Huddled Group (LSE:HUD) — HY25 results or the six months ended 30 June 2025

0:00 Good morning, and welcome to the HUDDLED GROUP PLC Half Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to Executive Chairman, Martin Higginson. Good morning to you. Hey. Good morning. Thanks very much, everybody, for attending. Before I get started, I'd just like to to introduce Dan Waterley, group finance director. Good morning. And also Mike Ashley, group CEO. Good morning. And I'd just like to sort of frame this presentation.

0:55 One of the reasons we we asked Mike to step up and and take on the role of group CEO was really to help us look at predominantly discount dragging. We felt discount dragging. It's a very, very complicated business. We were seeing great growth and have been seeing great growth in the business, but we really wanted to examine how could we make this business better. On the other hand, NutriCircle has been an absolute sort of star of the show, but it was it was getting Mike's depth of retail knowledge into the the sort of discount tracker piece to allow us to understand that business. We've made some significant changes within the team, and I really feel that we're now on the on the right track at where we want to go. So if we just flip to the next slide, please. So just sort of running through the numbers and the and the sort of h one highlights.

1:42 You know, revenue up sort of 4,230,000 on the same period last year, 81% increase, which I think is, you know, sort of shows that we're moving in the right direction. Discount dragging orders up in the period, but we knew and and we know that that we want we need to sort of undertake a review of that business. We've done that now. We've started to improve basket margin and more importantly, move the business into the operational profitability. So it's all about the key to orders now as as we move forward. NutriCircle really has been the star of the show. Absolutely amazing. Orders up 768% and revenue up over 600% on the same period last year. I think it really shows the potential of that brand as we move forward.

2:33 BOOP. And I think with BOOP, it's important to remember that that, you know, a year ago in September, this business started. So it was very, very much from fledgling beginnings, and it delivered, you know, just over £1,500,000 in the first half of the year. In September last year, it did about £40,000 just to put it into context. So I think, you know, a major sort of move in the right direction. And 4,000,000 items safe from going to waste. It's important that we remember the HUDDLED is there as a force for good. We stopped surplus items going to waste. In 2024, we saved 5,700,000 items from going to waste. And in the first half of this year, we've saved over 4,000,000, items from going to waste. So let's not forget that, as I said, we are a force for good, and, you know, this is this is about stopping perfectly good products from going to waste.

3:34 So if we just flip to the next slide, please, and I'll hand over to to David Warby to talk about the the sort of h one financials. Yes. Thanks, Martin, and good morning, everyone. Thanks for joining us. Yeah. So you see the the sort of headline income statement figures for the first half. We had discount revenue in just under 5,400,000, which was a 10% increase on the same period last year. We had a gross profit of £59,000, which is an improvement on what was a gross loss of 106 in the same period last year. And all of the gross profit loss figures are stated after full expense expense of marketing and warehousing costs.

4:25 Discount and revenue adjusted EBITDA loss of 454,000. Again, that's an improvement on the prior year of 731. And as you've seen today, if you've read this morning's announcement, both Discount Dragon and Nutriser are now sort of profitable at this level and have been in August and September. So there's there's an improvement in the second half. And then Discount Dragon, loss after tax, after depreciation, amortization, and one off cost of 782,000. Military Circle, as Martin said, has, you know, really grown significantly. Revenue of 2,500,000, it's an increase of 621% since on the prior period from when it was acquired in April 2024.

5:16 We've got a gross profit of 205 k, and that's up from 53 last year. Adjusted EBITDA loss of 73,000 really giving that down to sort of an increased overhead as we've built the business up to to to grow it, you know, and it'll grow it it growing into these overheads and also say that's now profitable at the adjusted EBITDA level. And loss before tax of 114,000. And then, Booth, there's no comparative things to Booth last year. Revenue, as Martin said, 1,600,000. The the business only relaunched under HUDDLED's umbrella in September of last year.

6:03 Business made a gross loss of 74,000. This is really down to high marketing spend because we're we're in the process of growing the the database. So that's that's the reason for the gross loss. Adjusted EBITDA was 398,000. Business is carrying sort of relatively high overheads at the moment, but we we, you know, we see it growing into those overheads. And we'd be sort of setting up the business for success, and we see a lot of potential in it. Head office cost to the PLC related items. And then so just to to sort of summarize on the group group level, revenue just under 9,500, which is an increase of 81% from the prior year.

6:49 Gross profit, 190, which is up from a gross loss of 53 k last year and adjusted EBITDA loss of just under 1,500,000. If we could move on to the next slide, please. Thank you. So just on the balance sheet, we've got we're seeing receivables of sort of 100 and about £160,000 of stock in transit. So the stock position is at the end of end of June, 1,300,000. Cash, we had 552,000. That's before the 1,500,000 investment that came in July and August. And we we take some borrowing opportunities that came available in the period. So we've we've sort of taken taken that on, which has been helpful. It's a good option for us to stop purchases and that sort of thing.

7:46 So that's the balance sheet. And next slide, please. Thank you. Just briefly on the on the cash flow. So we've had about 1,400,000 cash outflow in operating activities. Working capital movements was was as part of that was positive about 300,000. A bit a a big element of that was to do the Let's Explore business, which unwind. So we we sort of benefited from quite a bit of cash from that. Obviously, as as we get into the second half, the losses are narrowing that will put far less pressure on this on the cash flow from that point of view. We have £315,000 CapEx in the period, net CapEx, relatively high CapEx period, actually very high for for for us with warehouse works the warehouse. That will be going forward will be far lighter as we move to THG.

