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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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Hello, and welcome to the NWF results presentation for the half year to 30th of November 2023. This is actually my 14th NWF results presentation, but my first as Chief Executive. I was delighted to be appointed CEO Designate in the summer and have enjoyed taking over the day-to-day running of the group from October onwards, having benefited from an extended handover from Richard Whiting prior to that. Having been with the group since April 2017, I've had plenty of opportunities to get to know our people and our businesses, and I'm now looking forward to the privilege of leading the group through the next stage of its development. I'm joined today by our new Chief Financial Officer, Katie Shortland. Katie, perhaps you'd like to introduce yourself.
Thank you, Chris, and good morning, everyone. As you're aware, I'm Katie Shortland and I joined the NWS Group as CFO in October of last year. Prior to that, I've held senior finance and business roles within Rolls-Royce, Meggitt and lastly the M6toll. I bring experience in change in transformation as well as the breadth of knowledge across the sectors that I've worked with in. I'm delighted to be a part of a business that has great people, a strong proposition and a track record of delivering shareholder value and I very much look forward to driving the strategy of the company forward with Chris.
Thanks, Katie. Before we discuss the half year results, I think it's worth spending a couple of minutes describing the group for those of you who are new to us and also as a refresher for everyone else. So NWF is a specialist distributor operating in resilient niche market segments which are part of much larger stable markets. All our businesses provide an essential role in supporting the integration of their respective supply chains, whether between very large suppliers and smaller end users, or between large retailers and their smaller suppliers. Within each of our niche segments, our business is a significant player, and it benefits from scale and capability barriers to entry. In fuels, we are the third largest distributor of bulk liquid oil products in the U.K., selling to both SME and domestic customers. From our 27 depots, we currently supply around 660 million liters of fuel per annum. Our food business is a leading consolidator of ambient grocery products. So in simple terms, that means we provide the storage and distribution facilities for manufacturers and brand owners who have insufficient scale to integrate directly into the retailer supply chain. And our feed business is the second largest ruminant, that's cows and sheep feed supplier in the U.K., providing nutritional products and advice to over 4,000 dairy beef and sheep farmers across the U.K. to help them optimize the yield and performance of their livestock. Our current 3 businesses have a strong track record of generating cash and delivery of long-term shareholder returns. Now I'll move on to the summary results for the 6 months ended 30th of November 2023. Remember this is the seasonally quieter half of the year in both our fuels and feeds businesses. Now those of you who attended last year's half year results presentation, we'll recall that the summer of 2022 between an extended period of volatility in both the price and supply of oil and also the price and supply of the agricultural raw materials we use to make our feed. And both of those things followed the unfortunate events in Ukraine. This allowed the group to achieve significantly higher margins in that period as customers' main focus was on security of supply rather than price. In the second half of the last financial year, we saw supply chains adapt to those new constraints, and therefore, as expected, in the 6 months to 30th of November 2023 we've seen a normalizing of the fuels and feeds market and therefore, margins. Those have been partly offset by the really strong performance of our food business in the period. So that results in a headline operating profit of GBP 4 million and headline profit before tax of GBP 3.4 million. We've continued to have very strong cash generation and finished the period with GBP 13.3 million of cash in the bank to support our future growth and development plans. We've maintained our interim dividend at 1p. But given our strong financial position, analysts once again have us down to increase the overall dividend for the year by about 4% to 5% for the 12th year in a row. I'll now look at each of the businesses in a bit more detail. In fuels, we experienced 6 months of stable supply conditions and an oil price that fluctuated within a reasonably tight price range. Against this