Earnings Call: Q3 2019

Oct 22, 2019

Earnings release

Ladies and gentlemen, I would like to welcome you to the Travis Perkins 2019 Q3 training update. My name is Brita, and I'll be coordinating your call today. To let you know, all lines will be on mute for today's conference call but after the presentation, there'll be a question and answer session. And I would now like to hand over to Nick Roberts, the great CEO, to begin the call. Good morning to you all. Thank you very much. A real pleasure to join Alan and you all for my first call as CEO following nearly 3 months in charge of the group. My short time with the group in a tremendous experience, I have to say, what due to the welcome afforded to me by my colleagues, by our customers, and our suppliers. And clearly, I've had much to learn in this short time. The highlight of my tenure so far has been spending just over 6 weeks through the summer on the road, visiting colleagues across 60 of our branches, across all of our brands, up and down the country from infamous to Somerset from across in Rotterdam over to Liverpool, all our branches, our distribution centers, and our offices, as well as spending time out with our drivers, delivering loads to our customers, serving customers in branches behind our famous green screen, and understanding our supply chain. It really was a fabulous insight. I've seen firsthand the progress has been made equipping our branch managers and their teams, with the ability to make the right decisions for our customers at a local level. And whilst we've still got much to do in this regard, I'm confident that we're on the right track. This alongside meetings with our customers and suppliers Marge and Small has enabled me to understand merchanting and set that in the context of my broader understanding of the construction industry that we serve. I'm being really impressed by the quality and the character of our colleagues in ensuring that we give the customer the best possible service and our and our capability in data and technology that I believe will enable us as a business to evolve at pace for the future. So you can therefore give me really great pleasure to be sitting here with Alan, presenting what I believe are a positive update on the group through the third quarter as we deliver the plan as communicated to you all last December. I believe we have the right plan in place. I'm impressed by the progress that's been made so far against that plan. We will continue to focus on its delivery and we remain on track to deliver performance in line with expectations. In future Q1 and Q3 calls, they'll be conducted by Alan, unless anything of strategic nature or material is material to the group for which I'll join him on those calls. With that, I'll now hand over to Alan and look forward to your questions. Thank you, Nick, and good morning everyone. As you all have seen from the, heading on the Q3 trading update this morning, we'd characterize the performance is resilient in the context of challenging market conditions. So if I run through the headlines, The total group like for like revenue performance in the quarter, including Plumbing and Heating, was 3.4%. On a 3 year basis, you'll note that the like for like was 7.7%. That's a slowdown from 9.7% in the first half. Reflecting incrementally more challenging market conditions. The merchanting businesses continued to grow their share and delivered a decent performance 1.6% like for like, in the quarter, with the TransPerkins General Merchant growing us over 2% in the period. Coming and heating, our like for like sales overall were unchanged in the quarter. The branch based business has demonstrated good growth and that was offset by lower sales as we expected in the wholesale business. Toolstation business continued to demonstrate excellent growth. With Q3 like for like in the UK, up 15.4%. And likewise, our sales performance in retail was very strong, with 9.7% like for like growth, albeit still against the weak comparator, as you'll see from looking at the 2 year like for like. Within the Wix business, the strong performance we've seen across both the core and also the kitchen and bathroom showroom proposition. We also continue to make really good progress on the cost reduction agenda and remain on track to deliver the $20,000,000 to $30,000,000 of cost savings which were identified at the Capital Markets Day last year by mid-twenty 20. If I move to some of the corporate development activity, given the uncertain market conditions, while taking the decision to pause the plumbing and heating disposal process for the time being as we do not believe to sell in the current market conditions and optimize value for shareholders. We've made good progress in the quarter towards the demerger of Wix, both in terms of the activities to make Wix a stand alone business and in terms of the regulatory process. We remain on track to complete the demerger in Q2 2020. I'd also like to draw your attention the fact that we acquired majority control of Toolstation Europe at the end of September. Going forward, therefore, the business will be fully consolidated within the group's results. This, acquisition will enable us to invest further in our European operations. So if I summarize, the group traded well during Q3 in the context of a challenging market, We also continue to make progress in the period on delivering the strategy laid out in December 2018. Given the current market uncertainty, we're maintaining our cautious outlook for the near term, notwithstanding an adjusted Q4 comparator We anticipate full year performance to remain in