8:47 You know, the the CapEx will reduce significantly. So all in all, cash outflow of about 1,100,000. But, you know, just to sort of say to to just to repeat what I said before the narrowing losses and the reduced CapEx will sort of help that position going forward. And I will hand back to Martin. Next slide, please. Thanks, Dan. So let's just get into the sort of quarter three highlights. And as I mentioned before, Discount Dragon is a hugely complicated business. Getting the the product mix right is is really important. And actually getting this sort of retail knowledge that I felt we needed was was hugely important.

9:36 I think you can see there in the first number, the the 20% increase in basket margin is a is a real step change in the business. And just to so people understand this, we talk a lot about average order value. Now average order value is important because ultimately that that helps drive basket margin, but it's about getting that consistency within the the offering. And what we don't want to do is increase our our average order value too much because if we if we go sort of too much beyond sort of £50 mark, then that means that we have to send out two boxes. In sending out two boxes, we incur more postage costs and another box cost and more pick and pack. So it's really about finding the the optimal sort of average order value, but then driving basket margin. So the improvement in basket margin has been a major step change in the business, and that's what's led us to operational profitability in August, which is our sort of toughest month of the year, and again in September.

10:35 And what we're starting to see now is consistency in the brand, consistency in the offering, which Mike will talk a little bit more about later on. NutriCircle, absolutely the the hero of the piece. You know, revenue in in the quarter, we're expecting this to to exceed 1,400,000. And and just to put that into context, that's more than we did in the entire year last year. So it did more in the quarter than it did in the whole of 2024. So, again, you know, let let's not sort of forget the real star of the show here. AOV in in interest of 19%. And, again, back to that basket margin, which is so important, and it's important across all of our brands, up 23% in the period. And as we start to build out the sort of the offering and they're adding in vitamins and other products, we we hope and believe that we'll sort of further improve that that basket margin.

11:36 Book orders. And, again, it's really important that everybody remembers this is this is effectively one year old. Now in September, last year, we did just around 800 orders. At the moment, in September this year, we expect orders to be over 7,000. So I think that shows the momentum that this business has gone under its belt. It is a great, great business. You know, there there's there's sort of 3,600,000 pounds of cosmetics going to waste each year. So massive opportunity here, and I think we're well positioned as we start strengthening our our product mix. We're well positioned to take advantage of that. And during the period, we took a a 1,500,000, investments, into the business at no discount.

12:26 We've got a major institutional, or major institution on the share register, which I think for me was a was a big tick in the box, helps strengthen our balance sheet. And more importantly, it it gives us the runway and the confidence to to move the business, into sort of not only operational profitability, but full profitability without having to come back to the back to the market. So, you know, we are very, very positive. I think we've made a lot of the the right decisions and the right changes within the business. And I think we're now well poised, to move on to the next stage of our journey. And the next slide, please. I'm gonna hand over to, to Michael Ashley now who will who will delve a little bit deeper, into some of the things that he's done, during his sort of short tenure, that has really helped us sort of move the business onto the right track. So, Michael?

13:18 Thanks, Martin, and good morning, everybody. So, yeah, I'll kick off with with Discount Dragon. So I started it early July. I've enjoyed the business from my nonexec position. What I found, was, was the following. We we had a pretty inconsistent range proposition. That that was a limited choice in the key categories of food, cupboard, tea, coffee, and household. We weren't really encouraging customers to get to that 40 pound delivery threshold as well as we could. We were we have we had inconsistent margins, and that was probably from a non a not a disciplined approach on margin management, and that was due to an inexperienced category management within the team.

14:10 So we we focused on the following, better product availability. Really important that both our front and back baskets were consistent. And to do that, we had to widen the supply base, and we've been pretty successful at that in the quarter. We've offered greater choice on key brands in household, food cupboard, alcohol, tea, and coffee. We've still got a long way to go, but that's that's been significant in our 20% growth in basket margin, for q two. We've had a very disciplined approach to what we call our front basket discounts. So our freebies, if you were to look on our website this morning, unless the team have changed it, and we're giving away 20 free twirls. We know the cost of that, obviously. We limit that level of discount on on the front margin. They're they're there to drive, footfall to our website, the back basket, the the the width of choice on category is very, very important.

15:08 So we've got greater choice in food cupboard, household, tea, and coffee. And what you'll also see is a balance of price points. That's also really important to get to an average order value of £40. So it's it's just as important that we have we have really good value at 10 pounds, at five pounds, at £7.50. Ultimately, you know, we've driven real consistency in in the boxes going out to our customers. We average nine to 10 items day in, day out, which which is really helping to build that basket profitability. Next slide, please. So in terms of quarter four in Discount Dragon, our '25 focus is on the following.

15:55 We've got a 180,000 customers. It's important that we improve the frequency of the returning customers. It's important that our customer service improves through delivery accuracy and speed. We we are we will be able to offer next day delivery with a late cutoff, which really brings us into, yeah, you know, today's today's expectation. It's really important that we target the different customer cohorts. We we've got a brilliant CRM data analysis that that we that we need to target those customers who who buy only into certain categories. So when we're back in stock on on coffee, it's really important they know straight away.

