Flowtech Fluidpower (LSE:FLO) — Annual General Meeting

0:01 Good morning, and welcome to the FLOWTECH FLUIDPOWER PLC Annual General Meeting. Throughout this recorded meeting, attendees will be in listen only mode. Questions can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. I would now like to hand you over to Chairman, Roger McDowell. Good morning to you. Good morning, and thank you very much for joining us for our Annual General Meeting. I'm Roger McDowell. I'm Chairman of FLOWTECH FLUIDPOWER PLC. Let me just briefly introduce my fellow directors. I think we may even have a slide. My fellow directors include Aelsa Graham Webb, non executive director Jamie Brook, non executive director Stuart Watson, non executive director and Russell Russell Cash, CFO company and company secretary and Mike England, who is also with us here today. Sorry, did I mention you twice?

1:01 Like last year, we understand that a number of shareholders are physically unable to attend the AGM. So we're pleased to announce as last year, we're facilitating an online AGM experience through the IMC platform. And I'll remind you that this will be available subsequently. I think I'm correct in saying those of you that want to do it online and repeat the experience. The IMC platform does allow shareholders to listen to the proceedings of the AGM and ask questions through the live chat. So we encourage questions through the live chat. And it would be good if you have them. What we're going to do is firstly deal with the formal business of the meeting. And if anybody has any questions relating only to the resolutions of the formal business, then please pop them through now, and we will take them.

1:54 Failing that, we could potentially take them subsequent to the formal business. We are also going to give you a brief presentation. Mike will do a brief presentation once we conclude the formal business of the meeting. And again, questions would be welcome. So please submit them through the live chat. So moving then on oh, by the way, we are also joined by our registrar, Emily from MUFG Corporate Markets. So moving on to the formal business. The first item, Resolution one, these are ordinary this is an ordinary resolution. All of the resolutions, apart from Resolution 10, are indeed ordinary.

2:43 What we're going to do is read the resolution, and then I'm gonna ask Russ to to read the results of the voting in order that in fact, he's already put them on the screen, I think, in order that you're aware of how the voting has gone in respect to the resolution. So the first resolution is to authorize the company's annual report of accounts for the year ended 12/31/2025. You will see from the slide, Russ, just for those of us that are able to read the very small print, would you just Yes. I'll do it to the nearest 100,000, if I may. But votes in favor, 50,300,000 votes against, naught point 7,000,000, as Roger alluded to. I think it's bar resolution 11, actually. These are all ordinary resolutions.

3:34 So clearly, 98.6% in favor, that is approved. Moving on to resolution two. Resolution two is the reappointment of Mike England as the director of the company. I won't read the the boilerplate that goes with it. But resolution two, you can see on the screen the resulting voting. Russ, you want to just read that to the nearest 100,000? Yeah. 50,200,000 in favor, 800,000 against, 98.4% in favor, an ordinary resolution. Thank you for that. So resolution three, we report to Stuart Watson. And the results are, Ross? Identical, actually, 50,200,000 in favor, 800,000 against, pounds 98.4% in favor.

4:27 Resolution four, which is the reappointment of yourself, plus cash? 50,800,000 in favor, GBP 200,000 against, GBP 99.6% in favor. Thank you. Resolution five, ails, Graham Webb. 50,200,000 in favor, GBP 800,000 against, 98.4% in favor. Thank you. Resolution six, the midpoint of Jamie Brook. 43,700,000 in favor, 400,000 against and 3,900,000 withheld. In percentage terms, that's 92.4 in favor. Thank you.

5:13 Resolution seven, which I'm gonna ask Jamie Brook to propose. Jamie, if you wouldn't mind proposing it because of my reelection. Might be a moment of silence while Jamie switches his microphone on. Oh, this is slightly embarrassing. In that case, would either Stuart or Elsa please propose the seventh resolution? We've only got Mike and Russell in the call, Roger. Oh, thank you for that. Sorry. Apologies. That case, Mike, would you please propose my reelection?

