Hello, welcome to the Victoria PLC preliminary results call. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Geoff Wilding, Chairman. Please go ahead with your meeting. Good morning, everybody. Thanks for joining the call. I will begin by handing over immediately to Mike just to start taking us through the financial numbers. Thanks, Geoff. Morning, everyone. Hopefully everyone's got the presentation which went on the website this morning. I won't read every word, obviously, but I'll go through and give you the highlights. Starting on page four, just giving you the initial highlights. Revenue GBP 662 million. Obviously, the first thing to say is this year has been a year that's been impacted by a few things, clearly, most notably COVID. That was really a story of two different parts of the year in terms of the lockdown effect on the business and then the subsequent very strong performance that we've managed to deliver outside of lockdown, and I'll come back to that in a bit. Also, as always, there is some effect of acquisitions flowing through the numbers as well. Cutting through that in conjunction with COVID, obviously delivered these numbers here. The GBP 662 million is almost 7% up year-on-year in absolute terms. Of course, it was impacted in April and May last year with the initial lockdowns in particular. Post that time, we had very strong like-to-like growth, which across the year averaged out at 6.3% top line like-for-like organic growth. EBITDA GBP 127.4 million, an absolute record year for us, which has been fantastic. Again, 8% up on the prior year, of course, bearing in mind that April and May had a severe impact on the business in an adverse way last year because of the COVID lockdowns. Nevertheless, still delivering a record EBITDA from the remaining 10 months. 19.2% margin, which is up on the prior year of 19.0%. Actually that, again, disguises the fact that with COVID and cutting through all the effects of acquisitions, that we've had 340 basis points overall organic improvement in margin. Again, I'll come back to that in a bit more detail. Operating cash flow. There was a little bit of an impact, and I will come back to that in terms of working capital. Overall, we implemented very strict treasury measures this year in particular, as everyone can imagine, and we have again managed to deliver very strong conversion from operating profit into cash flows. That's resulted in net debt reducing this year by GBP 20 million from the prior year. Again, I'll come back to that reconciliation. Leverage at the year-end was 3.1x, which is absolutely consistent with the prior year. I'm just moving on to slide five. This gives a few more highlights. Some of this is repetitive, so I won't go into great detail. I'd rather get onto the data on the later slides. Just to reiterate, we've been through the year and ended the year with a very strong balance sheet, and we've performed, I believe the group has performed fantastically through this period. I won't get into the operational highlights and reasons why. That will come after this, and Philippe will walk you through that. Margin performance has also been absolutely fantastic for various operational reasons through a historical investment and also things that we've done in the current year. Philippe will take you through that some more. I'll take you through a breakdown of the numbers in a second, and cash flow as well. On slide six, this is just to show the track record. Again, it's just to really show that consistent growth, both in terms of revenue and in terms of margin that we have delivered over the years. If you look at that right-hand bar in EBITDA, you can see that there was an impact in the first half from those initial lockdowns on margin. Well, not really the second half of the year, really post those lockdowns, but the second half of the year absent that initial April, May lockdown was just a fantastic period where we delivered some very strong performance with 21% EBITDA margins in that half. Over the page, this is slide seven, shows some divisional numbers as we always do in the same format as you've seen many times before. I think the key thing here to reiterate is when you look at these numbers, there's various things going on really around COVID. Ceramic Tiles is the division that was most impacted by acquisitions. In fact, the main impact was from a business we bought right at the end of last year, if people remember, which was a business called Ascot in Italy which was actually bought at the end of 2020, but therefore flowed through and had an impact on 2021. The key impact of that, as you'll see in a minute, is that while that brought some incremental revenues, really it was all to do with manufacturing and synergies because that business when we first bought it had no profits and we've managed to integrate this and do a fantastic job there. The margin story is quite an interesting one, and I'll show you that in a second. Underlying these numbers, post-lockdown, across all the divisions, we have strong margin improvements. It's 470 basis points margin improvement in UK and Europe Soft Flooring post April, May. It's organic margin improvement in Ceramic Tiles post-April and May, and 690 basis points of margin improvement in Australia. We