Genuit Group plc (GEN) Earnings Call Transcript & Summary

Good morning, everyone. My name is Martin Payne, and I'm the Chief Executive Officer of Polypipe Group. On behalf of myself and my colleagues, I'd like to welcome you to Polypipe's Capital Markets Event, and I hope you find this session engaging and informative. I hope you and your families are all staying safe and well and keeping spirits up during these difficult times. As ever, I'm joined by Paul James, Chief Financial Officer, but I thought it would also be a great opportunity for you to hear from some of our senior team and show you some of the management strength and depth we have at Polypipe. So I'm pleased to say I'm also joined today by Martin Gisbourne, Group Strategy and Marketing Director; Dr. Jason Shingleton, Group Innovation Director; Cameron McLellan, Managing Director of Polypipe Residential Systems; and Wayne Glover, Managing Director of Polypipe Ventilation and Climate, all of whom will be presenting in this session. It's been a very challenging year, as I know you're all aware. The focus this year has been very much on managing the business through the significant short-term challenges that COVID-19 has created. And I'm very pleased with the way the business and our colleagues have responded through this crisis. The decisive actions taken throughout the year, including, amongst many others, the equity raise in May, has left the group in excellent shape and well placed to capitalize on the opportunities that are arising and will undoubtedly arise as we recover out of this crisis. Earlier this morning, we released our trading update for the 10 months to the end of October, which further demonstrates the robust recovery in our markets and the strong momentum we have generated in recent months within the group. And Paul will touch on this in his section later on. Today, though, is not about the short term. We hope to raise your eyes to the longer term to the days when the COVID-19 crisis is behind us and remind everyone of Polypipe's ability to outperform through its strong sustainability and environmental structural drivers through its clear and deliverable strategy and through its talented and dedicated employees. So to the agenda. I will update you on strategy shortly, followed by sessions on urban greening and sustainable water management from Jason; on healthy indoor environment from Wayne; on the progress we have made on our Manthorpe acquisition, which will all show you how we are putting strategy into action. This is then followed by a session on the business of sustainability from Martin Gisbourne, in which he will announce our new 2025 ESG targets. And then Paul will finish off with a few slides on Polypipe's compelling investment case and a quick run-through of the trading update. I'll then make a few closing remarks, and we will then move to a Q&A session, which, if we get our timings right, we'll get you away for midday. So without further ado, we'll move to the strategy update. In the first part of this presentation, I'm going to take you through a strategy recap, aiming to remind you of the strong sustainability and environmental growth drivers Polypipe enjoys and how we are leveraging them. To remind everyone what we do at Polypipe, we're helping construction build better by being the U.K.'s leading provider of sustainable water and climate management solutions for the build environment. We have the broadest range of products in the market: in the residential sector, a full range of plastic plumbing, soil and waste pipes, above and below ground drainage and attenuation, roofing products, ventilation systems, under floor heating and other unique products for the house developer and RMI markets; in the commercial sector, a full range of soil and waste systems, water transmission systems, above ground and below ground drainage systems, many of which are available through the Polypipe Advantage fabrication offer as well as the largest range of commercial ventilation systems in the U.K.; and in the civils and green infrastructure space, a full range of small and large diameter sewer and drainage systems, attenuation solutions, both high volume and the Permavoid shallow attenuation systems for podium decks and pavements as well as inspection chambers, flow control systems and cable ducting. The breadth of range gives us competitive advantage by allowing us to design cost-effective systems and solutions for the many and complex situations our customers find themselves in. So what are we trying to achieve? Well, the group has market-leading positions in its core markets as well as within the climate management and water management sectors. With sustainability at the heart of our growth agenda, we see significant structural growth opportunities within our markets for many years to come. We will continue to invest organically to create innovative solutions to help address the big real-world environmental problems of our generation and the generations to come; the continuing need for resilient drainage to help avoid the floods we have increasingly had to endure in recent years; the need for green urbanization to make our towns and cities better places to live; the need for improved indoor air quality, particularly in a post-COVID world; and the need for low- or zero-carbon heating systems and construction more widely. And it is this sustainable organic investment program that will help drive the growth and returns of the group into the future. Our legacy material substitution drivers still remain as strong as ever, and our geographic reach opportunities can still augment the growth we are achieving in the U.K. We have a clear strategy to leverage our customer relationships using organic and inorganic means to fill range gaps and adjacencies in our U.K. solutions offer, providing a one-stop shop for our customers. And later on, Cameron will tell us about the Manthorpe story, which is a great example of how this has worked successfully for us. Now we've talked about sustainability in terms of what we do, but we are placing significantly more emphasis on sustainability in terms of how we do it. We have always had a significant focus on our use of recycled materials, as you know, but we are getting more specific and focus in the areas of the business that will create a sustainable business into the future: on innovation, on digitization, on carbon reduction and, most importantly, on people. Martin Gisbourne will talk more about this in his section, unveiling our new ESG targets for 2025. However, please be assured that this is evolution, not revolution. This is a change in emphasis of what is already a successful strategy: to build upon the success to date and to deliver returns for all the group's stakeholders into the future. I'm going to take a couple of minutes to talk about the 4 environmental drivers in a little more detail. The first 2 are the increasing need for resilient drainage to help avoid the floods we have increasingly had to endure in recent years and the need for green urbanization to make our cities better places to live. Such regulations are driving planning authorities and water authorities to insist that developers install larger and larger stormwater management systems when putting hard services down as we experienced more and more exceptional weather events causing increased flood damage downstream. Urban planners are trying to design greener and greener developments that create more amenity space in our cities whilst helping to manage stormwater more effectively, improve air quality and combat the heat island effect in cities. We have many parts of the solution, and we are working hard with customers to continue that development process. Jason will talk more -- in more depth about these drivers in his section and how we are going about developing those solutions. The next environmental driver for our business is air quality. Air quality was already a growing issue for our customers before COVID, requiring ventilation systems that could ensure indoor air is free of harmful particulates, bacteria and viruses, issues specifically affecting schools, for instance. In a post-COVID world, these issues are going to be all the more relevant to wider society, to schools, to hospitals, to hotels, to offices and even residential homes. NuAire's ventilation and airflow management systems as well as particulate removal through our Noxmaster range and virus eradication through [ Safe Haven ] will help the group. Wayne will talk more about this in his section. Low- or zero-carbon construction is the final environmental driver behind our business. Most of the world accepts that we need to significantly reduce carbon consumption quickly. Society is demanding significant carbon reduction, and construction legislation is catching up with this desire. Apart from the more general drive to make buildings more energy-efficient through improved insulation, leak reduction and heat recovery in ventilation, which the group has already been helping with, Part L of the new building regulations will have major implications for climate management and buildings. From 2025, all new houses will need to have a nonfossil fuel heat source, which will have major implications for transmission systems, playing to Polypipe's significant strength in underfloor heating for wet-based transmission systems and ventilation for air-based transmission systems. This will be an area of significant focus for the group in coming years and represents some exciting growth opportunities. We also recognize that we can play a significant part in helping our customers reduce carbon consumption as they look to reduce their environmental impact. So I hope that you can see we have some very exciting structural drivers that will drive growth ahead of the construction market and help us outperform in the coming years. In my last couple of slides, I wanted to just quickly show you how the group's strategy to date has driven growth and a strong financial performance. This slide indexes the U.K. construction market back to 2011 compared to Polypipe's U.K. revenue and shows significant outperformance over the period. This shows that over the 8-year period between 2011 and 2019, Polypipe revenue has grown 8.8% per annum compared to market growth of 2.3% per annum. And this has delivered strong financial performance with revenue growing 9.8% compound since 2014, excluding disposal of France, and strong margins throughout. Although the COVID-19 crisis has impacted 2020, for all the reasons I have just been through, I'm confident the group will continue to outperform as we move forward. So with that, I'd like to hand over to Jason for the next presentation.

