Executive Chairman Geoff Wilding. Good afternoon, to you sir. .
Good afternoon, everybody, and thank you for joining the call. The demand for flooring products continued to be materially below the 25-year trend line during the first half of this financial year due to macroeconomic conditions. However, it is stabilizing, and after the large drops that we've seen in previous years, it was more or less flat for demand, but subdued. Management is therefore focusing on self-help actions to improve the efficiency and take market share. Firstly, by accelerating the integration of recent acquisitions, and secondly, by aggressively going after every available cost saving. As a result, GBP 12 million of cost has been removed during H1, and there is a further savings totaling GBP 20 million per annum underway that will be fully realized by March of next year, so that the impact for FY 2026 will be GBP 32 million of savings.
With that, I'll hand over to Brian to take you through the H1 numbers.
Thank you, Geoff. Good afternoon, everyone. I will run through some of Victoria's key financial metrics for a period where demand has continued to be weak, and we have been focused on managing costs and liquidity. I will then hand it over to Philippe, who will take you through more detail on each of the divisions. The financial information presented here is the continuing operations of Victoria. As subsequent to the period end in November, we disclosed that Graniser, or ceramic tiles business in Turkey, and its performance has been excluded from continuing operations in this period and comparative periods and included in discontinued operations. Slide 6 shows the group results for the period for the continuing operations.
As we updated the market in October, we saw a continuation of tough trading conditions in the first half of the financial year, and this can be seen in volumes being lower by 2.1% or 1.6 million square meters compared with the first half of FY 2024. The knock-on impact of the volume decline was revenue at GBP 569 million, being 9% lower than the prior period, with all divisions except Australia being impacted. Revenue declined more than volume as a result of a mixed impact in the UK and Europe soft flooring, where one of our businesses saw a significant increase in volumes of lower-priced products. From a margin perspective, UK and Europe soft flooring and UK and Europe ceramic tiles were particularly impacted by the drop-off in volumes falling through to the bottom line, despite cost savings in both divisions.
EBITDA margin in Australia improved, and North America remained relatively stable, as those divisions have a higher level of distribution businesses compared to the other divisions. In line with the guidance we gave the market in October, we delivered EBITDA of GBP 50.2 million and an EBITDA margin of 8.8%. Moving on to slide 7. This slide shows exceptional and non-underlying items. These are items that are either irregular and therefore including them in the assessment of the business performance would lead to a distortion of trends or technical accounting adjustments, which ensure that the group's financial statements are in compliance with IFRS but do not reflect the operating performance of the business of the period, or they're both. There are only two items which are cash, and the rest are non-cash. The cash items are acquisition and disposal-related costs.
This de minimis amount relates to fees paid to advisors for acquisition targets, which we were tracking in the period. The other cash item is reorganization costs in relation to the integration of our acquisitions, mainly Balta, and of these reorganization costs, GBP 1.1 million is a cash item for redundancies which we could not provide for prior years, which is partly offset by a provision release of GBP 0.8 million. Overall, cash add-backs have fallen significantly from prior years, and as we indicate in our FY 2024 year-end presentation, we expect these costs to be below single-digit millions going forward. The remaining items on this page are non-cash items, but I'll just quickly run through the relevant ones. Impairments of intangible and tangible assets as a result of accounting standards were required to assess the value of goodwill, intangible, and tangible assets when there's an indication of impairment.
The current low level of market demand is such an indication, and as a result, we were required to assess the carrying value of all of our businesses at the period end. To do this, we prepared discounted cash flow models using current trading as the base. Given where demand has been in the last two years, these models start from a low base and show an impairment to two of our businesses. As a result, we impaired assets of GBP 80 million in our Spanish ceramics cash generating unit, along with assets of GBP 40 million in our rugs cash generating unit. The next item to point out on this slide is the gain on disposal of fixed assets and investments.
