Sanderson Design Group (LSE:SDG) — Results for the year ended 31 January 2026

0:01 Good afternoon, and welcome to the SANDERSON DESIGN GROUP PLC results presentation for the year ended 01/31/2026. Send. Company may not be in a position to answer every question received during the meeting itself. Have the company can review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Lisa Montague, chief executive officer. Good afternoon. Thank you, and good afternoon, everybody. My name's Lisa, and I'm here to share with you today, along with my colleague, CFO, Mike Woodcock, our results for SANDERSON DESIGN GROUP to our fiscal year end '26, which was on the January 31.

0:52 And, thank you for joining us. I will share with you an overview of the year, and then Mike will give you a bit more financial detail and hand back to me to talk about the future and how we have continued to accelerate some of the key strategic and transformational initiatives and shaped our strategy to improve our results in this year and beyond. Our business is a Glance, for those of you that don't know us, is that we're a leading interior furnishings group that designs and makes world class fabrics and wallpapers. We also have a strong licensing channel that delivers finished goods with specialist partners in our core markets.

1:44 We employ 500 people, all of whom are committed to leading the industry in the way we work. I've been here seven years now, and Mike's been with us four. We both have luxury goods backgrounds and international backgrounds. To recap this year, for the results that we're announcing, we really have highlights of the year resulting in the decisive actions that we took to improve performance. We delivered cost reductions and we've improved the efficiencies that we set out to do. In summary, the revenue was broadly flat on the prior year, while profitability was greatly improved.

2:30 We grew back cash balances to £9,800,000, starkly reduced inventory and maintained a robust balance sheet. US sales grew by 10%, and The US is on track to be our biggest market very soon. Manufacturing has been turned around from a difficult year prior year, regaining profitability and has strong momentum carrying into this new year. Licensing for us has continued to perform strongly with encouraging underlying growth from established partnerships. Our d to c acceleration, we pulled forward the launch of all brands websites into the year that have been planned over a two year program.

3:20 And this has positioned us to build audiences for all of our six consumer brands in The UK and The US. Our designs have resonated well in the market. Highgrove by SANDERSON collection was that brand's biggest ever launch since, last May in its first year. And we had Huntington discovering a new body of archive designs that gave Morris and Co new impetus. Since the year end, we took a decision to purchase shares into the EBT to fund future LTIP vestings. The board proposes a final dividend of 1p per share to give a total of 1.5p on the full year, which is same as last year.

4:08 So in short, the strategy we employed is working. We've delivered the planned improvements, and Mike will now share with you a little more of the financial detail behind this performance. Thanks. K. Thank you, Lisa. Okay. So the first two slides in this section focus on the 10 KPIs we consistently use to track our performance. These provide a high level view of our result for the year, and then I'll cover each area in more detail later on. So f y twenty six has been a year of stabilization. As Lisa mentioned, turnover fell by 1% to £99,500,000 But the mix of the revenue and the benefits of the various cost reduction initiatives we implemented meant that adjusted underlying profit before tax improved from £4,400,000 last year to GBP 5,300,000 this.

4:54 We've also seen a significant improvement in our cash performance and the strengthening of our balance sheet. The absence of any major capital expenditure projects and a GBP 5,700,000 reduction in inventory has helped increase our net cash position by £4,000,000 to £9,800,000 at year end. So starting the deeper dive with revenue. This table shows our three key revenue streams of brand product sales, licensing and third party manufacturing income. Brand product sales were down 2% year on year, with growth in North America international markets being offset by continued weakness in our home UK territory. Licensing sales were robust against a record breaking FY 'twenty five, and third party manufacturing revenues returned to growth after a difficult year.

5:45 Looking now at brand sales by geography. Trading conditions in The UK remained subdued, with revenue is down 9% compared to the prior year. Income from our top 10 domestic customers was maintained, the decline largely attributable to small independent retailers on The UK High Street. The targeted growth market of North America performed well, with underlying sales up 9% in constant currency. Sales here were impacted in the first half by uncertainty around The U. S. Tariff regime, but recovered strongly in H2. We were able to pass the cost of tariffs on to customers via surcharge and that contributed around £200,000 of revenue or an additional 1% of growth in that territory. Northern Europe was a mixed picture, with strong growth in Scandinavia, which continues to be a core market for Morrison and Co, partially offset by softness in Netherlands, France and in particular, The Republic Of Ireland.

