Earnz (LSE:EARN) — Investor Presentation

0:00 Good morning, and welcome to the EARNZ PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via 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 Bob Holt, chairman. Good morning, sir. Good morning. Can everybody hear me now? Yeah. Good morning, everybody. Thanks for, I suppose, watching rather than dialing in.

0:50 Elizabeth and I have been doing this now for two point five years. We got a hold of a Shell company previously called Verditech. I'm best known for having built the two most successful businesses in this sector, Mears and SureServe. And so it's a sector I know well and I'm known well in it. I've probably been in it longer than anybody else. It has been incredibly tough building a small public company on the A market. Every time we've gone out to raise money, it's been really tough. In a sector where I built a £1,000,000,000 business, which really has been disappointing. Anyway, where are we?

1:36 We have continued now. We've done five acquisitions and the latest one is one of real size because what we're doing is we're adding some technology into our blue collar offering. At the moment, prior to this business, we were working in primarily the public sector, but also the private sector as well. And it's kind of, yeah, basic man in the van type things, boiler maintenance installation, solar panels, all that sort of around decarbonization and net zero, but also regeneration and also some general repairs and maintenance contracts. Initially... We reversed in two businesses, one based on Bristol, one dealing in insurance market in Plymouth.

2:26 And then we added one in Wales, one in the Northwest, and one over in Yorkshire. Elizabeth will go through those on the timeline later in the presentation. What did it do? It gave us a bit of scale. We just published our interim results. Obviously, we're early days with the business up to 20 odd billion for the... For where we are today. And again, Elizabeth will explain to you that because we started businesses part year and some of them obviously won't mature, the numbers in 2027 show a significant growth in revenue and profitability. But again, we'll through that. So what's this business about? It's a business called JEM. It has got some early advantage, early mover advantage in the district heating business.

3:13 District heating networks are prevalent primarily around tower blocks, so primarily, again, the public sector. The tower blocks obviously can't have an individual boiler in every individual flat. So what do they do? They have a central boiler room and they have what's called a district heating network, then, of course, circulates the energy throughout the building. That technology is very old and what the Energy Act that was formulated in 2023 brought about significant change because what it's done is given every tenant in a multi occupied tower block the ability to regulate their own energy costs. So what this business has done is put technology at the end of the grunt. So yes, they've done the whole... Yes, they've put new boilers in. Yes. They've then repaired the boiler room and put technology to gather the information in use, whilst at the same time putting the assessment assessment units into individual properties, which then comes together and assesses what power is needed, what energy and what the costs are. So again, Elizabeth will go through some of the detail.

4:28 It's a quarter one twenty twenty seven legal challenge for you to be registered to provide these services. So as I said, JEM have got early mover advantage. And what they have is they have a large contract with Westminster Council, also along with Islington, and they're on trial with three other London bearers. So for us, tremendous opportunity to get into a London presence because we don't have one until we've done this, and then clearly to build the business a little further. It's profitable. It made £3,000,000 in the year to June 26. We've had that due diligence verified, so we're pretty confident that those numbers are correct.

5:17 The the the large part of that profitability comes from the projects, so doing the initial grant. Although the technology is very profitable in percentage terms, clearly, it's only a small amount of the value. So we've scaled back the forecast again a lot later. We scaled back the forecast for '27 and '28 and just encourage the vendor or encourage the people to get more revenue through that will get, we get obviously higher elements of profitability. So we're still paying 10,000,000 in completion, but we changed values. It's a year of 5,000,000, 2,000,000, 3. It's actually 5,000,000 sorry, 4,000,000 in cash, million in loan notes and 4,000,000 in EARNZ shares. So that's how the deal ended up. And the main thing here is that we've also got an HSBC debt facility working cap, so working cap for the existing and the new business. So that's the short to medium term future of the business secure.

