Good morning. I am Trevor Harvey, the Group CEO of Stelrad, and here with me today is Leigh Wilcox, Group CFO. The agenda is as shown on the slide. After a brief overview of our results, we'll have a detailed review of Stelrad's financial performance, followed by a business review. Following the summary and outlook, we'll then move into a Q&A session. I'd like to begin with a brief overview of our performance in the first half. During the period, we delivered a resilient financial performance against a backdrop of ongoing economic uncertainty suppressing volumes in the Group's key markets. I think it is important to emphasize here that I have been in this industry for over 30 years. We are operating in one of the most sustained downturns in volumes in recent economic history.
The fact that Stelrad has continued to consistently deliver such strong results and operational progress throughout this cycle reinforces my confidence in our team, our capabilities, and our future prospects. Crucially, despite this environment, we have maintained our market leadership position with an addressable market share, excluding Russia, of 25.4%. This is a new market share metric reflecting the growth of the Russian market, and I will go into more detail on our market share position later in this presentation. We have also continued to enhance the flexibility of our operational capabilities, improving our already industry-leading on-time and full delivery rate to above 99%. I have said this before, but this is critical to our competitive position. If you cannot ship the rate as in time, you lose customers, and once you lose a customer, they are a lot harder to get back than they would have been to keep.
Leigh will run through the financials shortly, but in terms of highlights for me, we have achieved this commercial progress whilst continuing to actively manage our cost spares and optimize our product mix, delivering adjusted operating profit growth of 1.1% despite a 4.6% revenue decline, keeping our key KPI of contribution per radiator at over GBP 20, allowing us to once again increase our dividend by 2%. You will also note that we have recognized a non-cash impairment in our SPA division. Leigh will go into more detail on this in his section. To be clear from the outset, we are well placed to achieve full-year expectations of further adjusted operating profit growth, which remain unchanged. With that, I'd now like to hand you over to Leigh for a more detailed review of the Group's financial performance.
Good morning, all. We start the review with our financial snapshot. Revenue declined by 4.6% in the period, led by a 4.8% reduction in sales volumes, with ongoing macroeconomic uncertainty continuing to suppress both RMI and new build activity. There have been some favorable year-on-year trends in core European geographies, but this has been offset by a weak U.K. market performance. Despite a decline in revenue, adjusted operating profit has increased by GBP 0.2 million to GBP 15.9 million, and the adjusted operating profit margin has increased by 0.7 percentage points to 11.7%. Return on capital employed has improved slightly by 0.5 percentage point to 26.9%. For dividends, we propose to increase the interim dividend by 2% from prior year, which again reflects balance sheet strength and confidence in the Group's future growth prospects and cash generation potential.
Operating cash flow conversion is favorable year -on -year, despite investments made in working capital that are U.K. price realignment and a seasonal stock build ahead of the DIY heating season. We expect this measure to improve further in the second half and become stronger in the medium term, as I've acknowledged in our medium-term targets. Supported by an improvement in profitability and operating cash flow control, we have seen a small improvement in our leverage ratio. Following on from this overview, we'll now explore our performance in more detail, starting with slide seven. On this slide, we highlight recent trends in revenue, adjusted operating profit, adjusted earnings per share, and dividend per share at group level. In the subsequent slides, we will examine revenue and adjusted operating profit in more detail at a segmental level. Revenue year -on -year reduced by 4.6%.
The decline in revenue was due to a 4.8% decrease in sales volume during the year and the impact of the average euro rate devaluing against GBP, partially offset by selling price benefits. Selling prices continue to benefit from a positive U.K. radiator size trend, in addition to segmental mix benefit due to the European markets, where selling prices are higher, being more buoyant than the U.K. markets. Despite the revenue reduction, the Group has delivered a resilient performance, with adjusted operating profit growing by GBP 0.2 million at 1.1% to GBP 15.9 million, with a 0.7 percentage points increase in margin. The key elements offsetting the adverse volume impact include favorable material prices, with steel prices lower year -on -year, an increase in the average size of radiator sold in the U.K., and structural currency benefits.