Thank you, Martin, and good morning, everyone. If I could start with an introduction, my name is Jason Shingleton, and I am the Group Innovation Director. I want to take 15 minutes to walk you through our first growth driver, sustainable water management and urban green infrastructure. Those of you who have followed Polypipe since our IPO will already be familiar with our focus on sustainable drainage solutions, which helped to mitigate the impacts of climate change and increasing urbanization. Polypipe launched its first water management product, Polystorm, in 2004. Since then, increasing regulation, coupled with our continuous innovation and investment, has ensured performance well ahead of the construction market. I'm pleased to say that whilst luckily, there has been some maturity and growth of our core WMS products, mostly as a result of regulations washing through the planning system, we continue to see significant opportunities for growth for the future, both organically and inorganically. Climate change and urbanization are global and progressive. In recent years, their impacts have called the attention of societies across the world, and in many countries, people are now demanding action. However, governments are struggling to limit climate temperatures to less than 2 degrees C above pre-industrial levels, whilst urbanization is expected to increase with an additional 2.5 billion people added to the world's towns and cities by 2050. The U.K. is not immune. Total rainfall events from extremely wet days have increased by circa 17% since 1960. 17 of the 18 hottest years on record have occurred in the 21st century, and the population of London is expected to grow from 8.7 million to 10.5 million by 2036. The consequence of these changes and the way in which they impact people's lives are not only physical, they're also economic. In 2014-'15, storm Desmond alone is estimated to have caused GBP 1.7 billion worth of damage to the English economy. Now clearly, Polypipe cannot tackle climate change or urbanization, but we can develop solutions that help to tackle some of their impacts on society, impacts such as flooding, drought, pollution or loss of biodiversity. I would now like to spend a few minutes showing you some examples of just how we're doing this and how regulatory tailwinds are helping drive the uptake of new types of stormwater management solutions. For Polypipe, 2002 was in many ways a catalyst year. In order to try and prevent new developments overburdening existing drainage infrastructure or flooding rivers and streams, approved document age of the building regulations was updated to introduce a new hierarchy for drainage systems. For the first time, stormwater had to be intercepted and managed on-site before discharge. This single regulatory change precipitated our development and subsequent growth of Polystorm and Ridgistorm, both of which helped to solve the problems of how to soak away or store and manage the release of large volumes of water. It is now standard practice for all new build developments to undergo our flood risk assessment as part of the planning approval process. The assessment usually imposes limits on the amount of rate of which stormwater can be discharged from site. And this condition means developers need solutions to manage their stormwater runoff. In 2019, Polypipe revenue from core stormwater storage solutions exceeded GBP 30 million. In the same year, we delivered the acquisition of Alderburgh Ltd, which further strengthened our portfolio of modular storage solutions, giving us access not only to the technology for stackable geocellular units, but more importantly, access to the growing supply and install service sector for stormwater products. Whilst Polystorm and Ridgistorm continued to provide a very strong base to our WMS portfolio, more luckily, we are seeing progression towards the need for greener sustainable drainage, especially for catchments where space to manage water is at a premium and where the impacts of building density are most acute. In cities, for example, space constraints often make it impossible to bury large storage structures. So stormwater has to be controlled within the footprint of a building or best within the pavement of parking structures surrounding the building. Whilst managing stormwater remains a designer's priority, there are often other competing challenges which must be addressed, e.g., loss of amenity space, pollution, heat stress caused by the urban heat island effect. In 2021, we expect an updated environmental bill to set targets to deliver a minimum 10% biodiversity net gain on all new developments and standards to improve the quality of surface water runoff. Polypipe is already starting to address these challenges with our green urbanization proposition focused on a new generation of integrated green subs. Using the technology of Permavoid Limited, which Polypipe acquired in 2018, we have a complete range of product solutions for every category and scale of development. Solutions such as our Permavoid blue green roof or paved street attenuation system, which not only collects and store stormwater, but uses patented passive irrigation technology to draw harvested water from the recycled polypropylene geocells into the soil above, providing the ideal conditions for plants to consume water for growth and, in the process, transpiring excess water into the air above, cooling it by as much as 2 to 4 degrees Centigrade. Any stormwater consumed in this way is water saved from the potable network and that does not have to be drained from the catchment, so reducing the burden on downstream infrastructure. Now by being smarter and adopting new technology and techniques, a designer can derive multifunctional benefits from the drainage system, utilizing the space above to create biodiverse attractive places where people want to be, not only improving their well-being, but also with the potential to generate greater economic value for surrounding businesses. Just as shown here where shops, a café, green roof and a running track have been installed on [ Old Street ] in London, opening up the roof to occupants and making use of prime London space that would not have otherwise been accessible. But it is not only national regulations that can help to improve the built environment. More luckily, there has been increased use of planning regulations to drive change at the local level. The draft New London Plan calls for major developments to contribute to the greening of London by including high-quality landscaping, trees, green roofs, green walls and nature-based SuDS. It also requires the boroughs to introduce urban greening factors and to identify the appropriate amount of urban greening for all new developments, setting out an ambition to increase tree covered across London by 10% by 2050. Cities across the world are increasingly planting trees as they begin to recognize their value. Not only do they offset carbon emissions, they also provide shade and cooling of overheated spaces. But we can go further and we can be smarter. We can use trees as part of an integrated drainage network, draining services into systems built to support and water the tree, passively irrigating them whilst protecting their roots from damage and providing the conditions in which they can thrive. The last 2 slides show an example of such a project in [indiscernible] in the Netherlands. So far, I have mostly talked about the progress we have made in developing solutions for developers and constructors today. So what about the future? I've already alluded to the fact that it is not only new developments, which have a stormwater problem. Our existing drainage and sewage infrastructure was designed for a very different climate to that which we have today. Consequently, there is an increasing occurrence of legacy system flooding. One solution to this is to intercept the excess stormwater before it enters the drainage system. Here, we are showing 3 examples of projects completed as part of the Counter's Creek, Green Streets sewer rehabilitation scheme in London. Retrofitted rain gardens, porous surfaces or subsurface attenuation systems were installed to prevent combined sewer flooding of existing homes across the borough of Kensington and Chelsea. Subsequent to these projects, we've gone on to retrofit similar solutions to another 6 streets as part of a second phase. Another area where we are seeing growing demand for new solutions is bolt-on systems to our core attenuation products, systems which can treat or remove contaminants from the runoff they manage, pollutants such as silt, heavy metals or tire rubber. This is why we're already working on a new range of stormwater treatment devices using either hydrodynamic separation or filtration via green modular wetlands. Both systems can be installed in new developments or retrofitted into existing systems. These types of solutions are heavily used in the U.S.A. to help developers meet their obligations under the Clean Water Act, and they are now starting to be recognized in the U.K. The last opportunity I want to talk about is the ability to integrate our sustainable solutions with smart technology. Our smart roofs in Amsterdam and Aylesford are already able to sense and measure the amount of water in the storage units, in the soil and their cooling effects in the air above. The sensors are linked to computers and valves which control when and how water enters the system, ensuring the right level of irrigation of the soil to get the maximum amount of water for reuse and evaporation. By combining smart tech with weather forecasting platforms, we can enter the units before a rainstorm event to ensure maximum capacity for storage of the next weather event, thereby optimizing system performance. A more recent but exciting development is the potential to do all of this on a catchment-wide scale with attenuation tanks across a city linked and communicating with each other as to the best time to discharge their contents into the sewers, ensuring they don't overflow. If we can find better ways to intercept and manage excess surface water, we can remove the need to upgrade the existing sewer infrastructure, a process that would not only be very expensive but also massively disruptive. Now it might seem counterintuitive for a pipe company to be talking about ways in which they can remove the need for pipes, but the reality is that the way in which we drain our streets and buildings is changing and will continue to change. At Polypipe, we recognize this change, but we also recognize that we have a strong market-leading position which we can build with our new solutions. We also know that pipes remain very important to us and to our customers. There will always be a need for high-quality engineered pipe solutions not only for sanitation, but also to get increasing volumes of surface water into the right places at the right time so that they can be managed more effectively. Our core pipe technology will continue to be the medium by which we connect and integrate all of the great storage treatment and smart solutions we have or are still developing. Thank you. I will now hand you over to Wayne Glover, who will take you through our second growth driver, healthy indoor environments. Wayne?