6:25 Just coming on to what does it mean? It means, as I said, every role is individually metered. Now back in the day when we were building MERS, and we built it from 10,000,000 to 1,000,000,000 revenues over twenty odd years, this opportunity in the sector didn't exist. So when I was building Mears, we were looking at a 5,000,000,000 market size. We built market leading share. We now have a 15,000,000,000 market opportunity now, clearly. We won't capture it all. But if we capture even if we get on the percentage rating of what we do capture, we'll be absolutely delighted because it's a massive sector. And as I said, I've been around the public sector now for over thirty years. I was one of the early groups in Mighty, then I got control of Maers, halted, floated it, built it, and then lastly went into when it was struggling and returned that to profitability and then it was sold to private equity. So I think we're very comfortable with what we're doing. And of course, as I said, adding technology to us gives us a bit of an upside.

7:34 Really just legal duty comes from, if I might, from the Energy Act where the obligation there is for the twenty four hours for not only energy, but also AWABS law. AWABS is where the young boy died through damp and mold in a a canceled flat. They then brought out AWABS law, which effectively effectively put the obligation on every landlord. If he was aware of damp and mold, he had to actually very quickly. So we see it as a big opportunity because the sensors that we have fitted will also detect damp and mold. And clearly, we will then work in conjunction with the local authority to to make sure that those obligations are sorted.

8:22 Let me pass over and pass over to Elizabeth, and she'll do an introduction. Tell me a bit about her. Thanks, Bob. So I'm in Leesburg Lake, and I'm the CFO here at EARNZ. My background is I'm a qualified chartered accountant, trained with PLC many, many years ago. And then since then, I've worked in some very large PLCs, the PLC one hundreds, and I've also worked in some entrepreneurial start up businesses too. So I've had a full spectrum of experience in different types of businesses. And I met Bob probably four years ago now when I went to Revolution Beauty to be the CFO after it had floated the previous summer.

9:08 Bob wasn't there at the time that I went there, but he was brought in because it was... Some of you may have heard the story of revolution. I'll be brief. But as soon as I got in there, I realized that all was not as it seemed. The the business had floated for 500,000,000. And I got in there, and it it basically had no no cash. So the first thing was where is all the cash? And it sort of transpired and unraveled that there had been sales that weren't really proper sales, and therefore, the cash was never gonna come in. And we ended up having to have a full investigation. The shares got suspended. We had to exit the CEO who was one of the founders. And the chair of the audit committee had worked with Bob before, so it's just Bob.

9:55 And then Bob and I worked turning the business around, getting to the point where the audit could be signed off, the investigation was finished, and, the shares could be, trading again on AIM. So Bob and I worked really closely during that period. Very difficult challenging period, and obviously got to know each other well and enjoyed working together. So when Bob said he was looking to set up sort of MERS mark two, I was very interested in joining him. So after Bob had found the cash shell, ISO came on board in March 24. And as Bob said, we then had the task of trading businesses into the group. So we bought Cosgrove and Drew in Bristol and Southwest Heating in Plymouth. And both those businesses have done very well.

10:41 And then in the following year, we bought A and D Carbon Solutions in Wales. That was an interesting acquisition. They were working in mainly the ECO four arena, which was the government funding plan at the time for funding properties to get to energy rating c. And that business had all the accreditations to do any sort of buildings work, so it was quite valuable from its accreditations point of view. And we were looking at starting our own two startups in the North Of England operating in that market. So buying a and d gave us the sort of strategic advantage of being able to have the accreditations in a group company and start up these businesses in the North where we had some contracts that were coming to us.

11:36 And it meant we could take those on fairly quickly, whereas normally for a business to get the accreditations, it takes a significant amount of time. So a and d had the the value of the business plus all the accreditations. So we bought that into the group. And then we set up, Walmo Living, and we set up, National Retrofit Services. And that expanded our operations in the sort of retrofit government funding area of the work that we do. So we've now... At this point, we had a quite a chunk of government funded retrofit style work, and we also had Cosgrove and Drew and, Southwest Heating that are doing the more traditional m and e, maintenance and repairs type work.

12:24 So it gave us every sort of strand of where we wanted to be as a business. We then purchased Zero Carbon Group this year, which is again another, retrofit type business, in Manchester. And we have used that period of post that acquisition to consolidate a bit in the North. So we have moved the business between the two startups into one, which has allowed us to be more efficient. And at the same time, we were on our journey of our buy build journey, which is the the biggest strand of our strategy. And Gem came to us as a proposal probably... Well, right about the beginning of the year, actually.

