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Frank Andre Van Zanten: Good morning and thank you for joining Bunzl's 2025 Half Year Results Presentation. After a short introduction, I will focus on updating you on our North America and Continental European businesses. After this, Richard Howes, our CFO, will walk through our financial performance, leverage and outlook. We will then move to Q&A. But first, I want to thank all of my Bunzl colleagues for their hard work and dedication in what has been a challenging operating environment for many. I know many of you are working tirelessly to support customers and to deliver an improved performance in the second half of the year. I will start by summarizing performance over the first half. Bunzl delivered revenue growth of 4.2% at constant exchange rates. Growth was driven by acquisitions with underlying revenue broadly stable. However, group adjusted operating profit declined by 7.6% at constant exchange rates with our operating margin reducing by around 100 basis points to 7%. This has been driven by certain larger businesses within North America and Continental Europe with both business areas seeing a similar level of margin decline as the group overall. I will spend much more time discussing these shortly. Our cash conversion was better than we expected at 97%, although free cash flow declined by 22% due to our operating profit decline. We ended the period with an adjusted net debt-to-EBITDA of 1.9x, slightly better than guidance, driven by good cash conversion. Richard will discuss leverage in more detail later but we are now broadly in line with our target leverage range. Our capital allocation priorities remain unchanged and within this, we remain committed to sustainable annual dividend growth. We are, therefore announcing a 0.5% increase in the interim dividend today. August year-to-date, we have announced 5 acquisitions with a committed spend of approximately GBP 120 million. As is typically the case when there is macro uncertainty, the number of signed deals has been lower than usual but our pipeline remains active. In the first few months of the year, we also executed GBP 114 million of an announced GBP 200 million share buyback. We had paused further purchasing at the time of our Q1 announcement aligned to capital allocation priorities and our short-term leverage target. Today, given our current expectations for committed acquisition spend, we are resuming this buyback, GBP 86 million remains and will be fully completed by the end of the year. Before I go into the detailed performance, I want to highlight the main points I would like to take away today. Firstly, fixing the issues we see is our priority and I am confident in the actions we are taking. While it is still early days, these actions are performing in line with our expectations. In particular and importantly, our North America Distribution business is reenergized. I remain confident in our outlook and our expectations for an improved second half performance with a moderation of operating margin declining year-on-year compared to the decline in the first half. While it's only the first month and with the external operating environment remaining challenging, trading in July is demonstrating the anticipated improvement we are looking for in the second half. Secondly, I want to emphasize that we are committed to building further on Bunzl's historic success. Our performance in historic periods means that despite our earnings weakness in 2025, we have still delivered 6% compound annual profit growth since 2019. The Bunzl business model is fundamentally strong and we continue to have an attractive long-term compounding growth opportunity. I am confident in Bunzl's underlying resilience and consistency. And after fixing the issues, I intend for Bunzl to be associated once again with these key characteristics. So let me go straight to discussing the actions we are taking. Starting with the North America business, I will dive into the specific of recent performance shortly but I would first like to spend a few moments giving some additional context to help you understand the evolution of this business. Our North America business area comprises around 35 operating companies, of which our Distribution business is the largest. It generates around half of North America's revenue and around 30% of group revenue. It is largely -- it's largely services, grocery and customers and foodservice redistributors and is a leading national distributor in both these markets. Whilst we have experienced challenges in this business recently, it is important to remember that given its size, it has historically been an important contributor to the strong characteristics you typically associate with the group. Its resilience, for example, is supported by its exposure to both foodservice and grocery, which have complementary end market drivers. Furthermore, it has generated an attractive return on average operating capital driven by strong asset turn, in line with the business area overall. Distribution's strong customer proposition is supported by its scale and category expertise. We take these core strengths and apply them to our 2 main customer segments slightly differently. In grocery, given historical consolidation in this sector, our revenue is mostly attributable to national and larger regional customers. Grocery customers are using our products directly in their businesses to operate their stores and merchandise their products, and they prefer to allocate their own working capital and network capacity to goods they can sell on. They typically buy consumables from us over a contracted period and we are often their sole distributor for all goods not for resale. Whilst all our customers care about price and product quality, this customer set really values reliability and consistency of service. It is slightly different for foodservice redistributors because the product we sell to them are items they will sell on to their customers. They are typically focused around 90% on food and 10% on nonfood items. And so they leverage the scale and of ranges that distributors and importers such as Bunzl provide on that nonfood side. These customers will often utilize more than one distributor in order to find the best availability and price. Speed of service is essential. Revenue in this part of the Distribution business is more of a mix between local and larger customers. Overall distribution generates around 1/3 of its revenue through local customers with revenue weighted towards foodservice. The other 2/3 is generated via larger customers with revenue weighted to grocery. Whilst distribution has continued to hold a strong market position for many years, as with any business, we need to keep evolving. So let me now take you through the strategic and structural changes we have been implementing in this business over the last 5 years. In 2019, we were operating a branch-based model, which meant that 40 general managers across the business were each managing the entirety of their own operations locally from sales right through all of the supporting processes. National account managers coordinated our service delivery to national customers via these general managers. We delivered a very strong proposition to customers. But customer needs were changing. Our grocery customers in particular have become larger. Servicing them from our highly decentralized footprint impacted consistency