Hello everyone, welcome to the Victorian Plumbing's Full Year Results for the Year 2025. I'm Mark Radcliffe, the CEO. I'm here today with a few of my colleagues to give you an update on what we've achieved through the year. Today you'll be hearing from Dan, our CFO, Steph, our Group MD, and Kate, our MFI MD. 2025 has been an interesting year for us, a busy one as usual. Victorian Plumbing continues to be the number one bathroom retailer, obviously being solely online, and achieving our record revenue is quite telling about where the consumer is and where they're wanting to purchase these goods, and we continue to take market share, albeit there's less out there to go at now as we dominate the market.
There is still clearly a shift from offline to online that's happening, and the domination that we have in the market is solidified by our approach with marketing, our continued aggressive spend in this area, and our continued brand development, which is always helpful for our conversion. Victorian Plumbing's trade area, another area that we've been pushing, you know, we've seen good growth, 10% year- on- year. It's taken us to 24% of our overall revenue, which I think is quite respectable again in this, what's been a challenging market. The work that we're doing on those is still ongoing. We continue to expand the team, introduce more features to our trade app, which we've spoke about in the past, and then dedicated marketing.
So the tile and flooring category, the new adjacency that we've been chasing now for a couple of years, is continuing with its aggressive growth, 42% year- on- year growth, which is fantastic to report, but it's still early days for this category. We've got a lot of plans, product acquisition, marketing, all of these things have got a lot of work still to be done, but I'm pleased to see this aggressive growth. The marketing in particular is something that we've been rolling out through the year, more and more dedicated marketing to this category, and then the stock availability has been quite an important factor in this growth. The new warehouse and the new operation and the space that we gained allowed us to bring in stock and have much better availability. In addition to that, we had the free tile sample introduced.
We brought in some machines from Italy, and they proved to be super helpful to meet the demand of the tile samples. And when we introduced the free samples, the demand increased considerably, and we've kept up with that. So, you know, it's been really good, and there's more still to go at. Victorian Plumbing acquiring Victoria Plum was a very important strategic move. Obviously, the similarities in their brand and name were always going to be a problem, and with our ambitions for what we need to achieve in the future, it was critical for it to be removed as a competitor and as a confusingly similar name. And by acquiring and closing it, it's now cleared our path for continued brand development and customer acquisition.
We are the number one player in the market, and that process obviously ensured that that remains to be the case, and all our investment in marketing is now absorbed by ourselves and nobody else. The other significant achievements through the year would be the launch of MFI. I think it gives us the opportunity to replicate what we've achieved with Victorian Plumbing. Our intention is for MFI to become the biggest homeware stores in the country, and you know, with the synergies and the experience that we've got within the business and Victorian Plumbing, we've been in a really good position, and you know, it's got off to a very, very positive start, and everyone's very excited about it. I'm now going to pass over to Dan Barton, my trusted CFO. Hopefully, he can update you more specifically about what we've achieved during the 2025 full year.
Thanks, Mark. We'll now walk through our performance for the year, highlight key achievements, and share how we're well positioned for continued growth. Victorian Plumbing delivered another strong year. Revenue grew by 5% to GBP 310 million as we continued to gain market share in bathrooms and tiles and flooring. At group level, even after the planned startup costs for MFI, adjusted EBITDA grew 17% to GBP 31.8 million. Adjusted profit before tax was GBP 21.8 million, reflecting additional depreciation and finance costs from our successful warehouse transition. Importantly, tax benefits linked to that investment helped to lift adjusted diluted EPS by 2% to GBP 5.4. This financial performance demonstrates our resilience and positions us well for continued growth. The slides that follow next focus on Victorian Plumbing, inclusive of Victoria Plumb, but excluding MFI. Order volumes continued their strong growth trend, rising 6% this year to 1.1 million orders.
This performance was driven by the successful acquisition of Victoria Plumb and the return of our strategic marketing investment from Q2 onwards. We've consistently outperformed the wider home improvement and DIY market, staying ahead for the past two years and continuing to gain share. Our order volume growth over the past three years underlines the strength of our strategy and our ability to deliver growth even in a challenging market. Average order value declined slightly by 1% over the year. However, the second half marked a turning point. AOV grew 2% compared to the same period last year and 4% versus the first half. This is the first time we've seen AOV growth in several years, driven by the closure of Victoria Plumb in November and a small shift back to third-party products in H2 compared to H1.