6:37 And then sales in the rest of the world were broadly flat and included £1,000,000 of revenue from The Middle East, which represents less than 1% of group turnovers. So looking now at sales by brand. Morrison Co. Continues to be our only brand where revenues in North America exceed those of The UK. In constant currency, sales were up 14% in North America and up 9% in Northern Europe, driven by Scandinavia. As Lisa has mentioned, the brand highlight for the September launch of the Huntingdon collaboration, which should drive sales growth into FY 2027 and beyond. Clarke and Clarke is predominantly a UK brand and is therefore exposed to the continued softness in that market.

7:22 Sales here were down 11%, contributing to a 7% decline in total revenues. In North America, where Clark and Clark is distributed by our friends at Crabbit, sales were flat in constant currency, but we remain confident in the long term growth potential of the brand in that market. The SANDERSON brand, which has been a strategic focus for the group in the last three years, has had a positive year driven by the launch in April of the high growth by SANDERSON collection. Overall, brand sales were up 2% in constant currency, driven by growth of 12% in that North American market. Sales and hardware in The U. S. Were up 6%, reflecting continued traction from our collaboration with Henry Holland, which launched back in September 2024. Total brand sales were flat year on year with the overall result, like Clark and Clark, impacted by the brand's exposure to The UK market.

8:13 And then Zophony, their recent launches, Indian and rare textiles, have helped drive sales. In North America, high end residential and hospitality projects helped drive growth of 9% in constant currency, and sales there are now almost at the same level as in The UK. Our two factories, STANFORTH and BAROX TEXTYLES in Lancaster and ANSYSY WALLPAPER COMPANY in Loughborough, print for both our own brands and for third party customers. The factory restructuring mentioned earlier has reduced costs by £1,500,000 compared to the prior year, increased efficiency and helped the Manufacturing segment return to profitability. We now have a flexible, cross skilled workforce, better able to respond to market demand. Our digital first printing strategies and digital output of both factories grow to 63% this year.

9:03 The planned inventory reproduction program at the group level led to a fall in internal turnover, but third party sales performed strongly, especially in the second half, with full year revenues up 5%. Third party order books have benefited from continued momentum at the start of the new financial year. On that licensing, and our licensing activities leverage our designs and our archives and bring wider consumer awareness of our brands across multiple categories of finished goods. Revenues were robust at 10,500,000, slightly lower than the record breaking £11,000,000 prior year. In accordance with IFRS 15, the group recognizes the value of minimum guaranteed royalties arising under multiyear agreements in full upon signature.

9:50 This accelerated income, shown in the third column in the table, was 6,100,000 in the year compared to 7,300,000 in FY 2025. Agreements signed during the year with significant accelerated income included Ruggable, and represents the cash received by the group from our partners. The underlying performance was £9,000,000 representing a record breaking 35% increase on the prior year. So this next slide analyzes the first column on the previous table, looking underlying licensing income by brand and by territory.

10:41 In The UK, the 50% growth in underlying revenues reflects the initial launches of the Habitat Chew agreement signed in FY twenty twenty five and the first full year of revenue from the Clark and Clark agreement with Next. The growing importance in North America in the group's licensing operation can be seen with a 36% increase versus the prior year and was driven by Morris and Co's agreements with Ruggable and the Williams Sonoma Group. And then looking at the lower table, you can see that Morris and Co remains the group's most licensed brand. And as it mentioned, it continues to win new license partners. However, encouragingly, SANDERSON saw underlying revenues more than double to become the second largest brand in the licensing portfolio. So moving down the P and L, we get to gross profit, where we saw our gross profit percentage grow by 90 basis points to 69.1%.

11:34 The Brands segment recorded a gross profit percentage of 67.9%, which was in line with the prior year. The segment benefited from the sales mix shifting towards the higher margin market in North America and the higher margin channel of direct to consumer. However, this was offset by an increase in the mix of lower margin contract sales and a higher level of discounting for clearance products due to the high level of fabric inventories across the sector as a whole. The benefit of the restructuring exercises undertaken in our two factors can be seen with the gross profit percentage segment increasing by six eighty basis points despite the £2,800,000 reduction in internal sales. And then looking forward into the new financial year, our current levels of inventory and our utility hedging program should ensure there will be no immediate material impact on our results should current energy market conditions persist.

12:33 Adjusted underlying profit before tax was GBP 5,300,000, up from GBP 4,400,000 in FY 2025. Profit before tax was GBP 3,100,000, a significant improvement versus the prior year, which was impacted by a one off GBP 16,300,000 charge related to the impairment of intangible assets. In this table, selling and distribution costs are shown net of other operating income of £3,000,000 This other operating income represents the consideration received from the sale of pattern books that we supply to our, wholesale customers. As mentioned at the half year, for those of you that saw the analyst presentation, our approach to issuing these books has changed, resulting in both lower costs than income and a net year on year saving of around GBP $05,000,000.