16:49 And in, you know, seeing Discount Dragon develop in building our organic social marketing with core messaging around saving money and the planet, you know, we are a force for good. We're stopping we're stopping food going to to landfill, and and yet we can offer great brands at really fantastic prices and, again, maintaining that balanced price point. So we have to build the brand personality. And in becoming famous, for for what's next in my in my Discount Dragon basket. And and we have to continue to improve and review stock availability and range. We've got some fairly, exciting conversations with big distributors, within with within The UK food market, and we are, you know, we are building relationships also directly, with with the key brands and manufacturers.

17:44 That's really important going forward to help our consistency of offer and offer that and offer that choice on a daily basis. This is what will drive, repeat customers. Next slide, please. NutriCircle. So as as, Martin already, spoke to, you know, this has been, the jewel in the crown in the quarter. I think, you know, the improvements to the website and functionality has made it easier to shop. We you know, we've been successful in in growing sales outside of protein bars, which have been pretty much our staple. We've improved the width of choice. It's now easier to get to the 40 pound AOV. So that's that's driven fantastic results.

18:32 So the average order value is up 19% for quarter two, but it really impressively, the team have delivered an improved basket margin of plus 23% versus q two. So we've we we successfully driven sales outside of protein bars into, more healthy snacks, and that really has driven strong repeat monthly customers, as we said, from 5,600 to 10,000 per month. This has given us a really good platform for growth in in quarter three. So next slide, please. So in terms of our quarter twenty five focus, I think we've got to continue to improve and expand the product range. You'll be seeing us adding more vitamins and supplements to really, widen our reach into food nutrition.

19:24 We will continue to increase the average order value value and basket margin. We'll build and enhance the brand personality. We do need to become, we need to build the awareness of the brand in what we do. We will benefit from the move to three p l in terms of our delivery accuracy and speed, and that will ultimately improve, the customer experience. I think it's really important in Newsher Circle that we we now invest in this business to add new customers, because we we see really strong returning customer data, which we hope to build on in in Discount Dragon. We already have this in NutriCircle, so I think, you know, we we can get to profitability quicker on NutriCircle.

20:15 So, you know, that's that's the reason we will prioritize investment in Nutri, in quarter four to our customers to, to to our database. Thank you. Next slide, please. So Boop. Definitely, yeah, a year of growth. You know, the brand is only a year old. It is our most immature brand, And as a result, we have we have 50,000 customers as a base. We do have growing pains. You know? We have to point out that we have an inconsistent range proposition. We are we are working hard to improve choice in the key categories of hair, skincare, lips, makeup, and fragrance.

21:04 At the minute, our supply base is too narrow, and therefore, we don't present the products we want to regularly enough. You know, if you compare Boop to NutriCircle, NutriCircle benefits from being around for four four more years and having a customer database that is broader with, you know, deeper relationships with with suppliers. This is where we need to get to on BOOP. This is is pretty much the same business model. You know, our a our our AOV aspirations are around £40 per basket, but we need to give the choice in the categories in order to make sure that the customer, you know, has £40 worth of products to spend every month.

21:51 I think this this brand, though, does have, so much potential. It has very favorable product economics. If you compare to Discount Dragon, you can get to a 40 pound delivery threshold probably from five or six products. That's what we see at the moment. They tend to be small in cube, and therefore, from a delivery and supply chain perspective, this, this really does mean, there's a good profit opportunity. And when we get it right and when we do have good stock, it lights up and it lights up straight away. So for me, focus on on boot for for quarter four is is really, building a consistent range proposition.

22:36 So, next slide, please. So we have to improve the stock position. And in order to do so, we've we've strengthened the team. We've brought in expertise within the beauty market, and and I think that's gonna be critical to, opening up new opportunities, with within the supplier base. We we will we will continue to increase the customer database. We're at 50,000. You know, we've gotta build that. But at the same time, you know, through an improved proposition, we should be increase increasing the frequency of the returning customer. I think very, very important to to expand and improve visibility on the social media channels.

23:22 The the beauty the beauty market is awash with with with personality, and I think we have to basically play play within this within this space. So for for me, the hard yards are now on boob. It really is about driving better availability to to to improve our proposition consistently and on a daily basis. Thank you. Next slide, please. So I'll now hand over to Martin who will talk to you about, our move to ingenuity. Thanks, Mike. So we've spoken a lot about, wanting to improve our sort of fulfillment operation, wanting to get to next day delivery, wanting to strive, to be more of a sort of an Amazon type, service. And we know this is really, really important to to us and and more importantly to our customers.

24:21 It has taken longer than we would have hoped to to move the fulfillment center. But just to put that into context, you know, we we we've got to move over 40 articulated lorries. That's over 1,000 pallets and that's over 500,000 items, all of which need to be barcoded, need to be checked for their sort of volumetric sort of sizing, need to need to be loaded in to the ingenuity platform. So it has been more complicated. It has been more challenging, but we are very, very much on track. And, you know, I think once we achieve this and we get there, then the customer experience will will be night and day from from where we are. Highly automated. And in driving that automation, it will eliminate picking errors. And we've spoken about the number of items in the basket.