Thank you, Jason. Good morning. My name is Wayne Glover, Managing Director of Polypipe Ventilation and Climate division. Today, I will update you on some of the initiatives within the Ventilation and Climate division and what is guiding these initiatives within the Polypipe Group. In late 2019, and as part of the development of the Future Homes Standard, the government launched consultation on changes to Part L and Part F ventilation of the building regulations for new dwellings across the country. The published road map summarizes the ambition on the various stages involved, although, for obvious reasons, the timing is no longer applicable. The U.K. has already committed to reduce greenhouse gases emissions to net zero by 2050. We'll introduce a Future Homes Standard for new building homes to be future-proofed with low-carbon heating and world-leading levels of energy efficiency. The hard energy use in all new builds by 2030 and the consultation presented options to uplift the current Part L energy-efficient standards for new homes and improve guidance, support and quantify the proposed changes to Part L and develop improved transitional arrangements to accelerate the update of the new requirements. It was necessary to consider Part F ventilation at the same time because of its impact on air tightness, energy use and improve in the as-built performance. Part L specifies change in the whole building minimum energy performance target, which involves introducing primary energy as the principal performance metric; making CO2 and fabric efficiency a secondary metric; taking a significant interim step towards the Future Homes Standard through future-proofing new dwellings to be ready for low-carbon heating systems, including heat emitters that can work at lower temperatures, such as with heat pumps in the future; improving compliance with Part L in order to improve the as-built performance; and Part F specifies changes in terms of air quality requirements and focuses on compliance with existing requirements; simplifying the approach of the ventilation rate and system design requirements for dwellings, revealing that the wave of ventilation systems are presented in the approved document to reflect common design practices or making technical changes to guidance for ventilation systems in line with the latest evidence and understanding. Today, in a post-COVID world, mechanical ventilation is more important than ever. Polypipe has new products that will combat this issue going forward with increased mechanical ventilation for many indoor environments. In these examples in the slide, you can see what outline conditions increase the risk of contagion in this situation. The coronavirus as well as other viruses, such as influenza novel virus, are spread through the air, especially in indoor spaces. The viral load is not just for coronavirus but any airborne pathogen. While it is not as infectious as measles, scientists now openly acknowledge the role played by the transmission of aerosols. Tiny contagious particles exhaled by the infected person remains suspended in an indoor environment. At present, health authorities recognize there are 3 vehicles of transmission: the small droplets from speaking or coughing, which can end up in the eyes, mouth or nose of the person standing nearby; contaminated surfaces; then finally, there is a transmission by aerosols. The inhalation of invisible infectious particles exhaled by an infected person that once live in your mouth behave in a similar way to smoke. On well ventilation, aerosols remain suspended in the air and become increasingly dense as time passes. At the beginning of the pandemic, it was believed that the large droplets we expel when we cough or sneeze were the main vehicle of transmission. However, we now know that talking loudly in an indoor, poorly ventilated space over a prolonged period increases the risk of contagion. This is because in the -- speaking in a loud voice releases 50x more virus-laden particles than when we do not speak at all. These aerosols, if not diluted through ventilation, become increasingly concentrated, which increase the risk of infection. Scientists have shown that these particles, which we also release into the atmosphere when breathing, can infect people who spend more than a few minutes within a 5-meter radius of the infected person, depending on the length and time and the nature of the infection. In these examples, we outline what conditions increase the risk of contagion in the situation. A well-designed ventilation system exists to create and maintain a healthy, comfortable environment for the occupants by supplying outdoor or fresh air to the space and extracting air that is leading the pollutants. The airflow rate [ fumes ] are based on regulatory or other guidance of indoor air, outdoor air pollutants. Mechanical systems may also improve the supply air quality by direct filtration and may be varied in response to actual pollutant levels. The ventilation system will commonly be designed with supply and extract terminals located to provide a nominal air circulation path using the space itself as a mixing chamber. Unfortunately, this does not guarantee that the individual occupants in the space will receive a good supply of fresh air or that the pollutants that they generate will not be shared with others. Even though systems will be commissioned to verify that overall flow rates specified have been met, more systems do not have the flexibility to adapt to the changes in usage patterns and personal layouts that may be expected in the practical working environment. To counter some of these shortcomings, NuAire considered system designs that allow the ongoing provision of the best air quality for each individual without resulting to extreme measures of personal segregation. We looked at specialized systems, such as those employed in clean rooms and medical facilities, where the task defines and supply an extra air path. We studied the growing massive information and research on the distribution of pollutants within the space. We evaluated the many air treatment methods that have recently emerged. We overall -- our overall analysis showed that it was possible to combine this information to produce a ventilation system that could be readily understood and implemented, make good use of the capabilities of today's ventilation equipment, could be used to produce a healthy environment that we all seek, could reduce the immediate short- and long-term risk to personnel at work and in public spaces, can be retrofitted to existing ventilation systems and easily fitted to new build schemes. The NuAire [ Safe Haven ] range concept is our solution. The products are adaptable to a wide variety of application types with readily adjustable targeted airflow distribution and localized extract provided in a practical way. It is possible to configure a system to suit existing and future needs. By using the specified and accessible terminal or in-line filtration, the system reduce the risk to occupants from identified pollutant types and sources. The inclusion of a high-intensity UVC radiation as a treatment option ensure that the external, internal pollutant sources are fully controlled. The ultraviolet radiation cleans and keeps the filter free from contaminants and kills viruses on the filter and is used with highly effective air movement equipment, system energies just may be maintained to optimum levels despite filtration levels awfully in excess of typical standards. The degree to which this is successful is in terms of the ventilation effectiveness, with a fully effective system where the occupant receives full and purer fresh air and all localized pollutants are removed without affecting anyone else, having a ventilation effectiveness rating of 1. An ineffective system, where fresh air supply is directly extracted and no pollutants are removed, has a ventilation effectiveness of 0. The haven ventilation terminal system shall be capable of upgradable enhancements by the following optional extras; zonal and terminal supply air filtration, an air treatment model that can filter particulate gases and has biocidal treatment per zone; air quality monitoring and indication systems; air quality demand control system; local user controls. On the haven ventilation system, we'll provide a ventilation system that provides a constant and optimal ventilated environment; a ventilation system that minimize the risk of transfer of contaminants between occupants in a shared space; a ventilation system comprising a supply distributor with high level configurable vectored air distribution, an extract collector with low level air collection; a ventilation system that incorporates air filtration, removing particles such as carbon monoxide, nitrogen dioxide or pollen using different filtration, inclusive of HEPA filters and other air treatment means, such as, but not limited to, UV [ decontamination ], kill any viruses on the filter media as well as chemical and ionized gas contaminated systems and technologies. Our ventilation system is readily controllable and easy to install using dedicated components and self-sealing features; a ventilation system that can be created due to simplified design rules, constant starting pressure to reduce and eliminate the requirements for balancing and commissioning, therefore, saving time on site; a ventilation system offering an improved and safer working environment when people return to their offices. What I have talked about today can be applied to offices, schools, hospitals and multi-occupancy dwellings, such as apartments and care homes. We are researching use in residential fixed roof market to apply healthy, clean air to these dwellings. Pulling all this technology together on this slide, you can see a typical apartment layout where we can ventilate and control the climate in an apartment. This now becomes a reality. What you see in a typical utility cover today is that there -- has an MVHR system, a gas boiler, heating controller in any modern apartment. This cover in the future will now house the MVHR with a combined heat pump allowing full control of the ventilation and climate in the apartment or any multi-occupancy dwelling. With the move to zero carbon, there are advantages to pulling the ventilation heat pump into one combined unit, which will allow heated, cooling coils at the room terminals as indicated and to pipe to them as if they were an underfloor heating system loop. Underfloor heating could simultaneously be used in the bathroom, kitchen for comfort benefits or in all rooms, so the most appropriate [ heater meter ] depending can be used based on the conditions and the options required. I hope, today, I have given you a flavor of the exciting developments within the Polypipe and Ventilation Climate division. Thank you very much.