13:19 Aside from the impact of Pattern Books, distribution and selling expenses have remained largely flat versus the prior year. Savings from the renegotiation of our haulage and carriage contracts were offset by the impact of additional tariff costs in The U. S. As we mentioned earlier, these tariffs were recovered by applying surcharges to U. S. Invoices, which have been recorded as revenue in these accounts. But from the start of the new financial year, we've incorporated these surcharges into our standard U. S. Price list. Administration expenses were broadly flat, with inflationary increases being offset by savings from restructuring exercises undertaken across all areas of the business. And then finally, from a finance point of view, looking at the group's balance sheet and cash position, you can see we ended the year with net funds of £9,800,000 up from £5,800,000 at the previous year end.

14:10 Our headroom is further enhanced by a committed but undrawn Barclays facility of £10,000,000 Inventory reduction was a key area of focus with raw materials in the manufacturing segment and finished goods in the brand segment seeing reductions of 3020%, respectively. Net inventory ended the year at $21,500,000 down $5,700,000 from FY 2025. And we believe there is still scope for further but more limited reductions in the future. As I previously highlighted, the way accelerated licensing income is recognized means there's a time lag before the cash royalties are received. Minimum guaranteed licensing receivables increased to £17,000,000 at year end, which meant the £1,400,000 of the £10,500,000 of revenue from this channel has not immediately been translated into cash.

14:58 However, as noted on the licensing slide, cash receipts from licensing increased from £6,600,000 in FY 2025 to £9,000,000 this year. Contributions to pensions funds of £1,000,000 was significantly lower than in prior years following the one off injection of GBP 2,300,000 in FY 2025 to facilitate a buying insurance transaction for the smaller of our two legacy defined benefit schemes. And then finally, capital expenditure in the prior year totaled GBP 4,100,000, and that year included a new digital printer at STANFOST and the fitting out of the group's new head office at SISIK. This year, FY 2026, no major capital projects were planned, and as a result, expenditure fell to just £700,000 that concludes the financial review of the year.

15:46 I'll now hand back to Lisa to update now on our future strategic direction. Lisa? Thank you. Thank you, Mike. Now, everyone, in the next few minutes, I'll take you through where we believe we are in our journey and the road map ahead as we see it, as we push forward with confidence in the strategy, always a fine news, of course, along the way. Our strategic framework has been in place for a little while now, a few years, with four key pillars and four key underpins. We're focused on interior designers as customers and our omnichannel platforms to reach them. Our heritage brands, it's the second pillar, attract collaborations, lead on storytelling, and licensing appeal.

16:39 And then within products, you can see our focus on wallpaper as a growing category, and that reflects also our manufacturing expertise. And then The USA as a geography will remain our growth market until at least our penetration has doubled. Our ambition is to decorate spaces that make their owners dream and to achieve this in collaboration with top designers around the world, giving them what they want when and where they need it. This is how The US market works and why we are gaining market share.

17:25 Tiny for now, albeit it will grow. As a category, wallpaper is in demand. And as I mentioned, we're clearly recognized as a specialist printing at our UK factory, Ansty, in Loughborough. Wallpaper also sells well online, and demand is growing in The US where we can take the lead both with our in house brands and as a supplier to others. North America is where we see rewarding growth as a market, and we maintain clear ambition as we are definitely under indexed in that world leading territory. Culturally, we're leaning in to develop the teams to behave as a global organization, promoting British design inside and outside, and British design and make with exceptional craft and creativity to an international audience across all platforms, however and whenever it suits them to engage.

18:35 This requires agile mindsets and continuous development, very exciting, but the leadership also requires a sensitivity across the teams with a secure foundation from which to embrace new ways of working. Digital traction is exciting. Having brought forward our plans, we will now grow our audiences and our direct dialogue with customers, glean data and insights that we can use for future decision making. And combined, this will all take us forward celebrating the unique creative propositions of our brands, our highly crafted products, coupled with the efficiency and ultimately productivity improvements to be leveraged from technology.

19:22 It's all about achieving the balance of those things. For anyone less familiar with our brands, we have a good portfolio that covers a range of fabrics and wallpaper designs to meet most aesthetic and value preferences as depicted on this pyramid. Zofony is our luxury offer where we work on bespoke projects at the high end, and we have an exciting collaboration launching this month that I'll come back and talk to you about. Heritage brands have traction currently through the recent launches at SANDERSON and with Morrison Co. And the volume in our business has always been driven by contemporary brands, Harlequin and Clark and Clark.

