Ashtead Technology Holdings (LSE:AT.) — Half Year Results

0:02 Good morning, and welcome to the ASHTEAD TECHNOLOGY HOLDINGS PLC Half Year Results Investor Presentation. The

0:21 company may not be in a position to answer every question it receives during the meeting itself. However, company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Alan Purrie. Good morning to you. Good morning. Thank you, everyone, for joining us this morning. We will do the normal run through, some slides in the presentation and then, you know, open up to to questions. We're delighted to present another strong set of results and growing strongly through successfully executing our strategy of building a platform to sustain long term growth. We delivered 61% headline growth in, the first half of the year. 16% of that was was organic growth, outperforming our underlying markets. 47% of the growth came from the acquisition of ACE Winches, which we completed in November, last year.

1:24 And then we had a minus one impact from FX. We continue to invest in our business. We have invested 16,400,000 in the rental fleet in the first half that compared to 8,000,000 in the prior year. We are on course to spend 30,000,000 for the full year. We increased headcount by 8%, predominantly in technical and sales team resources. We finished the half year at 559. The Ace Winches acquisition is going well. We have strengthened the pipeline. We're now seeing the benefit of having a wider equipment and services offering. As we look at further m and a, the pipeline is is in good shape, and we will continue to progress that to capitalize on a growing market.

2:12 In terms of the the the market outlook, that continues to strengthen. We will discuss customer backlog, in a moment, but that continues to expand not only in size, but also in duration extending out, you know, towards '26 and and beyond. The board is encouraged by the group's performance in h one providing increased confidence in our FY 2024 out term, and our expectations remain unchanged. We continue to target low double digits organic revenue growth in the medium term.

2:48 When we look at what makes ASHTEAD TECHNOLOGY unique, the key strength is in our one team integrated project support of delivering vessel time savings and customer project efficiencies. We've got the biggest, team in the market. We've got we are a trusted partner. Our business is built around long term customer relationships. We've got a fleet of 23,000 assets, and we continue to expand our global reach. We have recently expanded our Norway operation to cover both survey and tooling equipment. We've we're building capacity through m and a, and through deployment of CapEx, and we're very focused on delivering project efficiency and quality to our customers. In terms of the three services or service lines that that we have in the business, 41% of our revenue in the first half came from Serbian and Baltics, 52 from mechanical solutions, and 7% from asset integrity.

3:52 I'd like to turn it over to Ingrid, who's going to talk us through, some of the financials, and then I'll come back and talk about the market. Thanks, Alan. Good morning, everyone. I'm pleased to present another strong performance against all of our KPIs. As Alan said, our revenues are up 61% on prior year, and that's due to the continued investment that we have made in both our organic and inorganic growth. We delivered EBITDA of GBP 22,600,000, up 46, and that delivers a margin of 28%, which is in line with expectations. This falls to an adjusted earnings per share of GBP 19.1, which is up 36% on the prior year. Our cost utilization remains in line with our target at mid-40s.

4:38 We've said in the past that we can reach a sort of cost utilization of this business of mid- to high 40s, which is a good utilization rate for us. And our return on invested capital remains the same as prior year at 25%. We maintain our robust balance sheet with leverage at 1.2 times, and on a pro form a basis, if we take into into account the full year base, that decreases to one times pro form a. And finally, and not least, we are pleased to present the continuation of our total recordable incident rate of zero throughout the period.

5:14 As a reminder, on the charts on this next page, these shows show our revenue, EBITDA and EBITDA evolution since 2021. The dark bars are our actuals, and what we've done in full year '23 and for the half year '23 is layered in the pre acquisition results from ASHTEAD TECHNOLOGY HOLDINGS so that you can see the comparison, and of our business compared to pro form a. The three bars on the left are full year results, and the two bars on the right hand side are our half year 2023 and 2024. You can see the trajectory that the business has been on over the past few years. And through the investment we have made since IPO, we have delivered growth in the half year to June, across revenue, EBITDA and EBITDA compared to the full year of 2022.