only talk about April and May lockdowns because frankly, through the more recent lockdowns, the business has just performed very, very strongly. I'll move on to the next few slides because these bridges are quite interesting in terms of the margin, just to illustrate what I've been saying. Slide eight is the first division, UK and Europe Soft Flooring. It bridges the EBITDA margin from last year to the EBITDA margin this year. You can see we had an impact of that initial lockdown period. That looks small, don't forget, that's only over a couple of months. Of course, like all businesses, when everyone stopped doing everything, that had an impact on our business. There were no acquisitions in this division in between the year. You can see there the very, very strong organic performance that business was able to deliver outside of those lockdowns to drive a record margin this year of 17.5%. If you skip over to the next, slide nine, there's again, an initial impact from the COVID lockdowns in that first bar. This is that acquisition effect I'm talking about. This is just a mix effect. We bought effectively a business in Ascot that was making virtually no profits. We also bought a smaller business during the course of this year, Keradom, in December, which is profitable in Italy as well, but smaller. The profit margin is lower than our incumbent business. Both of those diluted the margin in terms of just adding them in to the mix. Beyond that, we were able to deliver some margin improvements, again, organically. That is a smaller number than in Soft Flooring. What we found, and again, I don't want to cut across what Philippe will say as well in a minute, but what we found is that the second and third or second lockdown, certainly the second national lockdown, had a more severe impact on consumer behavior in Europe than it did in the U.K. That was effectively why we were able to deliver much stronger margin performance in U.K. and Europe Soft Flooring, which is predominantly a U.K. business. This is our Ceramic Tiles business, which is predominantly a continental European business. That also frustrated a little bit some of our integration activities, which we'll be delivering further margin upside this year. Just to complete the picture, as you can see in Australia, we're on slide 10. Okay, everyone knows Australia wasn't as severely impacted by COVID as a country, I mean. Again, we've just had such a fantastic performance this year in Australia, both in terms of revenue and margins. It's been absolutely fantastic. Some of the investments that we've made over the last couple of years have really come through in all of the divisions. Just onto slide 11. This is one that I've shown, and I like to repeat, and it is a busy slide, and I apologize for that, but it just walks through the exceptional items and other non-underlying items, because, of course, understandably, there's some big numbers here, and people are interested in what these things are and whether they should be worried about them or not. I'm just going to walk through them very, very briefly. I've highlighted the ones in blue, which are cash items, and the other ones which are non-cash items. The first few columns up to the total column are for the year just ended, and then the far right column is for the prior year, just as a comparison. If I just walk through exceptional items, we obviously make acquisitions. We made some acquisitions this year. We prospected a lot of acquisitions this year, some of which we decided not to pursue. There are acquisition disposal related costs. All of our exceptional items are third-party fees. We're not allocating internal costs. These are legal fees, due diligence fees in this case. Reorganization costs. There were a couple of projects integrating businesses in Italy and also a small project in the U.K., which Philippe will talk about in a minute. There were some redundancy costs and other things which are composed, which is the GBP 5.5 million. The GBP 6.5 million, when we bought the businesses that we bought this year, there was a negative goodwill arising, an accounting term, which basically means that the price that we paid was less than the net assets of the business on the balance sheet. We obviously got a very good price, and what you do with it in accounting terms is you take that as an income. That's income, in the same level we treat as exceptional, because it wouldn't be fair to show that as underlying. Finally, this GBP 5.7 million was a final deferred consideration payment that we made on one of our historical acquisitions, Keraben in Spain, which happened to be related to a tax ruling where we got a big tax benefit, and then part of that agreement, we had to pay some of that away back to the vendors. That was a final payment there. Those were the exceptional items. The big non-underlying item that everyone was at is the amortization of acquired intangibles, which is that GBP 26.8 million a bit in the middle of the page. What is that? That is when we buy a business, we have to fair value the brands and the customer relationships predominantly that those businesses come with, and we have to put those assets on the balance sheet. You only do that on consolidation. They're not obviously in the individual