Cavendish (LSE:CAV) — Interim results for the six months ended 30 September 2021

0:01 Good afternoon, ladies and gentlemen, and welcome to the FinCap Interim Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time. Just simply type in the bottom box in the Q and A box and press send. The company may not be in a position to answer every question received during today's meeting. However, the company will review all questions submitted today and publish your responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard, and we'll notify you by email when they're ready for your review. I'd also like to remind you that this presentation is being

0:33 recorded. Before we begin, we would like to submit the following poll and I'm sure the company would be grateful for your participation. And I'd now like to hand over to Richard Snow, CFO and Sam Smith, CEO from FinCap. Good afternoon. Thank you, Mark. Nice to see everybody. Not that I can see you. I think we're gonna kick off our presentation for our first half to thirtieth of September. So I think the main, theme coming out of this, which we wanted to really get across upfront is what we're trying to do here is build a different type of financial adviser which is suited to the businesses of tomorrow. It's about broadening our service offering to be a strategic adviser to growth companies over time which is doing things a bit differently in the And by that, we mean our culture is very different to any other player. We want to use that to keep growing the business in any market downturn or whatever happens, just continue that growth.

1:28 So I think that comes across in our numbers. If you look at the 39 transactions that we've done this half, there's quite a broad spread of where that revenue is coming from. So on the capital market side, we closed 14 equity transactions and one IPO in the period. We also closed 17 m and a transactions of which four were public deals, 30 were private, and then we closed six debt mandates. If you take back three three years ago just pre IPO, we were 100% revenue coming from the capital markets side of the business. And now we're about 35% coming from M and A. So it's quite a big change in three years and we plan to keep increasing that.

2:13 So record half year results. Revenue 31,700,000, that's up 55% on last half. And then PBT 7,200,000, up 67 percent. Our cash figure, we've been trying to grow the balance sheet since last year to really give us resilience to mean we can pay a sustainable and rising dividend going forward and invest in the business. And so that that now stands at 22,600,000, and Rich will talk a bit more about that later. One of the key things of FinCap over the last fourteen years actually since we set up has been every year to continue to invest. And that's what's meant that we've grown revenue over the last fourteen years irrespective of market conditions. So the investment that's gone in in the last half has been, firstly with the analytics team, which is a team looking at ideas for hedge funds and larger institutions, which is a brand new client base, brand new area for us.

3:09 That launched and started trading in April, and that started to generate revenue. And we've seen good, good uptake from that. We've also invested in two big sectors, which we were in, but we want to continue to get bigger in, which are the consumer space where we've invested specifically in the m and a side and life sciences where we've invested in the capital market side. And then across the firm, we've invested in client service, being able to take on bigger clients, being able to take on more clients. So across

3:39 the piece, we've also recruited over 30 people this year. So lots of recruitment gone on. And then the outlook has meant we really can increase the dividend. And we upped it in July to 1.6 p. And then we're now saying we will now pay 1.75 p a share. And the interim will be zero 0.6, which is up 20% on last year. So that really gives us the balance sheet gives us the sustainability to keep going with that dividend and keep raising it. So q three, a really good start. We've closed a couple of IPOs out, which will be announced shortly. We've done a couple of sell side transactions already. So we are still looking to maintain our range of revenue in the 45,000,000 to 50,000,000 mark for the year end. So that's the summary of the business. I'll hand over to Richard now to go through some of the detail of the numbers.

4:33 Thanks, Sam. I will quickly go through the numbers there. Pretty easy to present as an FD because of how strong they are, but, please fire any questions you have in on the right hand screen, and we'll address them at the end of the overall presentation. So Sam has said revenue was up 55%. Our FinCap Capital Markets business, which does equities trading, IPOs, and share sales for corporates and looks after corporates, in a retained basis as Nomad on AIM or as corporate broker, was basically flat year on year. It's obviously a very strong comparative last year, but this half was fin cap, capital markets third best ever half year. And it was a good period, particularly in sales and trading as I'll show you in a moment. M and a had a spectacular period, £15,600,000, up 283%.