and local management's inward focus on operations rather than being able to dedicate their attention outwards on sales and business development also impacted our ability to drive new business. Over the years leading to 2019, we're seeing revenue momentum slow. There were some other factors at play. For example, the low level of coordination of our overall product range had resulted in minimal development of own brands. In 2019, we generated only 5% of revenue through our own brands. We're also being impacted by our exposure to cost-plus percentage contracts with operating cost inflation and product deflation having reduced Distribution's operating margin. So strategic actions were sketched out for the business. Even though the DNA of Bunzl is to decentralize and empower local teams, we recognize we would need to flex our approach if we wanted to strengthen our leadership position and enhance our service and offering to customers. This would require us to move to a sales and operations model, which would separate operational activities such as ordering from suppliers, managing the warehouse infrastructure and logistics from sales processes, allowing local teams to focus their efforts on business development. Given the different nature of our core customers, the new organization will need to strike the optimal balance between centralization and local agility. Furthermore, we saw a strong opportunity to increase own brand penetration to complement our branded product range. We have long established relationship with branded domestic suppliers and the right balance can be achieved with the correct development plan. We also needed to transition large customers from cost-plus percentage margin contracts to index fee per unit contracts. This would reduce the downside risk to our margins in case of product deflation. New leadership was appointed to drive the operating model change and own brand development in particular. This strategy was and continues to be the right one for the business to deliver a stronger platform for growth and improve margins. However, the challenges have been in the execution, as we will talk about shortly. Initially, we were seeing some positive progress. By the end of 2024, a lot of these actions were underway and working successfully. We had increased our own brand penetration to 14% with good demand supported by the products' price point and quality. We have successfully reduced our exposure to cost plus margin contracts with the revenue exposure across the Bunzl Group being around mid-single-digit percentage today. Furthermore, whilst we have seen some gains and losses, we are starting to see good momentum with grocery wins. Over the period 2020 to 2024, we delivered strong compound annual growth in profit. This was supported by our management of high levels of product cost inflation as well as our strong capabilities managing significant supply chain disruptions as well as the growth in our own brand portfolio. However, whilst we had moved to 14 regional hubs and implemented the sales and operations model in 2023, our execution of the strategy fell short in some key areas. Centralizing decision-making and processes had improved consistency for large accounts but have reduced agility for some smaller local customers. We had gone too far with centralization for our local business. Our local teams had less autonomy and became slower to respond to business inquiries in this more dynamic part of the market. This particularly impacted our local foodservice customers who rely on speed of service and we saw a loss of wallet share. Furthermore, own brand growth had been delivered alongside reduced engagement with branded suppliers. Some of these issues were starting to become clear early in 2024 and leadership were tasked with taking corrective action. However, the impact on the business was obscured by offsetting the benefits, in particular, the transition to own brand and a strong holiday season at the end of 2024. The business ended 2024 with a view that performance was picking up, having seen volume growth with redistribution customers in the second half. In the first half of 2025, our North America Distribution business went through a very challenging inflection point, which became fully evident in April. The backdrop had become more challenging with continued pricing deflation and a difficult foodservice end market. Furthermore, leadership had not been fast enough to implement corrective actions and team morale had fallen. Volume growth with branded suppliers and own brand conversion fell well below our expectations. We had expected to win business on the back of the organizational changes but this did not happen over this period. This was compounded by the loss of a higher-margin category of business with a major ongoing customer. This category had supported a program which is no longer available in its stores. We did not win any large business over this period to offset this specific loss. Many of the offsetting benefits we had seen in 2024 fell away. We've seen higher operational costs with the business fixed cost base having increased with significant investments in people toward the end of 2024, higher inventory-related costs as well as operating cost inflation. All these elements combined resulted in a significant drop in Distribution's profit versus the prior year. As a result, we took decisive action to improve performance during the half. Firstly, we changed the leadership of the business. Jim McCool, the Head of North America, who has extensive experience within this operating company, took on direct leadership. He immediately sought to address team morale and remove the barriers to our local sales teams. I am spending a lot of time in this business and we have been working closely with Jim in overseeing the change processes. Both Jim and I are committed to and aligned on how to fix these issues. We are also very confident that the issues are fixable. Importantly, we have the right strategy and organizational model. And as we see the results of actions taken, we are going to have a much stronger business at the other end. One of the most impactful steps taken so far has been to push more decision-making authority back to the local level where appropriate. Instead of certain tasks being centralized, our 14 local market teams have regained control over pricing and margin for local customers as well as product availability. This has restored the agility and customer responsiveness that had eroded. We also took some cost out. At the same time, we focused on tackling the inventory position that had built up. We are refocusing our efforts on branded domestic suppliers who are core to our supply chain and making sure that we have a good balance of growth between their ranges and our own brand ranges as we continue to launch further products in complementary nonbranded categories. These swift measures are starting to pay off. The Distribution team is reenergized and focused on turning the business around. Our service levels are now normalizing towards the usual high Bunzl standard even as we navigate some ongoing tariff-related supply chain complications. Inventory levels are normalizing, which eases the pressure on operational costs and improves productivity of our warehouses. We saw our own brand strategy continuing to deliver with successful launches in Q2 and further launches planned toward the end of the year. While we saw