Earnings Call: H1 2020

Sep 8, 2020

A very good morning to you all, and thank you for joining us, and welcome to our first virtual results presentation Alan and I are here in Northampton for only the second time since March 18th. After my introduction and sharing a few thoughts, Alan will talk through the financial performance TJIC update and look forward. So the first half of twenty twenty was one marked by progress despite the challenges of the COVID pandemic. We've all been impacted by COVID, and Travis Perkins and the Travis Perkins family has been no different. The company as a whole plus all our valued colleagues and their families. The challenges we've had to overcome have been extraordinary. Arguably, this has been the most tumultuous period in our over 200 year history, But the measure of success for me, of how the crisis has been navigated is not only about how and what decisions and moves we have made to operate through the lockdown and beyond, but actually how the culture of the business has stood up to the test and how we've harnessed that culture and the moral compass to adapt the business to be flexible and agile and ensure that we not only survive whatever befalled us, but actually we came out stronger and better prepared to outperform our markets. Clearly, there's been a significant impact on the performance of the Travis Perkins group with a 20% drop in sales, which has led to a drop in profitability in the first half. But that's only half the story though. And like many businesses, we've worked very, very hard on our cash and liquidity management with real success and strong cash inflow, and as Alan will outline a positive impact on our net debt position. Later on, I'm going to talk you through the phases of how we adapted to the rapidly changing environment that we all found ourselves in pivoting operations very quickly, all the while continuing to serve our customers and provide them with the essential services that they need, being involved in the construction of the new NHS Nightingale hospitals as well as ensuring the critical infrastructure of the country remained operational and our homes remained warm and dry. But as a business, we just simply didn't stop there. It was very clear that our customers and we needed to change the way that we worked in order to access the materials that they needed. And we moved at pace as a group to accelerate the strengthening the core of our business to develop and improve our proposition for our customers These changes stand the group in good stead for the future, not just to trade through the crisis, but actually as a platform for future growth. We've made some great strides forwards. And whilst there's still a huge amount to do, as I'll delve into later on, the business is strongly placed to outperform its markets. But firstly, over to Alan. Thank you, Nick, and good morning, everyone. Before I take you through the detailed financials, I thought it might be helpful to remind you with some of the presentation aspects of our 2020 interim results which should be borne in mind. Firstly, in terms of portfolio changes, Toolstation Europe has been fully consolidated since the 1st October 2019, whereas we had previously accounted for the business as an associate company. And at the end of January 2020, we completed the disposal of the wholesale plumbing and heating activity, PFMP. Wix is included in 2020 and in all comparatives as the demerger was placed on hold in March. And then in terms of impacts of the pandemic, these are included in the underlying adjusted operating profit as presented. And I will try and highlight the details of some of these impacts as we walk down the income statement. We have, however, presented the costs of the significant restructuring ring announced in mid June as an adjusting item given its nature and its quantum. So Turning to the financial highlights. After encouraging start to the year with 2.4% revenue growth in the 11 weeks to 18th March, the impact of the pandemic and then lockdown was profound. Revenue for the half declined by 20.2% to CHF 2,780,000,000 and declined by 19.3% on a like for like basis. Given the fixed cost base of the business, the revenue decline had a significant impact on group profitability, resulting in an adjusted operating profit of 1,000,000 versus million in H1 'nineteen. The group recognized adjusting items 1,000,000, principally the significant business restructuring program we announced in June. Adjusted earnings per share fell to 1.4p per share, while basic EPS fell to a 45.7p loss with the difference primarily driven by the costs of the restructuring program. On the positive side, Cash generation in H120 was extremely strong, reflecting the group's focus on liquidity management throughout the pandemic. The group's covenant net debt position fell by 1,000,000 from the position at the end of December 2019 to 1000000 and by 1000000 from the position at the end of June 2019. Given the ongoing level of uncertainty in the UK economy and the group's end markets, the board is not proposing the payment of an interim dividend. The board recognizes the importance of dividends to shareholders, and so we'll keep this position under review taking into consideration the trading environment in the group's end markets and the ongoing liquidity position and will provide a further update in due course. On slide 8, I've broken out the monthly revenue trends by reporting segment and have also split out Wix core DIY And Kitchen And Bathroom Showroom Elements. As you can see, Toolstation has delivered a consistently strong performance throughout the half. While the lockdown had a significant impact on Wix, you can see how quickly core DIY recovered, reaching growth of almost 50% in June. Kitchen and bathroom revenue was close to 0 during April and May as home installations were on hold during the lockdown. Since that time, both delivered sales and orders have recovered well and leads remain encouraging. The Merchanting And Plumbing and Heating segments show similar like for like patterns, albeit Plumbing and Heating has remained weaker overall. Given the slower return of work in the home. Both segments remained open during lockdown for essential works, and have gradually recovered month by month since April. Within Merchanting And Plumbing And Heating, impacts differ by business unit depending on their predominant end markets. Of note, both commercial and newbuild continue to lag while RMI is relatively stronger. Across the group, like for like sales trends in July August, have returned close to prior year levels, supported by domestic RMI and current strong trading in consumer DIY markets. If we now look at the drivers of the 20% decline in revenue, as you would expect, this is virtually all driven by volume. Overall changes in pricing were modest in the period and were offset by mix. Changes in the portfolio and branch network result of a net reduction to revenue with the disposal of P FMP and the branch closures in June more than offsetting the contribution from Toolstation Europe and new branches opened in the previous 12 months. There was one additional trading day in the period as well. Contributing 1,000,000 to revenue. Year on year, the gross margin percentage at a total group level was unchanged and this despite the impact of the pandemic. Given the unprecedented circumstances in the period, there are a number of moving parts below the surface, which I think you'll want to understand. Firstly, there are some negative impacts due to the pandemic These are, 1, a reduction in anticipated annual volume rebates from suppliers given the significantly lower stock purchases in the first half. 2, a higher proportion of customer orders delivered particularly in merchanting and 3, an inefficiency in our supply chain operations due to distancing and other measures to ensure the safety of our customers. The second key factor is a small falling margin within certain segments due to sales mix. So for example, in merchanting, heavy side volumes have held up better than light side. In Toolstation and Wix, we have experienced some drag from the strength of DIY and also seasonal sales as consumers have undertaken jobs in and around the home and particularly in the garden during Q2. Conversely in Plumbing and Heating, we've seen a positive customer mix with installer sales holding up better than contract volumes. A third factor is the overall segmental mix. Both Toolstation and Wix are higher gross margin businesses than Merchanting And Plumbing And Heating. And this factor outweighs the 2 earlier factors I described. At this stage, It is quite difficult to predict how the second half will unfold, but I would expect a broadly unchanged gross margin overall year on year. With such significant effects fit line. Some of these will prove to be predominantly H1 items, and we would expect some reversals in the second half. So on slide 11, I've tried to bridge the H1 2019 operating profit to H1 20. You can see that of the million fall in EBITA, 1,000,000 is from the gross profit line given the lower volumes, meaning that overheads overall have positively contributed. If we unpick that overhead movement, of a net million positive, you can see the following elements. Firstly, government assistance of 1,000,000 with 1,000,000 from the furlough scheme and 1,000,000 from the business rates holiday. As of 10, June, virtually all colleagues who have been furloughed had returned to the business, meaning there will be a negligible contribution in H2. On the other hand, the business rates holiday will run until March 2021, and we would expect around 1,000,000 of benefit in the second half Overhead related inflation and movements in central costs of 1,000,000 together with 1,000,000 of investment in growth, principally driven by the Toolstation branch