6:01 So the business has more than doubled in size during that period. Getting into a bit more detail on the P and L. Our revenue growth of 61% came from a combination of both organic and inorganic investment. So as Alan said earlier, 47% HOLDINGS, of the growth came from the acquisition of ASHTEAD 16%, organic growth from continued investment in our fleet, and we had a small headwind from FX. But we also continued to grow, both the oil and gas and, renewables revenues. A lot of the oil and gas growth came from the acquisition of ACE. And as we've said in the past, you know, our plan there from an m and a perspective is to buy oil and gas businesses, but be able to reposition those into offshore wind for the longer term. We've also grown our revenues across all of our all of our regions. When you look at our margins, as you walk through the the p and l, our margins are in line with expectations at 39% EBITDA and 28% EBITDA, with operational gearing offset by ongoing investment as we continue to develop the platform for a larger business.

7:08 We've continued to invest in the team, and we were delighted, a couple of months ago to announce the the appointment of Brett of Brett Lestrange as our first COO in July. Brett has been with us for seven years. He was previously run-in our European business. He comes, to us with a wealth of operational experience both in The UK and globally. We've also continued

7:29 to invest in our HR, team. So from the the recruitment of our first director HR director last year, and we've built out the in house, people team. We focus on our performance and ensuring that as we build, a business, we maintain maintain quality as we grow. The other final point I would just make on margins is, as we've said before, what we're doing here is building out a three legged stool, We're not focused on purely being a rental business. We're we're building out a service component, which actually increases the stickiness with our customer base. And as we do that, we have seen our our margins evolve. And our margins are very much in line at what we've with what we expected. Finally, just on p and l, coming back to to that. Our EPS of 19.1p, as we said earlier, is 36% up on in the half year 2023.

8:21 Moving on to cash flow. We continue to generate robust cash flow conversion with 61% operating cash flow conversion in the half year. Our working capital is at its seasonal peak through the summer months, and we will see this unwind in part through h two. We've also increased our investment in CapEx as indicated in our guidance. We've invested 16,400,000 in our equipment rental fleet in h y twenty four. We maintain our expectation of £30,000,000 of total life CapEx spend in the full year.

8:54 On balance sheet, our balance sheet remains strong. Our leverage, as I said earlier, was at 1.2 times at June, that equates to one times on a pro form a basis. And we can today continue to deliver strong returns at 25% ROIC, evidence of the success of both our organic and inorganic investments. Great. Thank you, Ingrid. Let me now turn our attention to the market backdrop, which continues to strengthen and provides a growth runway, for our business. So if we start looking at the chart on the left hand side of the page, you'll see 11% CAGR. In the period '23 through '27, we've consistently said since IPO that the aim is to deliver low double digits organic revenue growth, and we believe our addressable market supports that outlook.

9:40 If you look at the right hand graph or graphic, you can see that, you know, we've got growth opportunities across all geographic markets that we operate in. One of the points that we've made is The UK represents 4% of greenfield oil and gas spend, but in The they are a little we are a little leader here in The UK in offshore wind, but we see, you know, very good opportunities across Asia, across The Middle East, and The Americas where we operate. Despite the recent headwinds in offshore renewables in terms of cost inflation, supply chain challenges, and higher interest rates, you know, we see 23% CAGR coming through that market.

10:26 ASHTEAD is an international business supporting our customers in all key offshore energy markets, and we believe that that we are really well placed to benefit from, market growth. If we look, quickly at offshore wind, you know, there's significant growth opportunities coming from offshore wind through the rest of the decade. ASHTEAD has got, you know, very well placed to benefit from the emerge the the increasing offshore wind market. Our equipment is highly fungible. It's about 85% fungible across both oil and gas and offshore wind. 48% of our addressable market in Europe is now coming from wind. 45% of our addressable market in Asia is is coming from from wind. If we look at the left hand chart, what we're pointing to here is global auctioning activity, which is forecast to be at record high in 2024 at 65 just under 65 gigawatts, of which 25 gigawatts is currently open, of which 70% is from Europe.

11:30 If we look at final investment decision, in in terms of Europe, which is the largest offshore wind market. That was at a record high last year. It's six it's, like, 8.6 gigawatts. Why are we pointing to auction activity and final investment decision? Well, auction activity and final investment decision are the precursor customer backlog, which is also creating the growth runway for us, which is a good segue into the next slide, which shows our customer backlogs.

12:02 For those of you who have been on these presentations before, in the last, few roadshows, we've presented both of those, both of these slides. Seven customers, who are all publicly listed, so the information is publicly available, increased their backlogs by a 121% since 2020, but a further 10% increase in the last, or in the first half of this year. Importantly, not only is customer backlogs increasing, but they're also extending in duration. So this information is not publicly available for all seven customers, but it is available for site for SiPEM, Subsea seven, and TECHNOLOGY. From the graph, you can see for execution in 2025, 36% of the backlog is for execution in that year and 38% of the current backlog is for execution in 2026 and beyond.