25:14 We've spoken about sort of complexities around things like discount tracking. It's important that we get that accuracy. The the the less mistakes we make, the better our trust pilot reviews. The our trust pilot reviews, the more likely. And the and more accurate we we get our delivery, the more chances you've you've got of actually coming back and buying again from us. Later delivery. So these are gonna be really, really important. It's gonna be important in groceries, equally as important in NutriCircle. But I think probably good beauty is probably the one where if you can order up to sort of midnight or even 1AM for sort of same day delivery, then that's that's gonna hit and resonate with with the customers and certainly that audience of customer that that wants product or wants it tomorrow, as I said, in an Amazon type type fashion. When we get better accuracy, there'll be less refunds, less refunds, less breakage, less, you know, sort of mistakes.

26:06 So, again, a a big sort of tick in the box. Performing capacity is no longer an issue. Because we can operate twenty four hours a day, it's fully robotic. There are there are no problems with capacity. And capacity has been something that we we sort of struggle with with historically. We've we've hit 3,000 items, and then all of a sudden, there is a delay in in getting those out of the door because you've just got humans involved. So the more we can we can remove that, the better it is. But all of this is is then based on sort of the core fundamentals of getting our product offering right, getting the product offering right, getting the margins right, and then getting it to customers on time and accurately. And so we're we're sort of a long way down the road. The the team, Paul Simpson's heading that up, who's we is our chief operating officer.

26:59 Paul's not here today because he's busy working on the migration as we speak, and we will be up running unable before that Friday and ready to take orders from customers. Can we move to the next slide? And I'm just gonna show a little video of the the automated sort of service that we're moving to. So if we can just play the video, please, I think we'll be in Thanks very much. So you saw in that

28:29 video some keywords, which I think are really important, retention, you know, focus on customer service. And and these are what is gonna be really, really important as we strive to improve, our offering across all three brands. Next slide, please. So in summary, look, what we've got here is we know we've got demand for the product. We know we've got demand for value. Yes. We've got to get more things right. We've gotta get discount driving customers coming back. We've got a long, long way to improving the offering. We've we've strengthened the team. We can see that that's happening. We can see it's happening in Nutrisurper already. And as we broaden the offering, we'll improve the basket margin on that. And Boot Beauty is really sort of there. It's got from 800 orders to 7,000 orders in a month. We're now about sort of getting the better product range and and improving that. But demand for the product and demand for value has never been stronger than it is today.

29:28 Next slide. So we've we've got to sort of you know, Mike spoke earlier about the the sort of tone of voice, and we've really gotta strive and and get over to people that we are a force for good, that we are saving service from going to waste. I spoke earlier about the amount of products just in the cosmetics business that go to waste. 3,600,000,000 pounds a year, of cosmetics products are wasted, which shows the the sort of scale of the opportunity. Next slide. And I think that that really sort of, you know, underpins the our our sort of a force for good. So just flip to the next slide. So Discount Dragon, work to be done, but we're we're making vast improvements.

30:16 20% increase in basket margin on the quarter has has meant a meaningful step change. We moved into operational profitability in August. That's now continued into September. And with a level of consistency and a level of accuracy in our basket margin, we can see that continue when it grow from here on in. Next slide. New Jersey Circle, absolutely the the hero of the quarter. You know, orders up massively over 700%, revenue up 600% in the same period, delivered or will deliver about 1,400,000 of revenues in this quarter, more than it did in its entire year last year. So moving in the right direction, we will further strengthen and broaden our offering with Nutris Circle over the coming months. We're gonna do some big, big deals that will be announced and sort of strengthen that proposition. That will further improve the basket margin and continue this journey with solid operational profitability.

31:22 Next slide. At Boo Beauty, focus on products. Our team is is actually out in in Canada as we speak in the the the big cosmetics conference. We know that they've already done a number of big deals there for us. So we're confident our product offering is is going to improve. And as Mike said earlier, once we get the right products at the right price, this business absolutely lights up. And with the right products, we we know we can take this into the, you know, take it in the right direction, and that will move into profitability in the sort of coming months. And all three of them combined will help us move into sort of group profitability within the resources and and the balance that we've got. So strength in the management team, solid balance sheet, great institutional investors, and I think now we've got a a core proposition across all three brands that is delivering results, delivering operational profitability, and marching us forward to group profitability.

32:21 So thanks very much for listening. I really appreciate it, and we'll just open up now to questions. That's great, Martin, Michael, Dan. Thank you very much indeed for your presentation. I will now turn on your cameras for the Q and A. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the right hand corner of your screen. Martin, Michael, Dan, we have received a number of questions both pre submitted and throughout today's meeting. And I wanted to start off the q and a session with the pre submitted. The first one reads as follows. What is the current mix of new customers versus existing for each brand? And how do you see this developing over the coming quarters? Yeah. Thanks. Great great question. So look. We it's important that we look at each brand in isolation because each one is slightly different.

33:08 Discount Dragon average number of repeat customers is around about sort of eighteen, nineteen thousand based on this in the last six months. What we spoke about earlier is that the focus on getting more people to come back. We've improved the proposition and improving and improving the proposition. We're now confident that people will come back more frequently. We've added things like more coffee. We've added things like cleaning products. And all of these things help you not only get to the 40 pound threshold, but give you a reason to come back. So not only can you fill your basket with snacks and treats, you can also fill it with cleaning products, tea, coffee, and and essentials. So and then, you know, that will improve the better basket margin. Better basket margin makes makes ultimately for us with more operational profitability and allows us to then invest more money into marketing and attracting new customers.