20:14 Speaking of heritage brands, we're delighted to see that Morris and Co continues to grow and go from strength to strength, revitalized with the newly discovered designs in the Huntington collaboration and more to come over the next couple of years. We're also working on a strong creative campaign directed at new audiences in The US, and I'll be able to share that later in the year. SANDERSON has been boosted by the Highgrove collaboration that has strongly outperformed expectation in its first year, and we expect that momentum to continue with occasional new designs or colorways dropping in to keep the narrative alive. Newly launched this year is also the SANDERSON National Trust collection that's off to a great start, following the first one of its kind that's been selling well for over six years now.

21:15 The Huntington project is a collaboration with the Huntington, Museum, Library, and Botanical Gardens in Pasadena, California, where some 50 designs were newly discovered a couple of years ago now and have been developed by our very talented design team. 26 of these have been launched already, and we have another 24 to go this year and next. There's a design called Lennon Lilly that you've been just about seeing the curtains and cushions there. Do have a look on the website after this. That's become, fast become a new iconic design in the Morrison code portfolio, and we believe that this new impetus for a new IP will give us great success for years to come.

22:10 Highgrove by SANDERSON benefits the King's Foundation and has been a huge success on every level. Sales are the strongest in the first year of any collection launched since 1860. The halo effect on the brand is clear, especially in The US where SANDERSON was less well known. In fact, around half of the sales have been US orders, where our English print mark and decorating style clearly resonates. A select few new designs are being unveiled at the Chelsea Flower Show next month when the King's Foundation hosts a garden that they've announced designed by Alan Tint Marsh with David Beckham, and we expect a fair amount of attention as we co sponsor the Highgrove Pavilion across the other side of the main avenue.

23:02 And in the fall, a collection of walls will join the initiative completing the full decorating proposition. We announced a Zophany collaboration with Michael Smith that goes to market also next month. A lot happening in May. In fact, on the May 26, this collection will launch to market. I've known Michael for a few years since we were in Madrid together at the same time. He's widely considered to be America's number one interior designer, which I suppose means number one in the world, famed for decorating the White House with the Obama's. He's also a huge Sofoni fan and asked us to help to fill a gap that he perceived in the market for sophisticated outdoor fabrics that can also be used indoors.

23:53 Our designers work closely to translate archival designs into his six type color palettes onto outdoor fabrics to create this capsule and work with our factories and others to do so. It was then photographed in Cecil Beaton's former home in the famous Winter Garden in Wiltshire, with Beaton himself played by none other than Hamish Bowles, who, if you don't know, is Anna Winter's global style director. The result is a charming collection that launches to market next month. Michael's already specifying it in his high end residential projects. And we figured if Michael Smith couldn't find what he was looking for, then nobody could, and that does seem to be the case.

24:43 Clark and Clark has huge potential, particularly in The US where it's growing strongly and reached about $10,000,000 in sell out this year, which you don't see in the numbers because of the, the way we account for distribution agreement. With strong new collection launches, catching up from the lull, partly due to the tariff cautions and a planned promo trip for Emma Shipley, who we worked with on Clark and Clark, to fanfare her new designs in the market later this year, There's lots to look forward to in this coming year for Clark and Clark. Harlequin has recovered also and is showing good traction particularly in The US and with hospitality contract sectors that appreciate Harlequin's modern designs and textural finishes.

25:30 Our new sharing partner in Florida is off to a strong start and driving Harlequin growth in The US, particularly in those sunshine states. And we worked hard last year to bring forward the website development, and the whole organization has transitioned, I would say, from a purely b to b wholesale business to full omnichannel in our approach. Digital platforms are driving high margin growth from new customers. Trade customers on our wholesale trade hub that has been greatly improved to include images, inspiration, stories, and helpful stock or pricing details has have brought 30% more adoption from existing customers.

26:24 And all sites, both consumer and trade, tell our powerful brand stories and help our customers to make choices. The benefits derived from data and CRM learnings will drive better decisions as we continue to navigate market changes. And I'm also thrilled that we have a new leadership role with Charlotte O'Sullivan joining us in January as group digital and innovations director to guide our future road map. As I said, we now have six transitional brand sites and a great platform for the trade to self serve. In f y twenty seven, the year we're in, it's all about finessing and enhancing the proposition, building our user base and the frequency of visits and engagement.