12:56 This visibility strengthens our confidence in the market and our ability to continue to execute our strategy. Turning to m and a. M and a was one of the four growth drivers that, we came to market with in November 2021. Our strategy is is very simple, and it it's very clear. It's to consolidate a fragmented market, expand geographically, to expand our products and services, and also to expand further into wind, if we find those opportunities. What we're looking for is businesses with strong cultural alignment, market leading expertise, long term customer relationships, opportunities to grow, and not only the business that we acquire, but, you know, to to also, grow everything that we've currently got in our portfolio and to drive through revenue synergies.

13:47 What are we seeing? We're seeing a range of opportunities, from the very small through to significant sized businesses. You know, we're seeing ASHTEAD as being seen as a buyer of choice. We're active in the market. We are an excellent home for owner managed businesses that we've that we've acquired. And, you know, we we remain focused, on m and a, and we see this as as a as a real opportunity to drive financial performances and synergies, across our business. But the one thing that we would absolutely point to here is that we have been very disciplined in our approach, and we plan to be very disciplined going forward. Turning to the acquisitions that we've done, in recent years. We've done eight acquisitions since, 2017, three post IPO, which were WeSubsea, Hierarche, and Ace Winches. Just to give you an idea of why we did these, we subsea is a a dredge business that they've got their own design, build their own product.

14:48 We see this as a hook asset, which drives, revenue pull through from other equipment and services that that we have. Higher tech, we we bought, for continuity of supply through vertical integration. We we were the single biggest customer. We made up 80% 80 18% of the revenues, and it's been a great addition, to the ASHTEAD portfolio. Each which is the last, or the latest acquisition that we completed in November, last year. Now critical back deck equipment that's required as part of Mechanical Solutions' strengths, we're very encouraged by the ability to package equipment, cutting equipment, and winches, we weren't able to do before.

15:37 As I said earlier, the integration is is going well. We've got a strengthened pipeline going into 2025. The focus is very much on business development, quality of earnings, and localization of the offerings to drive growth, revenue, and cost synergies through the business. So we believe that, you know, we're we've we've we've bought very well. We're really pleased how these three latest businesses have linked together in the asset portfolio, and we plan to continue on the m and a strategy. And then finally, before we open up, to questions, you know, we are we're encouraged by the start to '24. Market indicators are strong. Customer demand is high. We believe we're very well positioned to play across both, end markets being offshore wind and oil and gas. Our fleet is highly fungible.

16:26 It's highly movable. We've got an international business, and we remain confident that we'll make further progress through, the second half of this year, both organically and through m and a. And finally, the board is encouraged by the group's performance in f y twenty four, which gives us increased confidence on our full year f y twenty four outlook, and our expectations remain unchanged. That's great, Alan, Ingrid. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated in the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A can be accessed via our investor dashboard.

17:11 Alan, Ingrid, as you can see, we have received a number of pre submitted and live questions for today's presentation. And if I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you both at the end. Thank you. The first one, that's come through is the new government has pledged to quadruple offshore wind by 2030, and the and the that on the face of it sounds positive for ASHTEAD. How does this compare with the current stroke previous target? I think, you know, we as as I said, The UK is a market leader in offshore wind. You know, we are encouraged by the the government's approach to the offshore wind market. They've increased the target on thirty third or 2030 from 50 gigawatts to 55 gigawatts.

18:00 And what we would say there is that the rise time data that we're showing in these slides is based on 43 gigawatts. So, you know, one of the the challenges there is is how does the industry, react to be able to put that level of infrastructure in play by by the end of the decade. But we clearly see that as a growth opportunity, for this business and and and very, very welcome to it.

18:28 There are a few quite a few questions around margins. As I explained earlier, as we build out the service capability of our business, and as we grow that service and offering, we expected margins that would would come down. We make no excuse for for that at all. That was something that we guided to, at the at the back end of last year. The acquisition of ACE came with with lower margins. But what we're trying to do here is not focus on margin maximization. If we wanted to do that, it would be a pure play rental business, and that would give us one aspect of what we do. What we're trying to do here is build out a much more robust, wider based business that can, do a lot more for its customer customer base and increase our our TAM or total addressable market while we're doing that. In terms of guidance, going forward, I've guided at sort of high, 20% EBITDA margins, over the medium term, and I think that is pretty much in line with what most of the analysts that follow us, are are shown in their forecast as well.