13:10 And we wanted a presence in London and the Southeast, and we have obviously got that now. So we'll probably talk about a bit more about that. But just in terms of our strategic priorities and how does this all fit in. So we want to be a national multi service group. And as I said, we've expanded the services that we have offered, and we've got a presence in the South and South... The Southwest. We've got presence in the North. And now with Gem onboard, that gives us a big presence in London and the Southeast from which to grow. We also want to be developing with the owner of the IP, the proprietary technology that we bought because that gives us a competitive advantage in this market. The connection. Okay.

14:00 Sorry if there was a little blip. It came up saying there was a problem with the connection. So the technology gives us an extra string to our bow, and it gives us early mover advantage because no one else is producing the technology in quite the same way as GEM, the technology they license. So it is agnostic to what system it goes on. So if Bob talked about agility, which is what sits on the heat network and controls the flow of energy and enables the, supply to be able to fill individually. That can go fit on any any boiler, any any heating system that is already in place that doesn't require, an upgrade. And they're the only ones at the moment in this market that, that is applicable. The other providers, you have to go with their particular hardware for the technology that they're producing to work on it. So we feel there's an early advantage here.

14:57 And, also, they've worked and developed this with Westminster City Council who are seen by other borough councils as as a sort of leading council to watch what they're doing because they, you know, they don't want to all do it individually. Watch what they're doing. And when they're happy with something and they sign up to something, a lot of other local authorities take that as the due diligence work has been done. And therefore, it's a safe bet for them to then sign up for the same supplier or software or whatever it is that they're purchasing. So the Westminster City contract is is quite key to this business. It gives us a lot of EBITDA as well, as Bob said, that opens the door for the HSBC facility. Our aim was always to get to the point of having that facility with HSBC. Bob and I work with them very closely at Revolution and, save them... Hopefully, save them quite a bit of money together, by keeping that business afloat and turning it around. So they've been very supportive of us right from the start. They did give us a 500,000 loan, early on, and now they have given us a 5,000,000, RCF with a 5,000,000 accordion.

16:10 And the reason we can get that is because the profitability of GEM added to our profitability means that we can borrow, significant sums for working capital now to fuel our growth, and some of it can be used for future smaller acquisitions. And the other two points... The other point on here, which I haven't touched on is the long term relationships with local authorities. We see this as key. The sort of ethos as the group of the group is we want to be partners, and we think that's the way to work with local authorities. They're under significant pressure. And if we can be a a reliable partner to them, then it becomes a mutually beneficial relationship where both sides sides benefit. So this... With the relationships they have with London boroughs, it increases our relationships with local authorities.

17:00 So introduction to If... So the way to look at GEM is they they run their business in three main divisions. So the first one is repairs and maintenance. So these are the sort of long standing contracts with local authorities where they have teams allocated all the time on the ground to respond to repairs and any planned maintenance that's needed. And about 45% of their revenue comes from that side of the business. And as you would expect with that sort of thing where you've got a long term contract, the margins are lower than on other parts of the business. But they they, you know, they're good margins for long term agreements. Then 50% of the business at the moment is on project work.

17:46 So they will go in and if, say, they were putting in a new district heat network, they were designing a new boiler room, etcetera, that would be classed as a project. So 50% of the rev comes in a much higher margin. And whilst they get work from various London boroughs on the project side, it's always easier if you have a relationship on the repairs and maintenance side and you're performing on that contract. It's always easier to get given more projects. So that's where our sort of strategy in order to be a partner of choice comes in in building those relationships so that we get more of the higher margin revenue going forwards. And then 5% of the revenue to June was on the technology piece, so on agility and the smart meters in the individual properties.

