Camellia (LSE:CAM) — HY26 Results

0:00 Good afternoon, and welcome to the CAMELLIA PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Byron Coombs, CEO. Good afternoon, sir.

0:32 Good every good good afternoon, everybody, and welcome to the presentation. I'm Byron Coombs, CEO of CAMELLIA, and I'm joined here today by Oliver Capon as chief financial officer. We plan to follow the same format as we used back in May. So very shortly, we will play presentation which we prerecorded on Friday, and, that presentation will go on for about twenty minutes. And at the end of the twenty minutes, we will, come back to a live audience and, and deal with the q and a. I think with that, perhaps we could, roll the presentation. Thank you. Welcome, and, thank you for joining us for CAMELLIA's results for the six months ended 06/30/2026.

1:29 This is the usual disclaimer. Please note its contents. I'm Byron Coombs, CAMELLIA's CEO, and with me is Oliver Capon, CAMELLIA's chief financial officer. Unfortunately, Graham McClain, our director of agriculture, can't be with us today. In this presentation, we will talk you through the first half twenty twenty six financial results and outline the progress we have made against our value enhancement plan. I'll begin by providing a short description of CAMELLIA and its business strategy. This is the fourth of these presentations, so I'll keep the background commentary relatively short. At the end of the presentation, we will answer any questions that you may have. Let me begin with a brief outline of our business and our strategy.

2:21 CAMELLIA is a long established international business group with a portfolio of investments focused on primary agriculture. I'll say a bit more about our investments in my next slide. But in the meantime, two principles guide the management of CAMELLIA. Firstly, the company was established with a strong social and environmental purpose. The company is committed to supporting our employees and the communities and natural environments around our farms. Our social environmental commitment is not separate from the commercial case. It's an integral part of how we operate, and it supports our long term success. Profit and purpose must work in harmony at CAMELLIA. And secondly, we take a long term approach to managing the business.

3:11 This approach is in part a function of the industry we work in. For example, the trees and the bushes that we plant today will not reach maturity for between five and ten years depending upon the crop. In addition, our industry is subject to longer term market supply cycles that affect market prices both positively and negatively. And finally, we take a long term view by investing in farm infrastructure, which reduces production volatility and ensures long term sustainability of the land. Turning to the nature of our investments, this map illustrates the scale and geographic spread of the portfolio. Our businesses operate in eight countries and produce a range of agricultural and nonagricultural products.

4:01 Alongside tea, our biggest agricultural product, we produce avocados, macadamia nuts, arable crops, rubber and blueberries. We also have some exposure to commercial forestry and livestock. We have over 34,000 hectares of pea, three and a half thousand hectares of macadamia trees, 4,300 hectares of arable, and currently just over a thousand hectares of avocado orchards. In addition to our agricultural operations, we have an engineering business in Aberdeen and a retail tea business in London. Our portfolio benefits from diversity of production sites, crop, market, and weather.

4:47 This diversity helps address the natural volatility of the agricultural industry.

4:57 Let me now turn to our business strategy. In May 2025, just over a year ago, we announced our medium term value enhancement plan aimed at achieving three outcomes, improved operating results, reduced portfolio risk, and faster long term growth. The principal actions that comprise the plan include disposing of unproductive nonoperating assets, disposing of noncore businesses and operations, improving operational efficiency, and investing freed up capital for future growth. I'm pleased to report that good progress was made in the second half of twenty twenty five and that we have made further headway in the first half of twenty twenty six.

5:46 Let me now hand over to Oliver to take us through the first half's financial results.

5:53 Thank you, Baron. I'll now talk to you the financial performance for the first half of twenty twenty six. I will cover four things in this section. The headline financial summary for the six months to the 06/13/2026, the balance sheet, cash, and liquidity position, the trading performance business by business, and the outlook considerations for the second half. Before I start, one framing point that is worth repeating every half year. Our results are highly seasonal. Costs fall relatively evenly across the twelve months, while a significant proportion of crop volume and, hence, revenue is weighted to the second half. A first half trading loss is therefore normal for this group, and the more meaningful comparison is the movement against the equivalent period last year rather than the absolute number.

6:47 Revenue from continuing operations was a £104,600,000 compared with a 107.7 last year. This reduction largely reflects the disposal of three loss making Indian tea gardens. Seasonal trading loss improved significantly to 5,000,000 from 9,600,000 last year. This improvement was driven by cost discipline, efficiency measures, and better yields and pricing, particularly across several tea businesses. This led to an adjusted loss before tax improvement to £3,300,000 from 12,900,000 last year. Net cash was £551,600,000, and total liquidity was a 133,200,000 at June 30, increasing from $100,101,700,000 at the same time last year.