fewer-than-expected business wins in the first half, the pipeline of wins is looking positive for the second half. And I am pleased to say that profitability momentum through the first half was in line with our expectations despite the challenging market. Importantly, these early indicators are positive and tracking in line with our plan. In the second half, we expect a moderated operating margin decline compared to the significant decline experienced in the first half. Although the benefit of some actions are not expected until well into 2026, I am confident in the progress we are making. This is the right strategy. And when executed, we expect to show continued market leadership, a well-functioning operating model which allows us to enhance our focus on sales and deliver an optimal service for both larger and local customers, continued complementary own brand growth alongside preferred branded supplier programs, the business operating once again with high product availability and strong service levels and, importantly, a highly motivated team. Given the importance of this business to the future success of the group and my strong confidence in these actions the team has taken, we will become an even better Bunzl. Turning to Continental Europe, where the operating environment also remains challenging. We saw Continental Europe's operating margin decline by around 100 basis points over the first half as had been expected. This follows trends already seen in the second half of last year. The decline was driven by France and certain online businesses. In France, we have seen the continued impact of deflation with prices normalizing in the Cleaning & Hygiene sector from the higher levels seen during the pandemic. This has been compounded by a weak economy. With revenue pressure, the impact has been amplified by a relatively high fixed cost base as well as continued operating cost inflation. Profitability of certain online businesses was also impacted by revenue softness with lower traffic and conversion of online marketing activities. Despite muted economic growth across Europe, there were brighter areas of performance. In particular, our Benelux business returned to growth following a challenging second half of 2024 and Spain has been resilient against a good performance last year. Improvement actions are well underway in Europe, having been initiated in the second half of last year. We expect the net benefits from cost actions to start to accrue and expect our heightened focus on pipeline management to support net business wins in the second half. The region is also pursuing procurement opportunities such as consolidated own brand supply in certain regions. Furthermore, we face easy comparatives in the second -- easier comparatives in the second half. Together with our actions, this supports our guidance for reduced operating margin decline in the second half. Whilst we are very focused on improving performance in the second half, I wanted to reiterate that our long-term compounding growth strategy remains unchanged. Many parts of our business are unaffected by our current challenges and are continuing to focus on delivery against this broad strategy. In the medium term, you can expect Bunzl to continue delivering growth organically and through value-accretive acquisitions. So far in 2025, Bunzl has completed 5 acquisitions with a committed spend of around GBP 120 million. These acquisitions include our expansion into the attractive Chilean health care market as well as our first acquisition in Mexico since 2013. The breadth of these acquisitions continue to demonstrate the large number of lakes we continue to fish in. Despite a slower pace of deals this year due to macroeconomic uncertainty, the acquisition pipeline remains active and, historically, Bunzl's M&A activity picks up quickly when conditions improve. We continue to have over 1,300 targets in our database. Andrew Mooney, our Corporate Development Director, looks forward to discussing our acquisition strategy and opportunity in more detail on the 8th of October at our next investor seminar. Let me now pass you to Richard.
Richard David Howes: Thank you, Frank, and good morning, everyone. With around 90% of adjusted operating profit generated outside the U.K., our results on average were negatively impacted by currency translation of between 3% and 4% across the income statement. Starting with revenue. Group revenue grew by 4.2% at constant exchange rates to GBP 5.8 billion, driven by net acquisitions, which delivered 4.9% to revenue. Underlying revenue declined 0.2% and there was a 0.5% impact from an extra trading day in the prior year, net of a small benefit from excess growth in hyperinflation economies. Underlying revenue grew by 0.6% in the second quarter, demonstrating an improvement on the challenging first quarter, where we saw a decline of 0.9%. Within underlying revenue, both price and volume were broadly stable for the half. Now turning to the income statement. Adjusted operating profit declined by 7.6% at constant exchange rates to GBP 404.5 million. Operating margin reduced to 7% from 8% in the period last year at actual exchange rates. As Frank has mentioned, this margin decline was driven by the Distribution business in North America and certain large businesses in Continental Europe. Adjusted net finance expense increased by GBP 12.1 million to GBP 58.9 million due to higher average net debt during the period. We continue to expect adjusted net finance expense of around GBP 120 million for the full year. The effective tax rate was 26.4% compared to 25.5% last year, reflecting the absence of one-off benefits from group -- U.K. group relief and tax provision changes included in 2024. We continue to expect around 26% to be the effective tax rate for the full year. Adjusted earnings per share fell by 10.6% at constant rates to 77.8p. The higher tax rate and increased interest charge more than offset the benefit of a reduced average share count, reflective of the buybacks executed between the 2 periods. We have increased the interim dividend by 0.5% to 20.2p per share. Now turning to the business area performance. As you know, our performance in North America has been driven by our Distribution business. While adjusted operating profit for the business area as a whole declined by 14.7% at constant exchange rates, excluding the Distribution business, North America's adjusted operating profit was more stable, albeit still impacted by the uncertain environment. We have seen some tariff-related price increases during the second quarter and expect to see further increases later this year. Performance to date suggests tariff-related price increases will provide some benefit in the second half, albeit impacted by the uncertainty we have seen and continue to see in tariff levels across Asia. Frank has covered the drivers of Continental Europe's 9.9% decline in adjusted operating profit at constant exchange rates. So let me turn to the other regions. Growth in the U.K. & Ireland has been driven by our acquisition of Nisbets, which was acquired in May last year. Over the first half, Nisbets has seen good sales momentum despite a more challenging trading environment. However, profitability was impacted by product mix with an increased weighting to heavy catering equipment such as fridges and freezers and slower-than-anticipated progress on maximizing the benefits of warehouse automation that the business