19:32 There's some questions around working capital, and and and cash flow. On working capital, we generally see a seasonal peak in working capital, as we kind of come into that busier, summer months, that should start to unwind or should unwind, before the the year end. We typically target a 10% revenue, or working capital being 10% of our revenues. That can be impacted by, the timing of CapEx in particular because that's one of our our kind of larger creditors. So if we, you know, depend on the timing of delivery of some of the CapEx, you know, that may impact and may and may result in a bit of a swing and potentially downwards, on that percentage, but, that's what we're guiding to. And from a cash flow perspective, you know, we've obviously spent a bit more CapEx in the first half of the year, and we're still guiding to the 30. So with that, working capital unwind and the reduction in the second half, just in terms of the timing of of deploying that CapEx, we should see a positive cash flow in the second half of the year.

20:42 There's a question about seasonality and whether we expected any changes to seasonality versus prior year that are worth flagging if there are any changes that are driven by ACE or market market activity. I think on that point, we would just say that in the last few years, particularly as we came out of COVID, we've seen a very strong, q four and q one. So typically, the the seasonality in this business is we would have a a q one would be our quietest quarter, you'd see a buildup, into q two and q three, and then it gets quieter q four. And that a lot of that is weather dependent because we obviously work in here in the North Sea, but also in in other parts of Europe. But in the Gulf Of Mexico, we can have hurricane season. In Asia, we have monsoon season. So it's not just the not necessarily just the winter impact. It's actually global.

21:33 So we are we are forecasting that we'll return to more normal seasonality this year. The reality is if if there's decent weather or depending on eventual schedules, know, we could see some some, you know, continuation of what or, you know, a closer impact like we've had in the past couple of years, but we would generally not forecast that, you know, just because we we know that any kind of bad weather could actually impact on the numbers. So that's already factored in to to the forecast that we're or the gains we've given. I I think that's a that's a very detailed answer by. I think in in very simplistic terms, we don't see any abnormality going through back end of the ship. There's a question on here. One of the company brokers was suggesting that the company may face a, h two headwind from a slowdown in North Sea activity.

22:26 Could the company comment on that point of view? So I think this was a comment that was made by one of the analysts that covered our stock, and it was tied to the government's potential policy towards oil and gas. You know, we'll all have to wait to see what the outcome of the election is at at the end of October. However, we do not believe that, you know, we are gonna be impacted by any change in in the, in The in that budget. If there was to be an acceleration of decommissioning in in The UK as has been flagged by The UK press, we see that as as a growth opportunity for this business. But the one thing that we would point out is that our oil and gas exposure in The UK is to inspection, maintenance, repair and decommissioning.

23:17 We've we've got very, very little exposure to greenfield development. And on a and on a global stage, there is very you know, The UK spend in offshore green greenfield development is is very, very small. So where we see opportunities in oil and gas through greenfield development is very much out with The UK. It's in places like Norway. It's in Brazil. It's in Guyana, and it's in The Middle East.

23:46 There's a company here there's a question here around ACE and the opportunities that we see in offshore renewables. So could the company provide a little more detail on the opportunities we see ahead for ACE in offshore renewables? So in a very simplistic basis, the ACE Winches business is about the lifting, pooling, and deployment of offshore infrastructure. I think we flagged previously that very little revenue from ACE winches is is generated from offshore wind. At at the point of acquisition, it is a focus area for us, and we are spending increased time to increase revenue from that end market. There's a couple of questions, around pricing and just what we're seeing there, comments that we've taken that graph out of the pack. I'll answer that perhaps you can just explain why we've done that. Sure. You know, so we've we've taken the graph out of the pack for commercial sensitivity reasons.

24:48 We have made a lot of headway over the last couple of years on pricing, and we believe that there will be continued positive pricing momentum in this business going forward. Our customers have made positive, messages around their pricing momentum, and we believe that there will be no impact from cost inflation on our business, going forward. This might be a tricky one for you, Alan, so apologies for asking for this one. But what do you consider investors tend to fundamentally misunderstand about ASHTEAD TECH? Wow. That's that's that's an interesting question. But I think it comes back to what we're trying to build because, you know, if we if we spend a minute or so on that, you know, ASHTEAD TECHNOLOGY is a business that is gonna be 40 years old next year.

