Okay, the agenda, we've got an overview, the full year results, which Paul will detail. Key drivers and strategic progress, and current trading and outlook, with some time at the end for Q&A. A quick overview. The results are ahead of expectations in a challenging environment, and we are now the U.K.'s number one for bathroom products across both online and offline channels. A strategic increase in paid for marketing activity which led to market gain shares. Victorian Plumbing key strengths remain a market leader, industry-leading margins, cash generative with a robust balance sheet. Utilizing these strengths allow us to take further market share. Our well-defined strategy remains focused on core B2C, trade, and adjacent products.
The board proposing a making ordinary full-year dividend, an additional special dividend, continued confidence in the medium-term targets and the growth opportunity.
Morning, everyone. Just to cover some of the highlights of the financial results. Revenue, as you said, is broadly in line with last year at GBP 269 million. About the same as last year, but importantly, 6% growth in the second half of the year. Down in the first half, but 6% growth in the second half. Reference point is almost 80% higher than FY 2019, which was entirely pre-COVID. Gross profit was GBP 121 million. Gross profit margin down year on year as it was in the half year. Importantly, again, we've seen the improvement in the second half of the year, 1 percentage point improvement in half two gross margins, which is encouraging.
Adjusted EBITDA of GBP 19.5 million, which is slightly ahead of what was consensus for most of the year, about GBP 18.5 million for the second half. EBITDA margin reduced by 8 percentage points to 7%. As Mark said, robust kind of debt-free balance sheet. Closing cash, GBP 45 million versus GBP 32 million last year. Cash conversion of 73% EBITDA to free cash flow. Free cash flow in the year of GBP 14.3 million. Again, we'll cover this in more detail, but the board proposing kind of our first dividend of 2.8 pence per share, which is an ordinary dividend of 1.1 pence and a special dividend of 1.7 pence.
Which will be a total cash distribution to shareholders of GBP 9 million, payable in March next year after our AGM. Just some operational highlights. 880,000 orders, slightly down on the year, 3% down versus the previous year. Again, importantly, with an increase in H2 of 2%, so, you know, the trends are all positive here in the second half. AOV increased by 3% on the year, so this has gone up consistently for the last, you know, four or five years. Again, up 3% in the second half to GBP 360. Marketing spend at 28% was higher than last year. As, you know, we discussed at length at half year.
Mostly, that was entirely kind of investment in H1 and then normalization right in H2. The investment in H1 was entirely around, you know, a period of lower demand post, you know, release of most COVID restrictions. We kind of doubled down to gain market share and, you'll see the evidence of that in today's today's information. Trade continues to grow really well. Trade revenue's grown by 25%. Trade is now 20% of the business, having been 14% at IPO, and you know it was one of our key kind of drivers of growth together with adjacent categories. We're pleased with the trade performance. Interestingly, as we'll see in a moment, B2C is also back into growth more recently.
Just to follow that, an increase in our rates of last year of 4.3% back up to 4.5%, which is kind of pre-pandemic type levels. We're pleased with that performance. On to the income statement. Revenues are GBP 269 million, broadly in line with last year. 6% growth in H2. Gross margins, again, 45% this year versus 49% last year. An improvement in H2, so it was 44% H1, 45% H2. Trending in the right direction. We'll come on to talk about some of the drivers of that at the end in a moment. Marketing spend, again, 28% last year versus 26% prior year.
Again, all about investment in half one to drive share. The evidence, the success of which came through in half two, and then some of these numbers we'll share with you shortly. Some of the underlying cost increases, a number of reasons really around, you know, the ongoing fight for talent, which drives pay inflation, as you've probably seen everywhere. There was about an 8% increase in FTEs, which was mostly in the first half of the year and has kind of mattered now. Most of those FTEs are in warehouse or tech, you know, dev roles. Increase in the amount of space we have, but also the cost of that space.
Some of our warehouse space is short term and therefore expensive warehouse space, which, you know, we aim to change in due course. Cost of that increased in the year, and the amount of space we have increased. Then there's some annualization of PLC costs, given this is our first full year of being a listed business. Just some more detail on each of those. Revenue, 25% growth in trade, so the yellow block on this slide. B2C is down overall for the year, but you can see at the bottom that came back to be about flat for the second half, having been down in the first half. Is in positive territory and it's starting to function.