invested in prior to acquisition. Elsewhere, our existing foodservice businesses performed well over the period, helped by customer contract renewals. The declining operating margin in the U.K. & Ireland has been driven by the dilutive impact of consolidating Nisbets, which tends to have a seasonally lower margin in the first half of the year compared to the second half as well as its profit performance over the half. We have also seen some margin impact in our Cleaning & Hygiene business from selling price deflation. We are, however, making very good progress on synergy projects in Nisbets and expect these to largely benefit the second half. Our performance in the Rest of the World has remained strong with underlying revenue growth driven by strong inflation in Latin America and moderate volume growth in Asia Pacific. In Asia Pacific, we saw good performance in health care, the biggest sector in the region. And overall, operating margins in the Rest of the World continued to be strong. However, trading has become more challenging in the second quarter in Brazil. Although businesses have had success in passing through some currency-driven product cost increases to customers, they have not been able to do so fully in a weakening market. This has impacted Latin America's operating margin. Moving to cash flow. Cash conversion over the period was 97%, which is better than expected, supported by improved inventory levels through the second quarter. We generated GBP 243 million of free cash flow, a 22% decline year-on-year, reflective of the decline in our adjusted operating profit with the change in net interest and income tax payments broadly offsetting each other. During the period, we paid out GBP 67 million in dividends and made a net payment of GBP 42 million to buy shares for our employee benefit trust, leaving total cash generation prior to acquisitions, disposals and share buybacks of GBP 134 million. Net of a GBP 17 million inflow from the disposal of R3 Safety in the U.S., cash outflow related to acquisitions was GBP 31 million. All but one of the additional acquisitions announced year-to-date completed after the 30th of June. Turning to the balance sheet with comparisons made to the position at the end of 2024. Working capital increased by GBP 25 million as lower inventory and the benefit from currency translation were more than offset by an increase in receivables and reduction in payables, including the payment of share buyback commitments. Deferred consideration relating to acquisitions decreased by GBP 15 million to GBP 243 million. Inclusive of the off-balance sheet components, deferred and contingent consideration was GBP 336 million compared to GBP 375 million at the end of 2024. This reduction is largely driven by payments in the period. Adjusted net debt including deferred and contingent consideration to be paid on acquisitions was GBP 1.9 billion, down GBP 52 million versus the end of 2024 but up GBP 208 million compared to the end of June 2024. Our adjusted net debt-to-EBITDA was 1.9x compared to 1.8x at the end of 2024. This headline ratio continues to exclude the impact of leases and the increase reflects our reduction in EBITDA in the first half of 2025, whilst being supported by a good second half of 2024. Returns have been impacted by our performance over the period with a return on invested capital of 13.5% and a return on average operating capital of 38.8%. Despite the decline, our return on invested capital remains strong and broadly in line with the level achieved in 2019. Turning to capital allocation. The strength of Bunzl's performance and high cash generation in recent years had resulted in low leverage. In the first half of 2023, our leverage was 1.3x compared to 2.1x in the first half of 2019 and compared to our target of 2 to 2.5x. This was despite an increase in average annual acquisition spend over the recent years. As a result, last year, we committed to returning to a more appropriate leverage. At an adjusted net debt-to-EBITDA of 1.9x today, we have relevered. This has been delivered through both an acceleration of capital allocation, including share buybacks over the last 12 months but also the weaker earnings we have delivered. Given macro uncertainty, we continue to believe leverage around 2x is appropriate. However, our capital allocation priorities remain unchanged. Given our anticipated level of acquisition spend this year, we are resuming our previously announced GBP 200 million share buyback. We had paused the buyback alongside our first quarter trading update to provide sufficient headroom for acquisition spend in the year in line with our capital allocation priorities. Given the lower level of spend year-to-date, as well as our expectations for additional spend over the remainder of the year, we will complete the remaining GBP 86 million of share buyback by the end of the year. With this buyback and the anticipated additional acquisition spend, we expect leverage to be towards 2x by the end of the year. Should we generate an annual free cash flow of GBP 500 million to GBP 600 million, this would lead GBP 200 million to GBP 300 million of excess cash after dividends and employee trust share purchases. With acquisitions supporting earnings growth, this allows us to continue to fund future acquisitions whilst maintaining our leverage. As part of our capital allocation framework, we are committed to a progressive dividend policy, further building on our 32 years of consecutive annual increases. We have announced a 0.5% increase in our interim dividend today with continual annual growth supported by our conservative dividend cover. We expect our dividend cover to be around 2.4x in 2025. Turning to the outlook. We have shared with you today the positive indicators that we are starting to see. These are in line with what we had expected and as such, we reiterate the outlook we published in April and at the preclose in June. We continue to expect moderate revenue growth in 2025 at constant exchange rates driven by announced acquisitions and broadly flat underlying revenue. We expect group operating margin for the year to be moderately below 8% compared to 8.3% in 2024. This guidance factors in a moderation of year-on-year operating margin decline in the second half compared to the approximately 100 basis points decline seen in the first half. This confidence is driven by the expected benefit of actions taken in North America and Continental Europe, the easier comparatives we see in Continental Europe and the benefit of Nisbets' synergies. We also note that the group's second half operating margin is seasonally higher. And as Frank has already mentioned, trading in July is consistent with our expectations for the second half. I'll hand you back to Frank for some final comments before we move to Q&A.
Frank Andre Van Zanten: Thank you, Richard. I would like to conclude the formal part of this presentation by reiterating my 2 earlier points. Firstly, our priority is fixing the issues that have impacted the group. I am confident in the actions we are taking and while it's early days, these actions are delivering as expected. Secondly, we are committed to building further on Bunzl's historic success and returning to the more consistent performance that you are used to. Thank you for your attention. We are now very happy to take any questions.
Operator: [Operator Instructions] Our first question comes from Rory McKenzie from UBS.