In September, we entered into a sale and lease-back arrangement on a property in Belgium, which generated GBP 30 million of cash and resulted in a gain against book value of GBP 2.9 million. The next item is the loss and disposal of subsidiary. During the period, we disposed of Hanover Flooring, a subsidiary in our UK and Europe Soft F looring business, which resulted in this loss. A very small item in the cash flow is, sorry, not in, excuse me, in the non-underlying items relates to acquisition-related performance plans. These are non-cash P&L charges related to earn-out liabilities for businesses which we acquired using that earn-out mechanism. As we've not acquired any business using this mechanism in the last couple of years, this adjustment has become smaller and continued to do so.
We've also continued to amortize our acquired intangibles as required by IFRS, and we exclude the amortization of these from underlying performance, as once the acquired intangibles have been fully amortized, they will not be replaced. We have also excluded depreciation on the fair value uplift of properties that we've acquired. This is because we treat this depreciation as non-underlying, as we do not revalue other properties in the group, and this therefore does not represent underlying performance of the business. Hyperinflation, as in previous periods, we've excluded this. Now, you remember that under IFRS, we were required in FY 2023 to start to adopt hyperinflationary accounting for the businesses that we operate in Turkey, as cumulative inflation over the previous three years was in excess of 100%, and this continues to be the case.
All of the income statement and balance sheet items have been re-indexed to update them for a notional purchasing power. We do not believe that the indexation reflects the underlying performance of those businesses. And then just on the financial items, there are some adjustments which are non-cash and therefore preferred equity, and this relates to the payment in kind that we have on the preferred equity. And that's it in terms of major items from an exceptional point of view. Moving on to cash generation, the operating cash flow before interest tax and exceptional items was GBP 31.7 million for the period, compared with 54.8 in the same period last year. The positive news on this is the change in working capital.
We saw an inflow of GBP 2.1 million in the first half versus an outflow of GBP 20.7 million in the same period last year, as our management teams focused on generating cash by reducing working capital. This has been delivered despite a reduction in demand and against the historical seasonality, which tended to see a build-up in working capital in the first half of the year. We expect to see further improvements in working capital in the remainder of FY 2025, as focus remains on this, with each management team having targets and incentives to achieve reductions. Other items to note on this slide are the CapEx items. There were some in relation to the restructuring of Balta, which should now become a much smaller number.
We expect the total CapEx for the year to be GBP 60 million in line with FY24, despite the timing of the CapEx spend being slightly ahead of the same period last year. With the sale and lease-back entered into on the property in Belgium, we received GBP 30 million of cash in September this year, which is shown in the bottom half of this table. Exceptional cash items mainly relate to redundancies for the restructuring of Balta. With the completion of the major part of restructuring, this amount has fallen substantially from prior years. We expect circa GBP 10 million will flow out for the full year of FY 2025. On slide 9, we've got a graphical representation of some of the numbers that we've just talked about on slide 8. We entered a period with net debt of GBP 658.2 million, in line with the March 2024 position.
The major movements here are the free cash flow before exceptional items, which we've just discussed, of GBP 12.7 million, along with the expansionary CapEx and cost for synergy projects, mainly related to Balta, of GBP 9.3 million. You'll also see the sales proceeds from the proceeds, sorry, from the sale and lease-back of the Belgian property and a small inflow from the disposal of the subsidiary in that GBP 31.6 million. Graniser's net debt increased by GBP 15.2 million in the period, and that's part of the bridging item. The proceeds for disposal of GBP 10 million will be reported in H2. We factored 8 million less receivables, and also that was funded out of the net debt that we show on this slide. And finally, we had a positive FX impact of GBP 17.6 million related to the revaluation for FX of our Eurobonds .
On the next slide, the net debt, you can see the net debt of GBP 652.8 million is pretty much in line with the March 2024 closing position, but this results in a leverage of 6.2x . You'll also see from this slide that we had over GBP 68 million of net cash compared with 73 at March 2024, and included in this net cash was an RCF drawing of GBP 15 million, which is in line with the position at the end of March 2024. This net cash position, combined with on-draw facilities at the end of the period, means we have significant liquidity of over GBP 200 million. Management is committed to reducing leverage ahead of the next round of refinancing by generating cash from operations and the sale of non-core assets. This includes the disposal of Graniser, which had a 0.5 times beneficial impact on leverage.