Good morning. My name is Cameron McLellan, and I'm the Managing Director for the Polypipe Residential Systems division. Today, I'm here at the Manthorpe customer experience center to talk about strategy and action and update you about the progress we've made in our acquisition of Manthorpe Building Products. We acquired Manthorpe back in October 2018. Based in Ripley, Derbyshire, the business employs over 100 people and specializes in injection moulded and extruded plastic components for the residential market. Founded in 1986, business has built an enviable reputation for studying the residential build program, along with the changes in building regulations to understand the challenges for on-site trade space. Our in-depth knowledge fuels the innovation required to introduce new products that solve installers' problems with key features and benefits that they value above the competition. The products that Manthorpe manufacture have a good spread across the build cycle. Starting with this underfloor ventilation system installed at the foundation stage, we then move on to the cavity trains, cavity closures and the peep weeps for cavity protection, insulation and ventilation as the shell of the building is constructed. As the half of the building is put on, we can see installation by dry fix roofing products along with our roofing ventilation systems. As the interior of the building is finished, we see the installation of our air leakage products installed along with loft access doors. And finally, as the exterior landscaping is installed, so is our threshold channel drainage. When viewed in conjunction with the Polypipe product range, we can see that the combined system covers virtually every stage of the build process. Strategically, Manthorpe has been a good fit in several key areas for the Polypipe residential division. There's an excellent overlap in our relationships with developers. Both Manthorpe and Polypipe are recognized for tackling specific legislation-driven design challenges, which leads to new products in the marketplace. Those products address the same challenges of water and climate management and also substitute legacy materials in the build process. We also share the same link to market through our merchant customer base, allowing our installers to access all materials required for a project from one outlet serving very valuable time whilst adding incremental sales for the merchant. Common manufacturing techniques allow for synergies through sustainable recycled material development and process improvements driven by the cost virtualization of ideas through our groupwide improvement initiatives. So how has Manthorpe fared following its acquisition? We've looked to develop the business by leveraging the strength of the division in 3 key areas. The first is by building on our extensive relationships in a merchant channel by developing a compelling product proposition. The second is by continuing to drive and gain specification through our developer agreements. And finally, by investing in research and development to expand our portfolio with new innovative products. A key strength on the Polypipe Residential division is its extensive distribution base. With over 3,500 stocking branches, our installers can readily obtain our products to complete any project from large developer new build sites to [ modest ] RM&I extensions along with distressed purchases. The opportunity to offer at Manthorpe a one-side Polypipe product systems has proved popular as it allows the installer to buy everything they need in one go. So far, we've signed a deal with a national merchant group, where Manthorpe is stocked alongside Polypipe in over 160 branches. We have also signed an agreement with a major multi-regional independent merchant to roll out the product range across the estate, displacing the incumbent supplier. 2021 will see further opportunities to expand our stocking outlets as we continue to sell the benefits of the complementary system offering. As I mentioned earlier, both Polypipe and Manthorpe have good relationships with the developers from a commercial and a technical specification standpoint. However, the strength that Polypipe brought to the acquisition is we had over 200 deals with the developers ranging from national housebuilders to regional developers, through to small independent developers building a handful of homes a year. We've been working closely with these housebuilders to develop a proposition that brings the complementary product ranges under one agreement [ and hinges ] on the technical prowess of selecting new Manthorpe products. I'm pleased to report that we've gained combined specification with a number of developers, but in particular, for the G965 underfloor ventilation system with Avant, Barratt Homes, Countryside and Taylor Wimpey. We've also gained approval for our new flood accessories with Avant and our loft doors with London & Quadrant. And we are currently working with a national developer on a new roof ventilation product that will be rolled out in 2021. The final development area is the introduction of new products. Our focus has been in 3 areas of underfloor ventilation, fire cavity barriers and cavity ventilation. The Dual Extended Underfloor Vent, G965, was brought out of a technical view of the change in building regulations Part L. The move towards more energy-efficient buildings has highlighted the need for ever-increasing wall and floor furnaces to accommodate insulation. The underfloor vent systems of the past were no longer the best solution for the future. Although this detail could be resolved using the existing product, using extension sleeves and ducting, it was not the right solution, and research showed that it could lead to errors being made on site. So a product was developed for a client of houses today and in the future. This product was simply enough in concept, being larger in vertical and horizontal reach, but not so easy to realize and manufacture and a great deal of development have to be carried out to produce an acceptable finished product. Although this has taken time, the benefit of this product and the robust solution it provides is now realized by the industry being the specified product of choice of major housebuilders and the winner of the Best Building Fabric Product at the Housebuilder Product Awards 2019. REDSHIELD is a fire cavity barrier system for use around window and door [ panels ], which also meets the requirements of a cavity closure, preventing [ fully bridging ] and acting as a damp proof course. Our research showed that many of the products available in the market had questionable or misleading performance-based claims based on the misinterpretation of the building regulations and fire test results. We designed our product to remove any ambiguity, so that the [ form other fire ] barrier without reliance on surrounding construction detail in horizontal or vertical orientations and the ability to resist flame from either the direction of the cavity or from flame in the room. The unique adjustable put-together extrusions hold the minimum wall in compression to allow for expansion in the event of fire. This design also allows the product to be compressed further, hold it in place near the cavity and allowing a tight fit even in minimum cavities. The product was tested at Warrington Fire Research Centre in horizontal and vertical orientations in both fire directions, meeting the requirement of Part L of the building regulations, providing 30 minutes fire integrity. The product won Best New Product Award at the Housebuilder Product Awards 2020. Building on the successful original G950 Weep Vent and G951 Peep Weep, which became industry staples, we expected an opportunity to improve the original designs. Our in-store focus groups indicated that bricklaying contractors would prefer the outlet finishing first with the brickwork as it makes it quicker and easier to fit last line of brickwork, so this was incorporated into the design. The balance shape profile promotes increased flow rates along the base of the channel, creating self-cleaning and removal of debris and silt buildup. We also took the opportunity as part of the design process to optimize our manufacturing capability using the latest multicavity fast cycling injection model tooling, helping them drive down unit cost as far as possible. In summary, our focus on developing our merchant customer proposition, along with gaining the technical specification and the introduction of new, innovative products have seen our sales grow by 30% compared to the turnover at the point of acquisition. By continuing to deploy this strategy, we are confident that we can continue to grow our market share.