5:23 Now we know that in h one last year, post the immediate, I suppose, market correction and COVID, m and a stopped. So there is the benefit here of a comparable. But as Sam has said, 15,600,000 is more than, Cavendish has made, I think, in any year, never mind half year. So this is really good. And on the two businesses on the capital markets, sorry, £16,100,000, we're guiding CAVENDISH to deliver a result above £20,000,000. And FinCap Capital Markets, given that the sales and trading environment is definitely quieter, and I suppose the big institution investors are bit more selective, we think that achieving the same revenue would be an extremely good outcome and therefore unlikely. And that explains partly why with our guidance, we're being careful despite this very strong h one of guiding you to 45 to 50.

6:16 Look. With great revenue, performance and costs in line with our guidance, As you'd imagine, the profits have flowed through to PBT up 67% and EPS up 62. The p and l, the detail, just when you have a look at the interim statement, the only thing I'd flag, a big increase in the finance charge, that is the adoption of IFRS 16. We moved into a new office. Gosh. You know, it's it's last year now. We took it on, but we moved into it, about half one last year, and, therefore, you start seeing the IFRS notional interest charges. We'll come on to the cash flow meeting of that in a moment. And no nonrecurring charges. Last year's nonrecurring exceptional items related to the office move, and I'll need to run the two businesses, offices in parallel until we can finish the move during COVID.

7:12 The revenue breakdown, retainers, that's the regular payments made by our clients. The capital markets business were stable, which is consistent with us telling you we had a broadly stable client base. Trading and research had a really good compare period compared with h one last year, which itself, for trading research, was a strong period. Within that £3,700,000, we got the benefit of our new business called FinCap Analytics that is addressing, providing liquidity and ideas to a much bigger and different group of investors and hedge funds to those that we've traditionally engaged to look after our small, medium, aim listed growing companies. And, also, there was one very big capital markets transaction that the trading team did, and not on a risk basis, but a shareholder reorganization.

8:00 And therefore, we think that h two will be considerably lower than that number, and with lower retail activity. That that makes sense. Fundraisings and advisory, a little bit lower, reflecting the extremely strong period of h one and h two last year. As you can see at the bottom, CAVENDISH, their key fees are success fees. And as Sam will mention in a minute, they had a very, very good level of success fees per deal. We did have one or two lumpy deals in that. About 35% of that revenue came through in the last two weeks of the year, in effect, after our AGM update. Ideally, for an investment case, you'd like to smooth that out, but we have to recognize the revenue when it's done.

8:46 Cash flow statement's something I always looked at as an investor. The key things I draw out, there's this big negative number here around working capital. But what that is is because of the deals I mentioned a moment ago closing at the end of September, the funds flows for transactions happened a day or so later. So we made the money on the September 30, and the cash has come in for all of those deals during the very early part of October. So our current cash balance, which at the half year end was £22,500,000, is considerably higher at the moment, boosted by that revenue inflow. The other thing just to flag is the IFRS notional charges for depreciation and interest for IFRS 16. These give you a much better understanding of our half yearly run rate of our office cost. If you look further down the list, the lease liability payments are much lower, and that's because we've had a long rent free period, which is just finished. So if you're doing any modeling, any scenario analysis of FinCap when you think about investing in us, Probably better going forward to put a number of 1,900,000 for a full year versus £1,900,000 notional impacts. Really, that's it from a cash flow perspective, but do shout out if you have any questions.

10:01 Efficient cost model is a very important part of FinCap's story. We try and invest in revenue generating staff front of house and to run the piece in which I sit behind that as efficiently as possible. Now the operating cost per employee at £34,000 is attractive and very low compared to our peers despite us moving into a new and very, very good office. The operating cost per employee, though, rose significantly, and that's because we pay out broadly 60% of our revenue to employees as salaries and variable or bonus compensation. And, of course, if revenue grows, that number rises. And, if it doesn't, it comes back. That's how the model is meant to work. In terms of forward guidance for the current year, we gave two pieces of detailed guidance to the market.