Importantly, we've maintained price stability for customers, avoiding increases or heavy promotions to protect long-term value. Trade revenue continued its strong trajectory, growing for the sixth consecutive year to GBP 73.8 million, or 24% of total revenue. This also contributed to a 5% increase in items per basket, now averaging 3.3. These trends reflect the strength of our customer proposition and the growing relevance of our trade channel. Our tiles and flooring category delivered an outstanding performance, with revenue increasing 42% year- on- year and exiting the year closer to 50% growth now that we have unlocked capacity via the new warehouse. As we have communicated, this remains a significant focus area for us, and we see plenty more opportunity ahead in a large and attractive market. Our strategy is focused on capturing this potential, and these results show how we're on the right track.
Our product mix continues to demonstrate the strength of our own brand offering, which remains a key pillar of group profitability and enables us to invest confidently in marketing. Gross profit increased by 4% to GBP 153 million, with margin holding at a very healthy 49% despite the financial impact from the Extended Producer Responsibility tax introduced in April 2025. This consistent margin performance, alongside the growth in own brand share for the full year, highlights the resilience of our model and its ability to drive profitability. We remain confident that this mix positions us well for sustainable growth even in a challenging market. Now let's look at profitability. Adjusted EBITDA grew 25% this year to GBP 34 million, with margins improving by 2 percentage points to 11%. This performance reflects the benefits of marketing efficiency and disciplined cost control, alongside continued strategic investment in people and property.
Our margin bridge shows clear progress, moving from 9% last year to 11% today. These results underline the strength of our model and give us confidence in our ability to deliver sustainable growth and shareholder value. Adjusted profit before tax came in at GBP 24.3 million, up 5% on last year, with margins holding steady at 8%. This performance reflects planned increases in depreciation and finance costs following the successful completion of our warehouse infrastructure transition. While these non-cash charges impact reported PBT, they are linked to investments that strengthen our long-term operational capability and are already bearing fruit. These results once again demonstrate disciplined financial management and position us well to deliver sustainable profitability as we move forward. I will now hand over to Steph to discuss the operational aspects of the business.
Thank you, Dan. To kick off, we are pleased to report an underlying cost reduction of 1% during an especially busy period of transition, with efficiency gains and previous investments beginning to generate financial returns. Underlying costs now represent 38.5% of revenue, a decrease of 2.4 percentage points compared with the prior year and moving closer to the more normalized level recorded in 2022. We are also pleased to have delivered a reduction in property spend, driven by the exit from high-cost third-party warehousing that is no longer required. Moving on, our marketing has become even more effective this year, helped by the closure of Victoria Plumb, and we've continued to build momentum by investing in the strength of our brand. That investment is already helping us reach more people, deepen consumer awareness, and better set ourselves up for long-term growth.
We spent GBP 84 million on marketing overall, with the majority supporting our online activity and a growing portion dedicated to brand building, which is now around 10% of our marketing spend, up from just 3% a couple of years ago. It's a meaningful shift that reflects our commitment to strengthening the Victorian Plumbing brand for the future. Importantly, we've kept our marketing spend well-managed and efficient. Even as we've invested more in the brand, marketing remains tightly aligned with revenue, underscoring our consistently disciplined approach. This balance, being smarter with our spend while investing in the right places at the right time, gives us a strong platform to continue growing brand strength and capture even more market share in the years ahead. Our brand strategy is delivering clear results.
Victorian Plumbing's brand awareness has risen to 70%, up from 66% last year, a significant improvement driven by effective brand marketing and supported by the closure of Victoria Plumb. This positions us as one of the most recognized names in the market, alongside home improvement brands that operate costly physical stores and many more categories compared to Victorian Plumbing. Strengthening brand awareness is a key part of our growth strategy, and we'll continue to invest to build even greater visibility and customer loyalty. Our infrastructure investments have started to deliver operational leverage. Revenue per FTE has increased significantly versus last year, driven by additional capacity from our new distribution center, enhanced automation and streamlined processes, reducing downtime and manual rework, increased throughput without adding headcount at the same rate. We now outperform major competitors on a revenue per FTE basis, a clear competitive advantage of our pure-play online operating model.
While peers have seen only marginal changes, Victorian Plumbing has taken a substantial step forward, and there's more room for improvement, and this year marks the beginning. As we continue to refine our processes and ways of working, we see further opportunity to drive efficiency and profitable growth. I'll hand back to Mark to provide some more color on the strategy.
Thank you, Steph. Victorian Plumbing, acquiring Victoria Plumb, was a very important strategic move to remove that brand confusion in particular. Although they were the next largest competitor, it was more about the brand confusion. We're still in our early phases of our journey, and our ambitions are considerable. Having that confusion in a similar brand in existence would have been a difficult journey, made more difficult by their existence. And our brand awareness continues to move forward as a result. We're now achieving a brand awareness of 70%, so a really important part of our journey. The warehouse move was very challenging. You know, it probably took us to some dark places. Personally, I know it was a huge challenge, but we overcome some of the difficulties with a move like this.