market backdrop, we were able to grow volumes by 28 million liters through a combination of increased sales to commercial customers and through the contribution from our most recent acquisitions. This increase in volume was despite the softer market demand for heating oil as a result of the unusually mild autumn weather. I suspect we all enjoyed the hot weather in October, but if it's warm enough to go to the beach or have a barbecue then it doesn't tend to encourage our customers to go home and turn the central heating on. And that -- those conditions have continued to some extent through into the winter. Throughout that period, our depots have operated very effectively, and we saw a high conversion of inquiries into eventual sales. The management team of the business have also spent time on optimizing and improving the consistency of our offering to an interaction with our domestic customers to enable us to improve our ability to attract new customers and retain those we already have. We're currently trialing that approach in one of our depots. The results so far have been quite positive, and we look to roll that out across the rest of the business in the coming months. Lastly, our 2 most recent acquisitions, Sweetfuels and Geoff Boorman have been integrated in line with our standard integration model and are performing in line with plan. In Foods, we expect to see really strong demand from our customers, and we did with pallets stored peaking at 141,000 pallets. Now to put that in context, the total combined capacity of our Wardle and Crewe warehouses is 135,000 pallets, but we operate most effectively at around 90% to 92% of capacity as that gives us the space to be able to move our stock around internally to make sure everything is in the optimal location. So our effective capacity is around 122,000 pallets and therefore, activity in the period peaked at 15% above that. Now this has been anticipated, and we had secured third-party off-site storage provision to enable us to accommodate the increase.
Now those of you who've followed us for a long time, will know in the past, our use of overflow storage has tended to create inefficiency and a net cost. But over the last 2 years, the management team have invested a lot of time in strengthening the relationship with each customer, so we have much better visibility of their expected level of activity. In addition, we've combined this with significantly improved forecasting tools which enable the team to plan effectively in advance of that additional stock arising. So despite the use of overflow storage, we were able to maintain our high service levels, maintain the overall efficiency of operations and therefore, pass on inflationary cost increase and deliver really strong financial performance. And that higher level of storage also gave rise to a higher level of throughput, which again helps drive that profitability. Now this strong performance and the high level of demand from our both existing and new customers supports the new Lymedale warehouse, which we announced in January. And I'll talk about that a little bit more later in the presentation. And then moving on to feeds. Here, the price of our raw material inputs has been considerably lower and more stable than the comparative period, which saw extreme volatility, high prices and a record milk price. That volatility in the first half of FY '23 supported elevated margins, but we saw those conditions stabilize in the latter half of FY '23. And therefore, as expected, we've seen a normalizing of margins in this half year versus the comparative period. Through both the summer and autumn, the weather alternated between very warm and very wet conditions.
And for those of us who have the joy of knowing the lawn every weekend, we know that's excellent conditions for growing lots of grass. So as a result, farmers have experienced really good grazing conditions and have gone into the winter with a really good stock of forage. As a result, our farming customers have utilized a little bit less feed. And in addition, we have chosen to forego some lower-margin merchant business. So as a result, our volumes are a little bit lower at 225,000 tonnes. But our management team have really effectively managed the selling price and operational costs to ensure that inflationary cost increase and particularly electricity could be passed through whilst maintaining underlying margins. To provide the volume growth of the future, we continue to invest in our NWS Academy with the latest cohort of 11 trainees joining the business in the autumn. As a reminder, our training program is tailored to provide the nutritional advisers and feed sales specialists of the future. I'll now hand over to Katie to talk through the financial highlights of the period. Katie.