25:41 So it's been around for a long time. But when we look at the development of the business, back in '2 probably back in 2017, this was a 100% survey and robotics business with almost no exposure to offshore wind. What we've built out is a much stronger international business, both organically and through m and a, by building out both mechanical solutions and ASHTEAD TECHNOLOGY and focusing, the business into offshore wind. So today, you know, the business that we've got is very well placed, both for growth in oil and gas and in offshore wind. And we're really adding value to our customers through the combinations of skills and capability and equipment that we've got on the business. You know, we're we're investing 30,000,000 into the into the business this year to expand and develop the fleet. We've increased headcount by 80% in in in the first half with further additions coming in the second half. We've made changes to the management team through Brett becoming COO, which is, again, a precursor to further growth in our business. So, you know, I think it's a combination that's coming together that's really driving momentum in our business and create more stickiness with with our customers. I think the one thing that may not be fully understood is the amount of own equipment that we've

27:11 got in our business. So in our survey and robotics business, we've we we buy all that equipment from OEMs. But in the mechanical solutions business, for example, ACE winches. ACE winches designs engineers and assembles their their own winches. The business that we bought that's got dredge pumps we subsea, you know, that is own design dredge pumps only available through ASHTEAD TECHNOLOGY. So we're building uniqueness into our business model, by owning, technologies that are not available anywhere else in the market.

27:49 There's a question around the increase in in admin expenses and how we expect that to play out in the future. I mean, as a business, we've we've more than doubled in scale, in the last couple of years. With the addition of of East at the back end of last year, we added over 200 people, to the to the number of employees we've got. The two biggest, costs that we have are are personnel and depreciation, and both of both of both of those things are things that we have been investing in quite heavily. And we've increased our employee numbers from two eight nine to five five nine, in the past twelve months, and that is or or June to June. And a lot of that, as I said, came from the ASHT acquisition. As I said, as we build out that service capability, that comes with the people. So a lot of the people that we've invested in have been around technicians and increasing our, our sales force.

28:40 We have added, a few piece you know, a number of positions to the the senior team, and that is about building out a bigger business and making sure that this business remains robust, and and we can keep your we increase the quality or or maintain the quality. So for example, our on our HR team, we've expanded into learning and development. We have our own in house recruitment team because we're because we're expanding. And that part of that is actually those people, I mean, certainly on the recruitment side, effectively pay for themselves. So, you know, that will level out, in terms of of the growth because, clearly, once you've built the kind of, sort of, I guess, core team, you don't need to expand too much on that. But as we continue to build that service piece, we will continue to invest in and increase in our our employee base to grow.

29:34 There's somebody asking about whether share buybacks are a consideration for us given the share price reaction, the visibility, and the metrics that we have. So I think just in terms of capital allocation, what we've said in the past is we've got three main focuses from a capital allocation perspective. The first one is organic growth, and we're gonna continue to invest in our fleet to build out both in scale and capability and to target the the market opportunity that we see ahead of us. The second one was m and a, and we are looking to to continue to grow this business through m and a. And then finally, on dividends, you know, we'll continue with our small progressive, dividend policy, and that is the three main areas from a a capital allocation perspective.

30:29 There's quite a lot of repetition in these questions. There's a question about supply chain, and whether we are now seeing those normalizing post COVID. So the impact of COVID meant that the the lead times in new equipment pushed out quite substantially. Obviously, they they have stabilized. We're not seeing, you know, them extending in duration, but they're certainly not coming back. And from what we hear from suppliers is we are unlikely to see any change in that in the next eighteen months. So, you know, what that means is we continue need to we need to continue taking a longer term view on placing of CapEx orders, which we've been doing for the last two years. So there's no change on that front.

31:22 There's some questions around, again, some follow-up questions on the margin, and ACE coming with a lower margin. That that's a comes from a number number of things. So, the reason that ACE's margin is lower than ASHTEAD's or pre pre ASHTEAD's is because, generally, a lot of the winches that we're putting out actually go with a team of people. So it's a service, not pure rental. So that is a lower margin business, in the same way as our mechanical solutions is a lower margin business. The other thing that ASHTEAD with the some of the, equipment, quite often, there is, ancillary sort of consumables that are passed, and the the cost of that is passed on, to the customer on a cost plus basis. So you don't have that dilutive impact on margin.