All of the positive factors are underpinned by strong ongoing margin management that has helped to ensure that price movements are controlled successfully. The structural currency benefits arise from the way the Group has structured its Turkish operations, with again a factor of a year-to-date devaluation of the Turkish lira against the euro, which will further benefit the cost base of our Turkish operations in the future. Adjusted earnings per share has moved in line with profits. The fourth chart shows a proposed interim dividend of GBP 0.0304 , representing a 2% increase. This chart shows how we have maintained an ultimately increased dividend despite the earnings reductions in 2022. A detailed income statement, which highlights the movement in interest and tax, is included in the appendices. On slide eight, we examine the volume of premium panel mix trend in more detail.
In respect to volumes, we can see the 4.8% reduction year- on -year, with high interest rates and inflation continuing to suppress both RMI and new build activity. Positively, the Group has achieved year-on-year volume increases in Belgium, Poland, France, and Germany, supported by market trends and our sustainable competitive advantages. These favorable trends were offset by weaker market performance in the U.K., Italy, Sweden, and the Baltics. The Group's premium panel penetration percentage was slightly below prior year at 5.7%, with a subdued market environment holding back further improvement. The Group continues to promote the sale of premium panel products into all of its markets, recognizing the additional margin these products generate, and has made tangible progress in its U.K. strategy in the first half. We expect further progress in premium panel volumes as the markets recover.
Supported by ongoing operational control and margin management, despite a challenging market environment, contributions to the radiator have remained in excess of GBP 20, with a year-on-year variance mainly due to country mix. Our contribution margin of 34% provides the Group a very strong operating leverage that will drive profitability improvements as the markets recover. This slide shows how revenue has developed by operating segment. Despite a 9.6% decline in sales volumes, U.K. and Ireland revenue only fell by 5.8%. For the first successive year, the segment has benefited from an increase in average radiator size because of the heat output for each radiator sold, which has partly helped to offset the volume decline and a drop in premium panel penetration percentage, which has been impacted by low U.K. consumer confidence.
Within Europe, sales volume declined by 3.8%, with a volume improvement in Belgium, France, Germany, and Poland, 8% by adverse volume in Sweden, Italy, and the Baltics. Euro revenue in GBP terms has been adversely impacted by 1% due to a year-on-year strengthening of the average GBP versus euro exchange rate. Additionally, European revenue was negatively impacted by adverse country and customer mix. Sales in Turkey were strong, supported by market recovery, albeit with low average selling prices. This slide shows how the changes to reduce operating profit have impacted segmental profitability. In U.K. and Ireland, profit reduced by GBP 0.1 million, with impacts of volume decline largely offset by an increased radiator size, favorable selling and material prices, and structural currency benefits. Operating profit in Europe has fallen by GBP 0.1 million, with a net volume decline compensated by favorable material prices and structural currency benefits.
I've noted the full year the performance of radiators SPA within the European segment has been impacted by the weakness of German and French markets since acquisition, which has led to a non-cash impairment being recognized in the period. The Group continues to focus on improving the margin of the radiators SPA sales, with the exit from a significant loss-making contract with M25 denying them renewed opportunities to focus business efforts on the product ranges which are unique to radiators SPA. The recurring impairment and opportunity in more detail later on. European international operating profit increased by GBP 0.2 million, with the favorable volumes arising lower in lower margin countries. Central costs have reduced in the year due to one-off consultancy costs related to the appraisal of premium panel strategies in 2024. Moving to the cash flow statement and the Group's leverage position.
The first half has seen investment in working capital. This is partly seasonal, with a build of inventories before the DIY heating season, also due to the working capital impact of a prior U.K. price realignment exercise that was undertaken at the end of 2024, as previously outlined in our full year 2024 results. Capital expenditure payments are ahead of prior year, but this is a factor of timing and there is no change to our full year guidance. There's been an increase in tax payments, with the Group's U.K. business becoming a cash tax payer in the period after fully utilizing historic tax losses. Interest payments have benefited partly from the timing of payments, but also due to lower interest rates, especially the lower Euribor rate.