Rory Edward McKenzie: It's Rory here. Two questions, please. First, I wanted to ask some more detail on the cost base plans for North America and Europe. If we assume that gross margins were pretty stable in each region and I think SG&A rose by about GBP 10 million to GBP 20 million year-over-year in local currencies for H1, I guess, does that sound right firstly? And then in terms of modeling that from here were there any one-off costs you charge in H1 that won't recur in H2? And could you also quantify the savings you expect to make from your actions, please? And then secondly, can you talk about the pricing environment? It sounds like H1 overall was still marginally deflationary. But can you quantify the price increases that you recently put through and the potential impact to H2? And then just give a bit more background on how you're managing the U.S. in particular given the tariff volatility there.
Richard David Howes: Yes. Okay, Rory. In terms of our cost base, yes, we have seen an increase in OpEx across the year. It's largely been inflation driven. I think we've done a good job actually of mitigating quite a lot of that through the actions we've taken but also some benefits in freight that we've seen particularly in North America. So overall, I think actually our SG&A has been well managed. As to one-off costs, there have been some costs of the cost takeout exercise we've seen in North America and in Continental Europe. I think given the majority of this is in North America and given the fluid labor market there, you could assume that the costs associated with this are in the low single-digit millions and, of course, they've all been taken above the line as part of our trading results. So that's the cost piece. In terms of pricing, yes, we have seen some easing of deflation across the first half. That has largely been mostly in North America, albeit we have seen some elsewhere. And part of that will be that we have put prices up with our safety customers primarily in the second quarter. Now that really happens because of the delays and the uncertainty associated with tariff levels. It has taken place later in the quarter than perhaps everybody anticipated, which means actually the impact on the first half is relatively limited and there will be further benefits to come from tariffs in the second half, albeit I reiterate that the level of uncertainty remains high, still not clear on tariff levels in China, for example. And as a consequence, even though it is a tailwind, I would contextually make it clear that it's not a big tailwind. It's a relatively modest number I would expect.
Rory Edward McKenzie: And just coming back on the cost base. It doesn't sound like what you're saying that there's any kind of large absolute cost reductions you expect to make over the next 6, 12 months. It's more about repositioning the business to drive growth. Is that a fair then in the context of what you just said?
Richard David Howes: Well, I think we -- I think it's true to -- in terms of actions taken, we have already taken a significant amount of action, particularly in North America towards the end -- during Q1, towards the end of Q1, which we saw the benefits of in Q2. That is addressing structure. It is addressing a number of people in the business but it's also addressing disruption-related costs associated with higher levels of inventory. So we have seen a significant reduction in the amount of storage trailers we've used and third-party storage, which is expensive and it is inherently more disruptive to productivity. So as the inventory has come down, we've also seen an easing of that cost pressure. Those 2 together has been quite meaningful in the second half and will be additive in the second half.
Operator: Our next question comes from Ryan Flight from Jefferies.
Ryan Daren Flight: Three from me, if I may, please. First one, you've noted reduced engagement from suppliers, largely on the back of your focus on own brand. I wondered if you could kind of update us on this engagement and your relationship with suppliers and how you strike the balance on own brand. It seems that you're still kind of pushing the own brand penetration and then just how you strike that balance. Second one, you've got your kind of shorter-term leverage target at the lower end of the previous range, so it's 2x. I wondered if you could kind of build out on what you really need to see to move back to the 2 to 2.5x range. And then the third one, just on M&A, really. I know you've kind of noted the tougher macro environment. But is there anything else for us to be aware of? Are you being a little bit more prudent? Is there anything on valuation, competition? That would be really useful.
Frank Andre Van Zanten: Okay. Let me take the first and the last one. On engagement and supplier, yes, so what we've seen during that sort of process in the business where things got a little bit too centralized, I think the -- we got a bit too black and white in terms of introducing some of the own brands, which meant that at some point went at the expense of, let's say, the branded suppliers. Now that's quite a nuanced situation also because in some cases, let's say, the branded suppliers in the U.S. also have some older machines and purely in a international context are not always competitive. So the market is driving you sometimes towards these kind of solutions. But if you look at a large business and a large product range that we have, I think the approach now, which is the right approach is where is -- where we really look at, okay, what are product categories that are, let's say, unbrandable and having very little impact on the preferred branded suppliers. And then there's also a large amount of volume, let's say, sitting a little bit in the middle where we are not selling own brands and we're also not selling products from preferred suppliers, where the aim is to move more towards preferred suppliers. And we've seen, let's say, we've seen this operate very successfully in other markets of Bunzl that it's actually very well possible to grow your own brands and at the same time, also grow your preferred supplier brands. And a lot of work has been going on in the last couple of months in terms of engagement on top level, on regional level but most importantly, on salesperson level, having these people talk to the salespeople from the branded suppliers, making combined plans and that is really a focus now for the second half. Bunzl is a powerhouse in the U.S. market. We are a really big company. So let's say, the branded suppliers are actually very excited that Bunzl is going to adopt a slightly more nuanced approach and they're very keen to work with us and continue to grow and pick up the right strategy. So you'll feel good about the opportunity to grow with our preferred suppliers. And at the same time, as we said, we had some good launches in the second half. We have more own brands to come in and it's slightly more in categories that are not so much part of the product range of our branded suppliers, like straws, for instance. It's a slightly more commodity group where already importers and people play. We've got a great opportunity because we are so big, we have so much scale. And when we bring that in, imported and our own brands, that's a real opportunity. In terms of M&A, yes, the pipeline is good. Obviously, the situation in the world is more dynamic. That means that sometimes people's business is a little bit under pressure given all what is happening. And you just tend to see that some of these processes are then a little bit slower. We sometimes pause if we're not convinced about, let's say, the sustainability of some of the profit trends we've seen in the last couple of years. But still very, very strong pipeline, a lot of conversations happening. But -- and at uncertain times, you just tend to see periods where you close a little bit less deals. But I'm not worried about this at all. It can be a little bit lumpy. Sometimes you have a little lower spend and sometimes you spend like GBP 770 million. So this happens. And we're still very well positioned. People like Bunzl. We have 1,300 opportunities. And you'll find out even more about this all at the upcoming seminar with Andrew Mooney.