Total orders recovered is kind of down 3%, but AOV is up 3%. Active customers slightly down year on year. Gross profit, again, you know, down year on year for the reasons that will be obvious to a lot of people on this call. Product inflation, supply chain costs, shipping costs, and distribution costs in the U.K. all impact there as well as most businesses. Obviously you see a drop from kind of 49% to 45% in the year. The good news, I guess, is that there's a change in that trend in the second half versus the first half. 45% in the second half versus 44% in the first half.
Clearly there was better news on, around now around shipping rates, container costs and so on, which, again, it's fairly well documented now, I guess what. You know, $2,000 to $3,000 per container pre-COVID went to some crazy number, $12,000 to $15,000, and then now back towards pre-COVID levels, and it may even go less than that. We haven't yet seen, you know, the most of that impact actually, but so that's yet to come, but it's definitely visible now. You know, the impact of that, those container rates on margins was about 3 percentage points against pre and post-COVID.
To the extent that comes back, I guess that's an opportunity if that plays out or carries on, you know, trending the way it is at the moment. That's slightly offset by dollar rates. You know, about half our purchases are in dollars. That again was much worse a month ago than maybe it is now, but it's clearly not as helpful as it was maybe a year ago. It's certainly improving as each day goes by. In terms of the split between own brand and third parties, the split hasn't changed much. You might recall at IPO and since we've always said that we see the split as being quite healthy, 75, 25. We've got no great desire for own brand to go, you know, a great deal higher than that.
It stayed broadly the same because of course, we bring new brands on and we bring new own brand products on all the time. The impact on each of those margins, you can see, has been broadly the same across the year. Own brand, you know, still kind of 50% margin and the balance being made up by third parties. Again, no great changes there and the impact on both elements has been about the same. Underlying costs, clearly the lion's share of, you know, overall spend is on marketing spend, which is mostly paid search, with some brand spend in there as well. Mark will cover marketing strategy more in a moment.
We took a, you know, a, a decision in H1 against a difficult demand environment to spend more heavily, whereas everybody else will have been pulling back. You can see when we talk about market share in a moment that the benefits of that have shown themselves in H2. Marketing spend normal, you know, was more, I guess, what we call normalized in H2. People cost again, ongoing pay inflation, driven by, you know, intense kind of environment about, you know, recruiting and retaining colleagues, which everyone again sees most of that, recruitment has been in warehouse or dev roles this year. That's more or less plateaued in the last four or five months. There's some annualization of PLC cost in that.
As there is in other costs. Property again is almost entirely related to warehouse space. This is the short term leases that we have for properties that we don't have long term leases on. Again, other is mostly website hosting costs for new website plus some annualization of some PLC costs. Just the kind of, just to leave it there, margin bridge, clearly obviously that's what on the right-hand side is, you know, there's 4 percentage points of impact on our margin. 2 percentage points from that marketing investment, and 2 percentage points from other overheads, gets us to 7% EBITDA margin for this year.
Again, with some, you know, hopefully positive signs on margin and shipping costs that can address those. Cash flow, we start the year with GBP 30.7 million of cash. We generate 73% EBITDA to cash conversion. We've got a small investment, additional incremental investment in stock holding. You know, this is about using our balance sheet strength to our advantage when others potentially can't do that in our, in our, in our, in our sector. The stock, you know, inventory clearly for us is not fashionable, it's not perishable, it's not seasonal. We can confidently hold higher levels of stock to maximize availability to customers without worrying about, you know, the aging of that stock or the seasonality of it.
An increase in cash in the year of GBP 12.8 million, closing cash at GBP 45.5 million. We have a GBP 10 million RCF always remained undrawn since IPO. A proposed ordinary full year dividend of 1.1 pence per share, a special of 1.7 pence, which addresses the kind of excess cash we have on the balance sheet, which will mean a total payout of GBP 9 million, times of which is in March after the AGM. In terms of that policy,
Around capital allocation. Clearly the business generates significant cash flows. Our priority is always to invest in growth initiatives in the business to the extent they need some kind of capital investment or investment. It is true that most, currently, most of our short-term kind of growth initiatives don't require huge amounts of cash. Trade or adjacent categories don't require huge amounts of investment. The one exception to that is if we were to acquire a new kind of super shed or warehouse that would require, of course, fit out, automation, systems and so on. That's the exception to that.