opening program. And then there are 1,000,000 of losses in Toolstation Europe now fully consolidated. We then realized 1,000,000 of overhead savings in the half which is a combination of prior year overhead reduction initiatives and savings made since lockdown I'll cover future savings from the restructuring program announced in June on the following slide. And then within provisions and accruals, it's important to note we've recognized additional charges due to the impacts of the pandemic in line with our accounting policies. Of these, I would expect a number to unwind in part in the second half, and we've estimated these reversing items at around 1,000,000. The amounts composed of 3 main items: 1 holiday pay accruals as colleagues had taken fewer days leave in the first half than their entitlement. Secondly, an increase in debtor provisions under IFRS 9 and thirdly, increased provisions for slow moving stock given lockdown. The final element of the bridge is a year on year reduction in property profits of 1,000,000 given lower completions in the period. So turning to program on 15th June. The program takes into account the lower volume outlook given the economic conditions. And is designed to help mitigate the anticipated fall in gross profit contribution around 165 branches have been closed, primarily in the trade merchant businesses, including plumbing and heating. Together with selling and administrative roles across the businesses and also in corporate functions, the total targeted reduction in roles is around 2,500, roughly 9% of the workforce. In terms of cost savings, The program is expected to deliver an annual reduction in overheads of approximately 1,000,000 As the vast majority of actions were put in place by the end of August, we would expect to deliver a material saving in the balance of 20.20. While an adjusting item of 1,000,000 has been recognized in the income statement, the gross cash costs of the programme are around 1,000,000, of which approximately 1,000,000 will be incurred in 2020. Which will be incurred over future years relates primarily to leasehold property payments and should be offset by sales of freehold sites closed as part of this program and also hopefully reduced by finding sublet arrangements. So I'll now turn to performance by reporting segment, starting with Merchanting. After an encouraging start to the year, The segment was of course heavily impacted by lockdown. Around 1 third of branches remained open during late March April. As the business pivoted to focus on essential projects only, including, as Nick mentioned, support to build the network of Nightingale Hospitals, and to maintain key infrastructure. Branches progressively reopened from late April onwards to support the steady recovery in construction end markets. The recovery has been strongest in domestic RMI markets, with the Travis Perkins General Merchant recovering most quickly, and the specialist merchants with a greater exposure to new house building and commercial construction lagging somewhat as customers ramp up more slowly. Despite good control of discretionary costs and government assistance received, the fixed cost nature of the branch network together with gross margin pressure from reduced annual volume rebate expectations and the COVID related and efficiencies I referred to resulted in the 75% decline in operating profit. And as I mentioned previously, the restructuring program is concentrated in the merchant businesses. In the Merchanting segment, 140 branches were closed by the end of June. These closures together with the restructuring of sales and above branch support teams are expected to generate around 1,000,000 of annualized cost savings the Merchanting segment. Moving to Toolstation, the businesses continue to deliver outstanding growth outperforming their respective markets. Despite the disruption of lockdown, Toolstation UK delivered like for like revenue growth of 12.9% as it rapidly adopted its business model to run the branch network as click and collect fulfillment centers and also ramped up home delivery capability. As you would expect, distancing measures and the adaptation of the business model, resulted in higher operating costs in the period in the UK operation, hence the fall in operating profit from 1,000,000 to 1,000,000 in the UK. While lockdown resulted in a pause in the branch opening program, with only 9 new branches in the UK in the half, We remain committed to the plan to open 60 new branches in the year. Nearly all of these sites are already identified and we opened 90 new locations during July August. In Europe, The impact and timing of lockdown was of course different from the UK, but the Toolstation proposition clearly responds well to customer needs. With its multichannel capability, its high stock availability and outstanding value. Total sales in the Netherlands and Belgium grew by 79% and by 56% on a like for like basis. In France, total sales grew by 74% and by 61% on a like for like. Although the branch network expansion is behind the plan for the year, 8 new branches were opened in Europe in the first half with further openings in Netherlands, Belgium and France all planned for the second half. And as disclosed previously, the additional operating costs of the European businesses will lead to the consolidation of around a 1,000,000 loss for 2020, of which 1,000,000 was recognized in the first half of the year. Like Toolstation, Wix also demonstrated its integrated digital capability and its ability to adapt rapidly to market conditions. From the end of March to mid May, Wix stores operated as fulfillment centers for click and collect orders alongside direct to home deliveries from the distribution network. Stools reopened to customers in late May, driving an acceleration in DIY sales, as the trend for consumers to carry out DIY projects continued strongly. In June, overall like for like growth was 22%, despite kitchen and bathroom sales not recovering fully, with core DIY sales up nearly 50%. For the half, despite lockdown, core DIY delivered like for like growth of 6% while the Kitchen and Bathroom showroom business declined by 40%. Gross margins were essentially flat year on year, with a mix shift towards DIY from KNB or Kitchener bathroom showroom sales, offset by reduced promotional activity in the DIY categories through the busy spring bank holiday period. As with other segments in the group, the retail businesses delivered good control of overheads. And this will be further underpinned by the June cost savings program. However, given the fixed cost base of the store network, operating profit declined to 1,000,000 in the period. During lockdown, sales in the Plumbing and Heating segment reduced to around 1 third of prior year levels, similar to the other trade focused businesses. The recovery in sales has generally been slower than for the general merchant business, driven by slower recovery in new house building, a more gradual return to activity in the social housing sector and a careful return to operating in customer's homes by larger contract installers. Gross margins were stable with the impact of lower annual volume rebates offset by the shift in sales mix towards smaller installer customers and the positive business mix change following the sale of the PFMP wholesale business in January. While absolute overhead costs reduced, The significant drop in volumes drove an operating loss for the business of 1000000 in H1. As part of the restructuring program, 16 Plumbing and Heating branches were closed in June alongside a streamlining of above branch activities. This is expected to generate around 1,000,000 of annualized cost saving. So turning to cash and debt, As I mentioned earlier, our cash performance in the half was outstanding with the generation of million of free cash flow before property transactions, and this despite the significant fall in operating profit. As you can see, the major contributor was the significant inflow in working capital. Inventory reduced by 150 £4,000,000 as stop purchases were reduced, and inventory was also moved around our network. Receivables reduced by almost 1,000,000 given the contraction in credit sales during Q2 Our credit teams in conjunction with branch and sales colleagues have done an absolutely outstanding job throughout lockdown in collecting receivables. Given reduced stock purchases, trade creditors also reduced during the period. And in other creditors, the balance was assisted by the deferral of VAT payments due from between March to June to March 2021. This total is approximately 1,000,000. On Slide 18, looking at the group's capital expenditure. Base CapEx totaled 1,000,000. This was only modestly lower than H1 'nineteen, as there was a significant capital accrual at the end of December 2019 paid in Q1 and as a number of which refits had already been completed prior to lockdown. New capital commitments were constrained from March onwards and so expect to see lower cash CapEx in the second half despite the Toolstation branch expansion program. Given the exceptional free cash flow generation, the business delivered a significant reduction in net debt. This was also aided by the 1,000,000 inflow at the end of January from the disposal of PFMP and by the suspension of final dividend for 2019. Covenant net debt was a modest 1,000,000 with reported net debt including leases also some 1,000,000 lower. During May, we prudently agreed a relaxation of covenants at the end of June December 2020, but we also chose not to put in place additional facilities. As at the 30th June, the group had liquidity headroom of 1,000,000 composed of the undrawn revolving credit facility of 1,000,000 and cash on deposit of 1,000,000. This position strengthened further during July August by approximately 1,000,000. Given the uncertain outlook, we