Thank you, Cameron. Good morning, everyone. My name is Martin Gisbourne, and I'm Group Strategy and Marketing Director at Polypipe. You've heard from Martin Payne about how much our current and future focus is on creating solutions for more sustainable infrastructure with examples brought to life by Jason, Wayne and Cameron. We plan to do that by concentrating on 4 key environmental drivers: the need for resilient drainage, green urbanization, clean, healthy air and the low- or zero-carbon built environment. These 4 trends are an important part of creating a more sustainable built environment, but they're more than that for us. They are also the key strategic drivers for our commercial growth. Today, I want to talk to you about how we are responding to these market drivers as a way of creating a more sustainable environment while ensuring the sustainable growth of our business. We call it winning sustainably. In the following presentation, I will update you on the various activities that underpin our sustainability agenda and explain how those activities add value, not just to those big issues facing the world, but to our business as well. We know that what gets measured gets managed. That is why, today, we're announcing a series of targets and KPIs which reflect the material sustainability issues that are core to our business that can be thought of in terms of the circular economy, innovation, climate change and diversity. Some of these we've been engaged with and articulating to stakeholders for some time. Some of these are new initiatives to provide increased momentum and to ensure the subject becomes ever more embedded in the fabric of our business. We all hold ourselves accountable by setting out a clear strategy for measuring and reporting performance across a range of targets. Let me start by talking about recycling. During the pandemic, we're seeing many businesses put recycling initiatives in the backseat. We're proud to continue leading the industry on recycling standards. Our multimillion pound investment in our polyolefin recycling facility has enabled us to lead the way amongst our peers, both in terms of total proportion of recycled material and the level which we recycle within our own facilities. And we're looking at how we can continue to support the transition to a more circular economy through our recycling efforts and the important role our products play in long-term infrastructure. We take plastic waste such as bottles and food packaging and recycle it to create products for infrastructure and the built environment. These often have a design life of 100 years, converting waste into products that themselves are addressing the key sustainability challenges of climate change and green urbanization. We are now committing to increasing the role we play in the circular economy. In 2019, we processed 117,500 tons of polymer, of which 50% was recycled material, leading the way in the sector. Our commitment is to achieve 62% of our tonnage being recycled materials by 2025. This is in line with the current achievable ceiling of 62% for recycling within the framework of the product standards which we operate. Along the way, we're engaging with policymakers to change some of these outdated standards to allow further usage of recycled and expand its role in our sector. However, we'll also explore ways to sell high integrity, modern, sustainable products, which achieve the performance our customers demand even if the standards regime struggles to keep pace. This is our role as industry leaders, and it's how we are trying to raise the bar for the whole sector. We'll find ways to introduce ever more sustainable products to market. We will continue to invest in capacity and capability to drive our ability to use recycled material. And on the subject of investment, we'll also be seeking to use green finance as part of our financing mix, with a near-term objective of GBP 10 million being secured through this avenue. Our role in the circular economy doesn't end with polymers. Our commitment to reduce waste extends more broadly across our businesses. Our ambition is to become a zero to landfill business, and we will be developing targets for recycling other materials such as packaging, wood and metals so that we can be a zero to landfill operation across all our activities. Identifying new solutions to the major environmental challenges the world is facing is core to our growth, but it requires innovation to create those products and solutions. That's why we have such a strong ongoing commitment to innovation in our business. In fact, it's a key pillar of our sustainability strategy and is also reflected in the KPIs and targets we set. We see innovation as critical to making our business more resilient and to solving our customers' challenges with ever more sustainable products and are winning recognition for this already. All of our NPD programs will now include environmental impact assessment as part of their governance processes. To put a scale on the level of innovation we foresee, we will be spending 2% of our net revenue on innovation. This will be the enabler to ensure that we have a 5-year vitality index that doesn't drop below a 25% threshold, 2 metrics that would place Polypipe at world-class levels. This means that, by 2025, at least 25% of our sales in that year will be products that do not yet exist. We anticipate that a significant proportion of this project pipeline will be addressing the 4 growth drivers which we have highlighted. Furthermore, simple vitality index can be a blunt instrument. And so we're also aiming to have 40% of those new sales coming from projects which fall into the new and breakthrough categories. This is an ambitious target, but Polypipe has a strong pedigree in launching new products, which have underpinned our growth and margin performance over the years, and you've seen further evidence today in Wayne's exciting commentary on [ Safe Haven ]. We're also innovating in the way we operate, and of course, this involves ensuring that we are keeping pace with the opportunities to add value to our business via digital initiatives. We're in the process of appointing a digital innovation director and have already scoped some key projects. For example, including ways to drive improvements through smarter pricing, supply chain efficiency and using artificial intelligence and data techniques to improve our forecasting capabilities. By 2025, we anticipate the stream of improvement projects on revenue and cost initiatives will yield GBP 3 million per annum in margin improvements, which will allow further reinvestment in our digital development. I spoke about innovating to make products which respond to those major sustainability challenges that society is facing and that our customers are facing, too. It is increasingly important that we can link into the sustainable supply chain, which our customers rightly demand. Climate change is one of, or possibly the biggest, environmental crisis facing our world. And the built environment and its support sectors play a major role in the U.K.'s carbon footprint. We can play a key part in reducing the carbon emissions of the U.K.'s built environment, both through our products and how we operate. By 2025, we will reduce our like-for-like carbon impact by 66%. This will be in scope 1 and 2 activities. And significantly, we will achieve this without resorting to offsets. Thereafter, we will aim to exceed the U.K. government objective of an 80% reduction on the same measurement basis. We have plans in place to achieve this, including sourcing green energy, reviewing the makeup of our transport fleet and also to ensure it is as efficient as possible in delivering a great service with the optimum level of resource, reducing the miles that we travel along the way. As well as our energy sourcing, we're also reducing our energy consumption by a range of initiatives. As tangible evidence of this, Polypipe Building Products has just received full ISO 50001 accreditation for its energy management systems, testimony to its prominence on management's agenda. This is the right thing for us to do, both from a society perspective but also commercially. The large U.K. contracting firms are increasingly keen to partner with companies that can play a role in reducing their carbon impact in their value chain. Polypipe believes that our actions on sustainability can be one of our sources of competitive advantage. In the coming months, we will be producing materials for us to use with our customers specifically in this regard, as we ensure that we are taking a lead based on substantive quantifiable benefit. This continuous innovation and improvement, of course, requires a committed, diverse and empowered workforce. People are our most valuable asset, and that's why we're investing in bringing fresh perspectives into the business to drive that innovative spirit. We are focused on making long-term meaningful change to ensure that we grow our workforce with talented people of all backgrounds, with a pipeline of diverse talent to continue our growth for years to come. Real change likely won't happen overnight, but we're committed to getting there. We're starting with a suite of different actions. Polypipe will join The 5% Club, building on our existing apprenticeship programs which already number 80 colleagues. We will measure the ethnicity profile across all of our sites and ensure that we match the makeup of the local communities within which we work. In doing this, we'll also be adopting the McGregor-Smith recommendations into our management practices and systems. Our gender diversity also remains a priority to ensure we are accessing this wider talent pool as possible, and we'll be seeking a gender pay gap position at least in line with the U.K. mean. These initiatives have been alongside our ongoing development programs to ensure we have a workforce that is capable of meeting our challenges. Of course, we also need to be confident it is engaged and motivated. We check the level of engagement of our workforce via an annual survey. This measures a variety of metrics as well as providing an aggregate score which reflects the engagement level of our colleagues. We will seek a 5% improvement each year in the level of engagement score that it provides. Our Polypipe businesses are very much part of our communities, whether that means the local community or the wider construction community. We have an active program of involvement with these communities, and this has been even more evident during the testing times of 2020 and the COVID-19 pandemic. Our businesses have been involved in countless support initiatives, from making PPE for local hospitals through to using our transport to deliver provisions to local people and various acts of individual charity and fundraising. As I said, we also feel a sense of belonging in community within the construction industry as part of our belief that we are helping construction build better. Our established connection with Help for Heroes reflects this community responsibility, with 1 in 4 ex-servicemen taking on a career in the construction sector. We have been involved with sponsorship, fundraising and provision and assistance with skills and training to assist in the successful transition to a career in civilian life. This is a long-standing commitment, and we've just confirmed our involvement for at least the next 3 years. As I said in my introduction, we ultimately see Polypipe as being in the business of sustainability. We have a role to play in making the built environment more sustainable by helping create a more resilient planet and a more resilient business. This is core to our commercial strategy, and we believe it will create value for all of our stakeholders. The metrics and initiatives which I've communicated today will form part of our commitments, against which we will report and be measured in our future communications and presentations. Thank you. And I'd now like to hand over to Paul.