line with our expectations. And with that, Nick and I would be very happy to take your questions. The first question today from the phone line. This comes from Paul Nadia from BNP Paribas. So, Paul, your line is now open. Hi. Yeah. 9 of 1 for taking the questions early. So I'll have three questions to start then. Firstly, if I can start 2019, The store is obviously basically, you know, a case of self help offsetting market weakness. Oh my gosh. It's, actually, if the market is still still weak into next year, is there more you can do, or are we in a situation where some property could come into some pressure in 2020? My second question is, isn't that just for Nick? So, like, you've you've sound quite aligned with the strategy from last December's Capital Markets Day. I just want to read if there's any areas where you might think differently. Maybe on digital or IT center or range centers, or or if there's any areas where you think you could you could potentially do a bit more. And then, thirdly, on the pH sale, is to delay just about the market conditions, and maybe you can show us by giving some commentary on the level of interest you've seen for that business. Okay. Thanks, Paul. On your first question around self help and, continued market weakness, if there's more we can do it, if that continues into 2020. I think there there is more accuracy that we've got for the first comment. Remember, we sent the 20 to 30,000,000 annualized savings will be realized by June 2020. So that would continue. I think it will depend on the the level of volume growth that we see in the market or otherwise. So we have contingency plans where we could go into a downturn as to what we would do to respond to those market conditions. So we've got a plan. I think there's you know, there's more that we can go after. And as ever in a business, you you whilst you sit out a plan, events that you haven't anticipated or the timing of those events is always different. So you have to be alive and responsive to the conditions in front of you. So we're constantly working with our businesses on thinking that through I suppose the threat of a no deal Brexit and the impact on the economy means that and we're in a heightened state of preparedness as to what those contingency plans would look like. On the coming and heating, and then I'll kind of connect on the alignment question. If it's, primarily about the the market uncertainty. So we've had a good level of interest and in particular the, some of the sponsored community we've been speaking 2 are finding the financing, challenging in these conditions. They can get the financing, but maybe not at optimal cost. And therefore, we don't think we can get optimal value for our shareholders for the business. So I think it's appropriate to pause it for the time being until conditions normalize. Good. Thanks, Ellen. Well, of course, thank you for your question. And yes, you are correct. I am very aligned with the plan. As you know, from our conversations previously, But do you point about thinking differently? Yes. Clearly, look, I'll be, and I am actively looking at many areas, technology and data will fundamentally change the way in which all businesses operate progressively over time. And that's an area of, considerable interest for me, as well as looking at how we optimize and really drive efficiency further into our supply chain. You mentioned range centers And clearly, we've taken some decisions there, but looking more broadly as our businesses grow, how we might think about our distribution and logistics in a very different way. And clearly, you know, as I speak to our customers, large, medium, and small, I thought to think about how we will partner with our customers much more seamlessly in the future. So I think by the time you will see plenty of evidence of thinking differently, and I look forward to talking to you about that in more in due course. Yeah. That's great. Thanks, Nick. And I'll just because I just have one, just to display a general, follow-up. I mean, you're you're having quite a cautious outlook, but you're confirming the guidance. Obviously, we could have anything actually really changed in your thinking about the market or the group performance since the first half. Are we is this really just so much in line? Well, I I'd say it's it's largely in line. We did highlight that the half year and and, certainly in the on the, analyst meeting that we've seen the market start to slow from mid late May. So Yep. And I always said that this would be a very difficult year to read because of the unusual weather patterns and the impact of that in in the comparative year. So I think the market has slowed a bit more. I think that started in May. I don't think it stopped it in September. And I think we'll continue to see that uncertainty until the, economic and political, perhaps stop to lift. Thanks, Paul. Thank you for the question. So Robert, please go ahead. Good morning, everyone. Hi, Robert. Hi, Robert. Just a real general kind of question in terms of just given, you know, the well flagged kind of more challenging market conditions, as you say, since kind of mid late may We've seen any behavioral shift in the market, either your unit or general competitors in terms of extended credits gross margin behavior, you know, process behavior. Is there any variations to your, you know, different types of businesses within, and within Travis. So just kind of a general chat around that in terms of, you know, I suppose what I'm looking for, you know, is there any queries in the, in the turmoil that you're, you know, that you're focused