32:10 And there's been a few people asking whether, based on that, are we guiding to the fact that ASHTEAD had made a loss in the in the first half of the year? Absolutely not. ASHT has actually has created profit and has delivered in line with our expectations. So underlying organic oil and gas growth looks to be low mid single digit, and by the slowdown given strong pricing and strong backdrop. I think if you look at the sort of growth in be of two markets, you'll see that, I think, it was 71%, growth in oil and gas and 42% in renewables. If you actually think that when we bought ACE, the majority of that business is oil and gas. So a lot of the oil and gas growth did come from, the acquisition of ACE. And but when you look at it on a pure term, pound basis, know, we've grown both our oil and gas and our renewables revenues. And in terms of the mix there, that can you know, the customers are generally the same customers, so the mix can change depending on what the customer contracts are, across the business.

33:30 There's quite a few people asking about the share price drop, whether we can comment on that given the reaction this week. So, yeah, the I think the the share price drop is is disappointing. We have met a lot of investors since we announced the the results on on Monday morning. And, you know, I think the the overwhelming reaction is people are scratching their heads as to why there has been such a drop in the share price. You know, the thing that we have spent most time talking about this week is margins, which seems to be one of the themes that that has developed.

34:16 We deliberately set out to create a three legged stool in this business. The margins are different across serving robotics, mechanical solutions, and NASA and TECHNOLOGY. You know, we guided to lower margins, we have delivered on those margins, for the first half. And therefore, there should be no, you know, new news on that front. But whether that was just something that was misunderstood, we we we don't know. But certainly, that is probably the thing that we have we've spent most time discussing. You know, we are we're we're unapologetic, for the margins that that we are delivering. We're we're delivering strong margins. If we set out to create the the highest margin in this business, we would have stuck to surfing robotics equipment because the margin from that is significantly higher than from the blend that we now have, recognizing that certain robotics only makes up 41% of our business of revenue of our business.

35:20 But we firmly believe that the right thing for this business to do is to expand the range of products and solutions, and we are far stronger business, albeit a lower margin business, by now having the combination of skills and resources that we've got in the business. So whether that was misunderstood or not, we don't know. We thought we had communicated that. It was out there. We have delivered against the consensus that's on our website. That shouldn't have been any surprise to anyone, but it's up to the market to to decide what the share price is for this business. I think there's also based on some of the questions and misunderstanding that that dilution has purely come from ACE. Just to be absolutely clear, our mechanical solutions business and our asset integrity businesses both delivers lower margins than our Surgay Robotics business. So it's not just ACE. This is just it's a it's the type of, business that we're providing and the fact that we're providing a service, as I said, rather than pure rental.

36:32 There's question on CapEx and how much of the much of the cap CapEx is growth versus maintenance, it's quite a difficult question to answer because the reality is our our equipment can actually survive on generate revenue for quite a a long time. We would estimate that, you know, around about of kind of mid single figures, would be sort of maintenance CapEx. The reality is we're not necessarily replacing like for like. I think, one of the things that, again, is maybe misunderstood a bit is that we don't seek to sell the equipment at the end of its you know, once it get reached reaches a certain age. Unlike, the sort of more traditional rental hire businesses, we don't reach a certain age, and then we look to sell off the fleet. You know, we keep the fleet until it can no longer generate revenue for us.

37:22 And, as a result, we can get really strong returns from that CapEx. We do achieve around about a million pounds, give or take, of profit and disposal each year, and that comes from our ability to charge our customers if the kit gets damaged, either beyond repair or lost.

37:53 There's a question around the KPIs that most influence management bonuses, etcetera. So on the bonus scheme, Alan and I are in the same bonus scheme as the rest of as as a number of people in in this senior management team. So it's not just specifically for us. We have targeted we the the the way that the bonus scheme works is actually written down in our full year results. So if you wanna look at at more details, you can see that. But we are very much kind of focused on an EBITDA target across the group, but also with within that, with individual targets that are personal to us. Somebody's asking if we can be more precise on the level of pricing achieved.

38:40 Apologies for that. We're we're not going to be because, you know, that is commercially sensitive information. But as Alan said, we have seen continued increases in share in pricing, during the year. Somebody's asking about debt and and share count both increased in in recent years to fund growth. When when we think about financing, will it come from debt or equity issuance? And at what point do you see cash flows reaching the level where external finance is no longer required? This business delevers very, very quickly. So if we were to only focus on organic growth and or or to keep the business at a steady state, we could run this business for very strong cash flow, and we wouldn't need the level of RCF facility that we we currently have.