Well, thank you, Martin. Yes. Hello, everyone. It is my great pleasure to present the trading update released at 7:00 a.m. this morning for the period to 31st October 2020. The recovery in trading performance we presented on the 15th of September at the interims has continued, and I want to particularly focus on the more recent trading for the last 4 months of this year as it contrasts markedly to the first 6. Back then, we said trading for July and August was only down 6% and 3%, respectively, on the previous year; and overall, for the 4 months to 31st October, net revenues are now only 1.5% down after continued improvement throughout this period. Margin performance has also been improved as volumes have recovered and despite having to bear ongoing COVID-19 related costs. Now if I break that down a little between segments. Residential Systems revenue was 3.9% down on the prior year for the 4 months, and this is indeed a marked contrast with the 28.1% year-on-year decline in the first half. And Commercial and Infrastructure's earnings were actually 1.9% higher for these 4 months, admittedly helped by weaker comparatives in 2019 as there were some project delays then, but also the Commercial and Infrastructure sector got off to an earlier start on recoveries in residential after the first lockdown in March and it has sustained that momentum. Now for the 10 months, group revenue is 13.6% lower than prior year, with Residential Systems and Commercial and Infrastructure segments 18% and 7.6% lower, respectively. The group remains highly cash flow generative. We said in September, Polypipe has resumed investments in growth opportunities, and we are still guiding capital expenditure to be in the low 20s millions in this year despite the prolonged period of capital expenditure restraints, not to say constraints, during the first phases of this lockdown crisis. Despite the uncertainties that face us from the effects of the second lockdown as well as the prospect of no-deal Brexit, the Board does not expect underlying operating profit to be less than GBP 35 million for this year, right at the top of the current consensus range of GBP 30 million to GBP 35 million. The positive medium-term fundamentals of our business certainly remain in place. It is important to restate our investment case. The group is a leading provider of sustainable water and climate management solutions for the built environment, being the largest manufacturer in the U.K. and among the 10 largest manufacturers in Europe of plastic piping systems for several sectors. We're also a leading designer and manufacturer of energy-efficient ventilation systems in the U.K. following the 2015 acquisition of NuAire. We have balanced exposure across many market segments and a proven business model with product innovation as a key driver for growth and profitability. We have strong ESG credentials with clear targets, and sustainability is at the heart of what we do. And this is shown by an increasing need for resilient drainage, exacerbated by climate change; the need for green urbanization, driven by population expansion and increased population densities in the urban environment; the increased focus on clean, healthy air; the harmful effects of particulates emissions as well as novel viruses are still with us, and they need to be addressed. And there is a move towards low zero-carbon heating and construction more widely. We will achieve significant structural growth with environmental growth drivers delivering 2% to 4% outperformance across the cycle. We have a proven business model, as we have seen product innovation as a key driver for growth and profitability. And we have a breadth of product range, providing competitive advantage through the ability to design cost-effective solutions. And finally, we have a proven financial performance over many years, and this is shown by a strong track record of value-enhancing M&A with disciplined allocation of capital and consistent dividend growth and strong earnings growth and cash generation, driving attractive and sustainable total shareholder return. Thank you. And with that, I hand over to Martin.