Thank you, Chris. I'll now present the financials, starting with the income statement. Overall revenue of GBP 473 million has decreased by GBP 12.7 million in the period, and that's been driven by lower commodity prices and a product mix movement that's been offset partially by higher volumes in fuels, including the acquisitions of Sweetfuels and Geoff Boorman that Chris has alluded to earlier. Headline operating profit was GBP 4 million compared to GBP 6.8 million in the previous period. And if I take each business in turn, Fuels reported an operating profit of GBP 0.7 million in the period compared to GBP 2.6 million in the prior year comparator. This reflects the change in market conditions with the normalizing of margins that Chris has referenced and that higher commercial mix. The lower demand in heating oil and that product mix will impact the pence per liter of just under GBP 1.4 million, the analysts would have us achieving at year-end, and this is more likely to be around GBP 1.3 million. Food has had a strong start to the year with operating profit of GBP 0.8 million higher than the prior period of GBP 2.9 million. This reflects a higher efficiency and an 8.8% increase in throughput. Moving on to feeds then, we reported an operating profit of GBP 0.4 million in the period. This reflects the impact of that low and stable commodity price on our profit compared to the prior year, which benefited from volatility in commodity prices and that higher milk price. In addition, we've absorbed energy costs in the year, as Chris has mentioned. You'll note we have exceptionals in the reporting period of an income of GBP 0.9 million. That comprises of a GBP 1.3 million income from an ongoing group action legal claim that was settled in the year, and that relates to the period 1997 to 2011. That's offset partially by GBP 0.4 million of expense relating to work undertaken to date to scope a new ERP system across the business. Whilst it will be a multiyear project, the costs are exceptional in nature. That takes our total operating profit to GBP 4.6 million compared to GBP 6.7 million in the prior period. Moving on to the bottom section of the income statement. Our finance costs at GBP 0.8 million have remained flat year-on-year. Within those costs, our bank interest has improved with lower debt levels being partially offset with higher interest rates as we will utilize our facilities at periods throughout the month and the year. Our IFRS 16 interest has increased marginally in the year, again, due to interest rates and our pension scheme interest remained unchanged. This takes our headline PBT to GBP 3.4 million in the period. Our effective tax rate is 27%, reflecting the full reporting period at the higher corporation tax rate as well as business-related nondeductibles. We do expect this tax rate to benefit in H2 from the Lymedale CapEx investment. Our interim dividend is maintained at 1p per share, as Chris has already mentioned. And as you can see from the bottom of the table, this continues to be extremely well covered. Moving on then to the balance sheet. Our fixed assets in the period have increased with the acquisition of Geoff Boorman in July '23. This is mainly in the form of intangibles. And with regards to the Sweetfuels acquisition, that would have been included in the year-end fixed assets haven't been acquired in December '22. Working capital has reduced due to the unwind of a large short-term supplier payment in the prior period, along with the product mix referenced earlier. I'll come on to net debt and pension later in the presentation. Overall, as you can see, we continue to have a strong asset base to underpin the business at GBP 228 million with net assets at just under GBP 80 million. And then moving on to our return on capital employed. You can see that we continue to show a strong return at 22.7% with good growth shown in the food business. Turning to pensions then. At the period end, our accounting deficit has improved slightly to GBP 8.8 million from the GBP 10.5 million in the prior year. This is mainly due to the company contribution. In addition, our triennial valuation to the year-end 31st of December 2022 is now substantially complete. It indicates a deficit of GBP 7.6 million versus GBP 16.8 million at the last formal valuation in 2019. The plan remains for the business to contribute GBP 2.1 million of annual payments, which will obviously increase in line with dividends, and this is a continuation of the success of the recovery plan in reducing the deficit overall. Just to add, given the current cash position of the business, this is not seen as a constraint to group development. Moving on to cash in more detail then. Our headline EBITDA for the period is GBP 6.9 million versus GBP 9.4 million in the last year. Our very strong cash conversion is reinforced by an improved working capital outflow than the normal seasonal trend with [indiscernible] at this point in the year despite that variance in product mix. We've also benefited from the receipt of the legal claim that I mentioned earlier in the exceptionals. Our tax reflects the change in corporation tax for the period and our acquisition spend in the period relates to Geoff Boorman. Finally, moving on to net cash. Our strong cash flow is reinforced in the chart on the right, with a net cash position of GBP 13.3 million at the end of the period. This actually reflects the cash flow before development expenditure of GBP 24.2 million. As noted previously, our facilities have been renewed for further 3 years. These are primarily invoice discounting facilities at a rate of base plus 125 basis points. The Board are comfortable to support a 2x net debt-to-EBITDA position, which continues to give plenty of headroom for development and acquisition and sits comfortably within our covenants. In summary, profit in the period has been impacted by those normalizing margins we've referenced earlier, but we continue to show a strong cash generation, which puts us in a strong position to support future development. With that, I'll hand back over to Chris to talk more about our strategy.