balance sheets of the businesses because they're intangible, but you do that on consolidation. Then you have to amortize them. That comes through as a cost. These aren't things that you ever have to pay to replace like a machine. There's no cash involved, and when that amortization runs out after the life of those assets, according to our amortization policy, you don't have to do anything else. You don't have to reinstate that cost. It is very much a non-underlying non-cash cost. Finally, in the finance items, just to quickly run through, we did a refinancing this year. I think as everyone's aware, we refinanced our bonds entirely in March this year. It was a huge success for us. We were very happy with it. We managed to both increase the tenure of our bonds. We now have two tranches maturing in 2026 and 2028. Also at the same time, significantly reduced the coupon that we're paying. With 50% extra financing, which we managed to raise, we effectively have pretty much the same interest cost annually because the coupon has come down so much, which is fantastic. We had very strong support from the bond markets, and we took advantage of that in going back to the market to refinance and raise some new money for acquisitions. That involved some costs. The first line release of prepayment costs is just the cost that we actually spent in the past in refinancing, that you treat as a prepayment and amortize it. We just release them. That's a non-cash cost. We did, however, have to pay some costs, and the GBP 6.3 million that's in blue is the redemption, the cost of redeeming the old bonds early, effectively. It's definitely worth the reduction in coupon and the maturity. Going further down, there's some cost relating to the preferred equity. Obviously, I think as everyone's aware, we raised some preferred equity with Koch Equity Development this year back in November, at GBP 75 million of preferred equity. It is equity. It's actually an equity instrument. It sits under IFRS as a financial instrument on the balance sheet, but it's a perpetual instrument that we very much treat as equity, and our rating agencies treat as equity. We treat the cost associated with as non-underlying, but I've split them out here for you. They're not cash. We don't have to pay these things in cash. There's a 3.4% cost of the actual underlying preferred equity instrument, and then there were various movements on other related items that we have to recognize, like warrants and embedded derivatives. For example, embedded derivatives for our right to be able to redeem early if we want, and things like that. They move around in value. We fair value them at every balance sheet date. At this balance sheet date, some of them reduced in value, these options, and so you get a cost, and that's that GBP 9.7 million. Again, we don't treat these as underlying costs. The acquisition-related items is changes in value of earn-outs, just for time value of money or for changes in forecasts, earn-outs on historical acquisitions. The GBP 1.4 million, the last cash item, in March we drew our RCF fully because we were worried with COVID about sort of bank liquidity, and we decided that it would be better, even though it would cost us interest, to just put the cash on the balance sheet. We did that. We sat on GBP 75 million of cash for six months, and then we repaid it. That was the cost of that, which we treat as. It did cost us some cash, but not really an underlying feature of the business. We just sat on the cash for six months. Finally, all of these final items are all other non-cash items. Mark-to-market adjustments for foreign exchange contracts or translational differences on foreign-denominated cash or debt. That completes the picture there. Sorry for quite a long slide. Finally, getting into cash flows, go on to page 12. Very strong performance this year, especially in light of COVID. If you show all the years as we've done in the past, 2021 on the far right, you'll see there underlying movement in working capital just before the first subtotal, GBP 18.3 million. That is worse than it normally is. COVID did have an impact in that sense, which we managed very carefully. We did, in the end, consume some cash into working capital, and that is unwinding during the course of this year. It's a timing difference, but COVID does have an impact on us from a working capital perspective to absorb a little bit more cash. That brought our conversion down slightly at the operating level. Below that line, you'll see also it looks like we've got a huge increase in interest paid there of GBP 30 million versus the previous year, GBP 25 million. That's not actually the case. That's just because we refinanced at the time, which means that that GBP 30 million actually represents more than one year's worth of interest. The actual annual interest cost is about GBP 24 million. It's just because of the timing of the refinancing. The tax replacement CapEx you'll see was a bit lower than last year against the COVID, and that breaks down to the free cash flow. Which, again, for those reasons above, conversion was slightly lower than last year, but not much. Just moving on to the next slide to show how that then feeds into net debt. The first bar there of the GBP 38.8 million