Thank you, Paul. I hope you have found this session interesting and informative. The Polypipe Group has performed robustly through the COVID-19 crisis with momentum building in recent months and is in great shape to capitalize on the opportunities that are arising and will undoubtedly arise as we come out of this crisis. But as I said, today hasn't been about the short term. I hope you can see the strength of the structural demand drivers behind our business, the sustainable solutions we can bring to the real-world environmental issues that are challenging society now and will continue to do so in years to come. In a post-COVID world, the drive to solve these problems will be even stronger than before, and we'll be there to play our part. I also hope you can see we are putting that strategy into action through continued investment in innovation, in capital and in people. And finally, I hope you can see we are creating a more sustainable business by placing even greater focus and energy on our ESG targets. We start from what I think is a good place in this regard, but the pace of change out there is getting faster, and therefore, we need to keep driving ourselves to keep getting better. The combination of all these factors gives me confidence that we will continue to drive strong growth and outperform the market in the future. And if I could perhaps leave you with one final reflection. Through the last recession in the late noughties, Polypipe continued investing in product, in capital and in people, unlike much of its competition. And in doing that, it laid the foundations for the success it enjoyed through the next 10 years, helping create the business you see today. Throughout this COVID-19 crisis, Polypipe has and will continue to invest in product, in capital and in people. And I firmly believe that we are laying strong foundations for another 10 years of success for the Polypipe Group. Now as you may have gathered, this has been a pre-recorded session, which I'd like to add has been done in a COVID-safe manner. We will now move to Q&A session, which will be a live session.

[Operator Instructions] The first question comes from the line of Christen Hjorth calling from Numis.

Three questions from me, if that's okay. Thanks for the presentation. It's very interesting. The first one, I will just say, on R&D more generally. Maybe just sort of a bit more detail of your approach, perhaps budget, how you decide to allocate it and also how success on that expenditure is driven. The second one is just where -- and you touched on it briefly there, but where you think you are versus competitors in terms of some of these exciting new products like [ Safe Haven ], also digital and water management solutions, things like recycling as well and also setting out these targets. And then just a final one is just on organic versus M&A and to what extent do you think you can just use organic growth to stay on top of these trends and what extent perhaps M&A needs to come into it as well, similar to sort of the Manthorpe deal, et cetera.

Thanks, Christen. Thank you for spending the time to see the presentation we've just given. I'll pick up the organic and M&A question. It's absolutely right, and I'll pass on due to Jason to tell you a little bit about the processes [indiscernible]. And you'll see it pick up a little bit where we are versus the competition. But in terms of organic and M&A, I think we've seen today that there's plenty of innovation coming through in the pipelines around the group. And you can see we picked on 2 or 3 examples here. There are many more around the group. So the organic approach will be finally to us trying to achieve some of the objectives we've talked about. But in terms of the M&A side of things, there are undoubtedly technologies and gaps in our product ranges that we want to fill that may well be better filled by using M&A rather than [ bank loans ]. And as we said in the presentation, it's quite clear that opportunities are beginning to arise as we come out of this crisis on that one front. So hopefully, that answers that, Christen. Maybe I can hand it to Jason [indiscernible]. Jason?