Leverage based on net debt and for lease liabilities is 1.48x EBITDA, which is a marginal improvement on prior year, and we expect leverage to drop further in half two. This slide gives further background on the non-cash exceptional items that have been recognized in the income statement during the period. The exceptional items are related to the radiators SPA business, and specifically relate to the impairment of goodwill GBP 2.6 million, the impairment of customer relationships of GBP 1.4 million, the impairment of property, plant, and equipment GBP 5.7 million, and the provision against inventory of GBP 2.3 million. The radiators SPA business has been exposed to declining market volumes in France and Germany since its acquisition in July 2022, resulting in deteriorating operating margins despite active fixed cost management.
Since the acquisition, the business has also been impacted by a significant low margin and utterly loss-making contract for the supply of steel panel radiators, which have contributed to suppressed European operating margins. Negotiations during the period to reset the price on this contract have been unsuccessful, and in light of the Group's focus on commercial discipline, decisive action has been taken to terminate all supply under this contract effective at the end of 2025. Whilst the exit from this loss-making contract will negatively impact the future revenue of volumes, it will result in improved contribution and the opportunity to reduce fixed costs. The exit from the contract presents an increased opportunity to focus attention on the electrical and designer product ranges, which are unique to this division and were the key strategic rationale for acquiring the business.
The refocused business will be underpinned by a rationalized product portfolio that will provide greater operational efficiency. This slide focuses on other key financial areas. Taxation, the effects of tax rates increased year-o n -year to 33%, primarily due to non-cash deferred tax movements in Turkey due to the relationship between inflation and currency devaluation. We expect the rates to reduce in half two to circa 31%. As noted previously, tax payments have increased as the U.K. tax losses have been fully utilized. For dividends, as mentioned in the overview, we reiterate that our intent is to increase interim dividend by 2% in light of that regressive dividend policy. Returning capital employed has increased by 0.5 percentage points to 26.9%.
The measure has benefited from the impairment recognized, which offset the investment of working capital and the higher GBP value of euro assets due to the weakening of the pound at the end of June. Finally, the Group's credit facilities, we highlight that our two facilities, with a total of GBP 100 million, remain in place until November 2026. The Group has generous headroom on both facilities and available cash. Our relationship with our banking partners remains strong, and we're currently engaged in discussions over the renewal of our facilities in the second half of 2025. We'll now provide some technical guidance for use in analyst modeling. We expect the market environment to show some improvement in the second half of 2025. Further benefits of lower steel prices are expected to be realized in half two. Other key input prices are expected to remain stable.
Capital expenditure and working capital investment expectations remain unchanged. Leverage based on net debt and for lease liabilities is expected to fall in the second half of the year after a seasonal increase of half one. The Group tax rate is expected to be around 31%, with some non-cash deferred tax movements in Turkey possible due to the relationship between inflation and currency devaluation. My final slide recaps the progress to date made against the medium-term targets we announced for the 2024 capital markets event. Market share is stable to date as green in Russia, where we choose not to participate. Though it's important to note that a weak U.K. market, where we are market leader, has diluted our progress elsewhere. Contributions per radiator have made strong progress towards GBP 21 without significant assistance from premiumization, which will provide future further upside.
Operating profit margin has increased by 9.5% in 2023 to 11.7% a year, despite market volume decline and further since the target was set, which is a pleasing progress. Operating cash flow conversion is well set to improve post-period investment in working capital during 2024 and 2025. Good capital employed is now well invested, and profitability growth in line with our medium-term targets will provide significant improvement in our return on capital employed percentage. As we noted in our capital markets event, the enhancement of the operating profit margin in our medium-term targets has reduced the impact of management actions that do not depend on market recovery. Since 2019, due to challenging macroeconomic conditions, steel panel radiator market volumes have fallen by 12% - 25%. Market recovery and enhanced contribution per radiator levels will provide additional profit upside beyond that given by our strategic drivers. Thank you. Now I'll hand you back over to Trevor, who will give the business review.