intend to maintain a very strong headroom position. If I look ahead, the long term fundamentals of our end markets remain robust, with ongoing demand for new housing and under investment in residential RMI. Since lockdown was lifted, we've seen a good recovery in the construction sector. With strong RMI and DIY demand continuing. While secondary housing transactions have been strong since lockdown, It's not yet clear whether this is a sustained trend or a release of pent up demand. We also welcome the government stimulus package for UK Construction. And given our broad end market exposure, we are well placed to service this demand. The near term outlook for the economy is, however, very uncertain and an increase in unemployment undoubtedly have a detrimental impact on consumer confidence. We therefore remain cautious on the volume outlook for building materials in the near term, but believe the group remains very well placed to continue to outperform its markets and generate value for shareholders. With that, I'm now going to hand you back to Nick for the operational review and strategic update and then I look forward to taking questions with Nick later. Well, thank you very much, Alan, and welcome back I'm planning to talk you to the pandemic and how I and my leadership team approach the challenges that presented themselves very quickly. We were all obviously in completely uncharted territory. As I mentioned earlier, this crisis period has been a lot about or a lot more than about survival for the group, It's been about how we accelerate our plan to improve our business and utilize wisely our people and resources to advance and improve. So I plan to give you some examples of how we, as a group, have done that and what we've achieved and how the culture and the people within our business have pulled together to achieve some remarkable feats in what has been a very short but a very stressful period for everyone. Finally, and I think more importantly, I'd like to talk briefly about how we're looking to the future. If the pandemic has taught us one thing, it's that our end markets really are changing and that our customers will respond and indeed actively seek different ways of working with us and these structural changes are a huge opportunity for us to develop and grow our business I don't have a future strategy to share with you today, but I do have a framework for how we're thinking through these opportunities and challenges and some different time horizons that we're looking to. So what has COVID meant forTP? Well, the answer, of course, is lots of things. So let me break it down for you in the way that we approach this as a leadership team. As we broke it down into 3 phases, the first thing to note and this has always been stressed is that whatever the decisions we've made at whatever point, the absolute number one priority has been the safety well-being of our colleagues. The 1st phase of the pandemic for TP really started pre way pre lockdown back in January as we started to look at the security and the impacts on the supply within our Far East supply chain and of course, as lockdown hit places like Wuhan and China more generally, we began to think about and operationalize looking after our colleagues in our Shanghai operation. But we started to think carefully about how we could and would mobilize work, our colleagues to work remotely and then how we would do that fast and at scale and ensure everybody could work should the pandemic affect the UK. We call this getting out in front of the issue and we started work on it very easily. It was no easy task come early March just after we spoke to you last, we mobilized thousands of colleagues to home working very, very quickly, and that necessitated some really quite highly complex processes around credit management and taking payment, over phone to home working very, very quickly and at real scale. The 2nd phase was locked down itself, and we used our voice with government immediately to position ourselves and as an essential service through lockdown so the business would not close. As Alan said, we supported the rollout of the NHS Nightingale Hospitals, which was incredibly important to us, we continue to support infrastructure projects and of course, we made materials available for the continued support of domestic maintenance at a time when we really needed to keep critical infrastructure operational and our homes warm and dry in a period of great national need. We really established our role as an industry leader, being primary in developing safe working practices very, very quickly with the government for the government with construction industry leaders and peers. We immediately pivoted our business to what we called our service light model branches were closed to customers, but they pivoted to being fulfillment centers for delivery, where there was no contact with customers to keep our people safe But indeed, we moved to remote telephony based or digital contact solutions, as Alan mentioned. We simply did not shuts our branches and stores. We pivoted our model and we did so instantly. With a third of our merchant branches closed and operating contactless models, Toolstation and Wix pivoted to nearly 100% of digital operation. We had a short but a very challenging peak with 15,000 of our colleagues on furlough, but we treated them with great dignity fairness and respect, and we kept them motivating by using video and homeworking methods. And then those colleagues returned rapidly. We moved as lockdown started to ease from having within our TP General Merchant to 130 branches open to more than 600 branches open in less than a week. And as Alan mentioned, throughout all of this, we kept a really tight focus on cash and liquidity ensuring the viability of the business, however, the crisis panned out and of course, the future looked very uncertain at that stage. Very quickly and in parallel, we moved our operations to phase 2, and we started to consider what we called winning the piece. Would look like. So what do I mean by that? So that's to us that meant what would we be, what should we be doing during this period of lockdown and operational constraints to ensure that we are 1 ready for whatever comes next but 2, we emerge stronger. For us, it meant using our time and resources really wisely to drive improvements in the business. And in many cases, these were improvements that we had planned already but we massively accelerated them. We generally aimed towards improving our customer service, improving our customer propositions, either to suit the immediate and constrained trading conditions, such as improving dramatically in capability within our merchant businesses, but actually looking towards building a stronger platform for future growth. The key recognition here is that COVID has not only been a crisis for us. It's been an opportunity to really focus our time and resources and to achieve much more than we had planned to in a shortened time frame. And to do this, we adopted a whole new operating rhythm and drumbeat, being comfortable with making lots of suboptimal untidy decisions experimenting, learning fast, measuring, and moving forward fast. It was a fundamentally different way of working for us, and we've learned a lot. So what is this meant for our group key priorities? I've described, a huge amount of change, none of which was planned at the beginning of this year or actually even when we last spoke to you at the beginning of March. In March, I presented 4 key priorities for the group. Many of you will recognize this slide. The first one as part of simplifying the group was obviously to successfully demerge Wix, which was a action that we paused at the beginning of down and pre lockdown. The board continues to believe that the demerger of Wix will allow both businesses to fulfill their potential and we'll only pursue it when the market conditions are appropriate to do so. The other 3 priorities, I think we can broadly group together under the banner of really strengthening the core of the business. The regeneration of Travis Perkins General Merchant, as I said, in March, was well underway but we've driven this at much faster pace of change and we're ahead of where we plan to be. For Toolstation, It's proven its strength, as Alan has mentioned, both in the UK and Europe, with strong like for like growth during this the most difficult circumstances. The network expansion, as Alan mentioned, was paused, but we've made so many other really important operational changes and unprogress that I'll set out. Which really gives us a strong platform for the future. And we made some excellent early progress in our broader operational platform for the business and a huge amount of planning is underway from the lessons we've learned during the pandemic to continue that progress. So first then to our TP General Merchant and really accelerating the strategy. Our aim of course is to be the 1st Choice General Merchant in the UK and to sustainably outperform the market. And that intent is as true today as it was 6 months ago. This slide will of course look familiar we were working on between then and now is where we are in that plan and what we've achieved. COVID has fundamentally changed the way in which our customers wish to deal with us They had changed force upon them, and we've enabled it very, very quickly. I won't talk through all the examples on this slide, We've speeded up our range in category reviews and enabled them to have much more local flavor very, very quickly. As I've mentioned, as Al mentioned, we pivoted our operations to call and collect and click and collect immediately, which has allowed us to give and allowed our customers to be much organized and disciplined with planned collection and delivery slots organized over web and phone. We've obviously made