Apologies. I made the classic error. Christen, yes. So in terms of R&D, we have quite a detailed process of measuring our strategic projects or monitoring them against what we call our strategic blue sheets. So we take all of those in an annual basis. We evaluate them. We agree the priorities and then we review those on a quarterly basis to make sure that those projects have come into fruition throughout the 3-year cycle. So I hope that answers the question about the process and how we track and monitor our NPD coming through. If I can just answer the question about the second part of that around water management solutions. So yes, when it comes to water management solutions, I'd like to think that we're well ahead of the competition, particularly with the move towards the green urbanization part of our package and particularly with the use of the Permavoid technology with passive irrigation. That's something that is very unique to Polypipe and something we're trying to drive for incremental growth. We also try and stay ahead of the core product market with our investments in Polystorm. As you've seen from the graph I presented, we're continually trying to introduce range extensions to that to meet the requirements of the customers and the planners to try and stay ahead of the changes that are driven by climate change, for example. Wayne, do you want to take [ Safe Haven ]?

Yes, [ Safe Haven ] is a product that we are about to launch to the market. Now we're about to start marketing, but it's a product that's unique out in the market. Although there are some competitors out there, a number of competitors have launched stand-alone products, which filter and recirculate the air. You still need to have fresh air input alongside these units. And this is the major advantage of [ Safe Haven ], that it works alongside already installed systems, retrofit or in new build, and it can supply the right -- correct amount of fresh air as well. And the NuAire [ Safe Haven ] also removes polluted air such as VOC, the particulate matter, noxious air, such as hydrogen and liquid aerosols, and also removes infectious air such as viruses, fungus, also some pathogens. So it is quite unique in the type of way and it is used and configured in the market. And therefore, that is the reason that we have patented the product system as well.

Thanks, Wayne. Does that answer everything there, Christen?

The next question comes from the line of Jon Bell calling from Deutsche Bank.

I think I've got two. First one is probably for Martin Gisbourne. You referred to The 5% Club, the percent of total workforce that are in earn and learn. I just wonder what the current percentage is at present. And the second one is linked with Christen's question actually. It's on acquisitions and the pipeline more broadly. Without being too specific, I wonder whether you could just comment on how that's looking and how the landscape has changed since COVID.

Thanks, Jon. And Martin, you want to take up The 5% Club and I'll come back on the acquisitions [ after you ]?

Jon, thanks for the question. The answer is we're just now at 4% in 2020, so as at that time presented. And we expect to go just over 4% in [ produce ] and head count [ as mentioned ].

Thanks, Martin. And then just in terms of acquisitions, Jon. Obviously, I can't go into too much details. But I mean, certainly, the landscape is changing. Obviously, there were plans before the COVID struck which got put on hold and we're starting to see owners, whether they're private equity or [ fund ], starting to think about coming back again. And obviously, we are keen to sort of try and play our part where there is a good, strong commercial strategic rationale for acquiring those businesses. We won't drop our financial targets and filters. So we're not going to lose that financial discipline that we have towards these acquisitions, but there's plenty of opportunity coming from that. And in both areas of the business, in the Residential Systems and Commercial and Infrastructure space. And look, I feel we've got a good team here. We've got a structure that allows us to do M&A and bolt it into the divisions that we've created a couple of years ago. So I think we're well placed. And obviously, [indiscernible] that we did earlier in the year, given the trading has [ gone away from ], gives us a balance sheet to participate in some of those opportunities.

[Operator Instructions] The next question comes from the line of Sam Cullen calling from Peel Hunt.

Two questions for me also. The first one is just kind of you can give an indication of the cost benefit on the increase in recycling that [ you're just harnessing ]. And then a second one, coming back again on the question around acquisition. I mean, you rightly pointed out at the start of the presentation, Martin, that you've grown the top line by about 9% or 10%. Since the IPO, it's probably half that on an organic basis. Going forward, do you think that, that rate of organic growth should increase from here with the new products you're looking to develop? And can you match the similar rate of growth you've delivered through acquisitions over that period on what is kind of a 50% higher revenue base; i.e., are there more opportunities available in smaller deals or large deals within your pipeline that you think that you can match that level of revenue growth?

Okay, fine. Let me [indiscernible] acquisition question again. If I could pass the recycling question back to Jason in a couple of seconds. So yes, in terms of acquisitions. Look, there are -- the sort of opportunities that are arising are small and large. I do see that there is potential in the next couple of years to get some new acquisitions under our belt. And again, the way we've looked at our product gaps and we looked at leveraging that customer relationship sort of opened up the opportunities that we've got for M&A and perhaps widening it compared to where we were looking [indiscernible]. So a lot of those opportunities are still there. In terms of the organic growth, those drivers are very strong. It's very difficult to put numbers to some of those things right now because they are big global drivers. But you can see in the history that we've been able to deliver that organic growth. As Paul said, we look to sort of grow between 2% and 4% ahead of the market. And don't forget, we've still got those strong drivers in maybe some material substitution as well. So even as the market grows, our share of that market should continue to improve as we reuse plastics to [ replace these in terms of substitution ]. So I think the sort of growth levels that we're looking at, we should be able to achieve what I've just described certainly over the next 3 to 5 years, definitely. Jason, just on recycling.

Sam, right, okay. So in terms of recycling, one thing I would say is that we're not necessarily trying to increase the amount of recycling that we're doing primarily from a cost perspective. And it's something we have to be quite careful about in terms of forecasting the delta between recycled material and prime materials. So that's important to remember. Having said that, what we are doing is investing in technology to make sure that where we are using recycled material, we can maximize the margin benefit that we derive from that line doing as much of our recycling as we can ourselves. Hence, the investment we made in the past in the bottle recycling facility. I think the one benefit that recycled material gives us potentially from a cost perspective is, is a more stable cost base in terms of attenuating the peaks and troughs of the prime market. And I tend to look at it more in that mind than sort of a cost advantage per se. Does that answer the question, Sam?

We have no further questions coming through on the phone lines. So I'd like to hand the call back for any closing remarks.

Yes. We just actually got a couple of questions on chat, so if I could just maybe pick those up. So we've got a question from [ Brooke Campbell Corton ]. So I'll read the question out and pass this to Cameron, if that's all right. Residential Systems. Is it your intention to announce pricing increases in the coming months for Residential Systems business, as is typically the case each year? What magnitude of pricing is to be announced? So Cameron, do you want to pick that one up?