Beyond that, I guess then, you know, the dividend policy is to maintain a kind of cover ratio of 3x to 3.5 x, which is how, you know, we've determined the ordinary dividend this year. To the extent we have excess cash each year beyond that, the board will take a view on, you know, whether we should return that to shareholders as a special in the same way as we have this year. We appreciate, you know, we don't want GBP 70 million, GBP 80 million, GBP 100 million in cash on the balance sheet every number of years. That's kind of the policy and that's what determines the results this year. Just balance sheet again. Strong, robust kind of debt-free balance sheet. A couple of kind of call-out points.
The growth in intangibles this year is around investment in the in-house development team who are developing kind of, new tech platform and so on. Slight increase in stockholding as I've already covered. The non-core liabilities relate to leases. Contract liabilities is deferred revenue, that's just orders that were dispatched before year-end that hadn't reached the customer by year-end, so it's a, you know, three or four day timing thing. The increase in trade and payables is in line with the increase in stockholding. Strong balance sheet, good working capital position, strong closing cash positions. Okay. Now cover the key drivers and strategic progress. Our strategy, we think of our strategy with reference to three horizons.
Horizon one, which consists of the core of the business, the B2C, customer acquisition, new product developments and innovation, further market share gains, ongoing competitor weakness, increase in addressable market as online penetration continues its upward shift, and finally, the opportunity for international expansion in key European territories in the medium term. Horizon two consists of trade. Focus on sole traders and SME homeowners and builders, dedicated account management in the trade portal, which will be further improved and supported by the rollout of the Trade App, which is very close to launch as we speak. Increased product choice to ensure we are a one-stop shop for trade as well as for consumers. Investment in specific trade marketing campaigns, as per usual again, which we've been testing recently in advance of the Trade App launch. Horizon three, adjacent categories.
Increase in range of products already available such as flooring and tiles. The increase in warehouse space will facilitate further growth in these categories. The increased inventory overall has limited some of our space for these adjacent categories in recent times. Again, it made sense to protect the core elements of the business with the increased stock holding. You know, we are making progress on gaining more space. Step change in investment to drive share in target segments to support customer projects. Increase prominence on website to highlight and promote the non-core bathroom offering. Review adjacent markets that would accommodate crossover with existing customer base. A nice slide here to talk about. We are the overall market leader.
If you remember from our previous slide that we had in our last set of results, during the IPO, the market share, we were second overall. We have now gained that first position, which I claimed we would do. I think 19% of the market and overtaking B&Q. As a market share of bathroom by revenue, we are now the clear number one. You know, but obviously very encouraging and again, testament to our approach to the marketing, certainly in H1, that push while everybody else backed away, has proved worthwhile. Again, substantiates my strategy to focus on taking market share through continued investment in marketing. Another positive there is our Trustpilot rating has increased since the last set of results.
The Trustpilot rating's gone from 4.3 through to 4.5. A continued investment in customer services has proved worthwhile. It's still an area that we've got lots of improvements to make. It's encouraging that we can reach that point, although that's not the end point. We've got a lot more to do on that, as we said. Brand awareness has continued to be strong. There was a small dip in brand awareness there, again, probably through the lack of offline marketing in the H1 that during that unusual period as we came out the back of COVID. Things are returning to normal now with our investment, so we should see that continue to improve over the coming years.
Bold creative marketing and developer technology platform underpins future growth. Bold creative campaigns. You'll be aware of the campaigns we've done in the past. Our target media audience remains the homeowner's aged 25 to 50 years old. Continued dominance in both paid search and organic drive, efficient sales acquisition, and resulting in increased market share. Highest performing SEO channel of all competitors. Launched trade specific radio advertising to test account acquisition strategies ahead of the Trade App launch. Our biggest ever creative advertising campaign launched in the final weeks of this year in 2022 as part of our new creative plan, brand platform, which I'll talk about a little bit more later. Technology, we've got a replatforming of the website, which is imminent.