18:34 And that that margin as you would expect is significantly higher. And that's the part of business that... Whilst whilst we believe we've got all the right people and the right skills and the right experience to grow the traditional side of business, we also obviously see the technology piece as a big part of growth. So we are looking to grow both both both sides of the business. But, obviously, the the more we get from the technology piece, then the the higher that drives the margin. So the next page is just a brief history of the financials for, JEM. And it shows that as Bob showed... Bob said earlier, the revenue to the end of June twenty six, the last full financial year was just over 30,000,000 and the EBITDA was 3,200,000.

19:22 And they've been growing the business quite steadily on the top line and the bottom line over the past three years. When we did the due diligence on this and we started, we we... Because it was a significant acquisition, we made sure that we got good lawyers and good, deal advisory support on this deal. And fairly early on, in the due diligence process, it was became apparent that the business had been run as part of someone else's... An individual sort of group of companies and for the benefit of that individual, their group of companies, not not for the benefit of of Gem as a stand alone business. So there were some issues in terms of the way people have been employed, in terms of going through PAYE or being consultants.

20:12 There've been issues with HMRC, etcetera. So we decided quite early on that we didn't want to take on buying the business as it was, the share capital of the business, German Environmental Building Services, because that would bring with it all the sort of potential liabilities, all the things that they've done in the past. And we didn't want to have to deal with those going forwards. And even though you can have warranties in your sale and purchase agreement, it's very difficult to enforce those at times, and and some things can be gray areas. So we wanted to make this as clean as possible. So we went back to the vendor, and we agreed a structure whereby we bought the trade and the business assets. They would be hived off into a new company that was clean, and then we would buy the shares in that new company. So that is the deal that we have done.

21:05 And just moving on to the tender pipeline then. So going forwards, that... And I'm not suggesting for a moment they're going to get 627,000,000 of new tenders, but they're they're they're bidding in a pool of 627,000,000. And there are sort of five key lots that they're bidding for at the moment, which will make a significant difference going forwards. There are three main frameworks that they're on, and those frameworks enable us as a group to take advantage as well. So we've already established that Cosgrove and Drew can support on some of the work on some of these frameworks in terms of their mechanical engineering work. So this opens up more ability for us to also increase the revenues across the groups and not just in GEM through the relationships they have and the Tilda frameworks that they are open...

22:00 They they are on. So key terms of the acquisition. And as Bob said, the the final agreement sort of was at the last minute of the allocation of cash and shares, etcetera. And and this hasn't been updated in this presentation, but the totals are... You know, the total consideration is the same, 23,550,000, of which 10,000,000 is upfront, and that is 4,000,000 of cash, 2,000,000 of loan notes, and 4,000,000 of shares in EARNZ. And that's that's for a company that delivered 3,200,000 EBITDA to the year, June. What we've done going forwards is we have incentivized or or we have agreed with the vendor that the deferred contingent consideration element should be based on revenue because from our perspective, we are confident as a management team that we can control costs, we can get savings through procurement, etcetera.

23:01 And we're very comfortable that if we can't see it, we will deliver the profitability. And so we felt that the best thing to incentivize on would be the revenue. So the deferred contingent consideration is based on revenue for year one and year two, and it's on a sliding scale of percentages. And then that is paid 80% in cash and 20% in, shares in EARNZ going forwards. And we've also put a gross margin, minimum gross margin of 22% on that. So if the gross margin was 20% and the revenue was, say, 30,000,000 again, there would be no additional contingent deferred consideration. The margin has to get to 22%. There is a catch up in year two so that if the targets aren't met in year one, the vendor still can earn the full amount of consideration, in year two if in the totals over the two years, which is the maximum.

23:56 But, obviously, the consideration is capped. The deferred consideration is capped at 13.55. It can't go above that. So use of proceeds. So we've raised 4.9... 4.9? Yeah. It's 4,900,000. And we've got roughly just under 1,000,000 of that will go on deal fees, and then the rest, the 4,000,000 will go to the vendor for cash. And then we have the 5,000,000 facility from HSBC, which will provide the working capital for the enlarged group going forwards. There is also a sort of true up in the completion accounts on the acquisition of Gem whereby there will be a working capital, payment probably likely due to us, once the completion accounts are completed because that was based on normalized working capital.