movement, this is on slide 13, is the total from the bottom of the previous one. We provide that as the free cash flow generated, bringing down the net debt. We spent GBP 37 million, so pretty much all of that number on acquisition-related expenditure. That was the acquisitions in the year, but also some earn-outs on previous acquisitions. We had some refinancing costs and other items relating to the bond refinancing and the pref refinancing, and pref money coming in as well. This is cash coming in net of cost. If people remember, we did a share buyback in the year. That's wrapped up in that figure there. The net impact of all the financing activities we did in the year was to bring the net debt down by GBP 18 million. We spent some of money on expansionary CapEx, which links to those projects that I mentioned earlier, which Philippe will talk a bit more about. There's some translational differences in the last part. Overall, net debt's come down by about GBP 20 million in the year. As I said, leverage, very stable. That's basically summarized on the next slide. You can see there, we have our debt items. The bit in the top half of the table is the actual debt items as I see them, actual bonds or bank debts or other loans and cash. Our net debt at that level is GBP 346 million, and then below that, we have to include things like our right-of-use liability for IFRS 16 accounting. There's some of the embedded derivatives and so on. That's just a bridge back because you'll see in the accounts a number of GBP 492 million. Leverage was, as I said, a very stable 3.1x, which is well within our financial policy. That's it. Philippe, I think over to you for the operational overview. Thank you. Okay. Thank you, Mike. Good morning. Very glad to report very strong results in UK and Europe Soft Flooring. As you can see, the EBITDA is up 18.7% to 17.5% with revenues on par. We had a very strong second half of the year with GBP 150 million. Don't forget, as Mike has mentioned, the first couple of months in the year or the first 10 weeks, actually, the revenue was down 80%, and we still managed to make an EBITDA 49%, up from 41.3%. Post-lockdown EBITDA was 20%, 21%. We've been trading very strongly in the last 10 months of that year and into the first quarter of this year as well. Overall, 17.5%, this is a record year for UK and Soft Flooring. The three reasons why we have had this result is, of course, we have the very strong post-lockdown demand from customers. We also have the improvement of logistics efficiency and the factory productivity as we've explained in the past. Of course, there's the CapEx plan, which we've done in the production logistics over the last two years. Some of the elements are listed there. I won't go in too much detail, but as we mentioned in the mid-year numbers, so we've continued to bottom slicing exercise of margin-valuated products. When there was a strong demand, we could easily do that. We have not focused on new product development. Yes, we have new product development in the pipeline, but we haven't launched it because the current products are selling very well. The biggest project in this division was the move of Westex. Actually, the plant Westex, we moved to the Dewsbury site. Westex used to have the dyeing of the natural fiber, and we moved the whole plant there, so they are now at a completely different location. The site was sold. This move has been done from a production operational point of view. Offices and showroom will follow in the course of the second quarter. We've also added new tufters to speed up the productivity. We've added beaming activity, which should reduce working capital. Normally, when we are tufting, we're tufting from racks. Now we have started tufting from beams. Basically, these are smaller batches, so we can put less stock than when we would be tufting on racks. Interesting. This is why we've mentioned it here, it's a new development or fantastic development in the underlay, which is a quality called renu, which is a sustainable carpet underlay made from 98% of recycled material. When I say recycled material, we're talking about post-consumer waste. This is selling for the moment like hotcakes. Very interesting new product development. Also, like we've seen in the carpet side with the underlay, we have decided to insource the logistics because we were still working with third-party logistics. We've insourced that because that's a key driver of the business as we have seen with the carpet side as well. As you know, we have done a smaller acquisition on the continent, Estillon, on the underlay, and this has become now the European outlet for our underlay activities going forward. Very important as this is also part of the dynamics which we have seen in the business and the improved margin at logistics. This you will find on the right side. I'm on page 16, by the way. This remains a key differentiator with our European counterparts. Currently, just for your information and to recap that, we have three warehouses in the U.K. We have one in Hemel Hempstead in the south, one in the Midlands, Kidderminster, and then one in the north, Hartlepool. We are shipping currently 24,000 pieces per week. This activity is currently we're doing 52% more orders with 33% less