Richard David Howes: And Ryan, on the short-term leverage point, yes, back in April, we indicated that rather than being at the moment in the 2 to 2.5, which is the typical Bunzl range over many, many years, that we would be -- we would focus on being more towards the lower end of that range given the level of macro uncertainty that is -- that was there at the time and I think is still with us today. What will it take to get back to the more normal range? I think just a bit of evolution of time and, hopefully, things settling down a bit will give us -- will put us back to that point. But broadly, we -- as I said, we have relevered. We relevered from 1.3 up to nearly 2x already. So actually, there's not much further to go.
Operator: Our next question comes from Will Kirkness from Bernstein.
William Kirkness: I've got 3 questions, please. And firstly, just going back to Rory's question. I wondered if you could provide the gross margin movement year-on-year for the first half. And secondly, in the U.S., having now sort of partly centralized and going back to the old model, I wonder if you're sort of running a slight sort of double cost base and whether -- so whether there's a -- the margin potential in the U.S. has been structurally impaired or whether you still have the same sort of aspirations for the margin there? And then lastly, just on buyback. Obviously, you were looking at GBP 700 million for '26 and '27, which was also suspended at the Q1 update. I just wondered if you could give an update on views there.
Frank Andre Van Zanten: Let me take the second question on the U.S., and then Richard can take the other ones. Yes, on the U.S., let's say, we're not moving to the old -- back to the old model with the general managers. And we -- so we have adopted the sales and operations model but basically implemented and executed that a little bit too much into a black and white way that had impact on the local business. So we are basically fine-tuning that model. And we have that model running in Australia and in Europe and in the larger businesses, very well-known system. So that will sort of continue to operate in a much better way. But within that business, we have allowed to have more agility and empowerment into these 14 local teams. So these are all very experienced Bunzl who can make very rational business decisions on margins, on availability, on getting supplies in and stuff like that. So not moving back to the old model because of the strategic reasons I mentioned. We wanted to make a change in 2019. We believe it's the right change. We see the benefit with the larger customers. They're actually quite pleased about all these changes and we are now modifying it for the smaller customers. And let's say, the reactions from the market and from our salespeople are very positive. So in terms of the double cost, some has been centralized. Some of the cost was not extra cost because we had, let's say, slightly more local people sitting in more central teams, sometimes also virtually. So -- but it's fair to be -- fair to say that some of the costs moving back to, some of the roles back to the regions had some impact. And that's why in the second quarter we also took cost out to rectify that kind of situation. So there's no double cost left.
Richard David Howes: And Will, on gross margins, you can assume that gross margin percentage is slightly up H1 '25 on '24 but that's very much driven by acquisitions. Obviously, we've got Nisbets for a full 6 months in the first half of 2025 compared to about 1 month in 2024. As to the GBP 700 million commitment we made this time last year, well, look, as we laid out at the time, that was very much part of us releveraging the business into the target range of 2 to 2.5, which at that point in time, we anticipated taking until 2027 to play out. Obviously, since that time, we have seen a change in our margins and we've had to -- we've seen obviously a more challenging first half than was expected. So essentially, we have relevered at least to the lower end of our range during this period. And to the point that -- and the question that Ryan made, we will go back to the range of 2 to 2.5. But essentially or largely, we have relevered within this period, which means that going forward, as I pointed out in this -- in the presentation, we think M&A is going to be the main driver of our cash -- of our free cash generation or the main use of our free cash generation after a dividend.
Operator: Our next question comes from Suhasini Varanasi from Goldman Sachs.
Suhasini Varanasi: Just a couple for me, please. You've mentioned in your remarks that organic growth trends in July have been in line with your expectations. Could you please clarify whether that growth in July was similar to Q2, which seems to have improved a little bit versus Q1 on an underlying basis? And maybe just one on clarification, please. I think your deferred and contingent consideration on M&A, could you just remind us how much is the expected payout for '26 and '27 on -- from the free cash flow?
Richard David Howes: Yes. Suhasini, when we said -- when we talked about July, we were actually talking more to not just organic revenue. So more to the point that obviously the second half requires a margin improvement. So the bigger point that we're trying to make in giving you a sense of what July has traded to be is actually that it's in line with our profit and margin expectations as much as it is revenue. So take it as a full income statement read rather than just an organic one. As to deferred consideration and contingent consideration payout, you should assume that the majority of the payments of the GBP 300-plus million that we have on the balance sheet and being accrued in contingent consideration will be paid out more in '27 and '28. There will be a relatively light amount in 2026, sort of mid-tens of millions. You can see that in the notes of the accounts. We do provide a time line for when these payments will be made. But majority -- the vast majority will come out in '27, '28.
Suhasini Varanasi: That's very clear. But just to go back on the first question. Is it possible to provide some color on how the underlying organic trends have evolved in July? I mean just want to understand if there have been any implications from tariffs prebuy, postbuy, whatever, how that has affected -- or inflation, for example, how that has affected the underlying organic trends.