24:52 I'm gonna hand back to Bob now to talk about the aspirations for the business and where we want to get to. Okay. So let's just stop for a moment. The management team have been in this sector for a long time. When I came into this sector, which was in the early 1990s, I wasn't looking to stay in the public sector. I didn't have a warm feeling about it. I never worked, never provided services into it. And everybody talked disrespectfully about working for local authorities, working in the public sector. What happened was very quickly I realized that it's blue chip because in the thirty odd years I've been involved in the public sector I've had no bad debts, zero. You don't have bad debts. Sometimes you have to work hard to get your money because you know if Mary's off ill in purchase ledger or sales ledger, you know, they don't bring in attempt to actually cover it. You gotta wait. So you gotta be on the front foot all the time making sure that when you submit an invoice, it's correct. It's the right order number.

26:02 It's got every box ticked and you get it. What one of my colleagues used to say back in the day was, unlike the private sector, if you submit an invoice in the private sector for a million quid and it's payable on the seventeen, eighteen, nineteen, December, you can bet your bottom dollar that somebody in the accounts department of the the payer says, it's a shame we're closing out accounts payable tomorrow, isn't it? Because this guy's not gonna get paid this until the new year. That does not do the public center. What they do is they go down, is that... Is every box ticked? Is it the right order number? Is it agreed? Is it everything? Is is everything ticked yet? Fine. Pay it. It gets paid. I like that. And for the first couple of years in Mears, I remember that we used to absolutely work hard at collecting our cash because I saw it as my cash. And we're the same here.

26:55 So we've got the the working capital facility, which we clearly will need for the significant growth we've gone through and going through. But to be clear, know, I think the deal... There's two research notes out there with the eventually that we published on our website. This show that this year we are... Our turnout... Sorry, next year, '27, will be 57,000,000. Turnout by making about 7,000,000. That's their forecast. That's forecast. And the year after, 2028, shows turnover of about 67,000,000, making 9,000,000. So massive transformation coming from the acquisition. Now I touched on earlier the fact that because we have done setups during '25, early twenty six and bought some early twenty six, we won't see... We haven't seen the benefit of those revenues in '26.

27:53 I mean, we had a small loss in the first half of 'twenty six, and we're seeing the benefit coming through from profitability in the second half of 'twenty six. And then it was just over £1,000,000 I think, making just over £1,000,000 in 'twenty six. But that then jumps to £7,000,000 in the year to 'twenty seven. So for us, this is transformational, it's got us on our journey, and it's also given us a London presence. London, I mean remember, we're a Chimney pots business. Where we see Chimney pots is where we operate. So, you know, opening the London market to us. And, of course, remember that I have been in it longer than most. I've known better than most. I've been more successful than most in it. So again, I'm not suggesting we're going to pick up billions, but again, I've been very surprised assuming that we carry on as we are, where we're not a few 100,000,000 revenues in three or four years' time, both organically and obviously another acquisition or two.

28:58 So in the short term we're looking at getting to 130,000,000 and the idea is to keep it at double digit EBITDA margin. That's quite tough and that will depend purely and simply on the mix of work we do. If it's all regular repairs and maintenance man in a van, it will probably be 7% or 8%. But if we link it in with technology, which is in the nineties percent, and it depends how quickly that grows, and so it's in the project stuff, which is 40 odd percent margin, then clearly, that that mix of revenue and profitability should come through. The key is what we have to do is exactly what we've in my previous businesses, is to become a partner of choice, not a quick in and out, make a make a fast buck and move on. That's not how the public sector respects you. It respects a partnership approach. It respects doing community programs. It respects going out of your way to look after the tenants in social housing. It's not an easy market.

30:02 Know, as I said, I've been in it longer than most, but this is a tough business. A tough business going into some of the most difficult living conditions throughout The UK. And clearly, we've been in it in various guises over the years. So for us, we're delighted with the acquisition we've made, delighted with the business we've got, but it's tough, so we gotta keep the the button very firmly pressed to to make sure we get them. So this... The the energy act. That you'll see lots and lots of chatter around decarbonization, around net zero, around what's the government's view on it, where can we afford it as a nation. This really started quite a few years ago where the government tried to put onto the energy companies levies to actually make sure that the energy companies are making all the profitability.