employees, the productivity is up massively. We serve the whole country, 91% of U.K. mainland is served on a daily basis, and on-time deliveries are at 94%, we've invested in more vehicles. We have 270 vehicles on the road now, which are for 85% Euro 6- compliant, and they can even run on HVO, hydrotreated vegetable oil. Alliance, for the moment, Alliance Logistics port has currently its own P&L. There's also some third-party logistics because we are so good. I think we are one of the best providers in the market to deliver soft flooring and hard flooring in U.K. market. This unique selling proposition, which we have on logistics, we cherish that, and we are looking to further develop it in the future. I switch over to page 17. When we talk about U.K. ceramics. The revenue growth, we've had a very strong growth. Growth in the second half year was even GBP 150 million. The overall margin performance, as Mike has explained, is weaker but basically the reason why this is the pro forma effect of the acquisitions. As you know, in the previous year, we bought Ibero in August 2019. We bought Ascot in March 2020, which was a business which had very low EBITDA, between 3% and 5%, and we've improved that massively. In this current year, we have, and Mike has mentioned that as well, we've done a small acquisition in Italy, which was Keraben. That was in December 2020. There's more than that. There's the like-for-like average margin performance is basically impacted by three factors. Of course, in ceramics, you have a higher degree of operational leverage. Ascot, as mentioned by Mike as well, so gave us immediate production capacity, but we had the delayed integration. It took us a few months to do the integration. We had some duplicated cost for a period of time. The Q1 2021, which is actually the fourth quarter of 2020 financial result. What we call the Lockdown 2, the second stage of the lockdown, European and continental customers were more impacted than the U.K. customers. In the U.K., although there was a lockdown, we've performed on a very good level. This was to a lesser extent the case in the ceramics business. Very specifically in Italy, we had the acquisition of Ascot and Keradom. We acquired this for the capacity. There was a local brand, Capri, and half of the production was used therefore, and we used the other half to in-source some of the outsourced product. We've also managed to reduce the operations with 129 people. There was a restructuring going on. We've increased on the productivity of the kilns as well in the business going forward. Very strong demand in Italy, mainly from the DIY, from Germany, France, and Eastern Europe. As Mike mentioned as well, we've topped that acquisition up. Another small bolt-on acquisition, which was Santa Maria. Santa Maria is a plant which is close to Imola. It was a very interesting concept because we had the opportunity to have another couple of kilns and atomizing capacity, which was exactly what we needed. In Italy, we have continued to do these small bolt-on acquisitions, mainly buying production capacity rather than brands, and to expand and to start insourcing, because that has a positive effect on margin going forward. For the moment in Italy, with all the investments we've done and with the plants we've bought, we have a capacity of about eight kilns spread over three factories. We keep on focusing on the low-cost production and integrated management. Spain. Spain suffered a little bit more because of the extended lockdowns. There was also a lesser government support, they were impacted a bit more than the Italian factories. When the business all started, the inventory, it takes a while because the program is pretty wide. It takes a while to build up the inventory again. It took us a bit till we reached the second half of the year, and then we were up to the level. As you have seen, we've still managed to do some like-for-like increases in the result as well on the ceramics. Interesting to know and to mention is the growth of the U.S. market. We do more business in the U.S. as well. Part of that is due to the increased import duties from China. Some of that business has come to Europe. The integration now, I'm happy to say that the integration now is complete in the Spanish factories. All the factories are integrated. We managed between Ibero and Saloni to reduce the cost with about 7%, and it was as mentioned here, so the silica law. We are an industry benchmark for health and safety improvements in Spain. We've sped up these investments just to be compliant with health and safety and the silica protection. We've done all the investments needed then. The last part is Australia. As we have mentioned already before, extremely strong performance, 590 basis points plus. We've expanded the turnover. The margin was very good and it was surfing between the lockdowns. They have been highly disrupted, but the management, the local management, has been coping very well. It has, in the meantime, used the opportunity to introduce more and new product into the marketplace. We do more LVT collections now, LVT, the luxury vinyl tile. The distribution of that is going very good and the demand is at a very high level. Also in the product, we see more polyester than polyprop, so