10:50 One about that percentage, the 60.3%, that's bang in the middle of 58 to 62%, which was our range of what we think we need to pay to keep our employees, motivated and to stay at thin cap in a very competitive market. We expect that to remain true for the, for h two and, in fact, for going forward for some time. Fixed costs, we're guiding people to £10,000,000. The first half was £5,200,000, including an introductory fee. This guidance excludes any fees we pay to banks or other parties that refer sale mandates to us. Everything was bang in line with our expectations. So, finally, current trading, great start to q three. Everything that we're seeing so far is consistent, makes us very comfortable with the 45 to £50,000,000 range.

11:41 We have a very strong balance sheet, as Sam said, and we have grown the dividends to demonstrate our confidence in both the current year and growth over the cycle in the future. Sam, that's me. Some of the operational highlights. If we start with the capital market side of the business, you'll see there that retainers are broadly steady, probably the same number of clients. We obviously had a good period of deal fees, which slightly down on last year, reflecting slightly quieter market. Trading was up over last year, but that was actually because of a number of block trades going on on the corporate side of the business. So that that was a a little bit lumpy. So all of capital markets performing well, just a bit lower than last year, but a pretty good result considering where the markets were and investment going into the life sciences space in in particular during that period.

12:38 If you look at the next slide, you'll see we're still winning clients. So six clients won in the period. And you'll notice even within the capital markets revenue split, there's a lot of different going on in different product lines. So 15 deals that are placings and IPOs, four that are PLC advisory mandates, six that are debt, and a decent number of value of of companies advised $0.5500000000 on the m and a side in PLCs. Then on to the CAVENDISH side, if you look at the deal credits for the year, I mean, they've they've got some great deal credits within CAVENDISH, closed some really good deals, 13 deals with an average fee of just over £1,000,000.

13:23 They did two very big deals towards the end of that period. But even excluding them, which is slightly outsized, still the average fee was 720. So that's been growing consistently since we bought CAVENDISH three years ago. We expect that to continue to grow. We've got a really good pipeline going into next year. And you generally have about twelve months visibility on M and A. So we're starting to look at mandates which will complete in the year March 23. So we're starting to get a good idea of where that will fall and that is all looking very healthy. Again, investment going into the consumer m and a piece in the origination team and also into PE sponsored coverage where we're starting to see some really good traction with PE firms giving us regular work.

14:13 And then strategic a really important slide because it shows really what I said at the beginning, which is what we're trying to achieve here, which is building this different type of strategic adviser focused on growth companies, but trying to do things in a really different way.

14:32 We currently are we have the most offering within our mid market, the most different services. And those pillars, ECM, M and A, debt, private growth cap and PLC strategic advisory, we want to be market leaders in all of those spaces individually, and all of those areas are growing. In particular, debt, we've just hired two new people, one senior, one junior. We've just hired a second senior person to co head the private growth cap team focusing on

15:04 fundraisers between the 2 and 20,000,000 mark. So we're really looking at that area grow quite fast. And then we've invested across the board to keep winning new clients, bigger clients, and be able to keep up with our growth. And then you look at the orange side of things, that's where we're looking at new things. We think there's still an an area where we could expand our business into new services that our growth companies want to buy in really interesting areas that still help to diversify our income streams. So the things that Richard and I are currently looking at, we are in the meeting company stages at the moment, are things like ESG advice, culture advice, diversity and inclusion, all the areas that companies are really starting to look at now as a priority and spend money on.

15:55 We would like to add those services to our roster of different services we currently have to offer. So really trying to build that growth company adviser to be a leading player in strategic advice for the growth company area, but doing

16:08 it a bit differently to our peer group. And we really think there's a space for that, which means if we keep investing our cash in organic growth and potential acquisitions, we will continue to grow revenue irrespective of what's going on in the outside market. If you look at the next slide, this sort of demonstrates what I was saying there. If you look at the track record of revenue growth from 2007 to today, it's been consistently going up. We've obviously had some really difficult periods in the market during that time and we've managed to maintain our growth consistently throughout. And the key to that has been constantly thinking about new areas where we can invest, constantly looking at new services, constantly keeping clients at the forefront of our minds doing absolutely the right thing by them and providing what they need, plus really looking after our team and maintaining our culture, which is a really