Thank you, Katie. As I mentioned at the start of the presentation, each of our businesses has a leading position within its niche market segment. And our strategy is focused on deploying the group's capital to enable each of the businesses to grow within that market whether through M&A, step change capital investment or continuous improvement projects. In fuels, our primary growth strategy remains consolidate in a highly fragmented market through M&A and then realizing the operational gains and efficiencies of a greater depot coverage. In food, it's through expanding our warehouse capacity to meet the demand from our customers and retailers and in feeds, it's using our national operational footprint and investment in our sales capability through the NWF Academy and our direct selling team to increase volumes. I'll now talk through each of those in a bit more detail. And I'm going to start with Food given our recent announcement of the Lymedale warehouse. So in food, we have a successful history of warehouse expansion to meet customer needs over the last 60 years. And in the past, that was mainly through adding additional warehouse space on our Wardle site. So the first significant step change was in 2020 when we increased capacity by 35% through the addition of our Crewe warehouse. That project has been very successful, generating a return on capital in excess of 20% well ahead of the original plan. Since then, we've also experienced a consistent uplift in demand from both existing customers and potential new customers with the result that we have customer support in place for a further similar step-changing capacity with Lymedale. Lymedale is a brand-new completed facility based in Newcastle-under-Lyme. It's not far from the M6 and it's also not far from our existing facilities at Wardle and Crewe. And that means we can use some of our existing colleagues to operate the Lymedale site for us, which helps derisk the project. The facility has 52,000 pallet spaces, so that's bigger than Crewe and it represents an increase in capacity of 39%. And most of that customer demand that underpins that is from existing customers who are looking to expand the current storage levels or consolidate additional product lines through our business. The fit-out program of the warehouse commenced immediately after the announcements and is expected to complete in early autumn, but we will commence partial operations from the site from the early summer as racking becomes available for storage purposes. In the meantime, we continue to have a further pipeline of new customers wanting to work with us and that gives us a really strong confidence in the future of the business beyond Lymedale. Katie, would you like to talk us through the financial impact of Lymedale?
Sure. Thank you, Chris. Okay. Just to recap on some of the numbers. you will have seen from our announcement earlier in the month. This is a 15-year lease with a 12-year tenant break clause. We expect to invest GBP 8.5 million of CapEx kicking out the facility. You can see the shallow facility in the bottom left picture there. So GBP 8.5 million to kick that out, and that will be funded from the group's cash. In its first full year of being operational, which we expect to be full year '26, Lymedale is estimated to generate GBP 2.8 million per annum in operating profit. IFRS 16 interest impacts PBT more heavily in the earlier years until that asset value starts to unwind with the lease payments. So as a result, the PBT in full year '26 is expected to be GBP 1.2 million, growing up to GBP 2.5 million by the end of the term. In the current year, costs are expected to reduce headline PBT by GBP 1.7 million and this has been factored into the latest analyst consensus. And overall, I think with an IRR of 20%, we see Lymedale as a really exciting business proposition, and we're looking forward to getting it operational in autumn this year.