7:43 Working down the table, there are a few lines worth pausing on. Profit on disposals was 18,900,000, which I will discuss in detail later in the presentation. Other gains and losses swung from a 4,100,000 loss to a £600,000 gain, largely reflecting movements in foreign exchange. Taken together with the disposal profit, the operating result rose from 11,200,000 loss to a 14,500,000 profit and a profit before tax to £15,600,000 against a £10,400,000 loss last year. The adjusted measure is the one I would encourage you to focus on for underlying progress because it strips out disposal gains. On that basis, the loss narrowed from 12,900,000 to 3,300,000, an improvement of £9,600,000.

8:38 EBITDA moved from a 6,200,000 loss to a 13 £19,300,000 profit. The tax charge of £3,300,000 is higher than last year, and this largely relates to profits on disposals in in The UK. Profit attributable to shareholders was £11,800,000 against a loss of the same magnitude a year ago. After the period end, the final dividend of 260p per share resulted in a £6,600,000 cash outflow. Again, this is funded from reserves.

9:15 This bridge shows the trading loss improved 9,600,000 to 5,000,000 over the year. The strongest positive movements came from tea in India, Bangladesh, and Eastern Produce Kenya. India benefited from higher production, better pricing, and lower cost of production despite lower revenues from garden disposals. Bangladesh benefit benefited from higher production, stronger pricing, and lower cost of production. Eastern Produce Kenya moved from a loss to a profit as higher production production and prices more than offset increased overheads. These gains were partly offset by weaker outcomes at Kikusi and Malawi. Kikusi was affected by lower avocado sales in the period, disrupted shipping routes, and weaker macadamia pricing.

10:06 Malawi's trading business grew, but agricultural performance was mixed and cost pressures remained significant. Brazil was broadly stable with higher soybeans and maize production. And the remaining businesses, there was lower activity and project project timing which affected AJT. Jing increased revenues and narrowed its loss despite the continuing impact of the depressed Middle East and cost pressure. Looking ahead, it is still too early to give firm predictions for the full year performance due to the seasonality of the business. There are a number of factors to consider. There are broad improvements in operations, and we are seeing the impact of cost improvement measures in many of our operating companies. Several of our markets are seeing market improvements in yield and price year to date.

10:56 There were some offsets by others as witnessed by the conclusive results announced in August. We are feeling the impact of the Gulf crisis on fuel and fertilizer and also on logistics costs, and there have been above inflation wage rises in some parts of the business. The impact of El Nino over the latter part of the year of 2026 and into 2027 is not known and could have a material impact.

11:22 There are positives, but there are real headwinds, and they inform a cautious view for the full year. We will provide further updates to the market in late October when there will be more clarity on the full year results. I'll now hand back to Byron.

11:39 Thank you, Oliver. Having reviewed the financial results for the first half, let's turn our attention to the progress we're making with regard to our value enhancement plan. We are now just over a year into the implementation of our medium term VEP. We set two primary goals for the second half of twenty twenty five and through 2026. Firstly, to dispose of our nonoperating assets, and secondly, to improve our operational efficiency. Oliver will take you through our progress disposing of nonoperating assets in a moment, but let me begin with an update on our goal of improving operational efficiency and the progress we are making on our growth projects and risk reduction.

12:32 Operational efficiency improvement is the primary goal of our operating companies in 2026. Each business is exploring and implementing a range of initiatives to bear down on their cost of production. These initiatives include mechanization, drone technology, solar generation, and more efficient fertilizer application. The drive for greater efficiency covers tea plucking and crop harvesting, energy and fuel use in factories, procurement, and a tighter grip on central and regional overheads. These are unglamorous measures, but they compound and are beginning to and we are beginning to see some early results. We're also making progress on our goal to achieve faster growth. Our four announced projects are proceeding according to plan.

13:19 These projects make use of existing land, infrastructure, and management teams, which helps improve our return on assets while controlling execution risk. In October, we will begin planting the first 100 hectares of citrus at Maruki, our Brazilian farm. I was at the seedling nursery a couple of weeks ago and can confirm that the 70,000 plants we have purchased are in root health. By the end of twenty twenty six, we will have completed the planting of a further 100 hectares of avocados, the construction of our avocado packing plant, and the construction of a 1,000,000 cubic meter reservoir at our Umgagao farm in Tanzania. We are progressing the build out of our blueberry business in in Kakuzi with much of the polytunnels now in place, and we have completed the first phase of the conversion of 234 hectares of commercial forestry into faster cash generating arable.