17:03 strong point for FinCap as we grow. And then if you look at that revenue split, two years ago, just around IPO, we were doing around 20,000,000 revenue. Most of well, all of it comes from capital markets, but then half of it coming from the deal fees within those PLC clients. Roll on to, you know, the last couple of years, we're now the the £40,000,000 business if you average it over the last three years. Obviously, more today, but that revenue split is more like a third coming from m and a with a coming from capital markets deal fees. And we can plan to continue to increase those percentages coming from other areas over time.

17:45 So lower risk business, less reliant on the capital market. So pleased progress

17:56 the we've companies whether they're quoted or unquoted about the need to report on ESG. We are helping them try and report and have a starting point of where to go from. But we as a company FinCap are reporting. You can see on our website, we look at our carbon footprint. We look at offsetting. We're now looking at moving to net zero and how we can reduce that carbon footprint. We are doing a lot in terms of our social impact with entrepreneurship into schools. We are very key on education

18:32 and entrepreneurship. We're trying to get entrepreneurship into the curriculum. So those sorts of things are really about us as a in making sure we have social impact and we are sort of talking the talk on the ESG agenda. So that's really important for us. And then to summarize, it's a record half year for us, the third best half year ever for CAVENDISH. The best half year ever for CAVENDISH. A really good performance. It's meant we've been able to upgrade our dividend. We have a very strong balance sheet with

19:04 which to have sustainability of the dividend, our growth, invest organically in the business, but also to we've of of we've made progress of And question. That's great. And Sam and we'll Richard, thank you so much for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. But just while Richard and Sam take a few moments to review those questions submitted already, I'd like to remind you that

19:54 recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your Investor Meet company dashboard. I'd also like to remind you that your feedback is important to the company. And immediately after this presentation has ended, we'll redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations. That's the shortest period I've given anybody to look for the questions and consider the responses. But if I may ready to go. I'll hand back to you, Richard. Thank you so much. Can see two questions. Yes, Sam. I what I'll do is I'll read down the questions and pull them up and down, but we'll try and deal with all of them on here if that's that's okay and suggest who does them like we did last time. So, the first question is also something management needs to be always careful about, but it's the company's share price never seems to match its excellent progress.

20:39 Do directors agree with this sentiment and have a a view on why this may be? Straightforward. I'm gonna say as CFO, I totally agree.

20:47 I think that one of the challenges we've got with FinCap is around liquidity. Is there's a business with a market cap of less than a £100,000,000. They won't put you into, the Investors Chronicle, for example. So we are therefore focused on building a shareholder base with a small number of really good quality institutions. But this lack of liquidity can mean that if Singer and Friedlander or Peel Hunt went into our results a little heavy on stock and they sell into it,

21:15 it's difficult to create natural buying pressure. Sam, you think we're undervalued too, don't you?

21:23 Yes. If I if I'm allowed to say that. You are. Yeah. What we focus on is running the business, producing results. I think where we have been slightly stuck is where the whole capital markets, m and a community, the quoted players anyway have been stuck is. It has been a very frothy market. It's been a really good market. And I think last year we had our record results. And I think some shareholders were thinking, you can we do this again?

21:49 Is this the top of the market? Is it gonna come back? And I think what we've always said is, look, we are a long term growth play. Okay. You might have some ups and downs in the market, but by investing really carefully over the cycle in the right areas, constantly thinking about what companies want to buy, what they need, upgrading your people all the time, then we get the sort of revenue growth that you can see here on that slide. And I think we you know, it's just about convincing the market that that is happening. And these half results, I think, show it wasn't just a one hit wonder last year with COVID and lots of fundraisings around supporting businesses through COVID. This is actually a business that's diversified. It's got really good income stream. Now m and a is particularly busy.