6:02 Proposing your reelection, Roger Thank you. For this resolution. Russ? So there were 43,500,000 votes in favor, 3,600,000 against, and 3,900,000 withheld. In percentage terms, that's 92.3% in favor. Thank you. Resolution eight, we appoint Harry Limited as auditors. Outcome for that one, Ross? Yeah. 50,900,000 in favor, naught point 1,000,000 against, and almost 3,000 withheld. In percentage terms, I'd say 99.7% in favor. Right. Obviously, very popular auditors. Resolution nine, which is Yeah. Popular auditors with remuneration approved 50 well, 51,000,000 in favor and negligible amounts against and withheld. So 99.9% approved.

7:05 Okay. Resolution 10. This is the resolution which authorizes the directors to allot shares to an aggregate nominal amount of 1,357,272 spot 95 in line with current institutional shareholder guidelines. Represents approximately one third of the company's current issued share capital together with additional one third being 1,357,272 spot 95 to be used for rights only. The authority will expire the next AGM of the company are on the 09/17/2027, whichever is the earlier, thus voting as a result of that resolution. 33,600,000 in favor, 17,400,000 against. This is an ordinary resolution, so with a 65.8% in favor.

7:57 And then finally, Resolution 11, which is authorization for us to make market purchases of our own shares. We put this in somewhat tongue in cheek and expect a number of institutional investors to vote against it in principle. So it is not the outcome does not surprise us. So the eleventh resolution authorizes the company to make market purchases of its own shares, should the directors consider this to be appropriate and investors as shareholders generally. In line with current institutional shareholder guidelines, the maximum number of shares which may be purchased is 8,143,638 ordinary shares, representing approximately 10% of the current issued share capital. The authority will expire at the next AGM or on the 09/17/2027, whichever is the earlier.

8:53 So Ross, voting outcome on that? GBP 47,500,000 in favor and GBP 3,500,000 against and 93% in favor. Thank you. So I think that concludes the resolutions, if I'm correct. Ross? Correct. Yes. Yeah. In which case, we'll move on to a brief presentation by Mike. I don't know if you're collaborating in it, also whether it's simply Mike. But we would encourage you to listen carefully and, by all means, post questions and we will take them as soon as as soon as the presentation has finished, provided they are appropriate questions.

9:38 Mike, over to you. Thank you, Roger. And just a point of technicality because I got some messages from our our board members. They're on the call, but, unfortunately, they're not set up to speak. So just a technical problem there. So apologies that that's just causing I will thank you for that. I was slightly surprised to find that my nonexecutive colleagues weren't on the call because I fully expected them to be. So Yeah. That's good. Yeah. Great. Fantastic. So just five slides, really. I just thought it was useful to just give some updates for those that are new to the story, but also to existing shareholders. We thank you very much for your ongoing support. It's been a busy year, and I thought that it might be helpful just to give some some progress updates.

10:29 Obviously, we're we're in the trading period. We'll be coming to market more formally in September. And so I think our half year results announcements will go out sometime the end of July. So I'll just keep this very high level. As I said at our four year results presentation in March, we've we've spent a huge amount of time, effort, energy in going through a large scale business transformation over the last two years, and I'll just touch on strategy in a second. But we were very proud to open 2026 with a business that we believe is now very much set up with a strong platform for growth and most importantly, a scalable platform for us to grow both organically and inorganically on top of.

11:17 The world of motion is very much our brand line. This gives us an opportunity to not only operate within the world of FLUIDPOWER, but over time with macro trends such as electrification, sustainability, and digitization that there's forever technology overlap emerging. And, actually, I've been involved with a number of key supplier events over the last number of months. It's been fascinating to sort of learn about how new product introduction is accelerating, particularly with the overlap between automation, interflow power technologies, which is exciting, and that gives us opportunities to continue to grow, the business, into a larger market. The world that we operate within, is supporting, all industrial segments.

12:04 We're very proud to be supporting some of the biggest companies on the planet, and we're very much about keeping those companies moving, whether that be in the world of agriculture, the world of marine and shipping, whether that be oil and gas, whether that be aerospace and defense, whether that be more overarching industry as a whole. And our focus areas very much remain around the world of hydraulics and fluid conveyance, and this is very much where you've got heavy movement and that typically is through liquid. Pneumatic systems which is very much more around air which tends to be fast moving process orientated environments and process control systems which is very much the pressure, the temperature regulation around all areas of flow.

