, it's even more marked. That's a focus that we've had in terms of collections, making sure we're getting the money from our customers. It's a focus on inventory management, making sure we're not holding stock that we don't need or buying stock that we don't need. And then finally, a focus on payables and taking a good robust position in relation to that. Put all those together and you see a substantial improvement in our half on half working capital outflow. In addition though, we've also seen some other benefits to the cash position. First point is we've spent less in relation to CapEx, a deliberate decision year on year, partly driven by the fact that we have fewer big projects ongoing and partly due to the fact that we've been slightly more challenging in terms of what we need to spend during this COVID situation. So CapEx down, interesting enough and you see the line, you'd normally expect tax to be paid, we've received. And the reason that's the case is because we've been able to receive monies in relation to the losses that were made by CSS before we bought them. So it's a nice little inflow for us in the first half and we will see more of that in the second half as we claim against those pre acquisition losses. Finally, we see that we've benefited from the timing of the dividend. The dividend was paid in November. This is the year end dividend from FY 'twenty. It was paid in November. In prior year, it was paid in September 2019. So we get the benefits of the half year. Obviously that flows through in the full year and it's neutralized. So overall a significant improvement in the half year seasonal net debt and that you can see in relation to the chart in the bottom right hand corner, the blue line showing this year. Importantly, this isn't something that we just did at the half year. On the 30th September, we suddenly did some actions. This is consistent across the half as you can see there. And by the way, it continues into the second half as well and we are well below those levels of last year and remain that way. What that does is it reflects in a reduced average leverage, that middle chart on the right hand side, down from 1.1 last year to 0.2 times at the half year. And that's a situation we expect to see continue. And prudently, we're given a view that the full year will be below 0.5 times and the comparative to the prior year was closer to one time. So again, showing a bit the improvement being consistent both at the half year but also at the full year. And that's it, Paul. So back to you. Thank you, Giles. I think a little bit more granularity now about what's going on in those two segments, the Americas and International. As explained before, working with the winners has really proved to be very beneficial during the first half. We found that our major customers in the United States, Walmart, Target, Kroger, Costco, and we're serving Costco on an international basis, were very much open and considered as essential retailers during the period. And whilst they were accessible by consumers, we were able to sustain very good levels of revenue with them. But it hasn't all been good news. There have been certain channels which had a really tough time. As an example, the independent gift store channel in the United States, which had in the preceding years had declined, but actually it had plateaued and maintained a good level certainly last year. They were hit badly and many were locked down going into the Q2. But overall, the grocers, also the discounters and indeed the dollar stores have performed very well during the first half. The craft retailers, and to give an example, the equivalent of a craft retailer in the U. K. Would be Hobbycraft. In the United States, it would be Hobby Lobby. Joanne and Michaels have traded tremendously well, both in their brick and mortar stores when open and also online. And we're very excited at the trajectory that that is showing. Those relationships are really part of the CSS portfolio of customers. What is great to see is how we can also enjoy those relationships across our legacy product categories, which bodes very well for the future. I mentioned the decor and home accessory brand Exono before. What's really pleasing about that is really that is an outcome of our acquisition of Impact Innovations 2 years ago. Their business was very much focused in the Christmas season. We've taken those categories and we've adapted them for all year round business. And we are very confident that that has great growth opportunities for us for the future, not just in the United States, but in markets throughout the world. So, I mentioned CSS and their craft customers. So that's a segue into giving you a state of the union on the CSS integration. I can honestly say that, as I'm sure many would understand, acquiring businesses and the due diligence process leading up to the acquisition is one thing. But once you own the business is that's when you really get to know it. And we have had no nasty surprises. We are very, very pleased with customer relationships. We're very pleased with supplier relationships. We couldn't be happier with the people that we identified and the management team who could play a wider role in our business. So the business is in good shape and the integration process has happened extremely well. As I have shared with a number of our investors, we've been very action orientated and the integration process is ahead of plan in terms of time and value. When we acquired the business, we said that year 1, we should be looking at synergies of around $6,000,000 $10,000,000 in year 2 $13,000,000 in year 3. We're very comfortable with that, and we're certainly going all out for more. We are happy with how the teams have merged together under a new leadership structure. And we are already enjoying the opportunities of cross sale incremental revenues for next year and the year after. Purchasing synergies have also been delivered. There are more to come. Operationally, a number of sites have