30:55 We're actually putting something back into the economy. And they had eco one, eco two environmental contribution, eco one, two, three and four. They didn't work. And they didn't work because they weren't regulated and managed correctly. ECO four, a big part of it was for insulation. And guess what? Because it was poorly regulated, the insulation that was put into some older properties was poor and found not to have added any value. Although somebody assessed that property as a rating band gone up from an E or a D up to a C for further investigation in which France had been wasting money. And that would have been in the millions and millions of pounds.

31:42 So we had to clearly avoid anything that we bought, which has got the stigma of working in those sectors previously. Clearly, we didn't have any of those stigmas. But these are massive markets and they're blue chip, and you don't go skid. So guess what? I'm pleased that people still stay away from it. You know, as I say, if we can pick up 200 or 300,000,000 over the next three years, we've done very, very well. But those are the various plans that are out there with the government commitments. Mean, the government are committed to spend 15,000,000,000 on this over the next three years. So please god that we go and pick a lot of it up. Yes. I think it's probably worth mentioning, that we have been asked a few times when we were speaking to institutional investors about the... This agenda and whether we sort of were concerned that it might sort of come off the boil depending on whoever is is in power. And I think we were very sort of clear on the answer to that, and I think it's it's very clear for everyone who's sort of reading about it that there are sort of... There's a number of strands to this.

32:47 So what what the government's trying to achieve with the investment in heat networks, particularly, and also with a certain degree on green energy is energy security, and all parties completely support. And it's become very obvious to all of us that we need energy security as a nation, whatever color blissful party. And also the cost of energy and the cost of living is is key to every every politician's agenda. So that is not gonna change. And the area that we're working in is all about giving the end user energy the ability to control and to try and keep their costs as low as possible. So our view is that this market is is significantly government backed, but also it will be backed by whichever color government we have going into the sort of years ahead.

33:41 Yeah. And I should have mentioned that before. First, I should have said, I apologize for Elizabeth and I coughing, but we both got struck down with this this bug that's out there. It was a flu bug. She she didn't do that to all, I can assure you. But... So we've been struggling and I'm probably just coming through it. Elizabeth is a couple of days away from it. If I could ask you to turn over, please. So where are we? So Gretchen, they have supported me on every business I've been in the past, and from day one, big supporters of us on every transaction we've done. Pentwater were big supporters of Revolution where Elizabeth and I were there. And again, we probably rescued his investment there. So again, he was very happy to support us throughout our. And both of invested a bit and invested again in this transaction. This was a presentation that was put together for the transaction, I. E. Ahead of the transaction. So those two have both supported it.

34:42 I've got about 5.7%, but I think my family have got the same again, something like I think we're over 10%. And Elizabeth down there was invested.. So, you know, we're... We are committed, and we're in... We're here big time. And, of course, we've had two more institutions join post this transaction and join the party. One delegate who put quite a bit of money in there. Well, there's the team. Motley Crew. The Motley Crew. Yeah. We're particularly happy with our two non execs. So Linda Main, bottom left, was the main board director of KPMG and is very rigorous in her assessment of what we do.

35:36 Sandra was chief executive of the London Housing Association and actually worked in Westminster prior to that, for Westminster Council. I've been a director of a public company for over forty years and although I have a big personality and a strong personality, people make the assumption that you have non execs who are patsy and don't really call you to task quite the opposite. If you want to build a sensible, strong business, you want non execs who challenge you because it's quite easy just to get on with things without being challenged every day. They are very good. Peter worked for me in the past and John Charlton is company center. So we're very happy with our board. At this stage, it's it's suitable for for purpose.

36:24 Let me just take you through some quick appendice... Appendices. These are jet contracts. So tower helmets, over the page. GemAgility is is the software platform, and a big contract in Westminster where two sixty seven dwellings for metering compliance. So really, really happy with the deal we've done, delighted it could come on board, and we announced it on the September 30, and it closes on the October 19. I'm sure anybody who is an investor in public companies knows that the deal of this size has to go to shareholder vote.