34:02 So on this on NutriCircle, sorry, the intent of the customers is is very, high already. And, a lot of that's down to the the core proposition that we've got and the the sort of actual intent of customers to buy those sort of health and wellness products. We've seen the repeat customers rise consistent. At the beginning of the year, we were attracting around sort of five, five and a half thousand repeat purchases. In in August, that was nearly 10,000. So it's a massive improvement. So you can see it's going in the right direction. And the more repeat customers that we get, the more profitable that business becomes. And with improvements in basket margin, all of this just helps us march along on on a profitable cycle, but repeat customers are really, really important. And I and I think just to add on, you should circle.

34:48 We, you know, we are gonna invest in new customers because we've got such a solid repeating customer. So I'd anticipate in quarter four, our average order value, which is which is growing considerably in the last two months, to be maintained because we'll we'll we'll we'll have probably a high proportion in you whose AOV tends to be two or three pound less. So, you know, we we we want to add to that base because we're confident as soon as we add to that base that they'll they'll return very regularly, which is which is obviously very positive for for for for for sales and profit going forwards. And I think it's about that rinse and repeat model Yeah. That we've got. We've absolutely got it right with with NutriCircle. Boot is, you know, it's very much the beginning of this journey. At the beginning of this year, we had about 1,200 repeat customers that had grown from, you know, very modest beginnings in September of last year. August this year, you know, we talked about some 7,000 orders, but there's gonna be about three and a half thousand of those will be repeat. So you can sort of see that about 50% are repeat and 50% new. I And think as Dan alluded to before, we need to grow that base. And growing that base, we'll get more and more repeat customers. We can see the trend in that. We can see high levels of intent, and we feel that Boot will very much follow the same pathway as NutriCircle. High intent, decent basket margins, and a march to to sort of, you know, solid profitability.

36:14 Fantastic. Thank you very much. Moving on. Do you expect the funds raised in July to be enough to carry the business to full profitability? You know, mean, as as per the statement, first of all, getting a a big institutional investor on board, a a large institution, was a major milestone for the business. You know, adding more institutions to the share register, in my view, is is is a good thing. The additional cash has has helped strengthen our balance sheet. But I mean, the most important thing here is our move to operational profitability. And as we keep moving and we keep on that trajectory, then we will move to group profitability. And and that with the reserves that we've got at our disposal will allow us to do that. Thank you, Martin. Next question. What do you think is a realistic target for group AOV in the coming twelve months?

37:07 Look. We we we continue to focus on AOV, but, you you've you've got to sort of break this down into individual individual brands. So let's just start with with Discount Dragon. AOV is really important, but the most important thing here is is basket margin. And as I I spoke about before, you know, at the moment, we probably average around sort of $45.50 pounds per order, including VAT. But if we went over to 60 pounds, which everybody immediately sort of think that was that was great adding another 10 pounds of AOV. But in most cases, because of what we ship, being sort of, I think, cans of Coke or, you know, large items, that would tip us into a second box. And in tipping us into a second box for delivery, that means we've got another delivery charge. We've got another box to pay for, and we've got more picking and packing.

37:56 So AOV is important, but what is important is is basket margin. And and I would say really focusing on the basket margin and the improvements that we've made on that whilst maintaining a solid AOV Yeah. Sort of £40 net of VAT. Yeah. I think from a Discount Dragon and user circle perspective, we've we've got we've got a formulaic approach, which is now driving consistency. So so for me, the AOV will will remain constant, and and so will the basket margin. What we have to do in, in DD is get more returning customers, but they'll the the returning customers will still hit the same AOV and basket margin because of our disciplined margin approach. New Jersey Circle has seen big gains in in q in q three. I think q four, while whilst adding new customers, will will drop the AOV. The returning customers will will will maintain it. So overall, it will be a maintained position on both AOV and margin.

38:55 And then and then from a boot perspective, it's really inconsistent because because of the the the, you know, you know, the choice in in products that we're we're currently offering. But we know when we get that when we get that right, that immediately increases by five, six pounds to the level of the other two. So, you know, we're pretty confident that once we once we get better choice in the key categories, particularly in hair care, accessories, and cosmetics, then the 40 pound delivery threshold will be will be attained. And we're confident, you know, that we we we do buy at the right price, so we'd be confident that we'd we'd get our basket margins, that are very similar to NutriCircle.

39:42 So we've on on two out of three brands, we've now got a formulaic approach, just need more returning customers and more new customers, for Nutri. And on boob, we know what to do, but the the key to unlock the door will be much improved supply. And, you you know, we're we're doing the hard yards on that, and we will continue to do it. You know, we this business is only a year old, so we we we do need to forge relationships both both both with wholesalers, and also with the with the brands directly, because to Martin's point, you know, 3,600,000,000 of waste is, is something that we, we can do something do something good about, but it will be that formulaic approach to AIB.