on? Robert, that's a really good question in the current context. I think the the more difficult volume is to come by, I think, and more we'll see, some competitor reaction on gross margin or extending credit. So particularly some of the smaller regional players. We've heard noises about offering extended credit terms. Within the within the market. I think we haven't seen in our business particular trends on bad debts you know, as a proportion of credit sales, what we are seeing is occasionally contractors or subcontractor to you since it's solid, just disappear. With a few days' notice is that from the the marketplace, from a gross margin perspective, with discipline, but we will you know, it's our job to trade our business at the same time. So we'll be alive to the changes our focus is on the drop through of the gross profit that we can generate from our outperformance to the bottom line. And making sure we get as much as possible to drop through. So as far as I've seen, some incremental changes, regarding kind of, you know, to extend the credits, etcetera. Isolated events rather than it being enough to record a trend at this stage. Robert, I'm I'm also hearing chatter from time to time that 1 or 2 small merchants to start to lay off some stuff as well. In response to softer volumes. And but I don't I don't think there's enough to call back as we finish the trend at this stage. Okay. And then maybe just one more kind of a very general question. Just in terms of you know, what regional differences are you seeing? Is it the same as we've been seeing for some time now kind of subsidies versus the rest of the country? Any shift from that And any further commentary you can give on, you know, different trends by, you know, the segments or my you build non res, you collect non res addition in the statement itself? Yes, I think the regional differences are really a continuation of the trend that we've seen. So for example, the northwest continuing to be very strong. The London and the Southeast being weaker. We've seen the Southwest slower levels, but I think that's more a reflection of the slowing overall market. I think on segments, we are seeing a real slowdown in new housing staff. As opposed to building out, developments that were already in construction. We've seen some of the, groundwork activity slow, but I, you know, that could well well be due to the fact that we've had a really wet, 4 or 5 weeks. So it's difficult for them to get on the ground, rather than it being a and more sustained trend. We now have a question from Howard Seymour from Numis. So Howard You can now speak. Thank you. Good morning, gents. Hi, Howard. Howard from me, if I may, on an unrelated areas, firstly, in terms of the market share gains that you will look to. First half, you pointed out that that was most of these large contracts I'm just wondering if that's a kind of continuation there. Lots of the fact that clearly a lot of the big house builders specifically have become building just taking a couple more of what you just said, Alan. If that's this first question, have you seen the material shift in your pocket of market share gains? Or is it, as I said, just a continuation of where you were in the first half? I would come back to my, obviously, if that was possible. And I think it is a continuation, Howard. What we're saying in the first half with large customers we're growing more quickly than the, the smaller players win in the the marketplace. Just the that that would let a reflection on share gain with the larger customers just where the growth was coming from. Notwithstanding that. Yes, we have had, we think some share gain on the larger customer side. I think our share gains are also more in-depth towards the heavy side within the general merchant. Okay. There are some some sort of detailed points as well, Howard, around share gains in our managed services portfolio and, the growth in our tool high business as well, which I think is, is exciting for the future. Okay. Thanks gents. And second one was just on kitchen and bathrooms. To look for a fact again that's doing doing well in the market, the installation is gonna talk a little bit more about that. Again, he's continuation of where you were in the first half or obviously, quotation plans specifically. And are they more targeted reinstallation. Or, again, is it part of a general situation in terms of your positioning, firstly, first thing, sir? I think what we're finding, Howard, is a trend in the market. And this is, I should stress this within the data. For those less familiar with the story. We are seeing, a greater desire from customers for a, what I would call an end to end or turnkey do it for me solution. With a kitchen and bathroom. So the bathroom piece is growing strongly this year, and also clearly the larger part of the kitchen showroom. So we will be approaching, I guess, 60% of and the kitchens we sell now being installed, and we are extending some of the specialists services around that. So for example, offering a tiling solution as part of the kitchen installation, where we that enables you to capture the sale of the products as well as providing the service. The key for doing this well is having really good control over your making sure that you deliver on time in full, and a kitchen can be over one of the boxes that you deliver. So that you avoid repeat visits and you avoid cost per year within your supply chain. And that that needs a really disciplined, well organized team. So we continue to win awards for the installation service, that we are focusing in the books business. And we think that