closed, and we have tremendous opportunity to improve efficiencies and reduce costs further. So I would say it's better than so far so good. It's very pleasing and we've really hit the ground running. It's been very good news. And importantly, I think customers have really embraced the fact that I would say CSS operationally we're in good shape. If you like Design Group's magic pixie dust, one of our attributes is design and product innovation. Applying our know how onto CSS's product categories will make it an even more potent portfolio for our customers. And we're seeing that happening very quickly, and we're delighted with that. Clearly, operationally, COVID has made the integration process even more challenging. We didn't expect when we completed the acquisition in the 1st week of March, a couple of weeks later, there'll be a global pandemic. But we certainly responded to it, as I said earlier, with pace and we've been very effective and we adapted to it quickly, albeit it had financial cost. But the experience of our customers from a service perspective was not damaged at all. In fact, we performed extremely well. We highlight in the blue section on this slide that since the half year, we experienced an IT incident in October, which we wanted to put on the radar. The reason being not because it's going to have a material impact on the bottom line, it won't. But to the extent that the incident is significantly covered by our insurance arrangements, it may be the case that that insurance receipt doesn't happen until FY 'twenty two. This was an attack in our servers, which were impaired for, I believe, 2 to 3 weeks in October, during which time we had to go on manual systems. But I'm delighted to say that the response from our IT team was tremendous and highly affected and we've maintained good levels of service for our customers during that period. The bottom line is irrespective of the firewalls you have in place and the training that have in place, you're as good as your weakest link. And we will and have already asked ourselves what else can we do. And we will be looking at that not just on an Americas basis, but throughout the group. From a Christmas perspective, as mentioned, we received our orders early in the year. That was extremely helpful, and we've delivered very, very well. Anecdotally, what I would say is that early consumer demand in the month of October November has been extremely strong. Our customers ordered early. I would say they were pretty conservative in the levels of volume that they felt confident in committing to for this year. Everyone has taken those volumes. But the early signs are that many are selling out early and that does give us opportunity for incremental sales. Having said that, we will behave as responsible suppliers. There's a whole different experience of a retailer selling through in the high 90% as opposed to the high 80%. And we're being very measured and very collaborative with our retailers in terms of managing any incremental demand. So now let's just give you a flavor of our international business. And as Giles said, the international dynamics varied by region, particularly I would say that the UK business has probably been the hardest hit. Having said that, the team in the U. K. Managed costs extremely effectively and the margin mix was pretty good too. And therefore, despite the fact that our revenues are down, our profits are actually higher than expectations and we're delighted with that. I'd like to mention that we have actually now put the international business, Europe, U. K. And Australia under the leadership of our main board colleague, Lance Byrne. That way we are leveraging the IP, the product development, the customer relationships and know how across all of those territories. There are a number of customers who are now trading in all those markets. I think Audi would be one of them. And so the more we can collaborate as a group across those regions, the better opportunities that we have. So the international business is 25% of our total sales. This is a very important area for us. The competitor dynamics are different in that territory than they are in the United States. It's still fairly fragmented. And we've definitely seen that as our customers consolidate their supply base, we're seeing a different level of opportunity come our way. The shopping list, so to speak, is getting longer from our customers within that region and indeed within the United States. So we are in really good shape as far as leveraging those that extra scale is concerned. I haven't highlighted and I'd like to the whole issue of brick and mortar versus online trade. And what I would say is that certainly our business with the dedicated e tailers such as Amazon has seen significant increase. It was happening before COVID. It certainly accelerated since then. And we are developing dedicated product for those customers. Not all of our product on a single unit basis works online. So we are creating bespoke solutions. We are bundling our products so that they make sense for the consumer online. All you need for a party, all you need for your Christmas tree, all you need for Christmas. And you will see online if you check out Amazon, you'll see a number of our products available as complete solutions for a particular event. And that's trading very well. We're also seeing growth from our brick and mortar customers through their online platforms. And not only are those platforms selling some of the product that's available in stores, we're also creating product unique for their online offering. We only see this trend growing. And I'm pleased to advise that we have appointed an Executive Vice President of our e Commerce business commencing in the group in March of next year. We're very excited about that appointment and it bodes well for the future. So in terms of outlook and summary, well, I guess the numbers speak for themselves. We're very happy with H1 outcomes on revenue, on profit and on debt. We feel that our