And finally, for me, on slide 11, at the FY 2024 year-end presentation in June, we highlighted that while we could not control market demand, we would be taking a number of self-help actions to limit the impact on our liquidity of the lower demand. Firstly, we've taken GBP 12 million of cost out of the business when compared to the same period last year, and this has come from headcount reduction from restructuring and a focus on procurement. We expect the benefits of these programs to continue in H2 and have a bigger impact in FY 2026. Secondly, working capital has improved with an inflow in the first half, as discussed earlier, and we're on target to achieve further improvement in H2. Thirdly, we realize the benefits of a sale and lease-back transaction from a Belgian property of GBP 30 million and with potential further property monetization in H2.
Finally, while not contemplated at the time of the year-end announcement, in November, we disposed of Graniser, improving our balance sheet by GBP 30 million, which has had an impact on leverage of reducing it by 0.5x . We'll continue to focus on managing costs and liquidity into the second half. With that, I'll hand you the floor.
Thank you, Brian. Good afternoon to all. The first slide, Brian, yeah, on the cost-saving initiatives. Okay, the first slide gives you a perfect overview of the cost savings. We've done an FY 2025 of GBP 12 million and a cumulative forecast of FY 2026 for GBP 32 million. This is all the initiatives we've currently been deploying. I will explain what drives all of that, all of these cost-cutting initiatives in the different divisions. Yeah? The first division is the UK and Europe soft flooring.
As you can see, there's been a severe decline in revenue, and especially in earnings. So what we'll do in every division, we'll first explain the environment and then talk about the mitigating actions we've been lining up. So as mentioned earlier, the top-line decline is due to a drop in demand, which has had a severe impact on the cost absorption. Some of the volume gains, which we've had in certain pockets of the market, have been offset by pricing pressure and a negative product mix. There was also a large impact due to the increase of the cost of distribution, especially with our distribution logistics set up in the UK. We've had two distribution outlets which have had lease reviews to market conditions. And this has impacted earnings as well in the first half year and will continue to be in the second half.
And then there's the immediate effect of the demise of Carpetright. But it is fair to say that a competitor, Tapi, who's the largest retailer in the UK, has taken over from the receivership, 54 shops. And this should, or is in the process to make us recover about a third of the revenue and probably another third through our other channels, through our other retailers going forward. Then in that same environment, we need to mention as well that the U.S. market has been weak in terms of demand for rugs. So this is the landscape we've been operating in, so tough trading conditions. And for these reasons, we have conducted sharp mitigating actions. To start off with broadloom, so we have focused on reduction of overheads. We've been integrating two brands, Carpet Line Direct and Hugh Mackay, with other existing brands, Balta and Victoria.
So we've been eliminating the northern commercial setup, and this has saved us about 50 FTEs. So there was a reduction of the sales team, a reduction of the SKUs, administration, marketing, and other. So the impact of what we've done in broadloom was about GBP 1.3 million for FY 2025, and we reckon the full year effect is going to be about GBP 2.8 million. It has also a working capital effect for a saving of GBP 4 million on working capital. There is then also the full completion of the integration of the Balta ranges in the UK, since we have closed the factory in Belgium. Part of that collection is currently being sourced in Turkey, and the South Wales factory and the Yorkshire factory can cope with the volume, since we moved also some of the capacity from Belgium into these plants.
So, interesting, we want to make clear is that there is a solid double-digit growth in cut lengths. If we look at the four-week average, what we've seen in the first half and continuing into the second half, there's a four-week average of plus 15% versus the same period as last year in the cut lengths. And I just want to reiterate that this cut length business is the core of our business. It comes with a service proposition, which we deliver through Alliance, and Alliance is our logistics leg of the Victoria Group in the UK. So Alliance, talking about Alliance, it provides a best-in-class service in the UK. We've done in the first half 550,000 order lines. That could be a roll, that could be a cut, with an OTIF score of 99.8% on all available stock.