Thanks, Leigh. I'll now run through what's driving our confidence in Stelrad's future growth prospects. As we outlined at our capital markets event in November, we operate in a fundamentally attractive market with a significant installed base. This base provides an attractive opportunity in providing an underlying replacement cycle, a recovery in which will be a key driver for future volume growth. We then have two key structural growth drivers of increasing premiumization and the drive for decarbonization, which will improve our product mix in margin and enable above-market growth. Our ability to capitalize on both the market recovery and these mix drivers is underpinned by our competitive position and advantages. It is therefore critical for us as a management team to focus on these to ensure that our business is well placed to take advantage of this recovery.
We have the most flexible manufacturing base in the industry, alongside best-in-class customer service and product availability. Because of these, we have deep long-term customer relationships, which have helped us to grow and consolidate our market position over the last few years. We have four clear, consistent strategic objectives, which continue to provide focus and direction: growing market share, improving product mix, optimizing routes to market, and positioning effectively for decarbonization. Taken together, the Group's market opportunity, structural growth drivers, and competitive advantages, underpinned by a robust strategy, translate into a set of ambitious medium-term targets which deliver clear stakeholder value. These medium-term targets exclude the benefits of an underlying market recovery for which Stelrad is very well positioned. As I said, our market position is key to unlocking our future growth.
It positions us to take both advantage of a market recovery and replacement cycle, and to drive adoption of premium and higher heat output radiators. We remain the supplier of choice for customers. Our operational excellence underpins this, with a low-cost manufacturing base, significant production capacity, and critically, the best on-time and full delivery rate in the industry. This is what drives our position as the market leader. With a 25.4% market share, excluding Russia, I am conscious that this diverges from the market share data we have previously disclosed. For transparency, we've included the overall market share data in this slide. As you can see from the first chart, across the whole market, the top five manufacturers' market share has fallen by a net 3%.
This is primarily a result of market mix across the countries we serve, with smaller Russian domestic manufacturers benefiting from growth in the Russian market, which is included in BRG's European data. I would also note that our nearest competitor exited the Russian market later than us, and we expect this to be reflected in 2025's market share data. This, coupled with one of our core territories of the U.K. and Ireland making a lower contribution to the European market overall as a result of lower volumes, has resulted in a headline decline in our total market share to 19.9%. The strength of our market position comes primarily from our core European territories, where we remain the market leader despite the depressed volume environment. We've both grown and maintained our market share across the U.K., Netherlands, France, and Germany, key territories for a recovery in the volume environment.
The strength of our market position in the U.K. in particular positions us well to drive the adoption of premium panel and designer radiators in this territory. Alongside ensuring we are the supplier of choice in order to capitalize on a market recovery, there are two significant structural growth drivers of increasing premiumization and the drive for decarbonization that will support future demand for higher specification, margin-accretive products. As the market leader, we are in a prime position to drive the adoption of these products and have focused strategies for each to drive above-market growth that I will cover in the next two slides.
To capitalize on the opportunities presented by increasing premiumization in the U.K. market, we are leveraging Stelrad's traditional trade strengths with key initiatives to maximize the benefits of our brand positions, to ensure that installers and merchant staff are supported in upselling to higher-value products, and through installer-oriented marketing activities to remove any perceived barriers to recommending designer radiators to homeowners. Whilst we've seen a short-term impact from ongoing economic uncertainty in the U.K. on the penetration of premium panel radiators, we have made tangible progress on our strategy to drive the adoption of designer radiators. The refreshed stelrad.com website has now been launched, optimizing the consumer journey and broadening our routes to market for designer radiators where there is a greater level of direct consumer input.
We have also launched our 48-hour designer radiator service to enhance customer service levels for these products and to remove long lead time perceptions. We remain confident in the opportunity underpinned by the initiatives undertaken to improve the penetration of premium products in the U.K. as market conditions and consumer confidence improve. We continue to see long-term structural tailwinds from the decarbonization of commercial and residential property stock, with the average radiator size increasing by 2.5% during the period. Additionally, sales of dedicated higher output vertical K3 and height 900 radiators continue to grow strongly. We continue to further expand our high heat output and hybrid heat emitter radiator portfolios, alongside leveraging our brand strength and channel access to drive electric radiator sales in our core markets. The SPA business plays a significant role in positioning the Group well for the longer-term opportunity that decarbonization brings.