Thanks, Katie. In fuels, we continue to look to consolidate the highly fragmented market through M&A. And we have 2 ways of doing this. The first and quickest way would be to acquire one of the 15 or so smaller national or larger regional players who would bring significant volume and multiple depots to our group. That would give us more opportunity to create synergies from the merger. We regularly speak to those businesses, and they all know we'd be interested in buying them, and they all know we have the funding. But whilst larger they still tend to be family businesses, and therefore, we need them to want to sell for a deal to be possible. So we'll keep having those conversations, but it is dependent on one of those parties wanting to sell to us. The second method, which is a little bit within -- more within our control because there's more of them is to continue to look at targeted bolt-on acquisitions where it makes sense with our existing depot network. We continue to have a pipeline of those discussions and the factors that are giving rise to people wanting to sell their businesses remain the same. So that -- these businesses tend to be owned by people who are close to retirement age. They don't tend to have succession in the business. And the burden of running a small fuels business is becoming increasingly harder, whether that's the regulatory burden or the difficulty obtaining security of supply from the major fuel suppliers. So we continue to have those conversations. They have slowed down a little while we've been going through this normalizing of the market. And that reflects the fact that the seller isn't quite clear what profit stream they're trying to sell to us. And we, as a buyer, are not quite clear what profit stream we're buying from them. I think that will speed up again once we get through the winter and everyone has a bit more clarity around what the market looks like. Now as a reminder, we've undertaken 7 bolt-on acquisitions of that type since we commenced this strategy in 2019. We have a standard valuation process and then we have a standard deal and integration processes. So we've got a strong track record in buying these businesses and integrating them into our own business, and we'll continue to actively pursue that pipeline. The other area where we've seen some change in the fuels business is around climate change. So as you know from previous presentations, our focus in this area has tended to be around hydrotreated vegetable oil or HVO, which can be used as a substitute for both road diesel and also for Kerosene for home heating. In the case of road use, nothing has really changed. The HVO is still about 10% more expensive than diesel. And therefore, on the whole, our customers don't want to incur the extra expense at this point in time. And I don't see that changing in the short term unless there's some government support to encourage people to use HVO. But interestingly, what we're seeing on the home heating front, is the governments are currently consulting on legislation that would end up with homeowners being required to use a kerosene HVO blend to heat their homes which would be a very sensible and pragmatic way to reduce emissions from home heating for people who use oil to heat their home because it wouldn't require any extra expense on the part of the homeowner and it could go through the current distribution channel of people like ourselves without us having to incur CapEx in order to provide that product. So that would be a 5% to 10% HVO kerosene blend. That consultation is taking place at the moment. It clearly would be a sensible thing to put in place as a way of bringing down emissions overall. I am slightly concerned that it might get caught up in the timing and outcome of the general election. So we're watching that space at the moment to see how that progresses. In the meantime, we continue to monitor the other opportunities that may arise through energy transition for our business as a specialist in distribution liquid fuels. So then move on to the feeds business. Clearly, in this business at the moment, we don't currently have the same step change growth opportunities as the other 2 businesses. However, we already have an excellent operational platform with mills in the key markets of Cumbria, Cheshire and Devon. The strategy for the feeds business, therefore, is to maximize the volume in our mills to optimize that volume to ensure we have the right mix of higher-margin direct-to-farm business versus merchant wholesale business to sell additional nutritional products to those customers and to optimize the operational performance of both our production facilities and our transport assets. Now a key part of this strategy is our NWF Sales Academy, which is now in its fifth year. The ruminant feed market is populated by what would probably be kind of called a mature sales force and through our investments in the Academy, we've started to develop the youngest, probably most technically highly trained salespeople that are in the market. and we're combining those with the best of our more experienced and successful sales professionals to create a really effective sales force. That combination will drive additional volumes of both our core ruminant feed products as well as associated nutritional products where our market share has been a little underweight in the past. Our feed business also has the opportunity to play a part in the U.K.'s response to climate change and we're keen to work with our farming customers to ensure their livestock are fed in the most sustainable way. You may have seen in the last call, it's the first time that they've been target set around methane emissions. So our anticipation is that over time, the industry will become more focused on this area as retailers and, therefore, ultimately the dairies start to incentivize farmers to produce milk with lower methane emissions. So what does all of that mean for NWS as an investment proposition. It means we're focused on delivering a return on shareholder capital from M&A, step change organic growth and continuous operational improvement. Those activities are supported by a strong management and operating capability across the group, underpinned by significant asset backing and a very strong financial position. And that combination has enabled the group to increase the dividend for the last 12 years, giving shareholders a good return. So to summarize, as expected, we've seen a strong performance in food and normalizing of markets in fuels and feeds with some lower demand due to weather conditions. We've seen significant growth development continuing with the addition of the Lymedale warehouse and we've continued to have a very strong financial position to support future development. At this point in the year, with some key months still to come, broad expectations for the full year are unchanged and we remain focused on our longer-term strategic development as we continue to pursue our fuels M&A pipeline and the Lymedale fit-out progresses. We remain very confident as a board in the future development opportunities and outlook for the group. Now that brings an end to the formal presentation. Now Katie and I will be very happy to take any questions that anyone has.