huge changes to our network and announced some deep cuts within our merchanting businesses and within our TP General we've closed 82 out of 650 branches. That's 13% within our general merchant. As I touched on in March, we actually had a strategy over the few years ahead to close some of our smaller suboptimal branches particularly in and around large connotations. The reality was that many of these small branches couldn't operate in a COVID compliant way and indeed within the new ways of working that we had to bring in instantly post lockdown and under those new ways of working, which sustained. And Given the uncertainty that we see in the macro market, that Alan touched on, they were unlikely to be viable in the long term. And therefore, we accelerated closure of those branches. We've really made tremendous progress the merchant's digital capabilities. Merchanting has long lagged retail businesses in the use of digital platforms for the transactions, but as we all know, Trak for merchant businesses transacting through a digital means is only a fraction of the capability that Arch core trade customers look for But as it happens, COVID accelerated and changed that game materially so much so that we had to provide a contactless route to accessing materials and to transact in order to do so, and that became a significant priority from March onwards. And the business responded. We developed new and upgraded digital platforms for our merchant businesses very, very quickly delivering click and collect propositions and greater visibility of stock and availability by branch, which has been hugely successful and allowed us customers of course will return and are returning to branch based based transactions and interactions. We see this as a sustained shift on an ongoing basis. So what we've done has put us a long way ahead of where we plan to be. There's still more work to do of course and we are making great progress. The over the leg of that work, which actually is more important to our trade customers, is account management online and through an app. And, whilst we focused on the transaction piece through lockdown that is now returning to be our number one priority based on customer feedback, which makes transacting with us much more easy for our customers. So great progress made in the digital space. Our specialist businesses are extending their advantaged propositions as well. They're very much core to our business and we've made significant strides forward here too. They have to work very hard on accelerating their digital platforms, key line of partnered with TP to provide a much broader, higher offering And we've rapidly developed new pricing frameworks for customers making quoting far more easy, quick and consistent. BSS have continued to develop their customer propositions as well as their digital capability, restructuring their tendering processes and making great progress in developing BIM capabilities for the future. Benchmarks withTP to really integrate their back office systems and bring customer sets together to maximize the opportunity for these businesses. That sounds simplistic, but of course, in our customer base between these two businesses, there's huge overlap. And now we will work towards getting a much more coherent one view of customer and drive shared, shared, maximized share of wallet for these 2 businesses. For all a customer base. We continue to improve the business. They have made again great progress in upgrading their web web platform and developing their click and collect capability and the strength of our pure play online businesses like Plumb Nation has really shone through through the pandemic. We're seeing good recovery in RMI post lockdown and of course, we're entering the heating season now. The disposal of FMP obviously simplifies the business. And whilst we continue to retain the intent in the longer term to sell the business, we are focusing on operational improvement and improving returns. For Toolstation UK, we've made very, very significant development in the business. In recent years, the key focus for Toolstation as that outlines has been on network expansion. And whilst the rollout was paused, Of course, we opened 19 branches during July August. And as Alan said, we're on track for 60U openings this year, which in, in of itself, is tremendous progress, but that really wasn't the only area for development for the business. And we've achieved some really exciting things over the last few months. Toolstation entered the crisis of course with really strong digital capabilities which enabled a seamless transition to branch based from branch based to wholly digitally based transacting and trading. But that kind of trading volume and the increase in trading volume that we saw in those early days really caused the infrastructure to creak, and I will never forget sitting with James Mackenzie and the senior leadership team of Toolstation very early on Good Friday morning, seeing live, the web transactions increase hugely and to an extent that the website started to slow. As it reached maximum capacity. So what did the team do? Well, they simply rebuilt the website and they did it in 1 weekend and they did it over the Easter weekend. I mean, tremendous performance to execute that sort of change and then deliver a capacity that allowed the business to continue to grow and at pace. And obviously that's a change now that will last in the longer term. The team then followed this up with replatforming the wider business, which gives vastly improved operating capacity and effectively future proofs the IT platform for the years ahead. And this was done in a matter of weeks. And it gives the business a much more plat a stronger platform for growth in the future. So the volume of web transactions obviously wasn't the only challenge, higher web sales becomes the challenge of higher home deliveries and the home delivery distribution center really maxed out in capacity quite early on. So another challenge was overcome in very short order and in days we repurposed the Redich distribution center from branch replenishment to also be a direct to customer replenishment center. And that was done, as I say, in days. With all this change going on and whilst operating drive through gazebo covered Click and Collect services for our customers, Toolstation delivered very strong like for like growth. So I think you'll agree that is truly a remarkable performance. Toolstation Europe continues to gain traction. Our European business was well placed, as Alan mentioned, with a the combination of their multichannel capability, their value offer excellent product availability, a really winning formula in their markets and DIY customers and trade customers sought them out during lockdown. There's been a significant increase in new customers and these customers are proving very, very sticky. Once they try Toolstation, the rate of repeat custom is very high indeed, and you can see that in the growth figures. Even during the lockdown period, volumes have grown considerably and that gives us really great confidence around our plans for continued expansion through 2020 and beyond. For Wix, I think the story is one of demonstration of the benefits of digital integration. Of course, David stood before many of you in January at the Wix Capital Markets Day, setting out why he and the team believed so strongly that their strategy of a fully digitally integrated home improvement business model was so strong and 7 months on I think all they've done is demonstrated that the benefits of that model very, very clearly indeed. At the point of lockdown, the business instantly transitioned to 100% digital transacting with the store network focused on it becoming fulfillment centers for customers for drive through click and collect and, and 1000 orders for click and collect or home delivery process daily, 6 months of normal click and collect volume every 6 days and more than 1,000,000 new online customers registered with the business. That is more than the previous 11 years combined. So a phenomenal performance And of course, as Ana mentioned, that was on the core DIY side of the business, the do it for me KMB showroom and installation service obviously had to be paused during lockdown as we couldn't enter people's homes. But as lockdown lifted, it was clear that there was pent up demand for those services and those products. And so as we reopened the branches, the team developed ways of working both within people's homes, but also placing a new digital visualization and surveying, tool into the market, which has allowed our DFIM business in a safe and controlled manner to reopen and meet the demand. And now it's back up to speed with very, very encouraging lead generation over the last few weeks. So we've learned some very, very important lessons achieved a huge amount, both to enable our operations to navigate the crisis, but actually to drive some significant improvements in our business. We really just have not wasted this crisis and hunker down to try and survive it. An important question that we regularly ask ourselves is what those important lessons that we've learned are and what would we do differently next time? And importantly, what have we done in this period that will embed mentioned earlier is around the culture and the values of this business. As I mentioned that at the very start, but the strength of the culture and values in this business is what attracted me here over a year ago and really has served to guide us through these challenging times. We prioritized safety and well-being at all times and we've taken time to consider the moves that we've made and the pivots that we've made within the business remaining committed to our customers and committed to fulfilling the essential services that we provide them. We've been values