88% was delivered the next day, and 97% was delivered within 48 hours. We also expanded our IT systems into the Republic of Ireland and Northern Ireland, so the Irish retailers can benefit from the same service as in the UK. Important for Alliance is Alliance does not only work for the Victoria brands, Alliance also works for third parties. And Alliance has managed to grow its business with 13 non-Victoria brands. In terms of green initiatives, Alliance is on track to move about 9 million m² of carpet from the Victoria manufacturing site in South Wales to the Alliance distribution, fully carbon-free. And that is done with a small fleet which we have invested in recently of electric vehicles. We are also expanding. This is something we said in the previous presentations, so that we will be expanding on the hard flooring offer.
This is what we've done. So we've added laminate and LVP to the collection, and not only into one sales team, but in a multiple of sales teams. For underlay, which is also an important part of the business, so to remind you, we have two plants in the UK in underlay. One is Interfloor and one is Ezi Floor. So we have merged the manufacturing of underlay and accessories and optimized the commercial policy. We've currently integrated the two underlay manufacturing facilities in the UK, which include closure of a plant in Scotland that was in Dumfries where we were making the accessories, and the upgrade of a manufacturing plant through the acquisition of a small competing manufacturer in the crumb underlay. So all of this has happened.
The project, what we call the project WEEF, so that was good for a cost saving of GBP 1 million in this financial year and will be GBP 4 million in the next financial year. Then for rugs, we've executed on the plant closure, so it was completed with increased manufacturing footprint in Turkey, partially in Turkey, partially in another plant in Belgium. So we are improving or we are moving more business to Turkey because of its impact on the cost. And there's further reduction of FTEs planned in Belgium and U.S. distribution. Already 700 FTEs. We've already reduced 700 FTEs since we first acquired Balta two years ago. All the Balta projects, including last week's further reduction of another 28 FTEs, account in H1 of this financial year for GBP 5 million, and in FY 2026 will be GBP 10 million.
Furthermore, there's also pricing initiatives, price increase initiatives, because we will have increased labor cost in Belgium and in Turkey as of the beginning of next year. So next to that, there's also an ambitious plan to boost the productivity in Belgium with 10% and 15% in Turkey. So this is for the UK soft flooring. So then we move to the next, to the second reported division, which is UK and Europe ceramics. Again, first we present the environment. So overall, as I mentioned before, soft demand. We've also seen import of much cheaper Indian product, but we need to mention there that there are imminent import tariffs imposed by the US Chamber of Commerce in the US, and potential tariffs will be looming in Europe, and that could soften the pain going forward.
What we've also seen in the environment of ceramics is new market entrants, what we call category killers. Because of the pressure of the ceramics volume, some of the big manufacturers in Spain and in Italy have entered the more margin-enhanced service proposition, and they have come with a different price setting, which has put some pressure on prices. We've also continued in the first half, probably for a bit too long, our margin policy, and we have now reviewed a more margin or a more volume-driven brand proposition. A bit late in the process, but okay, we're mitigating that action as we speak. So this is the environment. What have we done about it? So we have taken aggressive action to mitigate the effects of the low demand whilst we wanted to ensure also the production capacity.
So what we've done, we've intensified the approach to integrate the ceramics group in Italy and Spain. So we've reset the organizational structure at ceramics group level, not so much in the individual countries. So we are working much more as an integrated group, and we have executed on the allocation of specific sizes to plant across geographies. So we've also been right-sizing the operational base. I think Brian and Geoff have just mentioned also the recent divestment of Graniser in Turkey while having continued access to cost-effective tiles through sourcing agreements. So we've divested, but we've made with the buyer a good solid sourcing agreement so that we're in a position to buy product at the equivalent price of our manufactured price. We're pretty strong in ceramics in the small-size offer and in the DIY channel.