The business has a strong management team, clear strategic focus, strong product capability, and we are now well positioned to drive profitability from a more focused SPA business. In summary, we are excited by the prospects for increasing premiumization and the long-term structural tailwinds from decarbonization and the potential for these trends to drive demand for higher specification, margin accretive products. As the clear market leader, we have a wide range of initiatives underway across the business that will continue to position Stelrad favorably to benefit from these long-term drivers. Moreover, we expect the benefits of our strategic initiatives to become increasingly visible in our key metrics as end market conditions improve.
Alongside helping our customers to reduce their emissions footprint, we continue to make good progress against our own ASG priorities, publishing environmental product declarations, reinforcing our supplier audit process, achieving zero avoidable waste to landfill, and submitting our first communication on progress report. I will now run through our outlook for the full year and beyond. We are well placed to achieve the board's expectations of further profit growth for full year 2025, which remain unchanged. The board expects a modest level of market volume improvement in the second half of the year, augmented by the strength of our market position, sustainable competitive advantages, operational excellence, alongside continued commercial and cost discipline.
Importantly, everything we have outlined today, from the Group's resilient performance and operational progress to its strong strategic positioning, all serve to reinforce my confidence in the Group's prospects of long-term growth and our ability to continue building sustainable shareholder value. With that, we'll turn to any questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We'll pause for a brief moment. Thank you. We'll now take our first question from Aynsley Lammin of Investec. Your line is open. Please go ahead.
Thanks. Morning, Trevor. Morning, Leigh. Just three questions from me, if I could, please. First of all, just on the U.K., the volume decline you saw in H1, just wondered if you could give a bit more color around that. You know, RM&I versus New Build, is there just a lag? We've obviously seen New Build benefit, you know, the brick companies as an example. Is that just a lag effect? Do you start to see that come later, given where radiators go into the build process? Just on the kind of bigger radiator size, you know, what's driving that? Is that regulation and is that sustained going into the second half? First question. Second question, just obviously flagging up a better volume recovery in H2. Just wondered what you'd seen in July trading, you know, what the momentum looks like, into H2.
The third question, just on steel prices, I think you're highlighting a benefit you expect in H2, given all the good work you've done with the margin improvement. Do you expect to be able to retain that at the bottom line? Just a bit more color around that steel price trend. Thank you.
Yeah, I'll be picking that up, Leigh.
Okay. I think you kind of partly answered your own question there, Aensley, in terms of the U.K. market. I think we all obviously have 60% - 70% of our U.K. market focused around RMI, which has been still very suppressed, as we've noted, and I think many others have noted as well. I think in terms of New Build, we are going to be later on in terms of the cycle going to New Build in terms of radiator being one of the last things to be put into the fabric of the building. Any kind of upside on there we'd expect to have much later than, for example, the brick guys. Although I think we have seen a bit of a pleasing uptick in our Elite sales, which are our primary kind of New Build product in the last few weeks.
In terms of the radiator side, we think that's regulation-driven. Obviously, over time, we expect it to improve further with the adoption of heat pumps, although the timing on that is obviously never, never guaranteed given the initiative changes. In the short term, even things like the regulation to turn down boiler temperatures are requiring bigger emitters to cope with a lower input temperature. That's what's driving that trend. In terms of the volume recovery and what we've seen to date, we've had quite a pleasing opening to the year in terms of the July volumes showing an improvement on last year, which helped to underpin our sentiment that we expect some modest recovery in the second half. In terms of steel prices, finally, year -on -year, we've got some benefits from steel prices.
A lot of that coming in from our Turkish business, and we expect to be able to hold on to a significant part of that within the marketplace, although we are conscious of making sure we tread the right line between maximizing profitability and market share. It's one way of hoping for some benefit, but we have a watchful eye on that.
Very helpful. Thank you very much.
Thanks, Aynsley.
Thank you. We'll now take our next question from Sam Cullen of Peel Hunt. Your line is open. Please go ahead.