led through all of this from everything to safety, to operations, to how we conducted ourselves with furlough, and this has retained great commitment for both our colleagues and our customers. Another thing that strikes me is obviously timescales. I regularly have to remind myself of what we've achieved in such a short period of time whilst I've referenced the last 6 months, many of the changes that we put in, practically all of them have been done in days weeks. That demonstrates to me that when we focus and we when we move at pace, we can achieve a huge amount. And acting was the key, acting in the knowledge that actually our first attempt at a new operating model wouldn't be perfect. We made lots of suboptimal decisions but we learned from them, we shared them, and we moved very fast to make improvements, and that has been tremendous. Nothing or many of the changes previously seemed too big or too complex. And we broke them down. We started small We've piloted hard, we've learned and we've moved fast with lots of decision making at pace. I think we've learned a lot about ourselves during this period. I think we're a lot more technologically capable than we thought we were. And whilst we've made very early progress in that regard, we're really starting to understand how we utilize our capability, work with our customers and use the data that's available to us to provide a better service and a better business going forward. I also think we've realized as a business how much we can learn from each other. The crisis has created similar challenges for all of our businesses and by sharing that knowledge by sharing ideas by sharing the results of pilots quickly and seamlessly across the business, we've become much more agile and much more successful as a business. And this collaboration between businesses is something that I'm really passionate about and will be doing more of in the future. We've already seen the benefits of this And more importantly to me, our colleagues have seen the benefits of this, and we move forward with that high on our agenda. So what about the future then? We've begun to think about the future before COVID arrived on our shores, but it became very quickly apparent that our planning for the future couldn't stop as a result of the crisis and we needed to push forward with our thinking. Indeed, some of our hypothesis that we were testing and talking about back in the autumn around customer behaviors and how they might change and how business models might change in the future have been accelerated overnight. And therefore, we need to keep thinking about them, planning for them and delivering solutions to them. So I think about the future across 3 horizons with clear strategic aims for each of those horizons. The first one, I think we discussed at length today, we call it strengthening the core of our business, getting the fundamentals right to deliver a successful best in market service to our customers today and to drive sustainable market outperformance. This includes 3 of our key priorities. And as you've seen today, we've made some really fantastic progress. We're actually, I think, ahead of where we intend to be, but there's still a huge amount of work still to do. The medium term horizon, we call this a staging post to create a modern merchant. What does that mean? It really means a leading business materials distributor, one that is truly customer intimate but digitally enabled and completely integrated with its branch network. It means greater collaboration across our business being more intimate with our customers, having a single view of that customer and how we can maximize our share of their wallet and really maximizing the opportunity at group level. And it means leveraging our scale to develop leading customer propositions for the longer term. And finally, of course, we need to look longer term. The construction industry landscape is changing. COVID has shown us that And as a supplier to the industry, we need to be prepared to change with this, of course. We ask yourselves some broader questions. How do we partner with the breadth of our customer base to enable our customers to do more, more easily? And how indeed do we help them grow their business and in doing so, grow ours? So lots more thought to come over the months ahead. So to sum up then, I think to try and describe the first half of twenty twenty is actually quite difficult, but in short, I'd say that we have successfully navigated the COVID crisis so far. It's still with us. And changes every day, and we've achieved a huge amount in improving our business, meaning that I think we're coming out stronger. We've done this by really focusing on a timely and clear purpose for our business being true to our values leading the industry and using our voice with government very, very clearly, looking after our people, our colleagues and our customers And we're coming out stronger because we didn't just hunker down and waste the crisis. We innovated fast. We challenged ourselves. We knocked aside old barriers. We got out in front. We took tough decisions early and we focused on winning the piece. We've still got an awful lot to do but I feel very much as though as a business, we're on the front foot. With that, Alan and I would be very happy to take your questions. Our first question comes from yves Bromhead of Exane BNP Paribas. Good morning, gentlemen. Thank you for your presentation. A few questions on my side. Number 1, I wanted come back to the annualized cost saving measures. I just wanted to know if you could clarify the timing of this between H2 2020 but also what we should expect in 2021. I would also be interested to better understand the mechanics behind this given that you benefited from the furlough, but also the rate relief. And therefore, what is exactly the net impact, probably to 2021? Number 2, looking more near term into H2 2020. I was just wondering if you could give us a bit more color in terms of the margins out of the business especially on your comments with the better activity levels, the cost saving measures that you've implemented, and the business rate relief, which should continue into H2 2020. So any color on that would be helpful. And maybe just a last question on the digitalization of your Merchanting business, given that you have seen a pickup in activity, can you comment on whether or not you've been seeing a switch back to the more traditional way and what type of investment you will do in the IT side of the business in the future? Thank you, Eve. Perhaps for those, first two, I'll hand to Alan and then I'll come back on the digital merchant. Yes. So, Yves, thanks for the questions. On the savings from the restructuring program, so 1,000,000 gross benefit. I think I referred to the fact that the program was essentially complete by the end of August. So if you take that 1,000,000 and you take 4 12s, that takes you to the number we'd anticipate for H220. And therefore, as you go through into 2021, I think you can basically assume on a gross basis 10,000,000 a month, for the 1st 8 months before we start to cycle the saving from September onwards in 2020. In terms of the furlough scheme, no anticipated benefit in the second half of twenty twenty. I think that that's done, from a business rates point of view, around 1,000,000 in the 2nd half and then GBP 20,000,000 to come in the first quarter of 2021. I think we need to think when we're thinking about the shape of the P and L about why we did the restructuring program. We undertook the restructuring because we're acutely conscious of the volume environment in the, in the short to medium term. So the the design of the program was to offset some of the shortfall in gross profits that we'll see because of reduced volumes going through the business. As we think about your the second question you have, Yves, on H220 margins overall, I think I referred separately to the gross margin element that I expect see that again broadly unchanged overall. I think we tend to see a slightly stronger second half in terms of margin. There will be benefit from the fact that volumes have picked up, but it's important to remember how uncertain the current environment is So I think it's we deliberately not given detailed financial guidance today because we just think the environment remains pretty uncertain at this stage. And Eve, of course, we saw, pick up through necessity. We closed our gates, but we served our customers through contactless means. And of course, our customers pivoted to using technology as a means of accessing materials Of course, as I mentioned, we have seen a transition back to as we've opened the gates of our branches while remaining and retaining our safe working practices in a very controlled way, we've seen customers wanting to re transact through the branch, but we continue to develop our digital capability because we see a shift in our customer's behavior and a willingness to use technology to work with us. It makes it simpler and easier for them in a number of different ways. So we continue to develop that. An awful lot of that development has been obviously our people's time and capability in developing these tools and deploying them very, very quickly. So we're still, as I said, working on how we plan the future of our digitalization of the business as part of our broader improvement in our technology underpin for the business. And as we plan that, obviously, we'll be thinking about the investment in that as we move forward. But broadly at the moment, that is within our kind of OpEx line as we invest our time and work with our customers to develop that capability. I hope that answers your question. Yes, thank you We now have a question from Robert Eaton of Goodbody. Robert, please go ahead. Good morning everyone. Can you hear me? Yes, we found morning, Robert. Good