12:53 And this is very prevalent across all those segments of the market. We have been very, very clear in our approach to market in terms of our go to market approach and our value proposition, we've solidified that into three key areas. The ability to provide a high service product distribution we've done a lot of work there to improve service, core service, and response, and I'll come to that in in a little while. Our services arm, which is very much looking at how we can design, we can repair, we can manufacture, we can subassemble systems.

13:38 So this is assembling and bringing together a wide range of our products and providing systems and solutions for customers. And then the third area is around projects, and this is where we're looking at very large turnkey projects where we're looking at designing, building, and integrating complex systems. And as I've talked about more publicly, you know, for example, moving a bridge, you know, it's quite a complicated large scale system, and we have capability there within our business. Those three areas are very embedded, and we're now building out capability to strengthen growth in in all three. And we work across a very complex supply chain. We work with a wide range of global component manufacturers, as I mentioned earlier, continue to support the trade channel, so selling to a wide range of distribution partners, which we value greatly.

14:29 We also are working with system builders and original equipment manufacturers as well as maintenance providers and so we have a a broad spectrum. And and roughly speaking, around half of our business is servicing an MRO, a maintenance repair requirement. Our business today is supporting the original equipment world, just to give you that that that overview. And we've rolled this out as a as a system in the The UK market, in the Irish market, and also across the Benelux, and that platform is now well embedded and in place. That sits on top of our strategic plan as I've been consistent about since the end of twenty twenty three when we when we introduced this to market. Customer first gives us the opportunity to accelerate our market growth rate. And this has been very, very much around looking at all aspects of service, but also our omnichannel experience and materially improving our digital platform.

15:28 I was delighted last year to see the new digital platform come live in The UK market in August, and we're very close to rolling that out in The Benelux in Ireland over the coming weeks, which is exciting for us. And that's a key underpin in a world whereby, yes, there is still very much a human to human interaction, increasingly, we are seeing that trend towards customers wanting to have more access to digital channel. The power of one has been very much around bringing together more of a fragmented business that we had. If I go back three years, we had around 17 brands to market, so this is bringing everything under the one FLOWTECH brand. But in the background, it's been about building integration layers, linking together our data so that we've got access to our inventory across the group, our customer data across the group, and and this is now allowing us to really start to accelerate how we can take our value proposition to our customers.

16:20 There's also an efficiency gain there in in making sure that as we scale, we have a more efficient operating model, and this gives us confidence that in time, we can move the business towards mid teen EBITDA margins. And the world of motion is very much around how we expand our product, our service, and our geographical reach. The European market alone in the world of motion is 30,000,000,000. And today, you know, we're a company that's going to be running this year in consensus numbers to around about a 135,000,000. So there's plenty of upside in what is a very, very fragmented market, which is continuously consolidating at a an accelerated rate. And we laid out six very, very clear growth engines which were focused around, and I'm not going to update on those now, but I will do when I come back to market in September.

17:06 We focused over the last eighteen months in four specific areas in terms of looking at self help growth momentum. The market hasn't really been our friend since we had what was a bounce year in 2022, certainly since the start of 2023. As we know, industry markets have been impacted, and And I think there has been some hope in each year since then that there's going to be a recovery, and that hasn't really occurred. And so, you know, we continue even now with the conflicts in in in Iran, you know, with impacts into industrial markets. I have to say that we've we've remained robust in the first half of the year. Whilst we've seen some impact certainly in terms of pricing in the market and price inflation in the market, you know, I do think that there's a resilience being built up across industry, albeit we do see some CapEx related projects being stretched out the longer that the conflict goes on. But we do continue to trade strongly, and we do believe we're taking market share in the first half of the year, which is encouraging.

18:09 We we we've made good progress in all four areas, and we continue to stay very focused on this as a as a management team. As I said before, the new digital platform is gaining good momentum. We're seeing month on month improvement in terms of traffic, new customer acquisition, and share of wallet gains. These things do take time to come on stream, but we're very pleased with the performance as it relates to our new digital platform. And as I said, in the month of of July, we will be seeing the platforms go live in both Benelux and also in Ireland. The product and service expansion has been a a real success. Strengthening our relationships with our our strategic suppliers, expanding our product offering has been a key focus for us. And within that, we have our own brand, Feet Pro, which continues to grow well. And, obviously, that is a a margin accretive play, but that's an area that we're putting extreme focus on now. We've built a very sustainable and scalable product information management system and master data management underpin, which means that we can now ingest products into our ecosystem, and we can push them out through the digital platforms far quicker than we've been able to in the past, with more assurance that the quality of the data, will be, at the highest order, which it needs to be, in a highly technical product area.