will continue to be a growth area in the future. Okay, great. Thank you. And then just final one for me. Grafner alluded to the other tier 2 shoes in Holland, relating to nitrogen at Michigan And Oxford Field Station European Businesses are focused in Holland. Have you similarly started seeing some aspect of that? So just just talk to another place. Yeah. No. No. We we aren't impacted, at all, toolstation Netherlands business continues to grow really strongly. So we have added more branches since the half year. I would say, however, that the nature of the Toolstation business particularly in Holland would be more focused on RMI type projects, and servicing the smaller that may be different from, how competitors are considered in their businesses. Thanks, Howard. Thank you. The next question today comes from Arnold Lemann from Bank of America. I guess my first question is on merchanting, as you mentioned, in the first half, you already had some growth in the heavy side. That seems to continue in H2. But on the other hand, that meant that, if I remember, well, the margin in the first half in Washington was broadly stable, So you continue to grow probably a little bit in Q3 and each 2 in merchanting, probably mostly pricing of our volumes, I assume. Considering all these moving parts, would you expect you know, another stability in margin in the second half. What do you think you can extract some margin gains from your cost of initiative. That's that's my first question. Related to that, I guess, could you give us an updated concerns you to estimate for the full year, you say performance remains in line with you with our expectations. Can you please please clarify a little bit what are your expectations, I guess, especially post IFRS 16. And lastly, maybe maybe a more medium term question for for Nick, uh-uh, you're you're, you you've got 2 solutions in Europe. You've got your first leg, or toe in Europe to put it, put it this way. Do you have any, any more ambitions side of the needle allowance, could that be your first step to what's expanding Travis Perkins in continental Europe, especially the, you know, medium term outlook if you potentially a bit slower. Thank you. Okay, thanks. On your first question on merchanting and you're right on the heavy side growth continuing. Clearly, heavy side is a lower margin percentage to pay gross margin level. And I reiterate my earlier comments about focusing on drop through So from a mix perspective, clearly that is a, it has a slightly negative impact on your if you grow the heavy side faster than the light side. I think I would anticipate margin is being broadly unchanged at the bottom line rather than saying that you would expect to see margin gains. I think I don't think you would see margin gains in the current context. If I look at current consensus, so post IFRS 16, excluding coming and heating, the markets around 395 at the moment. It is really difficult to read however currently because not everyone has adopted IFRS 16 in their forecast at this stage. Good. Thanks, Alan. Great question on Toolstation in Europe. And obviously, the acquisition of majority share, there is a really positive move in quarter. First of all, we're really building well on our base in the Netherlands and seeing really positive, positive progress there. And recently, the opening of a store in Belgium has allowed us to expand our operations there through Webb as well as the or store service from the Netherlands. What I'm excited about is as we, as we test the format further, as we grow in France. So we currently have 11 stores in Southeast And France, and we're looking about we're looking very carefully at accelerating the growth of our network there as well as a distribution center. So it gives the opportunity to further test the proposition further evolve the proposition along our growth in the UK. And I'll be working very carefully with Alan at what that means before the growth in due course. That's great. Thank you very much. Thank you. We now have a strong question from Charlie Campbell from Liberum. So Charlie, your line is now open. Hi, Charlie. Hi, good morning everyone. Yes, probably a couple of questions for me. Just, Toolstation Europe, you see positive controlling share. Does that mean you now own 100% or does the fund still retain some equity in the business. And also just a question really on the founders continuing interest within that business, whether he's staying on And then secondly, just just wanted to give us a bit more color on the the merchanting part that's not the core, if you like. So some sort of a bit more commentary around, sort of what you're seeing in CCF BSS and and key line as well. So just a bit more color on those very helpful. Thank you. Sure. And Charlie, on Toolstation, Europe. The founder remains involved, although he has held his shareholding to us. So he's still involved with the business on an ongoing basis. Our ownership is now over 95% but not the 400% there are some, options in the in the future to, take the 100% but we we've accelerated, really by neutral agreement. 