morning. Sorry, I've got 5 questions. So I don't know if you want them all at once or 1 by 1, Why do we take them all at once and then we'll decide how we, how we answer them? Okay. Just my first question is on rebates. You call it out as being an impact in H1, which is totally understandable. But I just want to understand, you know, what are your assumptions in terms of coming up with the rebate in H1? Like are you making assumptions about H2 in terms of where volumes would end up you know, to come up with that figure. So just to kind of debate about how much of you've already booked in rebates, and the assumptions that that is based on Second question is just around bad debts. Quite clearly, there's increased provisions being put through in H1, which totally understandable. But just generally, what are you seeing on the ground, as you chase around your customers to pay Is there any particular areas where it's harder? And, you know, smaller customers versus bigger customers, you know, different sectors. So just a general discussion around mass And you talked about July August is back to previous year's levels. Obviously, when you broke out the monthly figures for April and May June, there was big variance between the businesses, you know, mainly retail being a big plus positive outlier. And on that, can you just give us a bit more detail of the mix in that July, August, back to kind of 2019 levels. And my last question, so sorry, there's 4. My last question is just on the the store closures. When you're analyzing this, I might understand it's only a couple of months so far. How much of the sales are you capturing and how should we think about that as we model going forward? Thank you. I'm just trying to get the last one and you pick up the rebates and debt. And so yes, Robert, quite a financial financially focused set of questions more than the strategic focus. So on rebates, assumptions H1 and H2, The element that I was referring to on rebates that we've looked at differently of course is the any annual volume rebates or growth incentives that we receive from our suppliers. We've made a fairly prudent assumption at this stage, given the lower expected level of purchases for the year, we've reflected that as we accrue for the expected benefit for the 1st half we thought about where some of the second half volumes, in terms of purchases would lie and then form the view on that. From a a bad debt perspective, the increased provisions are, largely what you're required to through the accounting standard IFRS 9. So you have to look forward to your expected credit loss how do we do that? Where we base it on previous recessions and what we've seen at this stage on the ground, I refer to the the job the credit teams have done with sales and with branch colleagues, they've done an absolutely outstanding job, and have worked entirelessly with our customers to collect. So there are, of course, a few customers who have gone under during the second quarter, but we've not seen a large step up at this stage in business failures amongst our customer base, but that's the point of provisioning for the future in case that were to arise In terms of July August details on mix, I'd say it's largely a continuation of the trends that we seeing, in June. So, we're seeing continued robustness in DIY in retail across Wix And Talgiant. The Kitchen And Bathroom business in Retail is recovering well. Toolstation remains a consistent strong performer. We've seen the merchants, I think you have to break it down a little by end market to really understand what's going on there. So more softness in, new starts and in commercial. But the RMI piece remaining pretty robust at this stage. Fabulous. And just on your last question, Robert, around store closures and the retention of customers and custom. Clearly, there's a mixed picture here within our general merchants, I think, as I said, we focused on the smaller, typically rural or small market town branches that prove to be suboptimal for us going forward. And of course, with the smaller local, typically local customer base there, we've seen some loss of that customer whilst not all, within our urban, within the urban areas, we've seen and would expect, again, it's typically a larger customer base, retention of more than 80% of those customers. Within our specialist merchants, the pictures slightly different, of course, where we see very high retention, you know, within CCF, within key line within BSS, their larger relationships, larger customers, we typically deliver. And so actually they're less reliant on coming into their local branch And so we see very high retention rates there. So a mixed picture, depending on which part of the business and which part of our customer set we're looking at. I hope that answers your questions, Robert. Yes, if I could, just one more just, sorry, just on benchmarks and, you know, strategically align it more with Travis Perkins if there's too much of a big assumption to assume we could see that in a 5 to 5 year period being fully integrated within the general merchanting branch network given the crossover in a customer base? Or is that just a step too far? Well, as I said, we are we're looking at full integration in terms of our many of our back office, systems and processes because we the businesses share a customer base that is very common. And we aim, as I said, to maximize the opportunity and the proposition, the integrated proposition that we give to those customers and of course, the share of their wallet. So how we what we find as we move those businesses together will determine the decisions we make going forward but it will be a close integration of the businesses and that process has already started. Our next question comes from Will Jones of Redburn. Will, the line is yours. Thanks. Good morning. Yes, a few from me as well, please. I think, mainly revolving around gross margin and mix, but it be possible? I think the operating margin decline in general merchand was about 500 basis points. I know you don't like to split out exact details on gross margin anymore, but could you give us a broad feel how much of that came at the gross line potentially. Within the gross margin pressure, you've obviously highlighted various moving parts, but none of them were actually around kind of industry competition per se, although one of your competitors did refer to that as an issue back earlier in the year. Could you just give us bit of a feel on, on that point around the industry competitive backdrop, please. And then there's just a couple of questions. Well, one, yes, a couple of questions on mix, I suppose. It was, I was quite intrigued by your points on collect versus delivered. But if we look in 2019, I think 34% of merchant sales were collected and it was 40 2 in the first half of this year. So it's actually gone up, which surprises me, given the pandemic. So can you clarify the point please around kind of collect versus delivered? Within within the mix. And then actually, sorry, the last one was really just just kind of jumping topic slightly, but plumbing, heating obviously, there's been a lot of change in that business in the last few years around branch closures and disposals and now cost savings. And it's probably going to be won't make much money, if any, in 2020, but could you give us a broad feel for, what you might see as the right margin and it's a sensible level of volume at some point in the future for that business? Because obviously a lot has changed. Thanks, Will. If I start with the point on merchanting operating margins, you're right. I'm not going to provide a breakdown at this stage. Overall, the gross margin drop is a relatively modest part of the movement. I don't think it's helpful to focus on a 500 basis point decline in margin given the the severe impact of the lockdown on volumes. Just thinking about the competitive backdrop I'm not sure we've seen a huge amount of change to be honest during the period. I think all competitors have rightly been focused on, health and safety, and on supporting their customers through unprecedented conditions within the marketplace. I'd say we've not seen intensity on on pricing of landscape from a pricing point of view, given the volume shortfalls people have seen over the year, when I look at our overall trends, I'd say we're pretty comfortable with where we've been going there. In terms of our relative share. And as both Nick and I said, we think we're well placed to continue to outperform in the medium term. From a plumbing and heating point of view, a huge amount of change. If we think about the different drivers, we started from a point where the business on last year's volume was making around a 3% operating margin. There is some benefit from the disposal of PFMP, given it was a wholesale business, and therefore lower margin albeit around GBP 250,000,000 to GBP 275,000,000 of revenue. So think of that as an upward point And we've carefully said in the statement, there's lots more that we can do to, continue to improve the business over time. So for competitive reasons, I'm not going to go into the detail of what those initiatives are, but we, you know, we are optimistic that we've got some good plans. And when we look through the impact of the pandemic, we're positive that we can continue to improve that business a little further from this stage. I'll have to get back to you on the detail on the collected versus delivered, I think, intuitively, you're quite correct. I would expect that to be more delivered overall within the period. But we'll come back to you on that. We now have a question from Kristen Hoef of Numis. Kristin, the line is yours. Just three questions from me, if that's okay. First one is on the stock availability. You know, we've heard that certain products have been less available over