It's actually in testing live now with customers to a small percentage as we speak. That's started off very encouraging. We've finally got to that point where it's released. It was delayed as many software projects often are. We've finally got there now, so we're encouraging start with that as well. 3D Bathroom Planner gives customers the ability to view products within their bathroom space prior to purchase. Lots of work gone on with this in the past, and it's continuing to develop. Got some really exciting plans with that new feature. Release of Trade App will follow on from the replatform of the website, building on much of the same logic. Pricing and promotion management systems will allow us to make changes efficiently.
Purchasing and forecasting applications provide greater visibility and efficiency in our stock and ordering process. Progress in key strategic areas. Trade, as Paul has already spoken about, we've done really well on the trade side, which we have taken on some growth. This is done with competitive discounts for trades, and consumers alongside dedicated account management encourages a high repeat rate amongst our trade customers. Increasing range of smaller plumbing parts to become a one-stop shop for trade. Work on trade app close to competition to increase engagement and efficiency for trade customers. Trade revenue's gone from 14% to 20% of our revenue, which is again, a really encouraging move.
Yet, when you consider that so many of the things that we're hoping to offer to customers to improve this haven't yet been launched, this is really encouraging. Most of that has come through just through an increase in the team that's available to service the trade customers, some of the new marketing ventures, which include radio advertising, and the increase in their product range. Adjacent categories. An increase in tile and lighting offerings as we increase our supplier base on in-house design. We have a 56% increase in the number of tiles that we offer and a 53% in lighting. The in-house design has always been a really critical part of this, and still yet many benefits to come from that.
You know, one of my targets was to lead the way with our product design, and to be there first with fashion and trends in these categories. You know, we've already launched many tiles that we've designed in-house ourselves, and they've proved to be very successful. Increased prominence on-site once the new website is rolled out to showcase our strong adjacent offerings. Increase in warehouse space will facilitate further growth. Introduction of other products such as instant hot water taps that are not solely bathroom related. Supply chain and warehouse. Far Eastern team allows us to proactively manage our key supplier relations in those regions. Again, you'll be very aware of the challenges that exist in the Far East.
COVID is still an issue over there and disrupting many of their internal operations, shipping factories. Having an on-site team there is really helpful to actually get accurate information and to navigate around these challenges. High container costs seen in the previous 18 months have started to reduce, although currently offset by the negative impact on FX. Minimal exposure to currency, current energy inflation pressures with energy costs across the business of just GBP 400,000, so GBP 400,000. Good progress in securing new warehouse cities to support efficiency opportunities and future capacity growth, multiple on that in the coming months.
Just around the people, I'll pick up ESG in a moment, but a key part of that is, you know, the whole people part. I'm pleased to say we made great progress this year on moving that forward. Establishment of an employee engagement committee, roll out of lots of new kind of communication methods to our teams and benefits packages. That's resulted in a kind of increased response rate to annual surveys, which we decided to roll out last year. A big increase in, you know, the key question, "Are you proud to work for PP?" 58% last year to 72% this year, which we're really pleased about. There's lots more to do.
Lots of roll out of new benefits, share schemes, general engagement, establishment of a engagement committee. Great progress on that this year, but lots more to do. Which is part of, you know, the whole ESG agenda. You know, the middle section of this around D&I, great progress this year. Governance generally, again, we're compliant with all of the code. Most of our focus now is on around kind of progress towards ISO accreditation. That's all around policies and securities and so on. Good progress on that. Environmental, again, we're working with suppliers to increase the number of kind of, you know, eco-friendly products that we have. We've reported Scope One and Scope Two emissions already, and we will report Scope Three in the early part of next calendar year.
Hopefully, like everybody, we're working with suppliers to increase the levels of recyclable packaging, which we've seen some improvements in this year.
Just a quick run-through on current trading and outlook. Group, the strong start to the FY 2023 with a 10% revenue growth to date whilst maintaining H2 gross profit margin and with lower marketing spend versus the comparative period last year. We are conscious of the current trading conditions, and we'll continue to monitor consumer behavior and tailor our pricing and marketing approach accordingly as we always do. Our strong balance sheet is an advantage in the current market. That's what's been involved in our marketing and investment start as we deal with the near-term uncertainty. Continue to focus on our long-term goals, and we're making good progress in the role of our strategic growth areas underpinned by our market share gains. We are confident in future growth prospects of the group.