22:36 We're having a great time. Our competitors in the mid market don't have that M and A piece to add to the the offering. So, you know, we have got different revenue streams there, and we will continue to add those revenue streams and just prove out that

22:50 this is a sustainable growth story. So I think sometimes it just takes time for the market to catch up on what we're doing. Thanks, Sam. The the next question for Vivek is essentially the question is, how are we coping with retention, the competition for talent, and what are we doing to keep the teams engaged, motivated, both financial and nonfinancial? I think that's definitely one for you. So on this, you'll have seen in and part of our results is what we're trying to do on incentivization. So this half we put in an option plan which is all within our, our numbers that we've got authority for, for. And it's a three year program where everybody in the firm above a certain level will get options which grow as they stay over time. So that's gone down really well with the team. We want everyone to be a part owner of the business and think of the business in the long term and doing the right thing by their client.

23:47 And so that equity incentive has really helped retain. But the other thing I wouldn't underestimate is culture in a very, very competitive market at the moment where lots of competitors are trying to poach different people, offering them lots of money. You know, we are a great place to work. We're really working hard on being the best place to work in financial services. We're doing lots of things around the edges to make that better and better. And I think we're well ahead of our competition in how we do treat our staff and how we think about our staff. So, you know, that counts for a lot when you're looking at retention and loyalty. So we we keep investing in our culture and keep making sure that everyone feels part of the vision and part of the growth story.

24:35 Thanks, Sam. The next question, which I'll take really is, from Mark s, which I'm gonna summarize simply as Mark thinks that we're sandbagging our revenue guidance range, which is a perfectly good question to ask. So, Mark, when we look at our revenue guidance range and also the track record that Sam wants us to build as a management team, I think we have to recognize that the actual visibility in the ECM business on transactions of exactly when they'll happen is low. We've got a very good view from a portfolio perspective. If you had a 120 clients, you can work out broadly what you're gonna earn each year, but you're never sure from quarter to quarter who will be the big contributors. And in CAVENDISH, although you've got a very good visibility of deals where you've committed sellers, you're working on processes, you can't determine, as you can see with our half year results, whether a deal is gonna happen on the September 30 or on the October 5, which can have an impact on our short term revenue trends, not long term revenue trends.

25:38 I think Sam gave a a a good answer to this, when we were frankly, briefing the analyst. And she said that looking at everything we've done so far this year and the reasonable run rate on market market, trading and commissions, the lower end of that very lower end of that guidance range is probably off the table. But we certainly she and I, until we get through the end of this quarter and see what the m and a business has actually brought in after this feverishly busy period and whether we've landed these IPOs in ECM, whether we're towards the upper end of that range or indeed whether we could be above it. There are scenarios Sam and I look at which could be both sides outside that range. So we feel pretty comfortable with the range at the moment.

26:24 Probably the very bottom of that range isn't relevant as we sit today. Is that fair, Sam? Yeah. Shall I take the next one on Redcap? Yes. If you want to. So our regulatory capital doesn't really change. So it's try and hold at least 300% of regulatory capital. That's a bigger percentage than we held since we sort of founded the business fourteen years ago. So we've always increased it because our cash has increased. But the the position doesn't really change. It's not we've got such a big headroom. It's not something that that moves around at all. And as we're profitable, it just keeps going up. So that that's relatively static and and and Yeah. And, Molkash, look looking forward, there's some regulation changes coming around RedCap, which could well be to our advantage. So we have three entities really in the group.

27:14 CAVENDISH, which only needs a £10,000 of capital, FinCap, which is, as Sam said, the big capital requiring business that we're at 300%, and FinCap Group PLC, which is unregulated because it's a holding company, and the FCA mooting rule changes, which would essentially mean very little changes at FinCap, but that CAVENDISH will have to have a proper degree of regulatory capital. And why is that to our advantage? Well, we have plenty of capital, thanks to building this cash balance. And, of course, what it means is if they set that level as much as a million and £0.5, there are relatively few people who can set up m and a boutiques and actually offer regulated advice. So this, from a market perspective, is to to our advantage. But, that's a very full answer. I hope that answers what you're looking for.