each time. So I know obviously you've had quite a significant inventory inflows terms of working capital over the period. Just any thoughts on being able to restock and keep products and stock availability in general? The second one is, just on Toolstation. So firstly, there's some extra, COVID 19 overheads you referred to. I was just wondering if if that's expected to continue in the second half or whether the productivity in that regard can improve as time goes on. And then also with regards to Toolstation Europe, whether you can give any guidance at this stage to perhaps how the losses in that business trend, you've obviously given it for this year, but perhaps looking into next year as well. And then finally, just coming back to the restructuring point $120,000,000 of cost savings, which you've run through. Just if we look back to, like, a normalized basis in 2000, I'd say 2019, Would that be a net neutral impact on EBIT? I'm just trying to sort of understand what the potential impact on revenue and gross margin would be on a normalized basis from that restructuring? Thank you. Thank you, Kristen. Should I start and yes, on stock availability, yes, I think it's well known, an anecdotal in the market that very quickly some materials particularly plasterboard and plaster, for example, and some parts of the timber category quickly became pretty scarce. I mean, I think some of that was related, for example, to the very rapid deployment of materials to construct partitions for Nightingale Hospitals, for example, as well as the completion of work that was ongoing. That's, that stock whilst some parts of some items have remade in short supply, through recent months, actually, an awful lot of that availability has improved. And we're seeing a return to more normal levels. So overall, the stock levels are, as I say, improving and availability is in proving. On Toolstation, the extra overheads, as we both mentioned, quickly pivoting testamentally as Toolstation did to operating a car park base because Ebo covered Click and Collect model. You know, obviously, we had to invest in colleagues time to manage that model safely for our customers and for our colleagues. And as we've moved through that, we've we're experimenting with different technology to to help us manage customer movements within and around our stores and obviously now in recent weeks has returned within Toolstation to our stores being open fully, those costs obviously will normalize to pre COVID level. So that was a short term issue. There was some increased costs associated with home delivery, but again, as we return that business to more normalized levels, we're looking at ways to, to take those costs back in Let me do the last 2 next. So Christian on Toolstation Europe and the loss trend, I think the level of loss will depend on the, to some extent on the scale of our ambition and how quickly we go after the business. So clearly, when you open, as indeed in Toolstation UK, when you open new branches, you incur, the overheads before the sales come through and it tends to be about 18 months till they get to contribution positive, to the central overhead. So in other words, if we see an opportunity to go much more quickly and to accelerate the branch opening program in a European market. That will actually increase a loss in the short term. But on the other hand, we've got a Dutch business, which is maturing rapidly. So, we've made fantastic progress in the Netherlands. I think we have a a real winning business, there. And I would expect to see that business over the next 18 months moved towards being more EBITDA neutral rather than loss making. So that will offset some of the the numbers in other markets. On the restructuring and how to think about that, it's actually a pretty difficult question at this stage. That GBP 120,000,000 is a gross figure. Will we get to net neutral? Well, I think it depends on how you, how you model out what happens on revenue. So if I start from a a total revenue for the group, somewhere between 1,000,000,000 and 1,000,000,000, take a percentage point on that you can see that on an annual basis, a 1% volume shortfall at a 30% gross profit, if you did nothing, could be up a GBP 20,000,000 impact to profit. There are some overheads which are more variable with volume seed expect those to come down. So it's not fully the, a 1,000,000 impact for 1% on a full year basis. But depending on where you see the volume panning out you can see the importance, of having taken out some of the capacity within the business overall. Just one point to add on Nick's around stock availability, and restocking, given the ongoing Brexit uncertainty, do expect to see as investing a little in rebuilding some of that inventory, in the next 4 months, given that we were carrying around an 1,000,000 level of inventory at the end of 2019 in case of no deal, we will be looking to rebuild some of that given the ongoing uncertainty. Excellent. Thank you very much guys. Thanks, Kristin. We now have a question from Gregor Kuglitsch of UBS. Good. Thank you. So I just want to come back, I guess, to maybe slide 11, which kind of breaks out the earnings movements, obviously, lots of pluses and minuses. And you've given us some help on overhead savings. I think you were suggesting 40,000,000 dollars, $20,000,000 on the reversal of provision. And indeed, business rates being, I think, another $40,000,000. So there's quite a lot of positives there, right, if you tally those up. So the question I guess is, obviously, there's a volume equation, but then there's lots of stuff like, you know, 20,000,000 overhead cost inflation toolstation. Can you just give us some picture on some of these other moving items like the $20,000,000 for instance, on the investment, in the whole sorry, on the overhead cost tools. So just we can get a little bit of a sense for the, I guess, for the second half. And maybe just to be crystal clear, I mean, the reason that you not chosen to give any kind of second half earnings guidance. I mean, we're hearing, you know, obviously, Q3 is almost almost over. That should suggest you're perhaps not quite clear at this stage whether it'll be basically flat compared to last year, just to be clear. And then a couple of questions. Maybe just the technical, but on the like for like sales, so you're saying you're close to flat on a like for like basis, but then obviously you shut branches which I believe, if memory serves me right, costs 4%, 5% of sales. Is that the way to read it? So you're slightly down like for like, and then we have to knock off the basic, the store closures. And then maybe on cash, obviously had a great performance in H1. I think you're saying the $100,000,000 of that comes next year. Do you expect debt to rise from here? Obviously, absent of that repayment, next year, but this year, do you think it'll rise or do you think overall the increased working capital investment will be offset by basically earning and you did flag lower CapEx as well, just to understand the debt trajectory, that would be helpful. Thank you. Okay, Greg. Let me Let me begin actually. I may end as well because they were all quite financial. So overheads and how we should think about that I think you could take the inflation that we saw in the first half and assume that that's an annual event, so you could continue that through into the second half. On Toolstation, from an investment point of view, clearly there was a slowing in branch openings, but we're now reaccelerating the branch openings to complete the 60 for the year. So there'll be some ongoing investment there on a gross basis, within the overhead movement. And we've we've given very explicit guidance on Toolstation Europe at this stage. I think you did identify all of those savings elements on the other on the other side, quite clear. You asked a question about second half guidance and said Q3 is almost over. I'd say Q3 from, what we've recorded is 2 thirds of the way through actually, and Moreover, July August from a trade point of view are slightly weaker months than September. As people take their summer holidays, and the trade come back in. So, I think we need to see how that pans out through September October to have a clear view on where things head. The reason we're not giving guidance today on the balance of the year beyond what we've said in the statement is because the external environment is so uncertain at the moment, and you might find other people being a bit more bullish on things or a bit less bullish. But at this stage, I think we need to wait and see how things play out what the impact of local lockdowns may be, or if we get towards a second set of national measures, not suggesting a national lockdown, but those measures may be tightened at some stage given the increasing incidence of cases per 100,000 that we've seen over the last couple of days. On your point on like for likes, I think we've been clear, today and previously that a number of those branches that we've closed are much smaller than the average. So there's not, as pronounced a gap between like for like and branch closures, take the like for like at this stage is essentially flat when you're thinking that through? And then from a cash perspective, do I expect debt to rise in the let's play that out to the 31st December 2020, plus or minus 1,000,000, I think we're gonna day about where we were at the end of June. We reported this morning that liquidity had increased by 100,000,000 over 2 months in July August. But as we start to see the trade come back and the debtor book rebuild, I would expect to see some investment there, in the debtor book, I'd expect to see creditors in stock broadly offsetting them each other from here. And I expect to see some the growth in EBITDA versus H1 in H2 offsetting the cash impact on the debt side. So