27:15 Charlotte has joined to lend her experience and expertise to our delivery so that we can claim excellence in the future. This year, we're also embedding our CRM. It's HubSpot, which we had a pilot project on last year. So this will bring maximum impact. The future opportunity is undeniably strong. In our commercial markets, look at the territories, there are many challenges and uncertainties, but we have great product that's in demand and excellent teams and channels to deliver it to our discerning customers. And here they are. Our main customer is the interior design community globally, and they're our best ambassadors As we build our relationships and they trust us as dependable suppliers and creative partners, our fan club and industry notoriety grows with the positive effect of endorsement by celeb celebrated designers.

28:18 Some examples here include London's Madix Creative, showing how Morrison co can be used in a different way with wallpaper in a bold, colorful scheme up high as a freeze. Sophie Robinson, color queen, remains the most searched along with Henry Holland on our new HoloPrint platforms, and her high energy social marketing videos are indeed infectious. Michael Smith already mentioned, promotes us on many levels in his California studio, showroom, and now with our new collaboration. And Ben Pantryth, meanwhile, has decorated for the king and has collaborated closely with us on two Morris collections and supported our Kipps Bay showroom in New York last year with more opportunities to work together in the offering.

29:10 Again, in America, what we set out to do last year is done. This is all about finessing what's working, checking in with our top 10 clients in each region, and working with hospitality partners to ensure that everyone is getting the designs they need and the best service twenty four seven to build our reputation as a trusted partner, supplier, and global design authority. In The UK, we've also done everything that we promised in the f y twenty six, building a much better trade hub, the service portal for our customers to interact with, as I mentioned, to research designs to look up details, prices, stock levels. It's hugely improved from our very functional platform beforehand.

30:00 But now customers are inspired by our images and ad campaigns, suggested designs they might like, and they can even pay online. It's all very twenty first century. Hence, take up is positive, which relieves the customer service team to proactively support and solve when needed. The rollout of last year's pilot with our CRM HubSpot that I mentioned will bring together great opportunities to offer even better tailored solutions and service. And since we moved to Voisey House, we've dreamed of creating a design hub in West London, a destination of the exchange of ideas and the design community. And last month, we finally officially launched the Voisey Design Club, welcoming 30 top designers and a total 60 guests to our showroom for panel talk over cocktails and a delicious dinner at two long tables as you can see here. The panel discussing archive as the creative engine, very pertinent to us with our 75,000 documents in the archive upstairs from the showroom, really with a great representation of arts and crafts and lifestyle.

31:19 We're excited to continue a program of events that will interest designers and demonstrate our thought leadership, provide a hospitality space dedicated to great design and how it makes us feel. We also hosted a dinner earlier in the year in January for our international partners, inviting distributors from as far away as New Zealand and Kenya, markets that rarely get a mention in these presentations. We continue to build our global bonds in residential design and in contract with global strategies locally deployed with specialists in each region or country, be they agents or distributed networks. Webinars are very well received in the different time zones, and we believe that we can significantly build our international footprint by nurturing existing and new relationships following the way we've approached our success in The US.

32:21 Moving on to licensing. Licensing continues to build strongly with growing international recognition and the opportunity to build global partnerships as our brand awareness grows. We're working with category specialists and with big retail partners, approaching the market strategically, determining the road map for each brand and for each market to support that brand's positioning. And our manufacturing teams have achieved an impressive turnaround as you have seen in the numbers. The most rewarding aspect is the revitalized environment and the evident pride of the teams in achieving the turnaround.

33:07 We're now beginning to have to hire back to fulfill orders within reasonable lead times, which was the best possible outcome. The goal of manufacturing in the group is to drive vertical business advantage contributing to overheads and to drive efficiency. With the cost basis adjusted and the teams working in a more flexible and agile way, productivity is increasing and order books demand building. Continuing with our unique proposition as the only group printing both fabrics and wallpapers, offering top notch design skills to third party customers and our in house brands, our journey to excellence is well underway. Project management and agile ways of working are the areas of training across the group.

33:58 Digital first in printing continues with the greatest impact at ANSTI, where the opportunity is huge given new technology solutions that are being developed and some already available or coming to market in the near future. We're known for our excellent design, highly skilled craftsmanship and increasingly great customer service with performance improving on every level and good control across the KPIs. And now we're seven years into measuring emissions reductions and still going with a further six and a half percent this year having already brought down 40% overall. SANDERSON DESIGN GROUP is recognized as a champion in the industry, important credentials as a warrant holder, and employer with integrity.