1 of those options to take the ownership over 95%. So it will be fully consolidate and then we will have a small minority interest, but we'll we'll remove. On the specialist merchants, I think we feel we continue to gain share in those differences. So if I make a few comments on CCS, first of all, we've seen the market slow a little during Q3. So at the same time, we've seen some of the allocation that we've referred to previously is somewhat. I think that's a greater output and to the market for more capacity, but at the same time, the fact that volumes have, softened has made this situation a bit easier to manage. I think we've seen it from a key line perspective I said earlier, some of the new starts and slowing, we've been pleased with the overall performance of all the businesses, but also, we can be BSS. We have continued to performed really well within that marketplace, notwithstanding the software environment. Thank you. So the next question today comes from John Messenger from Western Europe Limited. So, John, your line is now open. Good morning, John. 2 if I could, please. One is just on Toolstation Europe as we were just talking about it. You give us a bit of an idea, a rough idea of dimensions of it just so we're all thinking of that in terms of obviously kicking in for a quarter and a bit for this year and for next year? Kinda it was obviously kinda after tax. It was a 4,000,000 loss in full year 'eighteen and two and a half million kind of loss in the half year. Is is that a business that will be positive in terms of EBITA, I guess, looking forward, just to have a rough idea of the size, up line sales and trading profit? And the second question was when we think about the retail side, obviously, the comparatives last year in Q3 were pretty weak. -7.2, I think, clearly, there's a deeper swing in the 4th quarter. Should we be thinking about business was a 2 year like for like, and obviously it was 1.8 in third quarter. That 1.8 clearly a function party of the way the business has taken share in the market. Is that something that you'd expect probably somewhere in the final quarter or should it be stronger in terms of maybe you should be thinking around that to your LFL figure and hoping the 2 percentage, or is it something that you'd actually be more confident on? Those are 2. Thanks. Okay, John. On Constellation Europe, first of all, clearly, we're in a happy investment phase in terms of the structure to get the business going. You know, roughly the the revenue in the current year would be on a full year basis, 1,000,000 to 1,000,000 and probably in the order of 15 1,000,000 loss in the business at this stage. Maybe a, you know, a reasonably fast growing business. We'd see the, on a sort of a like for like basis over 20% like for like growth. On the on your question on on the retail business. So in retail, Q4 2018 was 3.5%. Like for like, so quite a turnaround from the 7% of those sales decline on a like for like basis that we've seen across the 1st 9 months, you know, I'm not going to get into exact predictions on the 2 year, or 1 year like for like, that will be in a career, but we're very comfortable with the current trading trajectory and the business continuing. Sorry, can I just come up with this one? I'm not sure if it's disclosable at this stage, but at Toolstation Europe, how much has the group invested in terms of the shareholding increase Well, it will be disclosed in the annual report on accounts. Thank you. The next question today is going to come from Craig Weber Road College. From UBS. Question is just on cost savings. I know you flagged the cost saving run rate target in the statement there. Can you just remind us, I believe, there's costs from last year or initiatives rolling into this year. So kind of how much do you expect delivery of this P and L this year, 2019, and how much is left based on what you've announced so far for next year. So so if you could just simplify for us what the sort of incrementals are, it's a little bit difficult for us to calculate. Second question is just on Toolstation. You're, I guess, did I did I hear you say 14,000,000 dollars, $60,000,000 trading loss? Is that right? EBITDA, I guess, in your concerns. And then Yep. As a follow on to that, How quickly can that become breakeven? Because obviously it's quite a it's actually a reasonable material in the context of the group. So I think it's quite as we can understand a little bit on growth. But if you could give us some help as to when that could reach our Q And A business plan, please? And then finally, which is really housekeeping from an accounting perspective, do we need to Are you still allowed to keep CNH discontinued? Do we now have to reintegrate that package and taking it all out? So on the cost savings, Greg, are obviously of that 22 30,000,000, by the year end, over half of the actions will be in trading, delivery in the year, though, will clearly like that because of the timing of when the initiatives have been implemented. But I just thought, you know, certainly $20,000,000 annualized of activities will have been put in train but you would expect to see maybe half that if you average your payout delivered within the year. On the and Toolstation, Europe question, and when we can break even. The challenging question in that it depends how many markets you go into clearly, as you're starting up on those markets, you're going to incur relatively heavy losses. There is a breakeven point in terms of the number of shop units that you need to reach that what we've been doing over the last few years is investing in a in an infrastructure across the European businesses that you've shared, central functions, if you like, for Toolstation Europe to get the business going. I appreciate it's a, a, you know, in your words, relatively material number in the context of the overall group. We will only invest in markets at football when we're, when we're confident on those market trends, what we're doing in the Netherlands at the moment, we'd be very confident there. And as Nick described earlier, we're in test phase in Belgium and France at this stage. On the