40:29 Thank you. Thank you. Moving on to the next one. What are your expectations for q four? Should investors be excited about what is possible this coming quarter? Well, look, you know, we're we're excited about quarter four. Mean, to be honest, we we remain excited every day. I think when we get it because, certainly, as as I call Mike every morning at 08:00, I'd like to think that he's excited. I'm not always excited about that, but he does call every day at eight. Yeah. But, look, it's you know, we've we've moved. We've we've had a big step change in the business. AOV and basket margin has has improved. We talked a little bit about AOV. We talked a little bit about basket margin. You know, just to give you sort of NutriCircle as a as a as a good example, by actually adding a few more products to the to the mix, adding more or choice has actually improved our basket margin. Increasing basket margin just on that brand by 50p an item would actually increase profitability by around about sort of 40% based on current metrics. So you can see that, you know, the the pendulum doesn't need to swing much in order for this to become a really, really exciting business.

41:36 We're really excited about discount driving. We're excited about the changes that we've made. We're excited about the new products and the product mix we've we've got. We're we're having great talks with some coffee producers about sort of surplus coffee in the sector, whether that be pods, whether it's instant coffee, whether it be beans or or or filtered coffee. We're having great conversations on NutriCircle with some big, big names about taking, you know, different products from them. We want to add vitamins onto them. We want to add more wellness products. We want to get the breadth of offering. And, boob, you know, we we are as excited today as we were the day that we bought the business. It's an amazing business. The ability when we get the right products for that business to absolutely light up has has never been stronger.

42:26 So I guess in in theory, you know, we are really, really excited. We we look forward to quarter four. We look forward to the busy period, that we've got ahead of us. We look forward to strengthening NutriCircle's, offering ready for the busy January that it has. Quarter four is not necessarily the busiest month for the new circle. It's normally January, but it's strengthening our offering. We're gonna be ready for that. Yeah. I I mean, importantly, we re and it sounds sounds obvious, but we're the the the planning the team are doing now is is is is is looking forward so much more than it did. So we yeah. You know, we've we've got pretty clear plans about how we'll how we'll turn up in Black Friday in November, which is obviously peak period, especially online.

43:12 And and, you know, that that's just so important that we have the right products, but we know what to do now as we sit here at the end of September. So I think, yeah, reasons reasons to be excited. A yeah. You know, we strengthen the team within within, and the knowledge and supplier base that we need is now there. So, you know, it's clearly the number one priority, which does make me excited because, you know, I'm a lot more confident that we're we're knocking on the right doors. That's great. Another one looking into 2026. What are your ambitions for 2026, and how much do you think you can grow this business next year, if you had anything else to add there? My ambition is for Martin not to call me ace in the morning. And, unfortunately, you can't always get what you wish for. Yeah. No. We we've we've got, you know, great ambitions for for the business. You know, the move of of our full form center will really help us accelerate this business. We've always strived and wished for a sort of Amazon type delivery service. We'll be able to deliver that. You know, DD is about now the focus on repeat customers. And once we get to home, we can then press the sort of the marketing accelerator.

44:31 New Year's Circle is about broadening our offering. You know, we've grown a lot in the last twelve months, and we but we see a lot more growth in this brand. You know, broadening the offering, whether they help us do that, it's it's gonna help to improve basket margin and profitability. Yeah. I think I think the platform that we've established on on on DD and NutriCircle means that, yeah, you know, we can invest in building the personality of the brands. And I think, yeah, we've got some customers who who video themselves opening the boxes, and and and they are genuinely brilliant videos. I'm just delighted in the value that that they're getting sometimes on on quirky products that they wouldn't necessarily ordinarily put in their Tesco basket. I I I want to develop this because I think I think we can make, you know, make dealing with discount Dragon fun because because of the nature of the products.

45:28 I think I think from a new circle perspective, again, developing developing a personality in sports, wellness, nutrition, know, broadening the offer, to complement the fantastic range of protein bars we've got. We can do. We've got you know, we we're even, we're close to taking a first delivery of product from a well known wellness retailer in The UK. That that relationship's only gonna continue to develop. So I think, you you making sure we've got the the right platform on our product metrics and giving our customers more consistent more consistency in our proposition will enable us to become, you know, much more aware people to become much more aware of who we are and and and what we stand for. Because ultimately, yeah, we do we do deliver great value, but we're also, you know, preventing preventing waste, which is which is, you know, a very good thing to do. And at the moment, we we're not concentrating on that because we've gotta we've gotta do the nuts and bolts of the business. So I think that will start to come to fruition in 2026.

46:44 Yeah. Look. I think starting a business is never easy. Starting and growing a business is never easy. You know, lot of people expect this this sort of 45 degree trajectory, and it and it's not like that. There are challenges. There are things. There are curveballs that get thrown at us. We we deal with them on a daily basis, and and we come back stronger and and more determined every single day. So I think 2026, you know, we want to move this business. We want to get it into group profitability. You know, we all hate it when we're when we're not making money, but we can see the trajectory. We can see the pathway. We can see we're on the right path to do that. And we can see that we've got the resources. We see that we've got the team now around us to to achieve that. So I think we're all certainly, this time of table, we're all very excited about 2026 and what it can deliver for for not only us, but also shareholders.

47:36 Fantastic. Thank you. Now moving on to some live questions. Admin costs are 11 times gross margin and have grown by 30%. What is the business model that sees admin costs covered gross margin? When do you expect that to happen? You know, I I think as Dan alluded to earlier on, this this is about strengthening the team. This is about planning for growth. This is about planning for success. Yes. Our admin costs are high, but we see the growth of this business being, you know, big. We see this being a big business. We're not planning for this to be a a small mom and pop business. We're planning for this to be a a sizable business. We've touched on the amount of surplus that there is to waste. We've touched on how we've done the step change in discount tracking. We've touched on the the growth potential for NutriCircle and also the the real potential in boot.