28:00 So Michael d asks about m and a strategy, Sam. I think you've covered some of that in the presentation, but, CAVENDISH has been very successful. Yeah. I think the requisitions that. Yeah. We, we can yeah. I can reiterate again, we are looking at inorganic growth as well as organic growth. We obviously need to be very careful about what we do. It needs to fit culturally. It needs to be revenue that is a bit more recurring in nature and needs to be a service that our growth companies want and it needs to be in an area that's growing. So quite a lot of tick boxes need to be ticked before we go ahead and buy something, and we are talking about quite small bolt ons at the moment. There's there's nothing of size that we're thinking. So they're all being discussed at the moment. We're meeting lots of companies in interesting areas that we think have a nice fit, but it all depends whether you find that team that are interested in growing it, see see our our vision, work with our culture, and are very much aligned. And I think the the companies we've met so far are you know, there's good opportunities there.

29:09 Good. Next question about share based payments. So you will not be surprised to hear, Mark s, that I do think it's appropriate for us to take them out, but let me give you some some views. So equity compensation and options are a normal part of the financial services industry, and you may be here as a personal investor or you may well be in the industry as well and and and understand that. One of the challenges of iopress two when we look at compensation is you're meant to make assumptions about retention, whether people stay with you, delivery performance criteria, and everything. We do calculate share based payments pretty much on the most prudent basis possible. So we just assume that people are gonna be here for the whole of the three years and there is no haircut.

29:55 IFRS two ends up, therefore, with some quite odd numbers. And what we hope from a disclosure perspective is we we ask investors to look at the adjusted diluted earnings per share where we properly increase the share count to reflect the shares that we believe are gonna go out to people which they could potentially earn, and it gives a proper diluted measure of what our earnings per share is. I think IFRS two, it's been around for twenty years. We have to live with it. I did prefer the old days of fully diluted where you, you know, diluted for all options that were in or likely to be in the money and took out any charges and gave full disclosure so investors could form it their own way. But, when we adjust for share based payments, we're only really doing that. I think you look down at the, adjusted earnings per share to get a good underlying earnings per share, measure.

30:48 Sam? Onto the aggressively hiring at the top of the cycle? Yeah. Two bits. Buybacks, and are we paying too much for people? Okay. So if I talk about people, the the the people part of it is really important that we keep investing across the business. And I think, you know, if we were aggressively hiring in one area alone, you might think, oh my god. You know, is there risk there? I think think if you look at our hiring, it's incremental but in lots of different product lines. So this half's investment has been around our private growth capital team where we've hired one more senior person. So there's lots going on in the private market. So whether you think equity capital markets are going to move down at some point soon, you know, the private the world continues and probably grows.

31:38 The debt side, we're recruiting two into debt. Now debt is a side that's that's growing anyway. It's a new area for us. We're targeting PE and PLCs to do their debt refis and new debt facilities. But, again, in a downturn, that that starts being quite busy debt. The same with analytics, that team is a very it's a new product line. It's a new service. It's three people covering different stocks, covering a different client base. So most of the things we're doing and new sectors are new, and they're adding on to our existing capability. And generally it takes about a year for those divisions or people to start delivering, but we need to constantly hire to make sure we can have revenue growth. But we're we're not just talking about one area and aggressively just saying, right, we're going all out in capital markets because the IP market is gonna be massive for the next year. And then wait for the IP market to be quiet again. That's not how our hiring plans have worked. And the buyback, we we always look at options of buybacks here.

32:39 We have got cash. Our aim for the last twelve months has been to build up the cash balance so we've got a much more sustainable business. We can really withstand a difficult downturn. We can make sure we pay out dividends irrespective of what goes on with our business and profitability. So that's really important. The dividend stream keeps growing and we can pay it no matter what. So once we've got to a position where we're happy with the the cash on the balance sheet, we will look at all sorts of options. Is there something to buy? Do we use it as a share buyback? So it's it's all on the table. I think it's too soon at the moment to say what is the art of the possible until we get to the year end and look at the the balance sheet then. But I would say, really, we're pretty happy with where the current balance sheet is, but probably wouldn't want to go much below that at this point. Yeah.