there is an evolution there. In products which are margin generating. Last thing to mention here is that we have completed now, so as you know, we've closed 1 underlay factory in Melbourne and all of that was moved to Sydney. The integration was done in Sydney of all underlay activities and this process has 100% been completed now. Overall, most of the activities, whether that's soft flooring, ceramics or our business in Australia, we've done all the integration exercises and we're working on the integration now for the moment at the newest companies we've bought in the recent quarter. Okay, Mike, if I can hand over back to you? Thank you. Well, that's on the financial items. Geoff, do you want to talk to the outlook or conclude? Yeah. The year has started very strong. I appreciate we're only four months into it, or coming up to four months into it, but we've had a very strong start to the year. We've been successful at passing on the increased cost of raw materials to our customers. Certainly, the demand from consumers has made that very, very easy. One of the factors that we think is encouraging is, for many years, the data has shown that 12-18 months after people buy a new home, I don't mean a brand new, I mean a new to them home, they replace the flooring. There's a very strong correlation between the two. With the number of housing transactions, not only in the U.K. but also across Europe and in the United States, beginning about six to nine months ago, we think that that will sustain the demand for flooring for the next two years. We feel that the short and medium-term outlook for the business is very positive. Turning to acquisitions, we continue to pursue a number of opportunities. We've still got a substantial amount of capital available to us, partly as a result of the bond refinancing earlier this year, and partly as a result of Koch's commitment and investment in Victoria. I think investors should expect to see some meaningful acquisitions occur in the weeks and months ahead. With that, I'd just like to hand over for any questions. Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Charles Hall from Peel Hunt. Please go ahead. Morning, everyone. Could I just ask on the U.K., obviously you had a very strong second half margin performance. Was there anything exceptional in that, or do you expect that to continue on through this year? You obviously alluded to being able to pass on price increases. Can you comment about the extent that those have been? I think previously you talked about being able to mitigate any supply chain issues that are generally around in the economy. Is that still the case? Yeah. Thank you, Charles. I'll take this one. We have a very strong, in the first quarter, we continue on the same level as we've been working in the second half of last year. The demand remains very solid. Yes, we have seen some supply chain issues, especially with transport prices, with container prices for some of the products we are importing. We've been able to manage that. We've had some raw material price increases, but these prices are in recovery mode now, that we've passed on our price increases. We are hanging on to the price increases because for the simple fact that we need to hang on to them because we didn't increase to the peak. Over a time period, this will flatten out. We keep on having a few challenges in the market from a supply chain point of view, but we're mitigating them. We pass it on to the customers after we've negotiated with suppliers and do what we have to do. Don't forget as well, Charles, we are still improving on our logistics, on logistics performance. We are attracting more business. We keep on growing. If I look at the numbers of last month, how much business we attract, especially from overseas suppliers, because overseas suppliers seem to be struggling a little bit with Brexit-related matters on administration to bring product across, also for the distribution of their products. Whatever we've invested in logistics, has come to fruition now. Perfect. Thanks for that. Also a similar sort of theme in Australia, what are you seeing on pricing there? You had a very strong second half margin. How much is that a sustainable level? In Australia, we have had to surf between the lockdowns last year, and it's not much different now because I think half of Australia is back in lockdown. There's no interstate traveling. There's some challenges in some states, retail shops are closed and others they're still open. If I see the numbers coming in, the demand remains very strong. I think from a raw material point of view, they were hit to a lesser extent by the raw material price increases. They have been managing to pass on the increases because they've done a lot of new product development where they have incorporated the new prices of the raw materials, so in order to protect their margin. Strong demand in Australia and likely to go on for the foreseeable future. Perfect. That's very helpful. Thanks. Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. Our next question comes from the line of Robert Chantry from Berenberg. Please go ahead. Hi. Morning, everyone. Just three questions from me. Firstly, I just wondered if you could give a bit more color on the competitive environment and on customer behavior in Europe in terms of flows of ex-European tiles coming into the market, et cetera. Secondly, I guess in terms of deal structure, deferred and contingent payment hasn't really been used in the last three deals, and there's an example on the presentation deck of how you might fund the next GBP 70 million of acquisitions. Has there been a reason deferred and contingent hasn't been that used? Is it sensible to assume that there is capacity to do something in the future? Thirdly, clearly the Koch transaction last year was transformational for the business. Can you just give a few examples of how that relationship with Koch has changed how you operate and approach the business? I know there's some comment in the release this morning around procurement of certain types of inputs, presumably with deal sourcing and financing, but just some examples of how they've changed the way you approach the business. Thanks. Philippe, can you talk about the competitive environment in Europe and so on, and then I'll cover off the other couple of points from Robert. Yeah, sure. Competitive environment hasn't really changed a lot. I have to say on the continent, the demand in hard flooring, I'm talking hard flooring, not soft flooring, because soft flooring, we are not doing any soft flooring business in the continent. Hard flooring business, the demand has been very solid, especially across all channels, but especially through the DIY channel, which is more directed to our Italian businesses. We get demand, so we're looking even with all the extra production capacity which we bought, we are looking for extra to outsource extra capacity with other OEM contracts with alternative suppliers. Demand is very strong. From the independents, this is then more the Spanish business and the exports. We see a very strong demand as well. We can keep our lead times. The demand is strong and there is no extra competitors, but there's a few competitors who are specialized in specific activities. Like, for example, just to give you one example, in ceramics, polished is very in. Polished product, the very shiny products, marble lookalikes are pretty much in there. We've invested there, as well, to play in that game. We cover most of the production, not the production, the sales channels. We have a product development which is scoping to comply with demand. Not lot of changes there, Rob. Let me just cover off the couple of questions. The first one was about contingent considerations and earn-out. The deals that we did in Italy, the companies that we bought, we were effectively buying factories, capacity. We were going to completely integrate those businesses into our own current production. As a result, an earn-out wasn't appropriate because we would not be able to identify successfully the earnings from the businesses that we've acquired versus the businesses that we already own, because they would be completely subsumed into our existing businesses. The same has happened with the grass business that we bought in the Netherlands. That has been completely integrated into our existing businesses as well. As a result, it was going to be impossible to identify the earnings, the contribution as individually from that particular business. An earn-out wasn't appropriate. The U.S. business that we acquired, it was a largely private and majority private equity-owned business. An earn-out wasn't an option. In fact, the reason we were able to buy that business for such an incredible price was the private equity fund that owned it. This was their remaining asset in the fund. They were winding the fund up. They thought they already had a buyer. That buyer defaulted on completion. They needed cash to complete the winding up of their fund. Firstly, that meant that there was no earn-out available because they needed cash. Secondly, that enabled us to buy that business at an absolutely astonishingly good price. Those are the reasons for the lack of earn-outs in those. Other opportunities that we're talking to at the present time, and we are in active conversations, as you would expect with a number of opportunities, earn-outs are definitely one of the components of the deal in most of those discussions. Coming on to Koch. Look, there's three things they've done for us. Obviously, their capital has provided us with an ability to continue to grow the business significantly over the next few months and one year or so before we use it up. The capital contribution's been very valuable, and it's very valuable for the shareholders because we haven't had to issue equity, which would obviously be dilutionary. Secondly, they have been able to provide us with advice on raw materials, particularly around polypropylene. Polypropylene prices, and polypropylene is a core ingredient in the carpet fiber and the carpets that we make. Polypropylene prices spiked earlier this year or the underlying propylene molecules actually they spiked in terms of price. We know some of our competitors were driven to hedge their prices and take actions based on those high prices. Whereas Koch, who are a very large producer of propylene out of their factories in the U.S., were able to tell us that it was a short-term spike, and they would start heading back down