48:27 So what we've done here is we've planned for success. So, yes, it's painful. We're acutely aware of that. But but in doing so, we've got to have the right team around. So if we've the right team, then we're never gonna grow. So we we've invested in that, and and now it's about us delivering, that growth, top line and ultimately bottom line. Thank you very much. And perhaps one for you, Michael. It's clear why Mike's knowledge and experience is a positive for HUDDLED, but it's not clear what the attraction is for Mike given all his other business interests. Mike, if you could explain this to this investor, please. I think the the the investor in question may have got the the the wrong Mike Ashley. Unfortunately, I'm a lot poorer than the guy, and, fortunately, I'm a lot less busy.

49:14 As in, I'm I am very busy, but, I'm I'm a nonexec director in, in Midwich PLC, and I've been for for eight years. And, yeah, my background's retail, but I'm not, I think, the mic actually in question. Hopefully, that's, nipped that on the board. That's That's why we've been referring to me as Michael, which is only what my mom normally does. So, yeah. Thank you very much. The next question is on the share price. The company share price indicates the market is not yet convinced. What do you need to do to change the mood? I think we've I think we've we've we've we've sort of gone through that. I think establishing a platform where we deliver consistent operational profitability is is the number one priority, and we've made step change in that over August and September. Yeah. These are significant improvements.

50:08 You're looking at big, big profit swings. You know, we we've got now a formulaic approach to to delivering much better customer choice, and, you know, customers are responding as they will. We've done that on the two out of three brands, and we've said how we'll build going into quarter four. It's clear. It's there's a clear plan, and it's up to us to to communicate that. From a boot perspective, because it's only a year old, we've gotta build that base. And once we've built that base, we'll be we'll be we'll be well set for a successful '26. And I think as, you know, as the largest group of shareholders with management, we're probably never been more relaxed about where we are today and more excited about the future. You know, we all know that the the end market is struggling. We all know that that it it it's it's hard out there. It's hard for investors.

51:05 It's it's hard for businesses. But I feel we're we're we're on the right track. And this was never going to be an instant sort of win. I I think if people want that, then you're better off investing in crypto or in mine. What we wanted to do was really build a business that had longevity, build a business that was a force for good, and build a business that was profitable. Yes. It's probably not got there as quickly as as, you know, some shareholders would have liked, maybe as we would have liked. But the reality is we are on the right track, and we're making massive leaps and and and forward into building a business that is sustainable, profitable, and, you know, equally as importantly, is a force for good in in this current landscape.

51:52 Understood. Thank you very much. And next up is other plans to introduce subscription models to improve recurring revenue visibility? No. We we don't particularly like subscriptions. I think that, you know, we want to give customers the choice. We want to give them a reason to come back, not rely on subscriptions. You know, our focus really is on great products at great value. You also gotta remember that we deal in surplus, and and it's very hard, in the surplus world to do subscriptions because our product offering can change and does change. Yeah. So we're very much about value. And what do you think, Mike? Yeah. I think I think, look, subscriptions are are quite a clunky tool to drive loyalty, and loyalty is incredibly important.

52:42 But, ultimately, we sell products. And if we do a good job, people will keep coming back. So loyalty is driven by by, you know, the the choice you offer and the service you offer. Choice has definitely improved markedly over the last couple of months. Service not so, and we're really facing into that, and the move to three p l will help. I think, can we do more to entice our already loyal customers to shop maybe weekly rather than monthly? Yes. Is that priority number one? No. I think, but you will see in 2026 as develop. I think I think what I'm grateful for are, we've got a we've got a very, very good CRM system, you know, experience many.

53:32 This is as good as it gets. Some of the data we've got in Shopify, we've got all the tools to be able to target each each of our customers with, you know, different offers. That's where we've got to spend our time and effort. But there's no point doing that until you've got, yeah, you know, consistency of product choice. So it's all about the sequencing, and that will come in 2026. Perfect. Thank you. And the next question we've got here is, could you please state where the head office costs are set to remain fairly stable in h two twenty twenty five and beyond? Yeah. I'm happy to say that. I would say, yeah, relatively stable. I mean, we have made some additions and strengthened the the exec team as as everyone would be aware. So I would expect a a small increase, but broadly the same, I would say, in the same time.

54:26 Thank you. And the next few questions are on the t h g THG partnership. You say the THG move will be completed by Black Friday. But can you please add more color as to how this process will flow, and can this date be beaten? I think to say it can be beaten, I'm not gonna create a hostage to fortune because, you know, you've gotta remember, as I said, we've got 40 articulated lorries to move. And anybody who's familiar with our current location knows that we were on the 3rd Floor of an old mill. We have to move all of those items in a lift. Whilst we've got a couple of lifts, it's one of the lifts is a shared lift. So we have to do this at weekends and throughout the night. So it is a complicated piece.