Hi. Morning both. I've got three as well, please. The first one is just exploring the guidance on volumes to modestly increase in the second half. Can you give any more color, I guess, in terms of how you might expect that to split between geographies and markets or customer? Are you expecting a New Build recovery to offset sub-year RMI demand still, or are you expecting Europe to accelerate and the U.K. to remain depressed? That would be helpful. The second question is on the market share in the U.K. dropped back this year versus 2024 versus 2023. Can you talk a little bit about that? Lastly, just one for Leigh, really, that tax rate guidance you've given for this year, would we be correct to assume that would be similar for 2026 and 2027?
Yeah, I mean, in terms of kind of recovery of volumes, we said that's kind of modest. I think we're down 4.8% year -on- year in the second half. Some of that will be down to time, and we hope to get kind of back towards kind of in line with prior year in the full year, you know, or at least most of the way there. I think that would be some guidance. In terms of geography, I think we'd expect some New Build recovery to support the U.K.. Europe in general, it's been quite stable year -on -year with some increase in our underlying kind of core markets.
There's been some kind of trends in Italy and Sweden, which are more kind of just timing in terms of last year in Sweden, we have had some stock going into a merchant in Sweden, which means that's down year -on -year, and that will probably improve the situation in the second half on a comparable basis. Market share U.K., Trevor, is there anything you want to comment on on that one?
I mean, market summits are a fine line between regaining market share and preserving your contribution per radiator. I think we've done a pretty decent job of walking that tightrope. Our U.K. market share, I think it did fall by something like 0.5%, but we still continue to be the dominant market leader with 52.1% share, down from 52.6%.
Tax rate guidance, Sam, I think 31% we've caught up for this year. I think that's probably going to be the peak and expect some improvement in 2026, 2027, possibly half a percent per annum going down each of those years.
Okay, great. Thanks, Leigh.
Thanks, Sam.
We'll now take our next question from Greg Poulton of Singer Capital Markets. Your line is open. Please go ahead.
Morning, Trevor. Morning, Leigh. Can I just ask about, obviously, you've had strong progress on margins in the first half, but what levers there are to pull in the second half and next year to, I guess, offset those volume reductions? Could you also give a bit of color around radiators' SPA and how you see the rationalization of the range in that business and any costs that you could take out as a result of that? Lastly, on the new website launch, what's the response been to that? Have you seen good traffic levels so far?
Okay.
Sorry, Leigh.
Sorry, Trevor.
I'll answer that in reverse order, Greg.
Okay.
It's early days for the website in the U.K., but the last four weeks, we've seen a 15% increase in terms of traffic to the website and a 5% increase in purchase rate. These are very early signs, but we're very pleased with the way the website has been received by consumers in particular. In terms of further levers, we do have further levers to pull in terms of managing our costs. In terms of the SPA costs, Leigh, can you comment on that?
Yeah, and in terms of that business, obviously, the impairment's recognized in the period has been to that market volume story since we acquired the business. That's going to be hampered over time by a loss of low margin and likely loss-making contracts. Now, that contract is quite significant in terms of size, revenue, and volume, and probably detracts from what we really want the business to focus on, which is that electrical and designer product, which is the key strategic rationale behind why we bought that business. The future for that business obviously is removing that loss-making contract, giving an immediate benefit from 2026 onwards. The focus and the opportunity is one we're really excited about in terms of the ability to drive efficiency in operations through a more rationalized product portfolio in the future. I think that's one we're looking forward to working on with the management team.
Great. Thanks, Leigh. Thanks, Trevor.
Thank you. We'll now take our next question from Edward Prest of Berenberg. Your line is open. Please go ahead.
Morning, Leigh. Morning, Trevor. Thanks for the presentation. Two from me, please. Firstly, on the competitive environment, how are your competitors behaving in light of the volume decline across your markets? Are they cutting price? Are they chasing volumes, or are they holding reasonably firm? Secondly, in relation to this loss-making contract that you are ending at the end of this year, what do you estimate as the contribution impact kind of across the group from losing that? I imagine it'll lead to an increase, but is it of sufficient scale for that to be material and sort of help you in your pursuit of the GBP 21 contribution per radiator target that you've got? Yeah, thanks.