that's how I get to roughly staying around the level that we reported 13th June. Okay. We've got a question from the webcast from Sid Secuma from Jiohambro. It's a 2 parter. There's a history of IT upgrades going wrong at Travis Perkins. Could you please talk about some of the actions the company has taken to avoid any missteps this time around? And then the second part, could you also please provide some color on some of the actions taken to improve the operational performance of the P and H segment? Good, okay. Well, I'll start. Thank you, Sid. We are taking a fundamentally different approach to, addressing how we work through and with technology. And as I think both Alan and I outlined, we've rapidly developed and deployed tools, from our web offer to digital transacting and account management capability that we've developed, both in house and with partners, but we've done so in a thoughtful incremental way using capability, as I say, that we have in house and with partners and done so as small agile teams working between our technology function and our business together and very close to customers. That's a fundamentally different way of developing capability in an agile way, learning and learning and measuring success and moving very quickly than typically the large scale planned ERP type programmatic approach that many companies, not just Travis Perkins have taken in the past, and we know that there are substantial risks in working that way. That being said, we are obviously planning very carefully the way in which we will upgrade and replace some of our legacy transactional systems. But again, we're taking a fundamentally different approach. We're learning the lessons from the past we're working in a very agile way, with both business and technology teams working together. So I think our approach this time is fundamentally different what we've been able to learn through the crisis, has been substantial and is informing our approach. And currently we're making good progress. Nick, let me answer Sid's question there on operational performance improvements in Plumbing And Heating. I did get a question earlier on this and said for competitive reasons, I don't want to give too much in detail, but I'll try and help on some of the elements. So firstly, on the cost saving program, we've closed some more is in Plumbing And Heating given the impact that we anticipate, from the recession. So those cost savings, GBP 25,000,000 annualized, we've also, started looking at some further supply chain efficiencies that we can get So that's our large center in Warrington. We're getting benefits from the simplicity of the business having removed some of the, I call it a bit of a distraction from having a wholesale business within there. I think if Andrew Harrison and Dave Evans who run Plumbing and Heating were with us this morning, the single thing they would identifies since we created the separate stand alone functions to support a potential disposal of plumbing and heating that had a much greater accountability for the cost base and much greater visibility than if you've got a load of shared central functions So that's given them line of sight to be able to put in place some further changes within the business, which were part of the cost saving program. There are some gross profit initiatives, but I don't want to go into the detail of those. We are looking at our, supply based partnerships and how we can make those more effective in the future, but I'm not going to go into detail for competitive reasons. Thank you. Hopefully, if that answers your question, Sid, I think we have time for one more. On the phone. Our next question comes from Amy Galla of Citi. Amy, please go ahead. Yes, thanks. Just two questions for me really. On Toolstation, I remember last year, we talked quite a bit about the product range extensions that you'd you'd implemented in that brand. I'm wondering if you could give us some color of where you stand on the journey and what's the plan forward in terms of the product range ranges in the business. The second question I had was on Wix and Toolstation. Could you give us could you update us of where we stand in terms of e commerce penetration in both these channels, maybe both online and click and collect. How does that progress after all of your branches are now operating in full service. I'll start, Amy, just on range extension, the Toolstation team are continuing that journey. With an extended and deeper range, both with own brand products, which are proving very popular with our trade customers, but also continuing to enhance the range of a greater professional range of tools and products for our professional core kind of professional tradespeople customer segment as well. So continue journey, I mean, we will continue to look at what our customers want and how we serve them best, and we'll continue to expand our range. So that's that's an ongoing piece of work for the team. So good progress made so far and that journey continues. Comments on the mix. Just to add on Toolstation, if I can. First, Nick, the new catalog launch is in the next week or so in Toolstation UK. If you were to compare that catalog with the previous one, and the size of it with the catalog over the last 3 years, you'll see that getting thicker and thicker, each time So that gives you an indication that the SKU base is still increasing from a Toolstation Europe point of view where we are a smaller range at this stage. The pattern will be to follow, the UK in each of those markets as appropriate to their to the local demand. On the question around the e commerce penetration in Wix and Toolstation. I think, Amit, the sense of the question you're asking is, with the, branch network now fully, up and running again or almost fully up and running. And I'll explain that from a Toolstation perspective. What are the levels of home delivery and click and collect that we're seeing? From a Wix point of view, we still have a much higher level of home delivery and also click and collect. And remember, we've got the online in store capability as well. So they're still running significantly ahead of prior year levels from a Toolstation perspective, my comment is that not all of our Toolstation branches at this stage have gone back to things like taking cash and also having customers in the branch, for operational reasons where they're quite small and it is difficult to implement distancing. So those sorts of branches would still be, 100% e commerce, if you like, on the definition. Again, take that to one side, significantly higher level of home delivery continues within, Toolstation as well. Great. Thanks, Alan. I think we have time, we have 2 further questions. Our next question comes from Charlie Campbell of Liberum Capital. Charlie, please go ahead. Yes, good morning, everyone. Thanks for taking my call. Just a couple of fairly short ones from me, I think. Just on the just question of the overheads and trying to work through that overhead bridge on Slide 11. I don't know if you could tell us kind of what the overhead saving was from the F and P disposal, just help us square. So on that third call, And then secondly, on material pricing, obviously a couple of things in short supply, but would be rather thinking that material prices generally fairly neutral, or are there some pockets of inflation at all? I was just particularly thinking about currency maybe. Yes, Charlie. On the F and P saving, it's basically the, broadly equal and opposite to the impact from Toolstation Europe, overheads within the mix overall. At this stage, we're not seeing significant cost of goods inflation coming through, but we're about to enter though that round of calendar year annual negotiations. So let's see where that plays out. I'm not anticipating significant changes at this stage. Thank you, Charlie. Our next question comes from Sam Cullen of Peel Hunt. Sam, please go ahead. Hi, good morning everyone. Just got a couple. Can you with respect to the kind of guidance or lack of guidance for this year, can you remind us how big September and October are in profit terms in a normal year. So you can take that into the equation. And then also just, you gave some kind of helpful color earlier in the presentation about the trading in Kitchen And Bathons, whether you can just give us any comments in recent weeks there and also some color around how important that is to profitability of Wix relative to the core business? Just on the K and B point first, in terms of profitability at the moment, the strength we're seeing in core DIY is is more than offsetting, any impact from shortfall on Kitchener bathroom showroom sales. Remember that on the showroom sales, we booked the revenue when we ship the goods. So typically And we talked about this previously. There's an 8 week lag between receiving a confirmed order and actually shipping so or 6 to 8 weeks. So that gives you, what we saw coming out of lockdown was we had, we had shipments when tradesmen could get back into the home, during June, which came before new orders picking up, we've then seen a strong recovery in the order pattern, and we'd expect to see those sales go through over the next couple of months. So from a profit generation, September and October together are a little more than 20% of the the full year profit for the group. What you tend to see in the group overall is December, January, and February being relatively light overall with the exception of plumbing and heating, depending on how cold the weather is. You then see a strong period from March to Prostability drops a little from that June level normally during July August and then picks back up September, October, November? I think that's all the questions we have. Super. Well, thank you for joining us this morning, and we look forward to seeing you again next time.