We do that through Graniser and Serra brands, and we will further intensify that piece or that part of the market to our other Spanish brands as well. Important as well here, and this is in terms of a cost reduction. The decision was made to install a super-efficient line in the Saloni factory in Spain, which will still take 12 months to complete. But this project implies the installation of basically a longer kiln with a continuous press. All of these initiatives should bring us an extra GBP 3 million into FY26, next to some of the other initiatives which we're currently conducting to reduce the cost base in Spain and in Italy. The third division we report is Australia. As you can see, there's only good news from Australia. They are performing to budget.
The margin has been well maintained in spite of some of the demand softness we've seen even in Australia. So all segments in carpet, whether that is synthetic or in wool, also in underlay, have performed to budget. We've seen some more pressure in the LVP segment because there's more import from China and from Vietnam. There's a few more distributors on LVP. This has driven some more competition and some more price pressure. But in terms of development, we have located a few niches in that product group where we would have profitable continued growth. So the likelihood of Australia to perform in H2, as it has done in H1, is very likely. The fourth division we are presenting is North America. The same overall demand softness in flooring products we've seen, and this is what has put a lot of pressure on the margin.
We've seen a rise in COGS due to the sea freight, which has been absorbed by the business for most, and of course, this has weighed on the margin, and we did that to protect our market share. In the US, it's maybe important to remind that in the U.S., we only have distribution facilities. We are not manufacturing at all. We only distribute. So anything we bring in or anything we sell has been brought in either from the Far East or from Europe. So the impact of a container cost rise is massive, and next to that, in that same environment, as we're talking about the environment we're trading in, so we've seen some East and West Coast disruption as well in the first half.
So the mitigating actions we've been undertaking, partially, we've been redoing the product architecture, and we've scaled back on some of the new introductions we've done earlier this year at Surfaces. We've done product introductions in laminate and LVP. We've scaled back a little bit on these product introductions because we want to manage the working capital in a better way. So the warehouse capacity also will be integrated with Balta, Rugs, and IWT's Tesoro. So we have different warehouses in the U.S., all on the East Coast, in Charleston, in Palm City, then in Rome and in Savannah. So through the different product groups, most of that will be integrated going forward. The commercial, then there is commercial excellence initiatives as well to improve the profitability, including minimum order quantity policies, improved inventory positioning, and pricing enhancement to achieve improved margin performance and reduce the transportation spend.
All of that is in the process of happening and should bring us in FY 2026 about GBP 7.5 million, GBP 6 million. Important to know as well, so that we've been able to negotiate solid cost cuts at the partner factories in the Far East, which will help to drive the COGS down. There have been also across the board price increases to offset some of the increases in this COGS, albeit we haven't done much of that because we wanted, as said earlier, to protect the market share. But still, we will find ourselves in a position to do that in the next few months, and this should offset some extra margin in this financial year. That was the last reported division. Then a quick word on outlook. What we see is that some of the macroeconomic factors are becoming more favorable for demand recovery.
We've seen some interest reduction, and the likelihood of further interest cuts is there. But okay, it has not happened yet. So we have not seen the impact yet, but we're expecting there to be an impact. So the important as well is that the production capacity has been maintained. So this is very important. So it's not that we have just tried to get rid of production capacity. Even when we were selling Graniser, we have made, as I explained, that deal so that we could be buying at manufactured cost. So it's important to have these third-party manufacturing facilities as well. And then the operational leverage, so the cost reduction we've done and the efficiency improvements should improve also our operating leverage. Then there's a few, or there's a couple of slides in the deck which talks about the drivers of flooring demand.