I'll answer the first one, Leigh, and you can do the second. In terms of environment, Ed, in Western Europe, the markets are pretty stable and pretty secure, and we're not seeing any competitors being particularly aggressive or difficult. The only territory where we do have some competitive tension is in Turkey. In Turkey, there are a lot of local producers, very, very small scale, and we are seeing some quite aggressive commercial tactics develop in Turkey. I would expect that we would reduce our exposure to the Turkish market in the second half of 2025. Right, Leigh, the loss-making contract.
Yeah, I mean, the contract in volume and, kind of share value term is quite significant. It's probably just 3% or 4% of our volume. Obviously, the losses have varied over time and only really to become rapidly loss-making. The impact will be significant in terms of, because of the kind of percentage of volume, it will have favorable impacts on our contribution per radiator. Kind of motivated by the loss, it'd only be marginal. We expect to have quite a positive overlap on those targets.
Thank you.
Thanks, Leigh.
Thank you. Thank you. We'll now take our next question from Toby Thorrington of Equity Development. Your line is open. Please go ahead.
Thanks very much. Morning all. I've got a few supplementaries to questions that have already been asked now, I think. Firstly, in U.K. and Ireland, in the sort of RMI segment specifically, could you provide a bit more sort of color and insight on channel performance? You know, whether it's merchants, specialists, retailers, other channels that you address, and whether your sense is whether there's any sort of destocking or anything of that nature, which has exaggerated the nature of the, is it 9.6% volume reduction?
Sorry to add, Leigh.
There is certainly no evidence of any significant destocking across any channels in the U.K. and Ireland. In terms of channel development, clearly online and retail has taken a little bit of share, albeit I note that the Kingfisher performance hasn't been as good as people were expecting. In terms of online sales, I think it's important to understand the importance of online and pure play. I mean, from Stelrad's perspective, 10% of all of our premium panel and designer products are through our online channel. When it comes to decorative steel products, almost 20% of our sales are through our own stelrad.com website. We are seeing online play a more important role in terms of designer and higher-value products where the consumer is key.
Okay. Thank you. I assume that splitting the territories in Ireland has been a bit further than U.K. mainland, has it, Trevor?
Sorry. I missed that point.
Just to repeat the question, just to split the territories, I assume that the Irish market's been a bit firmer than U.K. mainland, has it, in the first half?
Ireland has been very difficult, very challenging.
Difficult. Okay. Interesting. Just onto SPA, you may have already sort of answered this question, I think, but I'll just try it again. I'm just interested to know how material this customer was to SPA at the point of acquisition. If you could give a percentage of revenue figure, that would be helpful. I think I picked up during the presentation that there are steel panel customers. I'm assuming that we'll be reducing steel panel or eliminating steel panel production in Italy now, and that will all be provided out of Turkey going forward. Would those assertions be correct?
I think when we look back to the point of acquisition, it has always been a significant element of the business in terms of volume and revenue, but it was always a very minor part of the profitability of the business. We've looked back over time when we bought the business to now, and that business has never contributed a significant amount to the profitability, and therefore, it's always been a marginal part of the business. Over time, it's taken quite a lot of focus away from what we really bought the business for, which is that electrical and designer product, which is kind of what you referred there. In terms of steel panel in Italy, that's definitely something we're considering. We want to give the opportunity to have an organic transition away from that.
This effectively now gives an opportunity to make sure that business is focused on what we really want it to be focused on and what we really bought it for, which is electrical and designer products, which are integral to our growth drivers.
Yep. Sure. That's very clear. Thank you. Obviously, separately, final question from me. You're in the middle of refined conversations. I obviously don't want to prejudice those, but just interested to see where you think your net debt might be at the year end. I've sort of got penciled in mid to low GBP 50 million. Is that a bit aggressive, or is that where you see it also?
It depends what makes you look at that in terms of I think it's excluding operating leases. I'd agree with that kind of comment. We should be leaving it a bit below actually. Mid to late 50s sounds about right.
Yeah. Okay, that's great. I'll leave it at that for now. Thank you very much.
Thank you, Leigh.
Thank you. Can I?
Thank you.
Can we close this now?
Yes, please. There are no further questions in queue. Handing it back to Trevor Harvey for closing remarks.
Great. Can I just thank everyone for joining the call today and for everyone's ongoing support of Stelrad Group PLC? Thanks again.