19:25 In terms of engineering projects, we continue to grow good momentum both in terms of our smaller scale projects through our engineering solution centers but also with our major projects. And we've got a very strong pipeline, and we have a very strong order book, and that continues to grow. As I said, there's been some push pushback of certain projects, but we're not materially concerned as the order book continues to strengthen. I think that's just part of the market that we're in. Inorganic opportunities, I'm gonna pass to Russ in a second just to give you an update in terms of the progress we're making there. We made an announcement, as you know, in June of a company called Helipebs, and Russ will give you a little bit of an update on that shortly. But But we we do do continue to look very carefully at both opportunistic but also strategic acquisition, but very much our key focus this year has been around organic growth and driving improved improvements to the profit recovery story, and ultimately driving improved cash generation as we move into the second half of the year.

20:27 We've also pivoted around some key growth sectors and built capability in house in order to access those more readily. The the trade channel, the indirect channel continues to be very important to FLOWTECH, and we continue to strengthen our teams supporting that channel. Aerospace and defense, as we know, is an area of investment, and we're looking very much at how we can bring together our full offering into the defense sector. We continue to to to grow strength within infrastructure. There's a lot of investment in areas such as flood defenses, you know, British waterways, the environmental agency here in The UK are investing a lot in infrastructure infrastructure as as is the the Dutch government and the Belgian government and in Ireland as well. So we see opportunities there for movable structures being very key for us.

21:12 We're also seeing some great progress in the work we've been doing over recent months in the data center environment, and we're now becoming more of a preferred supplier partner within that ecosystem, which is which is good to see. And, actually, as we brought together the the different parts of our value proposition from, you know, what were separate operating businesses, we now start to be able to put together a much stronger proposition towards a particular industry sector such as data centers. And transportation, you know, continues to be a big growth area for us, whether that be road, whether that be off highway, whether that be agriculture, or whether that be marine shipping. We do see continued opportunity there within the transportation sector. Underpinning all of that is a ruthless focus around our service levels. I'm pleased to report that we've continuously now, for over eighteen months, seen our our on time and fallout of our our our distribution center at 99.8%, which is really important.

22:10 And stock availability, we've we've maintained at 97% with with also very, very strong working capital management to boot. In a market whereby, you know, cash is becoming more of a challenge for for a lot of industry, it's really important that we maintain our stock levels, we maintain our availability, and that's a key focus for us as a business in terms of maintaining those service levels. Russ, just a word if you can then on the the the building we're doing on the on the platform as it relates to the accretive acquisitions that we've made. And then more recently, perhaps an update on q plus and Helly Peps, please. Yeah. Thanks, Mike. I'll only take me a couple of minutes to go through this slide. Mike, as I go through this, there's a few questions have been popping up. Obviously, the audience is interested in in the inorganic play, so perhaps have a look at those, and I'll pass the baton back. But Mike's talked about our ambition of achieving a mid teens EBITDA margin.

23:07 And, of course, to deliver that will be a beautiful blend of inorganic as well as organic growth. It's fair to say if I wind the clock back probably literally two years, we weren't envisaging a flurry of acquisition activity. It was very much focusing upon the businesses that we had at that point in time. But sometimes in life, opportunities come across your desk which are too good not to look at. And that was certainly the case before, right, where we had to move incredibly quickly, and we bought a hundred and seventy year old established business out of administration, and we paid nothing for it. And that's quite a broad statement, but it's literally true. It was a modest consideration to the administrator.

23:56 But in return for that, we collected out a beautiful data book, and that's why we have negative goodwill in our accounts at in the sum of 2,200,000. Obviously, in simple terms, we got rather a lot for not a lot of money. We followed that up with three other acquisitions, which equally fall under the heading of bargain purchase. And I use that expression because, you know, the the new term for negative goodwill, which is what I was brought up with, is bargain purchase goodwill. And there's bargain purchase goodwill associated with all Swage and indeed, Helipeps. And Thomas had neither positive or bargain purchase goodwill, actually. But if you add those four bargain purchase together, we probably inherited businesses with turnover of in the region of 20,000,000.