34:48 And this has mostly come from the teams on the ground up, which is especially pleasing. And through our people strategy, Work Beautiful is a critical pledge within our Live Beautiful framework. Our aim is to celebrate the authenticity of heritage and skilled craft, balanced with all the benefits to be reaped from technology in terms of efficiency and productivity. We keep our promise as a real living wage employer even when times are tough. And, ultimately, an engaged workforce will create an inspiring place to work. Looking forward, in terms of outlook, we're pleased that the results last year and the momentum into this year give confidence in the strategy and the ability of management to respond to difficult situations.

35:44 We've had a few. Of course, the board continues to monitor the external situation and any changes to the geopolitical risk in this currently volatile environment. Sales continue to be encouraging with q one revenues continuing the momentum we saw in the second half of last year and in line with our expectations. New D2C activity attracts new customers and gives us data to drive better decisions. Both factories are transformed and with strong momentum driven by demand. Successful launches last year and this are building sales traction into the future.

36:33 Licensing continues to perform strongly, and importantly, underlying sales from existing partners are successful. We have confidence in the strength of our brands, in the power of our archive and management's agility, giving us the ability to respond to external factors and with the support of our strong balance sheet. In summary, the board has confidence. Current trading in the first quarter is in line with expectation. Thank you very much for joining us and for your attention. We'll be pleased to answer any questions that you may have. Fantastic. Thank you very much indeed for your presentation. Do please continue to submit your questions just using the q and a tab situated on the right hand corner of the screen. But just while the team take a few moments to review those questions being submitted today, I'd like to remind you the recording of the presentation along with a copy of the slides and the published q and a can be accessed via your dashboard.

37:31 Lisa, Mike, as you can see, we've had a number of questions come through so far. Thank you to everyone for submitting those. Perhaps let's start with the the first one, probably more for you, Mike. How are the cost savings achieved? I appreciate you've touched on this, but I don't know if there's any more color you could add. Yes. No. I mean, I think I mean, the headline number tends to always revolve around headcount reductions. And we've taken out about 5,000,000 of staff cost over the last three years from the business. That equates to about 120 heads. So I think three years ago, had about six thirty three employees. Today, we're hovering around the 500 mark. Above and beyond that, I think what we've tried to do is encourage a cost conscious sort of attitude throughout the business. So if you look at the factories, for example, it's not really a cost saving, but they're very much looking at efficiencies in terms of the production process, how to reduce waste material, for example, in terms of wallpaper setup, for example. So we've looked across the P and L. We've looked at sort of, the support functions, external advisory costs, etcetera. So we've tried to leave no stone unturned to try to take cost out of the business to to offset some of these sales reductions we've been talking about.

38:44 Fantastic. Thank you very much indeed. Here we go. For the next one, what do you believe will be the key drivers for meaningful ongoing revenue growth? And would you look to make acquisitions to enhance this? Guess that's me. Yeah. We we very much see, as you can see, continued growth in The US. When I said we're under indexed, I mean that everybody that you might think of or we might recognize as a as a competitor in identifying, yeah, is bigger than us. We've doubled the business in the last five years in The US. We have had a subsidiary for some thirty five years in the market, and we have 35 employees there and a large network of partnership share rooms and so on. I I would see that continuing to grow. I think I mentioned until we've doubled again.

39:34 And and other international markets, although The US is the is the main big driver of that. Digital also will be a revenue driver and, of course, a high margin one at that. We'll never undercut our trade partners in terms of pricing, but, obviously, we can use promotional opportunities as well along the way with with designs that might discontinue occasionally and so on and so forth. So we do see that we're reaching new customers in in in a new way and and not cannibalizing our existing business. Our plan with the omnichannel is to just greatly increase awareness of the brands in the international, in all markets to reach also designers and consumers that might not be within reach of a showroom or a store, and then to drive that interest back into the network.

40:32 Fantastic. Thank you very much. Yeah. Jason. Sorry. Didn't ask the acquisition point. We would look at acquisition. I took it off the strategy, I think, like, five or six years ago because it didn't feel the right time. But but, you know, if there was a compelling opportunity that that came about and crossed our desk that was either going to bring significant synergies or allow us to expand faster in other territories, then we'd certainly have a good look at it. Super. Just a really extension of that question, actually. We've got another one in here, and you have just touched on it there, Lisa. But how important is the DTC digital channel strategy in in that growth and margin impact, I guess? We believe it's important.