14:20 The land has been cleared and is now undergoing soil improvement before arable production begins in 2027. Beyond these tangible decisions and actions, we are exploring other growth and risk reduction initiatives, both organic and through acquisition. We've identified a few of a few growth opportunities of varying sizes, which we are carefully assessing. These opportunities are all at an early stage, and it is possible that none of them make it to completion. We will update investors on our progress at the appropriate time. With respect to reducing risk, we have already exited three loss making Indian tea gardens, a Bangladesh finance company, a Bangladesh insurance company, and a Babunian insurance company.

15:12 We continue to explore divestment opportunities where we feel we are not the best owner. Our actions so far have helped mitigate losses, released cash, and freed up management time to focus on the businesses that can generate a sustainable return. With that, let me hand back to Oliver. I will now cover The UK noncore asset disposal program. What we have sold, what remains, and how the proceeds support our strategy. The key message is the program will be substantially complete by the end of twenty twenty six. The largest transactions are complete. The remaining assets are modest, and the proceeds have strengthened our liquidity and our ability to invest.

15:59 In the first half, the sale of the Lyndon Park estate, Indian art, and manuscripts generated proceeds of £29,200,000 and a profit of £18,400,000. Including the Chaloni Tea estate in India, total group disposal proceeds were £30,700,000 and profit of £18,900,000. These sales converted assets outside our core agricultural portfolio into cash. They also reduced the scale and management effort of the remaining program. There is no asset left of the size and significance of Lyndon Park. The disposals are part of the value enhancement plan, which aims to improve operating results, reduce risk, and support long term growth.

16:46 These proceeds give us greater flexibility, but investment discipline remains essential. Every use of capital will continue to be tested against clear return and risk criteria and strategic fit. Liquidity is particularly important in an agricultural group. Costs arrived throughout the year, as I explained earlier, while much of our revenue is earned in the second half. We also manage considerable weather, commodity price, and input cost volatility. As mentioned earlier, at June 30, the total liquidity was a 133,200,000, including cash, money market holdings, gilts, and treasury deposits. The dis these disposal proceeds were an important contributor to the stronger position. Turning to what remains, there are two categories.

17:35 The first is around 2,000,000 of heritage assets, mainly stamps and further art. Art sales are expected in the second half of twenty twenty twenty six and should be less material than the sales already completed. Stamp sales are also underway and are expected to be completed by the end of twenty twenty seven. This longer timetable reflects a specialist and relatively illiquid nature of the market. It does not change our intention to sell. It just allows us to execute in an orderly fashion. The second category is investment property. Around £1,200,000 remains of this across two properties, one of which is being actively marketed. There are three points to take away. First, disposal gains are significant but separate from underlying trading performance.

18:23 Second, future gains should be smaller because the remaining assets are lower in value. Third, the main benefit is not simply more cash. It is a simpler asset base, a stronger balance sheet, and greater capacity to fund the operation improvements and disciplined growth. The next test is how how effectively we allocate the capital released. Progress will be measured through better operating results, lower risk, and sustainable long term growth. With that, I'll hand back to Byron for concluding remarks.

18:56 Thank you, Oliver. Let me finish the presentation by outlining our priorities for the remainder of 2026 and the early part of 2027 and summarizing where we are in turning CAMELLIA into a sustainably profitable business.

19:14 The value enhancement plan provides a clear strategic direction for the CAMELLIA group. We have made good progress through the first half of twenty twenty six with improved trading performance, significant progress in the disposal of nonoperating assets, and progress on all four of our growth projects. Operational efficiency will remain our primary task through the rest of 2026 and into 2027. While difficult to deliver for many of our businesses, it offers the fastest return on our efforts. We have launched four growth projects and are now carefully looking at both new organic investments and acquisition opportunities. Our challenge over the next couple of years will be to find investments which offer acceptable returns over a shorter time frame.

20:06 The four investments already announced, while financially attractive, are clearly longer term projects. We will need to identify other investments which complement them with quicker returns to shareholders. Alongside our work on growth, we will continue to examine ways to reduce existing portfolio risk. We would highlight to shareholders that actions that structurally reduce portfolio risk take time to bring to a conclusion, especially in the current market environment. Despite a corporate tendency to caution, partly a cultural trait, and partly an acknowledgment of the industry we work in, We are optimistic that the work we are doing will result in good outcomes for investors.