37:10 We control the shareholder votes anyway because we have our two largest shareholders. We've got our revolvers from ourselves, so we're already over the 50%. So chance of it not happening is zero. So thank you very much. I'm not sure whether we have any questions up there yet. If you do have any questions, so Chris asked, the amateur gems, 30,000,000 revenue is at risk of going off in $27 amateur is already covered by the current tender pipeline. Should we view $30,000,000 sustainable run rate? Well, there is one of the contracts up for tender midway through the year. Elizabeth has done is drive down our forecast for 2027, so not to assume we get the full 30,000,000.

38:04 So I think, look, we'd love to think we should get over 30,000,000, and we'd be very, very disappointed if in that fact we didn't didn't win another sizable contract. How much is already covered? Well, yes. But I would hope that it actually be more than that. As ever, you want to under promise and over deliver. You know, the the way to build a public company is to continue going for upgrades. So that is in our mentality. Stress, it's a new business for us, so we'll go there. Liz, would you want to answer the next question about working cap? So the next question is what is driving the enlarged group's working capital requirement, and how much of the 5,000,000 RCF do you expect to be drawn in the normal course of trading?

38:52 So across the whole group, we are a growth business. So we've... We started a business. Well, we started two businesses, which we've now combined into one, and they're winning work constantly. So that that delivers a working capital requirement. Cosgrove and Drew down in Bristol is also growing significantly. So that requires a bit of funding. Yeah. And in those businesses, the payment cycle is a sort of... Well, in cost per vendor, it's sort of thirty days post, the end of the month of the invoice. In the funded, retrofit work, it can be as much as forty five days after the month end in which you've invoiced.

39:37 So there is a reasonable amount of investment required upfront because it tends that subcontractors need to be paid more quickly than that because they... Some of them are sort of one man bands. And then against that, you've got, GEM where they typically will be paid fourteen days after invoice. So the... What's driving the working capital growth is is a requirement, is the growth and the fact that we're ambitious. We're going out. We're tendering for business, and we expect to win it, and we need to support those wins with working capital upfront. So that is what is driving that. In terms of what to expect to be drawn in the normal course of trading, I mean, if if you're talking about this year, you know, 1 to 2,000,000, and then, you know, we'll we'll review and see what we need going forward after that. Unless we pick up a sizable...

40:26 For example, if you pick up a large London contract, which could be $1,520,000,000 a year, it's gonna want funding upfront. So that'll be another million to 1,000,000.5. So... Yeah. So... But I think we've... We're we're delighted that that HSBC supports us again. Why did... The next one... Next question is why did the vendor sell? Well, two reasons. One, one, he has many other business interests, primarily. He's a large owner of caravan and static homes in the country. But secondly, and probably more of a concern to him is this government's potential taxation of wealth tax. So he's already fashioned to go offshore. So in the nicest way, you know, that is tax planning, I think.

41:16 So that's the reason. Are reasons. Elizabeth? Family staff you have on the ground. So JEM has... We're inheriting about 80 staff from JEM. And across the board, we will have around about two fifty staff Yeah. In the group going forwards. Okay. So I don't think there are any more questions. Does anybody quickly want to come on with a question before we close? Well, thank you very much. I'll hand you back to Lily. Thank you very much for listening. Thank you for your We'd love you to become involved. What I always have said in the past is, and I'm not teaching you how to invest, please. What I'm saying is, don't invest today. Follow our story. Have a look at us.

42:03 In the days of Mears, where our share price went from 10p to 5.50 I used to be able to say, don't buy now. Have a look in three months' time and keep it done. And you may regret for not buying early. I'm not saying that here. What I'm saying is keep an eye on us. See whether you feel we're the right people to trust with your money with. But at the end of the day, we are very confident about what we're going to do. But again, these are difficult market conditions, and I feel good about that. I'll pass back to Lily. Thank you very much for your time. Thank you. That's great. Thank you for updating investors today. But please ask investors not to close this 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. This may take a few moments to complete, and I'm sure be greatly valued by the company.

42:50 On behalf of the management team, we'd like to thank you for attending today's presentation, and good morning to you all.