And we'll go to Adrian Kearsey at Panmure.
You talked about sort of the mature sales force being sort of say replaced, transitioned in terms of the graduates of the Academy. And then also you sort of in the same area, you talked about the ability to broaden the products that the sales team within fees actually sell. Are you seeing that transition coming through more easily with the newer recruits that are perhaps less conservative and stuck in their ways.
To some extent, although it depends on individuals really, agents. I think it would be a bit of a sweeping generalization to say it's mainly age driven. But certainly, it's an opportunity with the Academy to say to train people to do things in the way we would like them to do it.
And then sort of just talk about food, if I may. When you start filling up Lymedale, to what extent are you going to be grouping specific customers into specific warehouses. And to what extent would you be pick and mixing -- sorry, excuse the pun sort of different types of product line across so that, therefore, you may have certain types of sizzles in Lymedale, certain types of sizzles in Crewe, just so that we can perhaps understand how you intend to manage an increasingly complex warehouse network.
Yes. So the key -- the key thing is that we have stock where it's optimal to have it, and that depends on one who it tends to consolidate with, and secondly, what we're required to do with it while we're storing it. So at Wardle, we tend to prefer to have things that are a bit fitlier. So we may be doing lots of repacking work or an element of it going through our e-commerce channel because that's more suited to the Wardle site. Where we have customers who are quite easy to handle because it may be a full pallet in and a full pallet out that tends to be better suited to our Crewe and ultimately, our Lymedale warehouse where it's a newer facility, and therefore, we can operate more efficiently. So that's the kind of behavior that's given rise to that.
And we'll go to Andrew Ford at Peel Hunt.
A couple from me. Obviously, the recent volatility on fuel pricing, I assume has reduced the appetite for transactions on both sites. When the interest margin has stabilized, how do you expect that M&A landscape to change? And will that change also the mix of your pipeline to think in between [indiscernible].
Yes. So I don't think it's changed the appetite. I think -- I don't -- I think what it's done is just made it a little bit harder to have the valuation conversation because you're not necessarily talking from the same basis. So I think that will pretty rapidly right itself as we get through the winter, and it's much clearer what the stable level of profit stream is from the potential target, and it makes it easier to have that conversation again. So I think that's very much a short-term factor. With the family-owned businesses, it always comes down to what age of the people currently running the business and do they have succession. And in the majority of cases, they don't have the succession there. So it's just at what point are people ready to stop working in the business themselves. I think we might see an acceleration of people wanting to sell because there's been a bit of an opportunity over the last 2 or 3 years to do that one extra year given the profits have been so good for these businesses, the tentations being there to do that one extra year. I think with that normalization, that actually is going to create an opportunity for people to think actually now might be the right time for us to stop. Also, the other thing that might drive a bit of activity in the second half of this year is a general election always raises the risk of just the capital gains tax regime change and that might drive some activity as well.
And we have a written question from Andy Murphy at Edison regarding fuels. To what extent do you expect any supply issues from potential shortages caused by the current Gulf situation? And what can you do to mitigate if supply issues arise?