55:16 We're we're a long way down the track in terms of getting moved. I'm confident that we will do this as quickly as humanly possible. We have people working sort of night and day on this, and we've got a really experienced team as well as the the sort of THG team who've done this many, many times before. But we've got to get it right, not only if we've got to get it right in terms of moving the products, we need to make sure that there is no break in customer service, and we continue to supply people's orders throughout this whole process. So probably that's not the answer that anybody wanted, but it it it it's the best one I can give Yeah. With the information. But we're we're helping to get this done. Yeah. We are as quickly as possible, but what we cannot do is, you know, is pick from two locations for the same customer.

56:04 So, you know, there's a lot of there's a lot of thinking and planning going into this. And, you know, next four weeks is is is gonna is gonna see us move. So it's yeah. We are we're we're building. Thank you. Another one on THG. Are you beginning to see any traction on deals with t h THG's existing customers? Yeah. I mean, we're starting to see so I think that will improve tremendously once we're in there because we've we've we've talked historically about the ability to deal with surplus product from some of their partners without ever having to move location. Therefore, you know, reducing carbon footprint, making it easier for them to turn surplus into cash. So I think that that position will will 100% be improved once we're in that location.

57:00 But so far, we've done a number of deals, we think that will just become bigger, faster Yeah. As we move forward. Yeah. Especially for boobs. So in 2026, you know, there'll be so much more opportunity to to work with THG on all their on all their great brands. Fantastic. And the next question is why is q three total revenue expected to be less than q two? I don't think we've given any forecast We on we we did send a statement we expected of 4.9, I think. I think this yeah. This is a focus on, I think, the sort of more more quality orders and basket margin and emphasis on looking for basket margin.

57:51 I think That's So Yeah. So I think I think it's important that we we we get operational profitability rather than unprofitable sales. So we've we've deliberately stopped, looked at the business, and and and basically turned both Discount Dragon and new NutriCircle into operational profitability in August and September at the expense of some sales. There there's you know, we we some days, we were we were selling very, very profitably before we took the formulaic approach and gave the the balanced basket approach, which is what we've talked to. And so, you know, this is what I talk about in terms of establishing a platform for growth.

58:37 We've now got that platform. So I think in quarter four, you know, you will see that that that improving as we as we move through. But I I think we continue to be focused on basket margin. You know, profit per order or basket margin as we call it is is just so important, And and we will now spend our time focusing for Discount Dragon on those returning customers. We were attracting a lot of customers for one off buys and not making any money out of it. That business, we've kind of walked away from, which I think is a really important stepping stone for the for the for not only the business, but the team because it is a different way of operating. And, you know, we I think we've been guilty in the past of picking up deals and then and then, you know, maybe not having, as as strong a hit rate as we would have wanted to.

59:36 I think now, you know, what you're seeing is is is consistency and a move to operational profitability, which I do believe is, you know, more important than just driving revenue that doesn't make money. That's great. Thank you. Perhaps one last question as we reach the one hour mark. Are you considering any additional business segments beyond the current three divisions? No. I mean, there's nothing on the radar at all at the moment. And as Mike alluded to, our our focus really is consistency and profitability. And that is that is the sort of the mantra as we move forward. The mantra in quarter three and the mantra in quarter four. It is about getting the right customers. It is about getting those customers to come back. It's about building on NutriCircle, building on the growth and solid foundations we've made there, improving the product mix at Boot, and also getting transitions to to TSG for our fulfillment. So I think we've got plenty to do in quarter four as we as we described. Yeah. And, you know, there's a reference to admin costs earlier, but we we do have a young and hungry team, but they are quite stretched too.

1:00:46 And and, yeah, you know, when I've when I've looked at how we're how we're set up, yeah, you know, from a commercial marketing perspective, we we we're not blessed with big numbers, and I think it's important that, whilst we don't increase our expenses going going forward, in administration until we drive growth, it's really important that those guys are focused on driving the consistency. And, you know, that's that's, you know, that's where we are. That's great. Well, look, guys. You have covered a lot of ground there, so thank you very much indeed for addressing those questions for investors. And, of course, the company can review your questions submitted today. I will polish those responses on the investment company platform.

1:01:31 But Martin, before I redirect investors to provide you with their feedback, which I know is particularly important to the company, could I please just ask you for a few closing comments? Know, thanks very much, first of all, everybody attending. I know it's taken an hour out of your Monday morning, so we we really do appreciate that. I think as the business starts today, we are probably more excited today than we we ever been on this journey. We've got a really strengthened sort of senior management team. The the team below Mike and and team that work in each of the brands are amazing. They've done an incredible job. They have. We've seen some massive leaps across the piece. We've seen massive leaps in Discount Dragon in terms of it moving to profitability and the consistency. We've seen massive leaps from James and his team at NutriCircle who really, you know, rocketed that business, you know, beyond our wildest expectations.

1:02:26 You know, over 700% growth in orders is is is amazing. And I think we'd like to thank the the Boot team and also the new additions to that team who are really helping us strengthen our our product proposition and will help us take that business to where it deserves to be. So overall, you know, thanks very much for for being challenged. Those of you who are, those of you who are interested, please do come and join with us on the on the journey. And we've got a lot more to deliver. And I think as as we said right at the top of this thing, hopefully, we're a force for good, and a profitable force for good. Fantastic. Martin, Michael, Dan, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations?

1:03:14 This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of HUDDLED GROUP PLC, we'd like to thank you for attending today's presentation, and good morning to you all. Thank you, Erica. Thanks.