Plumbing and Heating, accounting treatment. So it was actually recognized in the half year as discontinuing rather than discontinued. The way that the accounting standard works for this, there are effectively 2 tests. The business has to be, saleable in its present condition. We certainly meet that criteria having successfully completed the separation during May in particular on the transactional IT systems. The second test is that you have to demonstrate that you've got, active interest in a marketing campaign. So how we meet that criteria will depend on the circumstances at the 31st December. You all have seen, I've spoken about Plumbing and Heating within the context of those overall numbers today. And also excluding that because it would depend on the conditions of the 21st September. I think it would be from your perspective, it would be prudent to still continue to forecast the Plumbing and Heating business. Thank you. Thank you very much. Thank you. We now have another question from the phone lines And this is from Annie Galla from Citigroup. So, Annie, your line is now open. Please go ahead. Good morning, guys. Just two questions from me. The first one was on the plaster board, supply. You mentioned that the tightness has been using more recently. Was wondering if you could give us some color as to the demand led or to or to what extent is this? Have you seen a capacity increase in this place? And to what extent should we expect these conditions to prevail into the next year, essentially, seeing a better surprise and trends that matter My second question was really on the additional stock that you have built up on the back of the Brexit, date Can you give us a color as to what is the additional stock that we should expect on why in following the next conclusion? Sure. I mean, on the on the first one on the plasterboard fly, think we have seen some increase in output, but it is well a question of demand in the marketplace. It wouldn't surprise me if the volume is actually slightly lower year on year. At this stage in terms of overall meter squared of plasterboard failed out within the within the marketplace. Should stress that another comment on our own position within the market. We would expect to see those conditions to continue to ease such that it's no longer an issue come early mid-twenty 20. And then on your second question around the additional inventory, we've maintained those higher stock levels at this stage that we built. As a reminder, it was around $30,000,000 in 2018 and a further GBP 50,000,000 by the half year twenty nineteen. In fact, we've been at those updated levels since late February, March now, having anticipated 1st 29th March. And then the 31st October. As to how it unwinds, I think that question is probably best addressed to Westminster at this stage unless the politician decides to put it back to the people. Thanks, Ami. Thank you for that, Ami. We now have a question from Clive John is how I could. Thank you. Good morning, Nick. Morning, Alan. Good morning. 2, if I may. One on, the sort of trading pattern throughout the third quarter. I mean, I think, Alan, I think you referred to sort of September, nothing massively for the softening trends, but then if you sort of talk about sort of incrementally more challenging through the course of the summer. So certainly what we've heard from others that the Cymbo is quite a bit tougher than than sort of July or August. So I'm just looking for a little bit more color on your trading through Q3. And the second one I had was, again, I suppose, around the comments you're making on pretty strong heavy side sales and how that sits with the comments you made about, we can do housing and we can commercial activity, which would generally be the bigger element for sort of heavy signs. So I'm just sort of trying to square that particular surface. Yes. I think on that last point, right. The comments about stronger heavy side is that within the general merchant where we've seen the strongest share gains, rather than it being a reflection of the marketplace on the trading pattern through the 3 quarter, you know, we we I did say we've seen incrementally more challenging that the new answer is trying to make was we actually thought the market started to soften from mid and a onwards role and that being a particular phenomenon, later in in Q3. I think it's, you know, from certainly from mid May onwards, we saw the market step down at 1 or so and then maybe it's, I'm step down a little further. As we we've got into the early autumn. But I, you know, I don't think it's a hugely different trend from the softening that we'd start to see. That's the point of 'nineteen. Hi, John. Just just a nuance to, to Alan's point on the heavy side. I mentioned in my commentary around the progress we're making in empowering local decision making particularly around heavy side in our range. I think what we're seeing is, some of the benefits of that, really stocking range that our customers want at a local level and ensuring that we are are really majoring on that category. And we're seeing some benefits of that starting to show through 3 early days. Okay. Thank you much. Thank you, Clive. We now have a question from Paul Jacobs from Barclays Capital. So, Paul, your line is now open. Hi, guys. I've got 2 questions left, please. Hi. Just the first that this year, you've had to contend with large currency swings, the the pound being weak and then more and then bouncing back more recently. How have you been managing that and to what extent is the recent strength, bit of a relief. But then the second, I'm just