strategic drivers to enjoy that performance are alive and kicking and in good shape for the future. I believe that our business is known for its innovation, for our pace, for our flexibility from our customers' perspective. And that pace was tested to the fore with the challenges of COVID. But I take my hat off to the team for how they have responded and delivered a great experience for our customers. And that's maximized our result in H1. It will continue to do so in H2. As we stand today, our order book compared to our forecast sales is in excess of 80% of annual expectations. Quarter 4 is a quarter where we have product listings very visible to us. So let's see. We look for the full year result with a degree of caution to see what the impact of COVID is during quarter 4. But certainly, the performance in the first half and since the first half bodes well. The year ahead, we'll see further synergies being delivered from the CSS acquisition, certainly in purchasing, certainly in operations and in cross selling. So all in all, we're really in good shape and not only to grow organically, but there will be other M and A opportunities on the horizon. As we've always said, there's normally 8 or 10 files on the desk at any one time in terms of M and A opportunities. We will continue to be very discerning with those. Very few of those opportunities actually tick all the boxes. So I hope that that overview of our business keeps you well informed. And Jels and I very much welcome any questions that you may have. Thank you. Thanks, Paul. The first question comes from Bruce Anderson, and he asks, is all the improvement in your cash position permanent or are they the result in part of actions taken in half 1, which will unwind at some point in the future? So I think the best way to think about it is we have the substantial element of what we have seen in the half year in terms of the cash performance relates to effectively the seasonal nature of the business. And as such, what we've basically been able to do is flatten that seasonal working capital build through good working capital management. And once we get through that, then that will we'll see a return to more, let's say, at the year end to a more normal position in relation to cash generation, which is primarily driven from profit rather than from working capital. Now the caveat to that is once you've got those working capital improvements, you do your best to try and hold on to them and we will do that clearly. But I think it's probably fair to say that whether I'm not sure it's the right expression is unwind, but I think we will see that a more normalized position return when we get to the year end. But the comment would be we'll still we are still expecting good cash generation at the year end. Thank you. And a question from Patrick Leach who asks, you've taken $2,000,000 of COVID costs as exceptionals, yet haven't adjusted for the $3,600,000 of government COVID related assistance. Can you explain the reasoning behind the different treatments? Absolutely. And in a sense, it's not really different treatments. It's just the overall approach has been the following. As a business, we have incurred costs associated with COVID that are significantly greater than the $2,000,000 that we have adjusted for. So that $3,600,000 is partly offsetting those additional costs. In addition though, it's important to remember that we took actions at the beginning of the year around how much we were going to cut back our business in relation to overheads. Because we have the knowledge of that government assistance, we did not cut back as much as we could have. And that's the whole point of the government assistance was to ensure that we kept people employed. And so from that perspective, the €3,600,000 is going to compensate for the fact that we've kept more costs in the business during that period of time. The $2,000,000 that we've adjusted for is directly attributable to COVID costs that will not be there in the future. And so that's why we haven't we've been consistent, but we've only taken what we think is appropriate to take to adjusting items because those costs and that we're able to do that with all the FRC guidance that's out there, we have only done what we could and what we should. And a question from Damian Cannon. This is a question for Paul. The results for half one were excellent and the business appears to be trading more strongly than expected. However, in recent months, there have been multiple direct to sales with your entire holding being sold. Can you comment on this difference in expectation? Of course, Damian. I mean, I understand the rationale for the question. Being fully Don't always have to do that, but I chose to I chose to take that advice. Don't always have to do that, but I chose to take that advice in terms of the capital gains tax implications of the change in tax policy that was likely to happen. And whilst that was conjecture, I believe and still is, I believe that most people would have seen that that is now the overwhelming consensus and the mood music that that is going to happen. So that was a tax planning discussion. In my own case, I maintain several 100,000 of LTIP shares And that's very motivating from my perspective. In terms of our other directors, obviously, these are individual choices and they do not reflect in any way the prospects for the business. Indeed, I felt at the time of my own share sale 3 months ago, but I saw that the momentum in the business is actually better than we had initially thought it would be during the year. And I'm only delighted for our shareholders that that's proved to be the case. And the business hopefully will continue to go on from strength to strength. So I've got really nothing further to add other than we have a motivated team and a business going in the right direction. It will be wrong to link the sale of shares by some of my colleagues to the prospects of the business. That's simply not the case. Thank you. And we've got a question