20:54 Our work in 2025 and early twenty twenty six to improve corporate governance and strengthen the skills and experience of the board and executive team is now complete. The sale of nonoperating assets is now substantially complete, and we're improving operational efficiency, reducing portfolio risk, and investing in future growth. There may be headwinds that reduce the impact of this progress in 2026, but we are confident that our plan will deliver the results that investors are looking for. Thank you for your time and attention today. Oliver and I will now be pleased to take your questions. That's great, ladies and gentlemen. And please do continue to submit your questions just by using the q and a tab situated on the right hand corner of your screen. And Harriet, if I may just hand over to you just to run through the q and a of the team, and I'll pick up from you at the end.

21:56 Okay. Great. So our first question is how will El Nino affect the company? Good morning again, everybody. El Nino, I think it's first of all, it's it's worth recognizing that this is a pretty strong phenomenon that seems to be building, in the world at the moment. When you look back at some of the, past episodes, the correlation between the El Nino itself and the impact on our individual farms is is not perfectly correlated. I think our sense of it is at the moment that the farms that probably are most exposed to an El Nino effect would be our South African farm and our Malawian farm.

22:41 These may be affected by extra heat and and drought in the coming months. Beyond those two, we don't expect very much very much more of an of an effect around the world. That that's as best we can tell at the moment given what we know from history. I think on the other side, we don't know how only it'll affect our competitors. So particularly with macadamias, we think Alnina will have a significant impact in Australia. So you may get some upward movement on price, but some downward movement on yields, but it's very early days at the moment.

23:17 Our next question is you have a large amount of cash. What are you planning to do with it? So, obviously, they made the tender offer last year, which then was very successful. And we've put in place, a a dividend that's still currently funded out of reserves. But the main thing on the cash is is to invest it. It's as we made very clear in the BEP, we need to invest for growth. We need to invest carefully, but we need to get to a position where our core underlying businesses deliver the dividend that we need to go and pay the market. So we're looking for good opportunities to invest, and that's what we'll be doing with the money over the coming period. Okay. Our next question is what other investments do you have lined up for the year ahead?

24:07 I think it's important to understand that we are actively exploring investments. We've we've made four that we've announced. We have a few more internally that we are looking at at the moment, and we continue to explore externally as well. I think at this point, there's not much more we can say. We are working hard on these matters, and at the right point, we'll make sure that we come back to investors and let them know where we are.

24:34 Okay. So our next question is why haven't you yet given a forecast for the year? As we explained in the in the r and s that was released last week, our our results are highly seasonal. So we always make a loss in the first half, and we aim to recoup that in the second half. But it is very variable. So we still don't know what yields will be and what prices will be for the latter half of the year. And the large chunk of our revenues are back end weighted. So our costs are pretty flat over the year, the large amount of costs back end weighted. And we're not gonna give a forecast until we got better far better clarity of what's happening. We have our normal uncertainties with the back end weighting of the of the the revenues, coupled with that with El Nino and the impacts of the it could that adds even more uncertainty this year. So but by the end of October, we should have better idea in terms of full year numbers, and we'll give some updates then.

25:29 Great. Our next question is given the very significant h one improvement in India, how should investors think about the normal h one, h two profit phasing of Goodrich, particularly given the timing of crop production, auction sales, and wage

25:42 costs? So Goodrich had a very good first half of the year as you'll have seen, but we still have a significant back end weighting. If you look at the revenue numbers, so average annual revenue for Goodrich is about a £100,000,000, of which 30,000,000 is in the first half of the year. So it's still 70% back end weighted. So we have a very large back end weighting and a large amount of uncertainty on pricing, particularly over the back end of the year. Great. Our next question is, could you help us understand the sensitivity of Goodread profitability to realize tea price and production

26:16 volumes? For example, broadly, what 5% change in either would mean for annual operating profit? Okay. So roughly, so I said 70% of our, of our income is back end weighted. So that's about 70,000,000 we expect, in the second half of the year. Our costs are pretty pretty static. There's marginal increase and decrease in cost based on yields, but not very much. So an increase of price is basically £3,500,000 bottom line impact for the second half of the year. A 5% increase in yield will be slightly less than that. But sorry. It's slightly slightly more than that, but not but not the same extent. So it'll be roughly £3,500,000 for a 5% change in yield or price. Great.

27:02 With Bangladesh realized prices materially higher following the industry pricing measures, what level of tea pricing would you regard as necessary for Duncan Brothers to earn an acceptable return after allowing for current labor and input costs?