Richard David Howes: Yes. Nothing around prebuying. We haven't seen that as a trend. A lot of the work we -- a lot of the price increases we put through in our safety business in North America, in particular, have been very much working with customers to make sure that we pass the right amount at the right time. As a consequence, we haven't really seen any disruption in people buying ahead in any meaningful sense. So it's not that. But I think it's probably better generally for us to have given you a full income statement view that both profit and margin in July are consistent with what we need for the full year. You can assume the same is true for revenue growth as well.
Operator: Our next question comes from David Brockton from Deutsche Numis.
David Thomas Brockton: I have 3 questions as well, which will hopefully be relatively quick. Firstly, in terms of the Q2 underlying revenue improvement, it looks stronger than I previously anticipated. And now you touched on some tariff pricing benefit, can you just confirm whether you saw any volume improvement through Q2 on Q1? That's the first question. The second question is just on the North American turnaround. Clearly rebuilding local sales team effectiveness is going to take time. Can you just give a bit more detail on where you are in terms of recruiting people to the extent that's needed and how that effectiveness is improving to date? And then the final one is just on Europe, where you touched on pressure -- revenue pressure with certain online businesses. Apologies if you mentioned it through the transcript but could you just elaborate on what precisely you've seen there for those online businesses?
Frank Andre Van Zanten: Yes. So maybe you can take the first one. I'll take local sales and online.
Richard David Howes: Yes. David, yes, I think you can take it that Q2 was a bit better than we had expected. But I think we should keep it in context because we are lapping some very, very soft comparators in 2024. And we will see tougher comparatives at the revenue line in the second half when actually we traded pretty well and saw volume growth. To your point on -- on your tariff point, most of the tariff went through in Q2, mid- to late Q2. Therefore, in terms of impact on inflation or deflation that -- it had less of an effect in Q2. There will be more of an effect of that in H2 as long as these tariffs stick, of course. On your point on volume, yes, look, I think you can assume there has been an improvement in volume between Q2 and Q1. Again, the point around comps is important because we very much need to see that improve in the second half. But I think it's encouraging and the positive signs we're seeing in our North American Distribution business around potential wins in the second half, should they arrive, would certainly help that.
Frank Andre Van Zanten: And your question on local sales, good question. So actually we haven't lost a high number of salespeople. We've lost some people. But more, let's say, recently, if we look at the last 6 to 9 months, our staff turn has been normal compared to previous periods, especially in our redistribution business. So that is encouraging. The problem was not so much around losing people. The issue was more around we've taken the weapons out of their hands to be able to be successful. And so we've given these weapons back by giving them own brands, good cost prices, most of all, local speed of execution and decision-making. And so it's the same salespeople. Actually, for these areas where we lost some people, we have a very successful sales team graduate program with more than sales -- 10 graduates in it. And these people actually have been going into the market over time also. So it's not so much sort of filling the vacancies. There haven't been a huge amount of vacancies. It's more like how do we make sure that all these experienced people we have, that we can make them effective by -- if they need a price, they can get it within an hour instead of in 5 days. They get the support from the local management. They can bring in a supplier. They can do stuff with suppliers. So that was more, let's say, the issue. In terms of Europe online, I think we have some very successful businesses in this area. One of the larger business has been adopting a strategy of implementing a marketplace, which effectively means that outside the areas of where you deliver products from your own warehouse, you basically load other suppliers who, on your behalf, selling or delivering these products directly. And basically, the business takes a commission on that. Because we've been uploading tens of thousands of products in a short period of time, that has impacted some of the speed of the tools. And we have fixed that now. So that is working again in an efficient way. So we expect in the second half these businesses also to improve over time.
Operator: Our next question comes from Karl Green from RBC.
Karl Green: I've got 2 questions. Just in terms of trying to assess and track the improvement program. You've indicated that service levels and inventory levels are normalizing. Just how far off the optimal level are both service levels and inventories, please? And any quantification around that would be helpful. Ditto, any kind of comments around where business wins need to get to, to be kind of back on track. And then the second question is really around the M&A slowdown. I think, Frank, you did indicate that part of that is Bunzl deciding to pull certain processes. So the question would be, what are you seeing in the books of targets that is giving you that sort of second thoughts or thoughts given you -- making you think twice about pushing forward? I mean, on the basis that Bunzl typically targets fairly resilient businesses, what kind of businesses are seeing the slowdown at the moment? That would be helpful.
Frank Andre Van Zanten: Yes. Just on M&A, so yes, you do see it sort of relatively broadly in different sectors, I have to say, certainly in areas like foodservice, you see in the U.S., for instance, that -- and you can see it also some of the results that Sysco and US Foodservice (sic) [ US Foods ] came out with softer numbers on volume. So you see that also when you look at acquisitions. And in that context actually, I'm quite pleased in terms of how we are doing in our food [indiscernible] business as well. So it's slightly broader. I think it's an uncertain time. So people are a bit more uncertain. Sometimes they wait a bit longer with putting their businesses out for sale and hope for a better time. So that's all relatively normal in terms of what is happening.