So important is the replacement cycle. Improvement and repair is very important for our business. 80% of our business is improvement and repair. It's not so much the construction and the new construction. So we are more in that repair market. So the housing transaction is an important driver. So in the housing transactions, it's important to see that every transaction brings almost two different orders. One of the buyer or the consumer, not the consumer, the buyer leaving the house and another one to get into the new house. So there's a lot of activities. Housing transactions are very important for us. Of course, consumer confidence is a very important one. And the drivers for consumer confidence is, okay, what happens to my wage? The wage growth, employment security is important as well. And then the consumer discretionary spending is important to track.
So this can be seen as lower mortgage rates because of the interest rate cuts, the wage growth, or lower inflation even, which is helpful to improve the discretionary spending. So the point in the slide is that flooring is a staple product with a very long growth trend and then assured replacement cycle. So some of the indicators which are tracked or they're shown below. So the higher household formation, the broader housing shortages, new construction as part of that. But the main drivers are the first four drivers on the page here. Brian, I think on the next slide.
Yes, thank you, Philippe. So as we said earlier, we can't control demand, but the business is still focused on growing cash generation.
You'll have seen that the exceptional cost has come down year on year in terms of the cash cost for reorganization, and we expect that trend to continue. Capital expenditure has reduced back to a normal level of GBP 60 million after the reorganization of the restructuring of the Balta acquisition. We've also talked earlier on about the improvement of working capital. After three consecutive years of increase, we're starting to see a reduction in that based on the good work of the teams in the business. We have sold some non-core assets. We highlighted we were looking at GBP 50 million worth of property at the year-end announcement back in June, and we've realized EUR 40 million, 30 million issue of sterling in the first half of the year. I think there's a question somebody submitted already.
We have got on our balance sheet at book value over GBP 100 million worth of real estate, which if we decided to monetize that, then that would be a significantly higher value than the book value when we went to monetize that at market value. We also disposed of Graniser, which has realized EUR 36.8 million, and that's helped to reduce the leverage in the business. And growing earnings, again, we've reduced cost year on year by GBP 12 million over the last 18 months up to September. That's around about GBP 35 million that we've taken out with further costs to come out of the business in the second half of the year and into FY26. Geoff, do you want to?
So I think in summary, the board of management, as you know, very large shareholders in the business, and we remain very positive about the future of the company and very committed to its success. Firstly, as we've identified here, the fundamental drivers for the flooring sector remain positive, notwithstanding the temporary demand, which is a result of macroeconomic conditions. But we are confident that demand will normalize in due course. The advantage of the cost cutting that we've made over the last 18 months and are continuing to make today is that the company is now vastly more efficient. And although some of these cost savings have been masked by the drop in volume, as Brian has just highlighted, we've taken out another GBP 12 million of cost in the first half of this year. There's GBP 20 million of cost coming out in projects being executed today.
This GBP 20 million is a defined number, which was in the earlier slide where we identified exactly where the costs are coming from, and the impact on FY 2026 will be a total of GBP 32 million of less cost than we were expecting earlier, so the result of that is that even with subdued demand, with a steady state demand where it sits today, we believe we have a very clear path to mid-teen EBITDA margins, and should demand recover or when it recovers, we believe those EBITDA margins can get back to the high teens. So now, we'll move to questions.
Perfect. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions. You can do that just by using the Q&A tab, which is situated on the top right-hand corner of your screen.
But just while the company takes a few moments to review the questions that have been submitted today, I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Dashboard. As you can see, we have received a number of questions throughout today's presentation. Brian, at this point, if I could just hand over to you to chair the Q&A, that would be great. And then I'll pick up from you at the end.
Thank you. Geoff, did you want to answer?
Yeah. Look, there's actually been quite a large number of questions submitted during the presentation. And so rather than read each one out individually, where they are very similar or largely duplicate, I'll be combining them.
However, nonetheless, I don't think we'll actually have time to get through all of the questions. The first question that we'll talk about, or the first item, is about potential for asset sales. Brian mentioned a few minutes ago that we have sold some real estate and non-core assets during the year to date. We have further potential asset sales in terms of both the individual operating units. There is no particular reason why we couldn't sell off certain divisions of the business should we feel there was the need to do so, and should the valuation be sufficiently attractive to the business. That would obviously have a very material impact on the cash position of the company and deleveraging. So there is a potential, but we have nothing actively in play.