So good question. And despite sort of the -- obviously, it's a very high profile in the press at the moment. We haven't seen disruption yet from tankers having to go around from Cape of Good Hope rather than through the Suez canal, nor has it quite worked its way through into pricing. Having said that, clearly, it could have an impact and probably will have an impact. And the challenge from a supply perspective is the U.K. does not store very much fuel. So if ships are delayed, then the they quite quickly can become supply issues for us. Now we are better placed than a lot of our competitors because we have arrangements with all of the major fuel suppliers and we're lifting from most of the major fuel terminals. So if there's an issue at one terminal in the short term, we can actually move fuel around the country, utilizing our own fleet. And that's very much what we did last year when there were supply issues. And that's actually quite helpful for us if the market becomes aware of that because our customers then again become focused on supply and that enables us to make a little bit of extra margin.
And we've got a question from Robin Byde at Zeus Capital.
Just on your M&A strategy. Is this just a U.K. only story? And would you consider new markets. And then secondly, obviously, recently, we've been talking a lot about cost pressures in your business and similar businesses. Can you just update us on those, please? Have they started to abate for warehouse staff and drivers and so on in recent months.
Yes. So M&A is very GB only at the moment. There's plenty to go out within Great Britain. So we don't see the need to stretch out into other countries at this point in time. we've got less than 5% market share in the U.K., so there's plenty to go out there. In terms of cost pressures, to date, we've been very successful at passing those on to our customers. So we've been very successful in doing that. The concern I suppose going forward is the increase in the national living wage that will come in, in March is found helpful because in the sector we're in, we have a number of relatively low paid employees. And therefore, at that end of the job market, that has a significant inflationary impact despite the fact that inflation overall, we're starting to see head down in the right direction. So we'll need to manage that. We started the conversation with customers around that well before it's actually announced. So we're confident that we will be able to pass that through. But that's probably the one area where there's a lag in terms of inflation still coming through.
And we'll go to Andrew Ford at Peel Hunt.
Just one on food, if I can. The demand that you're seeing from customers, is that driven by your service levels and what you're able to offer? Obviously, it's sort of a potential volume benefit for them, and that's what they're looking for. I guess the question is sort of being around sustainability of margins as you expand. And sort of, I guess, some further on that, obviously, you've done really well despite using that flow capacity, what impact should we expect around efficiency and margins in the short term if there is any as you go through that moving process?
Yes. So what's driving the customer demand is -- it is mainly our high service levels. So we are a specialist in that space. So our smaller competitors don't really have the scale to deal with the complexity of what we are to do. So that service suffers as a result of that. And some of our larger competitors. This is not what they really want to do. It's not where they're focused. And therefore, again, we think we beat them on service because it is what we do day in, day out. It's our sole focus and that makes us very good at it. So that means people want to work with us. Therefore, what we've seen from our customer base is, in some cases, the increase in volume is just they're doing very well with a particular product and therefore, they need to store more of it because the retailers are selling more of it. In some cases, it's that actually we weren't storing all of it. We may have been storing 50% or 60% of that, and they've decided they want to give us the other 40% because they think we're better at it. And then we also have customers where they'll own a number of brands, and we haven't been looking after all of them and they're choosing to give us some of their additional brands, again, because they're pleased with the service we provide them with. So all of those things are really driving that level of interest. And to date, we've not particularly gone out and sought new business either. So it tends to come to us rather than us going out to find it. So that provides further opportunity for us to be a bit more front-footed and proactive in going out and finding additional new business.
And that's the end of questions. Chris, do you have any closing remarks?
So I'd just like to thank everyone for joining us this morning and to say, we're continuing to focus on our long-term growth strategy of development by both organic investments and through targeted acquisitions supported by a really strong financial position, and we have great confidence in NWF's potential and future prospects, and I look forward to updating you all in the summer.