33:31 Look. There are times, Mark W, that we do think that putting a buyback in would stop some of the market making activity, which I'm sure puts a lid on our share price from time to time, but we have certainly not decided that we would do that. Multiples. Some of our competitors appear to be trading on cheap multiples due to concerns about the cyclicality of the business. Do we agree? And are there some reasonably priced acquisition targets? So, Mark w, I don't know. Perhaps you're referring to Peel Hunt, maybe less so Numis. I'm not clear what Peel Hunt's going forward numbers are because of the huge revenues and profits they made from their retail trading platform during COVID nineteen, and I know they were guiding people down heavily from a revenue perspective for that.

34:25 So it's not clear to us right now whether they are on cheap multiples or not. We'd have to leave that to you. And are there reasonably priced acquisition targets? I think, potentially, the answer, Sam, you've given is is yes. We may well have to buy companies out on earn outs where they see great value on joining FinCap, but where we can say, if you deliver three, four x revenue, five x revenue, there'll be a nice chunk of value coming to you later on in the process. So that's always the challenge of m and a. But I think there are plenty of interesting companies we're looking at, and we're obviously focused on it working for shareholders and not just for the sellers. I think part of the question might be aimed at, given our competitors might look a bit cheap, would we consider buying them? I think I've I've always said it. We we don't think our strategy of diversification is about buying a competitor in exactly the same space. Doesn't mean you never ever do it because obviously opportunities arise, but it's it's not in our strategy.

35:27 The cultural fit is always really difficult. It is it's a management headache time to do these sorts of things. So it's very, very unlikely we would consider something where we would buy a competitor unless it was very, very opportunistic. Hopefully, that answers the question. Yeah. Mark s, a question on what is the red cap for capital markets business. We don't disclose that publicly, but it's it is just small mid millions. So I'm not gonna give you the precise number. It changes every day, and I get an email. But it's of that order of magnitude for firm of fin cap scale and size. Jody Dee has made a very nice comment, so thank you, Jody. The next question back from Marcus again. Sam, do you want to answer it? Do we think we should be rated as highly as k three?

36:21 Well, what trying you know, that is our we are trying to build a business that is diversified, that is doing something different. I think we are still quite cyclical. We have m and a and ECM, but they are lumpy fees. There's not lots of small small fees fees in in there. There. What we're trying to do is build out a business that has more recurring, more, you know, more clients but less lumpy fees as a group. So I think, you know, we are absolutely over time looking to build our rating something that is more akin to a professional services group, whether it's a or or something like that. But, yes, that that is certainly the intention.

37:07 But I think we probably have to diversify a little bit more to get near that rating. Yeah. And obviously, if k three has a tough time and gets derated to the audience, then we would view that we want be the premium to them. But, yes, k three is a very good business and an excellent client. Richard, Sam, I I might just jump in seeing as you've answered every single question that's been submitted by investors on today's call. So firstly, thank you to those that have taken the time to submit questions and, Sam, Richard, for your attention in in responding. Know investor feedback is going to be important to you, and I'll shortly redirect investors to give you their thoughts and expectations. But I guess before doing so, if I could just ask you just for a few closing comments to wrap up with. Us, Mark. Sorry. Yeah. From Sam, from from both of you guys, that'd be fantastic. I was expecting that. Don't leave it. Don't yeah.

37:55 Don't leave it to me. Very much, everyone, for your time. I think the key message is, look, it's been a great half, but the markets have been strong. Irrespective of of that, that, we're building a business that is about the servicing the businesses of tomorrow. We want to be a different kind of adviser. We have grown in difficult markets throughout fourteen years and still continued revenue growth. We've now got much more cash than we ever have to continue to do that. So we're very excited about our prospects. We think we are a great story in the medium term, and we're paying a good dividend yield. So that's how I would summarize. That's great. Richard, Sam, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order the management team can really better understand your views and expectations.

38:42 This will only take a few moments to complete, but I'm sure will be greatly valued and welcomed by the company. On behalf of the management team of FinCap Group PLC, we'd like to thank you for attending today's presentation. That now concludes today's session. Good afternoon to you all.