There was also a question on the real estate values where Brian said the book value is in excess of GBP 100 million, but the market value is a multiple of that. That's probably about as much as we should share on the market value, but we have looked at the real estate values, which are a multiple of the book value. Probably a question for Philippe. There is asked about where. With the market being as challenging as it is, do we expect an increase in bad debts from our retailers in excess of historic levels?
Yeah. No, we are closely monitoring that. We did that. We started doing that about six months ago. And of course, there was the demise of Carpetright. We've only been hit pretty small there. We continue to monitor that, whether that's in Europe on the continent or whether in the U.K.
So we keep a very good record. So I can't see that happening in the because also it's important to mention that we are very widespread. So our customer base, we have about on the continent, we have about 2,000 customers. In the U.K, we have about 4,000 customers. So the concentration of our debtors is there's not a big concentration of debtors. So I think the risk is not bigger than what it was about six months or one year ago. Yeah. Okay.
Yeah. So there's a question in terms of the cash balance.
So on the face of the balance sheet, we show a cash balance of GBP 92.9 million. And on slide 10, we show a cash balance of GBP 68.8 million. So on the balance sheet, that is gross cash of GBP 92.9 million. From that, you need to deduct the RCF drawing of GBP 15 million.
We also have some overdrafts around the rest of the business, which brings us back down to 68.8. The RCF and the overdrafts are included under current liabilities in other financial liabilities. So part of that 81.5 other financial liabilities is the RCF drawing plus overdrafts. Hello.
Yeah? Sorry, I was going to ask.
There's also a question on the future of Saloni. I have seen. So the future of Saloni is bright. So first of all, Saloni, for the people who don't know the company and the brand, Saloni is one of our Spanish brands and is mainly focused on the construction business with good export to France and Germany, but also with a good foothold on the Spanish market. Don't forget, as I mentioned in the presentation as well, that we will be installing a complete new line, which will drive the cost down.
So we can be, or we can stay very competitive on the Saloni brand going forward. So this is the outlook; there is good. Geoff, did you want to?
Just another quick question more aimed at you around sales strategy. Does Victoria tend to focus more on selling direct to retailers or via distributors?
No. Okay. So clearly, the whole company, the whole strategy in the U.K is driven for retailer. The retailer is our friend. So we do some business in private label to distribution, but the core focus is retail. This is why we've invested over the last years quite intensively on the logistics platform. We have three warehouses in the U.K. And as I said earlier in the presentation, we do about 550,000 order lines in the first half. So this can be full rolls. This can be cuts. So we are interested.
This is the prime business of Victoria. This is the cutting business. So okay, distribution, if need be, yes, by preference retail. We are not opening trade counters as well for people because that was one of the questions as well. We're not opening trade counters. We fully support the retailer.
Another question for you, Philippe. How are you addressing pricing pressures from manufacturers based in low-cost countries like India and China and so on coming into both the United States and also into Europe exporting carpet and tiles?
Well, first of all, in the U.S., so as I said, we are not a manufacturer. We are distributors. So if we want, we can take advantage of these low costs as well. So ultimately, what is important is the bottom line.
So if we, and this is also something we've done in the past, if we decide to do so, we can buy from India as well and sell if we make a good profit out of that. So we are not forced to sell into the U.S. So the most important market in ceramics is the European market. And so we will defend, as I explained, we will defend our strategy is to protect that margin segment. Yes, we have had some new entrants, but we are looking for pockets in the market. We are not a massive volume supplier. We're looking for pockets in the market to get away from that price pressure and that import. So one of them is these small tiles, which we are doing and which we are pushing.
Another segment is the DIY with the service we deliver and the new product introductions which we are doing, so we continuously monitor the base to try and protect the margin, but okay, there's some basic volume which is needed, but we are addressing that by trying to reduce the cost through the various cost initiatives we are doing and the cost reduction which we will have once we have the new installed line.