from Bruce Fair who asks, can you see any signs of slowdown in craft and creativity? Good to hear from you, Bruce. Hope you're well. No, we can't. Having said that, when you're experiencing 500% to 600% the normal levels, it can't be sustainable. But I have to say that so far during the year that has happened. My view would be that with hobbies, when people get back into a hobby or they get into a hobby, it's very often sustained. Perhaps some of the purchasing, particularly of kids' creative play product, which is to entertain kids occupied kids whilst at home, that's likely to go the other way. On the other hand, we've had certain most important periods for us during the year is back to school and our design led stationery products where demand was definitely hit during back to school, that should come back next year. Similarly, in our goods not for resale, as I mentioned before, that hit a brick wall, that will come back. So there's going to be swings and roundabouts. And forgive the mix cliches, but we'll make Haywell the sun shines and the demand on craft product and creative play product has been strong. But we believe quite a lot of it will be sustainable. Thank you. Rebecca Stewart asks, you now report in U. S. Dollars after your acquisition of CSS. Is it possible there'll be a U. S. Listing of IG Design in the future? I can't see all the way into the future. But I can tell you now there's no plans that have been discussed at all to consider that. So no. And there's a final question so far from Geoffrey Huntington who asks, are there any new countries or territories that you've entered? I would actually say the answer is very few because we're already trading in 80 countries. But the level of resource, dedicated resource that we're putting into Latin America, in particular, and Canada has gone on to another level. We've been trading in particularly Mexico, Brazil and Argentina for a number of years, but we see significant scope to grow, actually particularly in craft product. Needlework and sewing patterns are in very strong demand in those areas. In Canada, very often in fast moving consumer goods, the Canadian market could be 15% to 20% of what the United States market would be. We've got relationships in Canada, but we haven't really been firing on all cylinders. And that deserves dedicated resource and we are putting that into those markets. It's pretty low hanging fruit. Now there are other areas where frankly our level of business pro rata to the population is relatively small. But culturally, the demand for our products isn't necessarily that strong or the credit issues or the logistical issues do not really attract us from a bottom line perspective. But frankly, if we didn't grow one new customer or one new category, we got lots of scope for growth. And whilst we like to break new territory, we've got some easier wins. And we've got plenty of growth potential with existing customers and existing channels. I think our focus rather than on new geographical areas is going to be more in the e commerce channels and also selling across our product categories with our existing major customers. Thank you. And another question from Damian Cannon who asks, it's good to see everyday sales heading to almost half of total sales. It seems that quarter 4 will depend heavily on these sales. Is quarter 4 normally weak for every day or are sales evenly spread across the year? Actually, it's the opposite, Damian. Quarter 4 is normally very strong for every day. That's it's a time of year when a lot of new product launches actually hit the stores, particularly February March. So it's normally a pretty strong quarter for us. Clearly, some of that is going to be subject to stores being open. But the demand for everyday product has been, as you quite rightly highlight, one of the strongest features of the year. So if quarter 4 continues the trends that we've enjoyed so far this year, we should really have a really great outcome for the year. It's all to do. We've got it as well primed to deliver as we could, but the proof of the pudding is in the eating. We are optimistic for the year, but we like to under promise and over deliver. And I'm sure you would prefer that too. Thank you, Paul. One more question if we've got time. Bruce Fair asks, e commerce going direct, how are your customers reacting to this as it could be seen that you're encroaching on their space? Well, Bruce, the vast majority of our e commerce activity is actually B2B rather than B2C. We have a limited amount of the B2C, which is in the sewing patterns business. So you're quite right, hunting with the hare and the hounds is not a great strategy. And in fact, whilst the gross margin levels with B2C are stellar, fantastic, We're very mindful of the fulfillment costs involved. And our overwhelming strategy is to work through e tailers or to supply certain channels through e commerce platforms rather than going direct to consumers. Thank you. And that's the end of questions and the end of our time. Do you have any closing remarks, Paul? Well, obviously, first of all, I'd like to thank everyone for their interest in the business and for your support. We are doing well. And I'd like to again just pay tribute to our team for showing remarkable resilience and innovation during this time. I would also say that the level of collaboration with our customers and our suppliers, I'd like to think reflects well on our mutual dependency. And as we've grown and we've taken a seat, let's say, at the grown ups table, I think that the kind of opportunities that we have have really shown through. And that working with the winners strategy is real. It's happening. And it stood us in good stead through this difficult period. I'm really genuinely excited about not only what we can deliver during difficult periods, but the shape of the business in more normal times. So thank you everyone for your support and we will continue to put our heads down and do our best to deliver the best possible result.