I'm glad to say we had a small turndown of the marketing at the beginning of the year in the first quarter in order just to allow us some space and time to establish ourselves in there, which was a sensible thing to do. There's still work to be done on there with some of the automation that's still rolling out, but it's all going really, really well so far, and we're seeing some efficiency coming through now, which is good to see the reward for all of our effort, so the trade offering that Victorian Plumbing is seeing continued growth. We've had 10% growth year- on- year, now represents 24% of our overall revenue. I'm pleased to say this has been helped with the continued developments of the offering to the trade customer.
We introduced a trade credit, which now allows trade customers to utilize a credit limit and continue purchasing from us. It's something that we've reluctantly introduced. I didn't believe that it would help, but it actually has helped. So one of the benefits of moving to our new warehouse in Leyland was the operational improvements that we've been able to seize. And one of the frustrating elements of our previous life in the other warehouses that we had, which were very segmented, we had a cutoff time for next delivery of 12:00 P.M. And I know both myself and I'm sure many of our customers were finding this frustrating, especially when we hold so much stock and we have such good availability. Another one of our key differences between ourselves and competitors.
Being able to move this cutoff time up to 4:00 P.M., where it is currently, has been a big improvement for the customer offering, and in particular for trade. Trade naturally needs goods quickly, and this is allowing us now to service the customer and provide a better overall service. I think over time, the knowledge and the experience of customers utilizing this service will build, and we'll get more repeat order on the back of it. With regards to our offering of tiles and flooring, the tile samples are quite an important part of the story. This product is in its very early phases of moving from offline to online. By providing these free samples quickly delivered to the customer in large volume, the demand for these is quite strong.
It shows that there's a lot of maturity still to come in this sector, which I'm confident will come over time. But a tile itself is quite different to many of the other products we sell. It's got a texture, the color variations. Even though imagery has become really clever and the technology has improved, people still want to feel and touch and get a sense of what the product will look like in their home. So these tile samples are quite important, and our improvements with what we do for these is helping conversion. Victorian Plumbing's marketing strategy continues to develop. One of the things that we've introduced in this current year, something we've been working on for some time and quite a difficult one to solve, is the audible part of our brand.
We've introduced a jingle, a sound to associate with the brand, and that's been played out on TV and radio. It's great to finally get something that people can link the audible part of our brand. And over time, we'll hopefully establish that as being something that is well known as the visual part of our brand. With the trade category within Victorian Plumbing, we've seen sports sponsorship as quite an important area for us to put the brand out there in front of the target audience. Football has been a key starting point for us, and you'll be aware of our Bolton Wanderers sponsorship. We did a three-year deal originally with them. I'm pleased to report we've renewed for another three years. We've got involved with tennis at Wimbledon, and we've also repeated our sponsorship with the Championship Snooker, which has been again helpful.
We're looking at all different areas with sports sponsorship. As you'll see from what we've done this year and what I've been able to update you on now, this is not the end point. There'll be more to come in the near future. The utilization of the MFI brand, which we acquired during the Victoria Plumb acquisition, it's a huge TAM. I found this really exciting as an opportunity. It gives us the biggest market that we could go after in the homeware sector, and it allows us now to cover more categories outside of what we do on Victorian Plumbing. We've got more rooms that we can service, and within a more suited brand for those other rooms. The Victorian Plumbing name is very much to do with plumbing products, whether it be kitchen, bathroom, and the tiles and flooring.
That all works really well within Victorian Plumbing, but MFI now has allowed us to branch out further, and we're really excited about the opportunity that MFI presents for us to tackle all areas of the home and garden. So MFI has got a lot of opportunity. As I said at the beginning of this presentation, I'm very pleased to say I've got Kate here with us today. She's going to be telling you more about the MFI brand and what this means and what we're going to be doing with this brand going forward. Kate shares my passion and ambition with regards to MFI and what we can achieve. Our shared goal is to become the largest online homeware store in the U.K. She talks and thinks about it night and day. I'll let her tell you more about it now.
Thank you, Mark. As most of you will know, this summer, mfi.co.uk went live in the form of a soft consumer launch, the first significant milestone on our journey to reinventing MFI, a brand that remains well recognized in the U.K. retail market despite a prolonged period since it last traded. As Mark and Dan explained at our half-year results in May, this strategic move into homewares and furniture allows us to enter a sizable new market where we can use our competitive advantage to drive sustainable growth. As the market leader in bathroom, we already know the U.K. consumer really well, and we understand how best to help them on their home makeover journey. Furthermore, our recent warehouse transformation means we're well set up for success. As part of the Victorian Plumbing Group, we have the infrastructure, expertise, and purchasing power to help effectively scale up this new venture.