27:16 So pricing has come up very nicely over the last eighteen months or so, and certainly through the summer weeks has held very, very firmly. So we're pleased about that.

27:32 I think that the current level of pricing is about what we can reasonably expect, and I think that this should give us the sort of a starting point for for profitability, which we've been lacking for a number of years. The big challenge now is really the the the yield side of it. There was some yield weakness in the summer months, not material. And if the yield holds up, I think we should be quite happy with this level of pricing. The final part, of course, of all of this really is is in a sense the cost of production, and, the the team out there are working quite hard to keep, keep the cost of production, rises under control. They have obviously been affected by the cost of fuel and fertilizer and various other factors going up this year.

28:21 So, you know, with pricing, I think we're in pretty good shape at the moment. We just now need to see if the weather will treat us well in the second half and bring in the yield that we're hoping for. Our next question is, could you quantify even directionally how much of Kakuzi's avocado deterioration reflects lower crop volumes, underlying market pricing, and the incremental freight quality costs associated with Cape Routine, respectively? Yeah. So so first of all, Kacuzzi is is a listed company, so we can't talk about what's happening within Caucasus. It's not already been announced by the company itself, so we can't give a detailed breakdown of of that. What we can say is there's still a lot of uncertainty in Caucasus. The the pricing for avocados only only crystallizes on arrival in in in at the the in Rotterdam.

29:12 So we've got a lot of uncertainty on the pricing. So we don't know how caucusi

29:16 will end up, but they have made a profit warning for the first half of the year, which you would have seen and we announced separately. So there's a lot of uncertainty there, but they are impacted by, basically, low rainfall in the second half of twenty twenty five, which impacted crop, costs of fertilizer and fuel, and cost of logistics. So those are the negative things that they're seeing. Our next question is, you're forecasting Malawi tea production of 17 to 20 in kg versus 23.2 kg last year. How much of that decline is weather related versus structural, and what portion of lost production capacity should we expect to recover in a normal weather 2027?

29:58 Yeah. So, Malawi, the the rainfall pattern for this year was was was very good January through April. And then the rainfall stopped. The rain stopped in April. Production continued. The tea continued to grow May April, May, June, and into the first week or so of July. But during that period, the the crops were taking the moisture out of the soil, and the absence of water meant that as we got into the end of June and July and August, the crops began to show much lower yield than than than in normal. This is a generally a fairly dry part of the year, so we're not expecting a great deal of rain for the next few weeks, and therefore crop yields are going to be, lower.

30:55 We have two sites in Malawi, one in Cholo and one in Malangji. The Malangji site is, is right at the bottom of the Malangji Massif. And to some extent, the the Massif itself generates some of its own weather. So whilst Malawi is quite dry through this period, it's possible that Malangji will get the odd few millimeters of rain and so on, which will be helpful. But the dry period very dry period, April through through May, is has finally caught up with us, and we are now waiting for rain. And we would normally get that mid late November through December, and that's when we get the really high production, December, January, and February.

31:42 Thank you very much. Our next question is AGT's revenue decline is very surprising, especially as there has been recent investment in the company. Can you please comment on h two outlook and the relevance of this part of the business? So we haven't made any comments publicly about the h two outlook, so so I won't do so now. But I can talk a bit about the first half of the year. So AJT is split into two businesses. There's the engineering business, and there's the site services business. Site services business had a great year so far. So on a par with the previous year, which is a very good year. Engineering started slowly but has come back up. So we're seeing revenues in line with what we had in previous years in in the engineering side. So it's basically as a as a weak order

32:28 book at the start of the year, which is now being that is now caught up, and we expect a strong second half of the year from from both parts of the business. Okay. Our next question is it's very disappointing that we haven't seen more improvement in admin expense with the simplification of the business via the PDP. Is there some reason savings aren't materializing? And why are there not more savings from the Linton sale, admin costs associated with now sold non core assets? Yeah. I think, you know, the the the answer is we are simplifying the business, and we expect that to show through. It hasn't done yet, but it I think we're fairly confident that with the actions we've already taken and one or two more actions that we have in the back of our mind, these will eventually show through.