returning the plumbing and heating side. It it seems this transaction was was very close to the time of the half year results. When I walk away, And then related to that, what do you think a sense of time frame is now for the disposal of the business or separation in some form? And as a consequence of it leaving, the strategy update, we didn't really talk much about the plumbing and keeping business, but given that you'll be hedged for a bit longer now, can you just run us through essentially what the different plan is. Thanks. Yeah. Paul, I'm I'm afraid I'm going to disappoint you on plumbing and heating because it would be inappropriate to go into detail if, where we are or were with particular buyers. You know, that I would consider too sensitive for for a call In terms of managing the business, we have been really pleased with the ongoing performance. Within the Plumbing And Heating business. So we did talk at the half year about growing the operating profit in the half by 9%. Clearly we have a, you put a lot of effort into the transformation plan And at the time that we held the Capital Markets Day, we're still only halfway through that transformation plan. So we are very comfortable continuing to manage the business. It is a merchanting business after all The reasons for the proposed divestments of Plumbing in 'eighteen were different from those from the circumstances surrounding a recent decision to demerge Wix, namely a quick question of longer term market economics. So hopefully that helps on that. On the currency management side, we've always had a program of rolling catches, and averaging out the cover that we got from the business. I get the point that the currency has moved around, but maybe I have a few more gray hairs than you, and I don't consider the level of currency volatility, historically, to be that large. I think that's just one of those things that you have to contend with as a business You have a strong management progress and really good people like Graham in charge of it. Okay. Thanks. Thank you. May I have a question from Reset Rossett from Health Valley. Sorry, Mohit. Please go ahead. Yeah. Thank you. Good morning, everyone. Yeah. So if I remember correctly, I had just one question on the full year guidance of the company. And if I remember correctly, in 2018, final results, mentioned that, 2019 operating profit, adjusted operating profit would be similar to 2018 level. Now that you have been you have maintained the full year guidance despite the fact that, during actual 19, adjusted operating profit grew by, I think, around 15%. So what are the key reasons why we are maintaining the the full year guidance of similar or stable existing operating profit despite this 3% surge in adjuvant. Okay. Thanks, Mohit. I think the comment around that you're referring to around being similar with a comment from, our full year results for 2018 back at the end of February. And we have, scheduled along the way that, second half performance, we'd expect to be similar to 2018 2019 as well. It was that H2 performance in 2019, we expect it to be similar to H1 'nineteen as well as similar to H2 'eighteen roughly. So that the following the half year results, I think, the we saw the consensus moved up, which reflected the, the strong delivery in the first half, I'm not expecting numbers to change in any way, given that we've said that H2 nineteen would be broadly similar to H1 2019 in terms of a more even profit and also at the same time similar to H218. Okay. So that roughly means that we can expect somewhere around 10% growth in adjusted operating profit at least But I I said earlier, you know, it's it's really complicated because of IFRS 16 and how people treat but we're pretty current consensus levels that we're seeing, including IFRS 16 and excluding something and heating around the 395 or so level. The final question today comes from Jess Carty from JP Morgan. Please go ahead. Your line is now open. Thank you. Good morning, everyone. I have 2 questions, please. Last one is, you can really comment on how trends have been in the first 3 weeks of this course across the business. And, second one is on retail business. 1 of your competitors talking about the investment in price for the second half. Can you talk about how you're seeing the competitive trends in that part of the business evolve? Thank you. Yes. I'm not going to get drawn into specific clients on 3 weeks of trading. So, you know, if there were any put it this way, if there was anything materially different from what we've seen in the previous 4 months or so, we would make that clear. From a retail perspective and investing to price, I think from our analysis, we maintain our value leadership compared to our competitive in the DIY market I don't think that's changed materially over the year. We've consistently been by our calculations about 6% or so cheaper than the nearest competitor from a pricing point of view. And clearly, there are from time to time investments that competitors make in particular categories, We have maintained our everyday low price type approach to the market and have implemented that with some really strong and effective promotions at key points during the year. K. Thank you. Thank you for that. We have no further questions. I'll hand back over to Janet. Super. Well, listen, thanks to you all for joining us this morning. And thanks for your questions. I hope that that's been useful, and we look forward to speaking to you all again shortly. Ladies and gentlemen, that does conclude today's call. Thank you again for joining. You may now disconnect your lines.