41:19 I don't believe we will become a predominantly online retailer in any way, but I think it'll be an important platform and channel for us. It gives us a different communication opportunity, to reach different customers, as I've said, to promote our brands, and to work in a in a truly omnichannel way across all platforms. We can see it in the Morris and Co numbers. Morris launched last year, had a full year, of the Morris and Co transactional website that launched only in September in The UK and then only March actually in The US, and yet two thirds of those sales in the first year are from The US. So that's that's where we're reaching quite remote areas and new customers.

42:07 Thanks very much. Perhaps one for you, Mike. What does the overall CapEx look like moving forward, ideally split between growth and maintenance? Okay. I mean, we said that I mean, this you know, the last two years have been one extreme to the other. So so two years ago, we had a new digital printer invested at STANFOST. We had a new head office. We spent over GBP 4,000,000 of CapEx. This year, just gone, we've broadly had a minimal level of capital maintenance. I think if you look back over the previous four years, we've averaged sort of GBP 3,000,000 to 3,500,000 per annum, and I'd expect us to probably return to that level. I think our next big one off investment would be probably on increasing our digital printing capacity at ANSTI. I think we're looking at our strategy around that as to whether or not that would fall into the back end of FY 2027 or the early points of FY 2028 or maybe split between the two.

43:01 Above me on that, I think we'd largely focus on capital maintenance. But, I mean, we have two factories, we have two warehouses, we have a head office. Occasionally, things break, our holes appear in rooms, and we need to fix them. So it's difficult to give a sort of definitive view of that. But as I said, I think we'll probably move to sort three to 3,500,000 per annum on an ongoing basis. That's great. Thank you very much indeed. A question from Adrian. Thank you. The team's clearly done a great job in getting the manufacturing segment back to breakeven. Going forward, PBT margin are you aiming to achieve in this division over the short to medium term? Yeah. Sure. I mean, we're back to profitability, and we've got great momentum at the moment.

43:47 So, you know, I think we would we would all expect sort of best practice margin manufacturing to to drop for around 10%. Yeah. And we should we should realistically be able to get to that quite reasonably. Super. Thanks, Lisa. And an extension from this from David. Thank you, David. Given that appears that you'll need to re add labor to capitalize on any meaningful volume growth in manufacturing, what would be reasonable assumption for contribution margin on such growth? Good and detailed question. I think I think it depends to a certain degree on where that additional manufacturing growth comes from. And I say that because digital production obviously requires significantly less labor than some of the conventional techniques that we have.

44:37 But clearly, we have a significantly fixed cost base within those factories. And I think this year, you've seen the benefit of a little bit of additional volume going through the factories. So it's difficult to say a precise number, but we should see, I guess, back to Lisa's point, you'd like to see those factories starting to return to 10% operating profit with a decent level of volume going through them. That's great. And another one from Adrian here. What's required with the branded segment to reach profitability? Is more cost cutting expected or required? It's difficult to cut more out of it, to be honest, without it's always possible. And if we have to, we will. But we've taken a good chunk of cost out. I mean, I think we referred to 5,000,000 over the last three years. A lot of that has been around The UK cost to serve.

45:28 It's really about top line growth and we need to get back to that. Thank you. And just combining two questions really kind of royal family related. Can you provide some more background on your work with the royal family? And obviously, is there any marketing activity surrounding the current royal visit to the all important US market? I'm not sure his majesty took the high grade wallpaper and fabric collections with him, but but he does promote it strongly when anybody's visiting Highgrove. We clearly had a royal warrant for over a hundred years, so we have decorated for the households for two kings, a queen, and now the current king. Highgrove came around through the King's Foundation looking for partnerships and approaching us, I suppose, first, probably as a royal warrant holder, but also through Quest, the Queen Elizabeth Scholarship Trust that promotes craft and making creativity in The UK.

46:28 It was set up thirty five years ago by Queen Elizabeth Queen Mother. And and so our name came up and our designers went and and sat in the gardens and painted and then placed some of those elements into some classic SANDERSON archival document layout. So it's been an absolute joy to work on the high growth collaboration. As I said, it's been hugely successful. The King's Foundation seemed very pleased with the results so far. We are bringing out a few new designs. For instance, the King's Rose that was launched at the flower show last year by David Austin is coming back in a sort of in its own design as a trail to be launched this year at the flower show. And I think activity will be heightened again around the Flower Show with the King's Foundation Garden and the high growth stand.