33:20 I I I think we just have to be a little bit patient on this. K. Our next question is, are you concerned about oversupply and poor pricing of academia? It seems conditions are rapidly deteriorating. Great. Yes. To be honest, we we are we are concerned around it. We're looking at pricing coming down a bit, and the the market does seem to be in a position of oversupply at the moment. So, yes, it's an area of concern. I think for our standpoint, we need to continue to drive down our costs to make sure we are continuing to be a very low cost producer in the marketplace to go and compensate in some way for that. But, yes, it the Macadamia does look to be in a position of oversupply at least for this year and next year. Again, we don't know how El Nino will affect that, so we expect there'll be some impacts on of El Nino supply demand. And we see the future supply demand coming close to equilibrium, but we see the next this year and next year as a a definitely an oversupplied market.

34:22 Moving to our next question. Pam, your email notes says net cash is 91% of market cap. Actually, net cash is 15,000,000 higher than what is stated as there is an additional 15,000,000 from our work sold where cash was not in bank at year end, making cash more than a 104% market cap. If you had equity investments and art, it is over 115% of the market cap, and this values agricultural assets as a negative. How can the management be happy with this, and it is not clear the BEP enough to address valuation issue? Okay. I think we'll both try and pick up on this. I mean, first of all, you know, it's not a satisfactory position to be in and and management certainly aren't happy with it. We don't set the price of the stock, so that that's set by by investors.

35:10 You know, it's our clear goal in life to make CAMELLIA considerably more profitable than it is today. And when we achieve that, which we will, then I think the the price to book value will change and the valuations will will show through. So we have a we have a plan. That plan will take a little while longer yet to implement. But at the end of that plan, we we do expect that that gap is significantly narrowed. I don't know if you Yeah. So it's it's clearly something we look at, but we can't influence directly. We can't influence it directly. So we indirectly. So the way to influence it is to deliver on the VEP, we think. So the moment the VEP is is a bit of paper. We have yet to actually prove out the VEP will deliver.

35:56 So the next next couple of years, we need to really prove that we can address some of the long terms long term structural issues in our companies and then invest wisely and sensibly for, for the future. And if we can deliver those two things, then we believe this will this will change around. Thank you. Our next question is, I hear clearly about the improvements in reconstruction, but as a long term investor, you still have a long way to go as I'm sure you are aware. What would be helpful is the return of the biannual dividend and better still construction of quarterly dividend. How realistic is it that at this time, and if you cannot and if you can become a target for the future? I I don't know how much it matters, frankly, the periodicity of the of the of the dividend.

36:45 You know, we have made a a big statement in terms of the dividend. We're now paying out around 6,500,000,000 of our capital every year. We're doing it once a year. And given the, seasonality of the of the p and l that, Oliver has spoken about earlier, that seems to us to be an an appropriate periodicity. The amount of it, we set at £6,500,000 or £2.60 for the time being. And as we start to progress towards stronger profitability, then presumably the board will will take another look at this. But in the meantime, I think we've made quite a good commitment, substantially higher dividend than we were paying in in prior years. Our final question for the session today is, are your investments in India likely to be diluted due to rising plantation and HQ costs and competition from small tea growers and private owners?

37:41 I'm not sure quite what you mean by diluted. I will see that there is there is pressure on the profits in India based on rising plantation costs and particularly above inflation pay pay awards. We need to make sure we continue to be competitive. So drive down costs, increase productivity as much as we can, use mechanization where where it makes sense, continue to make sure we have a quality differential to the market. So we have reputation for high quality teas, and that gets us a significant differential on auction prices. We see private sales and smallholder production actually decreasing this year for the first time in a while. We think that's due to the the the reduction chemicals they're allowed to use.

38:31 So, see, that that's a benefit to us. But we just have to make sure we are competitive, low cost, and high quality. And if we can do that, then then we'll be okay. Thank you for your questions today. I'll now hand back to Lily at DMC. That's great. Thank you for answering all those questions you can from investors. And, course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting the investors to provide you with their feedback, which is particularly important to the company, Byron, could I please just ask you for a few closing comments? Thank you, Lily. I think I would just like to leave you with a few thoughts. First of all, we have a clear medium term plan, which we are executing as quickly as we can. We're working hard to make our businesses more efficient, and that's the fastest return that, we can deliver to shareholders.

39:20 We're also looking to extract more value from our existing assets and management teams, which, I think we've shown so far that we're able to do. We have a number of exciting growth projects underway and are continuing to explore others. And the first half of the year, I think, went relatively well despite really the extra challenges that, came out of the Iran war, we were not expecting. We'll set we'll say a little bit more in late October as Oliver's pointed out and hopefully give you all a better sense of where this year, will end up. And, in the meantime, thank you very much for joining us here this morning. That's great. Thank you for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

40:11 This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.