Richard David Howes: And Karl, on inventory levels and service levels, this is a North America comment. I think the team have done a very good job actually of bringing inventory down quite significantly in the second quarter. This is in part because, of course, it was causing us cost problems. And we've effectively brought a lot of new owned brand inventory into the -- into North America, particularly in the second half of last year. And that can mean you're almost doubling up on inventory in certain areas. And when you're establishing new ranges, it's never too clear exactly in which markets -- of course, the U.S. is a collection of markets, which of those will see most pick up quickest. So there's also a period having to settle inventory into the right part of the country, which not only costs us in terms of inventory holding but also freight moving the product around. I think that is increasingly getting closer to what we would feel is optimal. And we've certainly seen the benefit of some of the cost reductions in the second quarter and expect to see the same in the second half but also allowing us to service what have been actually some quite successful own brand launches in Q2, which equally will help us in the second half. So I think we're pretty much there. But it's constant vigilance in this area.
Karl Green: Okay. And so just following up on my first question, when would you say the earliest point in time would be when you can declare mission accomplished on the turnaround program?
Frank Andre Van Zanten: I would say I feel really good about the changes we are making already and the impact on our people and how effective we are in terms of winning business, launching own brands and stuff like that. I'd say the -- I think for me, the proof on the pudding is really to get to this sort of more improved point where we all started the process for in terms of becoming more effective in terms of our sales growth and our own brand development. So I expect that to happen somewhere maybe in the second half of 2026, where everything runs more smoothly and that also translates into good growth and winning back business.
Operator: [Operator Instructions] Our next question comes from Dylan Jones from KC.
Dylan Jones: Just a quick follow-up. The statement around expecting some benefits in North America to materialize well into 2026. So can I just clarify the -- are we alluding to sort of organic revenue growth here from the winning back of business sort of following this restructuring? Or are there also some benefits in the cost base that you're calling out that won't come through until late 2026? And then just one last question from me. So I suppose what sort of gives you the confidence now that you sort of struck that right balance between the centralized and local autonomy in the North American business? So I also take the point earlier that it sounds like the operating model has been unwound from centralization towards sort of more similar to the model in Europe and the Rest of the World. But is there anything sort of structurally, fundamentally different in the North American market that needs to sort of be considered or monitored as you move towards this new operating structure?
Frank Andre Van Zanten: Yes. That's a good question. Yes. So let's say the one thing that is slightly different in the U.S. market towards the other markets is that we are there in a redistribution market. And so outside of the U.S., we are selling more direct to hotels, restaurants, catering, theme parks. And here, we are in a two-tier system where we are selling to the redistribution market. And especially the local part of that market is very, very -- you need to be very proactive, fast response because they are operating on behalf of their customers. So giving you an example. If you are local, let's call it, a small Sysco food distributor business and they're selling to a pizzeria shop and the pizzeria shop wants to have a specific pizza box or they're looking for certain Christmas articles near the end of the year which they don't sell a lot of, then that question gets to Bunzl because the food distributor can't stock all these products. There's maybe 100,000 products around the market. So the food distributors, they have -- 90% of what they sell is food. So they focus on stocking, let's say, the fast-moving items, maybe the napkin, the white napkin themselves. But a lot of these other items, they are relying on distributors for to fill that in because, otherwise, they need to have a warehouse that's 5x bigger than they operate on. So that's a bit different but that also dictates how fast you need to be able to be successful. Now -- and that is what actually we put back into the business and it's largely working because most of the people that were used to work in that old model are used to that responsiveness can deliver that. But the issue that was the case is they were not empowered to make that decision anymore because it was made centrally. We've now put that all back. And the indicator for me is that, let's say, our stock levels are coming down, our service levels are up, our people are happy. I'm sitting down -- I'm often in the U.S. I'm inviting the sales teams to come and see me. Every time I'm there, I'm meeting a sales group and you just get direct feedback on, yes, this is really operating and I want this and I want that, my customer is happy and I'm happy, still where -- we have still improvements to make and we monitor them and we knock them out one by one. So it's very clear to see if something is starting to get better. And that is what I'm seeing. But if you have customers, they also buy certain categories and they're not just shifting that every week when somebody comes in. So there's an element of, let's say, time, let's say, 1 year, 18 months that more of these categories are being reviewed again, certainly by slightly bigger customers as well. And that's the time where we will be there to trying to sort of win back. So we have some early successes. We also get some early successes in the second half already, which is encouraging. And we are focusing on getting more done in the second half because Bunzl is still seen as the market leader in redistribution. We're still dealing with all these categories. We just lost a bit of share of wallet but we are trying to win back, supported by more home brands also coming in.
Richard David Howes: And Dylan on that, the comment about expecting benefits from certain actions well into 2026 was something we said in April. And it was to make a point that we have a range of things happening here, some short-term actions that Frank has talked about that a lot of which have happened and taken place in either late Q1 or in Q2. But there are others which are likely to take a longer time -- longer to play out. We're mainly thinking about winning back business we've lost there. It's not a cost point. We think we've largely done the cost changes we need to make. So think of it more about winning back some of that volume we lost being majority of what that comment relates to.
Operator: We currently have no further questions. So I'd like to hand back to Frank for some closing remarks.
Frank Andre Van Zanten: Yes. Thank you all for joining. I think it has been quite an unusual half year for Bunzl, impacted strongly about some of the things that happened in our U.S. business. Just I'd like to remind people, this business represents 30% of our business. Bunzl has always been a very resilient, predictable business. About 150, 160 portfolio businesses in different markets and regions giving us that resilience. With this large business, we had a problem that pushed us out of resilience. I am confident that we will be fixing and are fixing the issues. It's going to take a little bit of time also to win back also. But I feel good about where we're going. And when fixed, I expect to have a better business on the other side. And the group will be the same resilient, predictable compounding business as you're used to. Thank you all and have a good day.