39:32 As I said, we've got one times pro form a net debt currently in the business, which means that we've got some capacity to utilize debt facilities for further growth, whether that is organic or inorganic. We could do we could we could actually do some sizable acquisitions and through using debt. Clearly, if we were to do anything bigger, there is potentially an opportunity in the future to to look at equity sources as well. We're very focused on making sure that we maintain our leverage, at a sort of the in the one to two times range. We know the market doesn't like anything too, high above 1.5 times. Clearly, the cost of debt is coming down, which may change that view. However, you know, we're quite firm on that. And, you know, if we were to go above 1.5 times, we'll bring that leverage that we would only do that if we could we know that we could bring the leverage down very quickly thereafter.

40:39 Somebody's asking what we're seeing in Norwegian market. And do we have any plans to expand the business base there? So the the Norwegian continental shelf is is very busy. We acquired an entity in Norway through the acquisition of Ace Winches. So they've been they've been active, in Stavanger for for a number of years, and we've taken that opportunity to expand that team to cover both, survey and ROV tooling. You know, we've made some positive starts over the last few months. We've got a facility. We've got a team. We've got equipment, on the ground. We also now have our export licenses in place, for the survey equipment, to go in and out of of Norway, and the reception from the Norwegian customer base has has been very strong. So, you know, we see a good opportunity to grow, our business in in that area.

41:39 Somebody asked about the just a clarification on the maintenance CapEx. So that does include replacement CapEx, the the sort of mid single digit that I talked about. And so anything above that, we would see very much as as growth CapEx. And the other thing I would say just on maintenance is that we spend, you know, probably sort of high single digit millions each year in maintaining our fleet that goes through our p and l. Some of that, we can actually recharge back to the customer if it's obvious that the damage or or some of the, repair as a as a result of some issues in the field, but and it's more than just wear and tear. But, you know, there's there's also a a cost going through the the p and l as well. We we make sure that we maintain the fleet, on a consistent basis, and we very much focus on having our assets, you know, in rental ready condition on the shelf and ready to to go out as quickly as it can.

42:40 It's probably are we seeing any opportunities or challenges related to the creation of GB Energy? Given that GB Energy is not set up and it's not entirely clear why GB Energy is going to be, We'll have to see how how that materializes. But, you know, I think as we said earlier, linked to the labor of government's desire to speed up energy transition in The UK, you know, we see the movement in the target for offshore wind to be a positive. And, you know, if GB energy are being is being set up to stimulate, you know, newer technologies to make sure that supply chain is in the best condition to, you know, move, towards more cleaner energy, and we see that as a positive and, and fully support it. And we've got a question around ROIC and WACC. Our WACC remains pretty much in line with what what we said in the past.

43:42 ROIC is also the same. So we delivered 25% ROIC in the prior year, and we've continued to deliver 25% ROIC in the period to June. Think that probably covers most things. There's a few questions around competition, but I think our preference would be not to comment on on competition in a in a public forum. Somebody's asking about the outstanding debt receivables and how they have changed. There's no no changes. I think we've got a very slight increase in number of days, like, by one or two days.

44:31 That's just timing. We've not got any concerns from a debtor receivables perspective. We've not moved the the provision significantly in the period, so we're very comfortable with how that's sitting. Okay. So we're just reaching the forty five minute mark. Unfortunately, we've got, follow on calls with, with with other parties, so we can probably wrap it up at this point. Thank you very much for everyone joining the call this morning. We really appreciate you taking the time, to listen in, for the questions that's come in. Just by way of wrap up, you know, we are encouraged by the start that we've made to '24.

45:20 We believe the market is in really good shape, pointing to customer backlog as a real indicator of the growth opportunity that we've got going forward. We believe that the steps that we've taken over the last few years to really position the business for growth to build out the skills, the capabilities through investment in our through the acquisition of businesses, through the deployment of CapEx, through building our team, puts ASHTEAD TECHNOLOGY in a in a really strong position, and we really, really remain confident and continue to build the business in the way that we've done so over the last few years. So thank you very much, and, we look forward to seeing on seeing you next time around. That's great, Alan. Ingrid, thank you very much indeed for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations?

46:18 This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of management team of ASHTEAD TECHNOLOGY HOLDINGS PLC, we'd like to thank you for attending today's presentation, and good morning to you all.