There's a question about, or a number of questions about refinancing the company's debt, and the first thing I want to say is it is not the company's intention, and we won't be providing a play-by-play commentary on the discussions and opportunities we have to refinance the company's debt.
But as a general overview, I would say the most important thing to understand is that the earliest of our senior notes are not due until August 26th, nearly two years away, with the second tranche not due until 2028. So unless we are able to get a secure financing on terms that we think is attractive for all the stakeholders of the business, then we are quite happy and contented to wait and continue to improve the business and deleverage. Philippe, another question for you about national insurance. No, I was going to say on national insurance. What is the impact going to be of national insurance, and how do we intend to address it? Well, the impact of and the wage.
Yeah. So the impact of national insurance is going to be bigger than the impact on the minimum wage.
So, we reckon that's going to be the impact for next year: it's going to be about GBP 1.5 million. We will, okay, like all my British competitors, have to address this. Like in every year, we do some price increases to prevent margin to slip. That's going to be part of that exercise. Yeah. We will definitely have to consider price increases if this, and it will happen. This is what we will do. There's another question here, as I can see, on the U.S. business as a core strategy or not. We are very glad to have a decent U.S. business and to have these distributors. Don't forget that for Balta, the U.S. is an important market as well. But it is not represented in this segment, but 45% of the Balta business is U.S. business.
So it remains important in our core strategy. And then it is good to have an omnichannel distributor where we can explore the various, whether that's distribution, whether that's retail, whether that's DIY, or any other channel which we could consider in the market. So U.S. remains utterly important for the group as a strategy.
There was a question also about the EBITDA contribution made by Graniser, the Turkish business we sold recently, and what impact that sale will have on the group's EBITDA going forward. So firstly, Graniser made no material contribution to EBITDA in the recent period. Due to conflict in the Middle East, which was a large part of its market, it lost a lot of revenue. And consequently, it made no real contribution in H1.
However, going forward, as you may have noticed from the announcement that we made last Tuesday, the two critical things that we agreed was the buyer of Graniser has agreed to supply us with ceramic tiles at cost for the next four years. So in other words, where we sit today, we know we now have the cash in our bank from the sale. We're no longer responsible for funding the working capital or the CapEx, but we are still able to access product as much as we require from that manufacturing site at the same prices if we still owned it. So this still gives us continued access to very low-cost manufactured product whilst having none of the capital committed to the business. And that is one of the reasons that we decided it was sensible when we received an approach from a third party.
I think that's it for questions in terms of new ones.
I'm just mindful of time as well. We've probably only got one more minute, so let me just quickly. We're just quickly going to scan through and just see if we can consolidate another couple of questions.
Can we pretty much tell?
Yeah. Look, there has been a serious number of questions about taking the company private. Clearly, we're not in a position where we can comment on anything specifically like that, but I don't want you to interpret that as meaning that we are about to take the company private or contemplating. It's just that if there is some type of corporate action like that, we wouldn't be able to comment on it in advance in any event, and I think given the time constraints, that's probably all the time we've got questions for at the moment.
So, I'll hand back to the moderator, the host.
Perfect. Thank you very much for answering those questions for investors. Of course, the company can review the questions submitted today, and we will publish out those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Geoff, I was wondering if I could just ask you for a few closing comments.
Yeah. I think the board is acutely aware of the narrative that has recently enveloped Victoria. We don't believe it stands up to scrutiny when one looks at the numbers. There's no question that there is leverage in the company, but we are taking steps to address it both through generating cash, through operations, asset sales, and potentially refinancing.
We are making the company vastly more efficient with all the costs that's been taken out and will continue to be taken out. The result of that is when demand comes back, and it will, the company will be dramatically more profitable than it's been in its past. I think that's a fair summary of the position as the board sees it. Thank you.
Thank you all for updating investors today. Could I please ask investors not to close the session? As you know, we automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Victoria PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.