Now I'd like to tell you a little more about our fresh take on MFI and how we see this as a credible challenger to other more established competitors in the segment. The homewares market is large, but it's fragmented, and in MFI, we have a three-letter brand and domain name that's short and snappy, the likes of which just aren't generally available nowadays. While the name itself and its market recognition bring huge value, our aim is to be uniquely distinct from the MFI of old. We want our customers to discover a fresh version of the brand with a new and improved product range, retailed solely online at mfi.co.uk via our established e-commerce model. With an energetic and warm tone, our branding is bold and innovative, designed to stand out in a crowded and generic space of soft beige competitors.
Our website is purpose-built to be an engaging and easily navigated space where customers will feel welcomed. We have a dedicated team of buyers using their breadth of prior experience in the segment to bring a carefully selected product range to our customers. As you can see from the imagery on the slides, that product range covers most rooms in the home: living room, hallway, dining room, bathroom, bedroom, and beyond. From beautiful bedding and textiles to practical and stylish freestanding furniture, from centerpiece lighting to statement décor. These products are accessible across price points with good, better, and best pieces in each of our category structures in line with the rest of the group.
This allows us to support many more customers in expressing their style at home, especially as we believe MFI will appeal to an even broader customer base than the core bathroom business across a wide age range, with both homeowners and renters looking to shop with us. Whilst we really are just getting started, the group's existing operations and expertise have laid solid foundations for the new business. We have an enormous advantage through the strength of our people, both with significant e-commerce knowledge within the existing Victorian Plumbing team and the dedicated MFI hires we've made over recent months. We also have significant strength across our infrastructure, whether that be our in-house technology, our supply chain and logistics network, or the dedicated warehousing space used by the business, and we have strength in our quality and stylish products marketed via the reimagined MFI.
Since the website went live, we've held back on actively marketing the brand and have used UK stock and dropship supply routes to minimize risk, while we test systems and processes and learn as a team. Our key focus currently is on building out the product range, switching where it makes sense to international suppliers, all the while building customer trust. The feedback we're receiving from customers already tells us that this soft launch period is going well. We have over 80 Trustpilot reviews with an excellent rating and a Trust score of 4.7, but there's still lots to do. It's great to reflect on how far we've come in such a short space of time, and we're excited to realize MFI's full potential. I'll now hand back to Dan for the rest of the financial update.
Thank you, Kate. Cash first, and on a group basis, our strong underlying performance is reflected in cash generation. Free cash flow increased 29% this year to GBP 24 million, with operating cash conversion improving to 77% from 68%. This demonstrates the strength of our model and disciplined approach to working capital, even as we continue to invest in growth. Robust cash generation gives us the flexibility to fund strategic initiatives and deliver long-term shareholder returns. Our capital allocation policy is designed to enhance shareholder returns while supporting our growth. We're prioritizing both investment in existing markets and in unlocking new opportunities, including leveraging the strong Victorian Plumbing financial covenant to expand into homewares through MFI. We continue to deliver sustainable dividend growth, with the proposed ordinary dividend for 2025 increasing by 34% to GBP 2.15 , supported by strong cash generation and a robust balance sheet with no indebtedness.
Looking ahead, we also see opportunities for selective M&A and international expansion, complementing our existing strengths going forward. Our consistently disciplined approach ensures we can fund growth, reward shareholders, and maintain financial flexibility. In summary, we've delivered strong growth, improved profitability in Victorian Plumbing, and maintained a robust financial position across the group. Turning to current trading, the group has started the year on a strong footing with continued revenue growth across all categories and in line with market expectation. MFI remains a key focus area as we build out its product range ahead of a full launch in 2026. While we anticipate an overall loss for MFI of between GBP 2.6 million and GBP 3.4 million this year, this investment is critical to positioning the brand for long-term success. Looking ahead at the group level, our outlook remains focused on delivering against our long-term strategic goals.
We are making solid progress across our key growth areas, supported by the market share gains we've achieved in recent years and the operational improvements implemented across the group. While consumer and economic conditions remain volatile, these foundations give us the confidence in the group's future financial prospects as we continue to execute our strategy with discipline and clarity.
Thank you for listening and watching the Victorian Plumbing 2025 Full Year Results. I hope that's been informative and helpful, and I look forward to speaking to you again in the future.