again, which is exactly what's happened. We didn't do anything stupid and hedged prices at the absolute peak. The last thing that they have been very helpful to Victoria is providing introductions and frankly giving credibility to Victoria, who is a completely unknown entity in the U.S. Koch have opened doors for us. The transaction you've seen Victoria already do in the U.S. with Cali, Koch's credibility enabled us to engage with that seller, and there are other opportunities which we expect to secure in the next few weeks and months. That will be a result of, again, introductions made by Koch and the credibility that it gives Victoria as a potential buyer. Sound like good guys to know. Thanks for the answers, both. We have one more question from the line of Richard Hickinbotham from Singer Capital Markets. Please go ahead. Good morning. You've answered most of my principal questions, but just a couple of supplementaries, if I may. I just wondered how far to run is the sort of bottom slicing of low margin soft flooring products. The other question I had was just really about the focus of future expansionary CapEx. What sort of quantum, what sort of opportunities are there for you, and what sort of return criteria you're putting against that investment? Okay. How far do we run the bottom slicing? Well, for manufacturing purposes, there's a minimum quantity which you will always need. We try to look for the right equilibrium in our factories. If we need for a factory like the Abingdon factory, if we need 12 million sq m, we will try to optimize that, and we will cut accordingly products away which are margin dilutive just to fill the factory at 100% because that's where we make the most money. The cost price is not what it is if you're only running at 80% of the capacity. We're looking for that fine balance. That's as far as we take the margin dilution. On future CapEx, I think on the soft flooring, with regard to production, with the new production outlet, which we're having in Dewsbury for all natural fibers, and we have Abingdon for the synthetic fiber. We still add some clusters and do bits and pieces. This is never big, and I think it was mentioned somewhere in the presentation, I think we can make another 15%-20% growth without having to heavily invest in CapEx. As I said earlier as well, most important for me as a key differentiating factor is logistics. We will keep on investing there. Don't be surprised if sooner or later you will see some more investment on the logistics side of that because this is just so helpful for us. The margin on a cut length is so much more than the margin on a roll. The more we can cut, the better it is. You can see some potential more investment in cutting operations. Having said that, the next 15%-20% growth which we can easily handle through the existing warehouses. The future, if we will go beyond that number, then you may see some more investments. Nothing major on the soft side. If we talk about hard flooring. Hard flooring, we are in all our factories, whether that's in Italy and in Spain, we are at full capacity. You may see some production built, some extra production capacity, if we want to expand. We can do that. We still have a couple of possibilities to go on this expansion. As you know, hard flooring is a bit more capital intensive than soft flooring. Okay, it provides a better margin as well, so it can carry that. I would say nothing spectacular to do the numbers and the growth numbers which we foresee for the next year or a couple of years. You should not expect anything spectacular on the production side. Problem is with new investment, it takes a while before they are there, sometimes it's better to follow a strategy like we do in Italy to do some bolt-on acquisitions, as Geoff has explained, just by... Buy production capacity, the advantage is we can immediately in-source some of the products. Don't forget, not only in Italy but also in Spain, we are outsourcing a lot of work. If we are buying a production plant, we have immediately upside by integrating the product, by insourcing the outsource. Is that an answer to your question, Richard? Yes. Thanks. Thank you very much. Richard, just on your question on return on investment. Sorry, yes. We have a minimum of 20%. We have a minimum hurdle of 20% internally. Actually, more generally, we look for a two -three-year payback as a general, which is obviously higher than 20%. Just to give you the broad idea of how we look at that internally. Great. Thanks, Mike. Yes. As there are no further questions, I'll hand it back for any closing remarks. No, look, I think, s orry, I started speaking while I was still on mute. I think both the RNS is fairly full, and the presentation is fairly full. Obviously, if you have any further questions, you're more than welcome to contact any one of the three of us. Fundamentally, I think Victoria is in a very good place, and we can expect to continue to grow the business and increase the free cash flow per share over the next 12 months significantly from where it is today. With that, thank you very much for attending, and we look forward to seeing you next time. This concludes our conference call. Thank you all for attending. You may now disconnect your lines. Thanks, everyone.