47:19 It has gone very well in The US, but I think, you know, whether you whether you like the royal connection and appreciate it and recognize it in the designs or not, it's a beautiful decorating collection and that's the English print mark and decorating style seems to resonate, in The US as well as in The UK at the high end, and it certainly elevated SANDERSON. Great. Thanks, Lisa. One for you, think, Mike. Roughly, what are your expected total annual pension costs going forward? Are you still considering a buy in of the remaining pension scheme? If so, roughly, what would be the cost of that? Oh, okay. Right. Pensions. So just as background, we have two legacy defined benefit pension schemes.

48:06 One, talked about earlier, the smaller of the two schemes, we performed an insurance buy in last year. So there are no ongoing contributions to that scheme. There are still some costs associated with getting to a full buyout associated with that scheme. So that's probably in the region of about £500,000 still to hit the P and L and cash flow as a result of to finally get that scheme off the books. Then in terms of the residual scheme, the larger of the two, and again, from an accounting point of view, it's showing on the balance sheet as a surplus, but it still probably would require a cash investment of some description description in order to persuade an insurance company to take it off us. Ongoing contributions to deficit contributions to that scheme have ceased.

48:53 We're currently spending around GBP 400,000 a year on contributing towards the administration cost of that scheme. So at the moment, that's the agreement we have with the trustees and we'd expect those to continue up until the point where either the scheme self funded itself to a buying situation or, as a board, we decided from a capital allocation priority perspective that that we were prepared to invest some additional cash in order to facilitate an insurance buyout. So, I mean, we continue to look at pricing on a on a fairly regular basis. But up until now, having discussed capital allocation priorities around capital expenditure, dividends, funding the EBT that that Lisa talked about earlier, we've we've not that that additional investment into the pension scheme.

49:41 Thank you very much indeed, Mike. Question from Tim. You mentioned rehiring and manufacturing. Is this reflecting a different skill set regarding digital printing? Not really. The it's it's more conventional because the labor intensity on digital is obviously a lot lower. The digital printer that we invested in three years ago now is really up and running and and contributing well. It's more balancing the demand for conventional and digital and and getting that mix right on our demand forecast. So our rehiring is mainly around conventional skills, actually, at the moment because the digital is is very well manned. And what we focused on is that cross skilling and flexibility to give agility across the factories so that we can adapt to where the demand is.

50:35 We are looking at how our digital mix, as Mike mentioned, can be calibrated and configured for the future to give us the optimal mix between flexibility and speed. So those are the two two main considerations. Perhaps one well, I I'll combine the last two together. One final question, please. Really just talking about who are your biggest customers? How do they differentiate between geography being US and UK? And what are the most popular brands that you're seeing in in in both markets? Customers the market structure is quite different between The US and The UK. UK is very retail driven, and and if you're predominantly UK audience, you'll recognize that, you know, many market towns around The UK have one or two interior designers, usually with the shop front often making curtains, headboards, cushions, and so on, And, you know, decorating big renovations as well as swans.

51:40 The US are growing and and then you've got John Lewis, of course, and, you know, big retailers and and online retailers as well. So our top 10 are tend to be big retailers. And then we have in The UK probably 3,000 smaller, more independent retailers. And then you have new designers coming into the market who are more likely to be working from a home studio and interacting with us on Instagram. So we have probably three big different types of customers. In The US, it's completely different. It's all interior designers. There is no retail as such. So all interior designers, big and small, some have studios that are very well established, and some, of course, are less mature. But that's a very different, approach to the market because it's about building relationships, making, the studios aware of our brands, really, and the attributes of our products and our designs, then they need to use them the first time, become familiar, we need to become a trusted supplier, they need to be assured of our service.

52:42 So it's a sort of a bit of a courtship and becoming to, be trusted in the market. And you can see that building. It's not that the market is expanding hugely, but we were, as I said, underrepresented and now taking a little bit more share, not that you'd measure it to a decimal point. Fantastic. Thank you very much indeed. And thank you for answering all those questions you have from investors. And, of course, the company can review your questions submitted then. We publish those responses where appropriate to do so. Just before redirecting investors to provide you their feedback, no particular point to you, Lisa, if I could just ask you for a few closing comments, please. Yeah. I'd just like to thank everybody for joining us and for welcoming us to your IMC community for the first time. Very pleased to be here and pleased to be able to share the story with you and want to thank everybody for their support and and to you also, Paul, for hosting. Thank you.

53:38 Fantastic. Thank you very much indeed for updating investors today. Can I please ask investors not to close this session? We automatically redirected to provide your feedback, which only take a few moments and they'll be greatly valued by the company. On behalf of the management team of SANDERSON DESIGN GROUP PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all. Thank you.