24:50 And, obviously, the reason that couple of them went into insolvency was that they were losing money. But as it relates to those four businesses, the current run rate's probably in the region of 25,000,000 of top line and in excess of 2,000,000 of profit. So having paid literally nothing or apps actually negative sums for that, that's obviously an encouraging return on investment. As it relates to q plus, that was what I would call a a going concern, a proper multiple of EBITDA deal. Just to remind you the numbers there, it's about in sterling terms, it's about 12,000,000 of top line and 2,000,000 of EBITDA. And in terms of cash that we've laid out, through acquiring that, it was in the region of 6,500,000.

25:37 There's another million to come in terms of some deferred. But if you add all those five together, I think what I'm saying is that we paid, you know, in cash terms, probably in the region of 6,000,000. And if you add it all together, 35,000,000 at top line, 3 to 4,000,000 at bottom line. So encouraging. As it relates to helipeds, by the way, there's a few questions. I've sort of seen a bit of publicity since we did that deal. And just for your avoidance of doubt, I think our r and s is actually pretty clear, but we acquired the business in assets with Helipebs. A couple of assets were excluded from that being the freehold property, but we, unsurprisingly, agreed terms of occupation for a period of time. And the company had some cash at bank as well, which was excluded.

26:23 That legal entity will distribute the surplus funds to shareholders through a solvent liquidation process. But aside from the property and the cash at bank, we bought the business. We bought its assets, but we took on no liabilities. I've seen in certain publications people saying, well, you must have done. You can't have done you can't have bought such a good business for, 400,000. Well, I'm sorry, but we did. We didn't take on any liability to the parent company. There was no liabilities at all. And the reality is that the debtor book, which was one of the big assets we bought, a million pounds, a bit more actually, should have collected beautifully. If not by the end of June, certainly by the end of July, the significant majority of sums will have been recovered. Over and above that, there's 500,000, a bit more actually, a good quality inventory, and some really good plans and machinery that will be bargain purchase goodwill attached to that deal, which will be reflected in the half year account as our r and s alludes to.

27:23 So that's all I really wanted to say, I think, as it relates to, inorganic. We didn't, to get to inorganic as quickly as it we actually have, but it would be wrong with us not to capitalize on the opportunities. Mike's alluded to the market's not been our friend for the last two or three years. And, obviously, it wasn't a friend for those businesses that are now part of our group and then trending in a really positive direction. Mike, you probably had a chance to look at those questions. We can probably deliver some answers jointly, but do you want to go first? Yeah. I can do. Just a couple of other adds, Russ, if I may. I think we've been delighted with the progress we've made on integrating the businesses. Obviously, it's it's very early in the in the in the journey with Helly Peps because that was all only in June. But, certainly, we we're we're very pleased with the progress we're making and actually the level of engagement with the people within these businesses, which is important because, you know, the the integration of cultures is critical.

28:18 Q plus, I think, has been a a fantastic addition to us within Benelux. Really, really great people, very technically competent. We didn't have a particularly strong pneumatics in house capability, particularly technical capability within the Benelux. And this was this was the leading independent pneumatic in house specialist within within The Netherlands. And, you know, true to true to their performance, they've continued to to impress us both in terms of their enthusiasm to want to to learn and become part of the group, but also their own performance as an organization, you know, just demonstrates the quality of that business. So we're really pleased to have them on board, and that integration is going very, very well. On Helipebs, this is a very a very, very long standing, high quality manufacturer, actually, British manufacturer since 1838.

29:10 So we're very proud to have them within the group. Within this within the world of hydraulics, very few companies would would not know HeliPEPs. They're they're known for specialist hydraulics. Some of the manufacturers, very high quality, particularly in subsea environments, marine environments, oil and gas environments, and even within environments such as nuclear. So these are quite specialist segments. And actually, this gives us access to some segments of the market where today, whilst we do some business, actually, the opportunity there is for us to grow. And we've started to see the order book open up nicely with HallyPEBS already now that they're part of FLOWTECH, and I think that gives some of those very large global customers real confidence in financial security for the future, which is important. So we're we're glad to have them on board. Really great leadership team.

29:58 Really fantastic skilled people. And so the couple of questions in there, Russ, then. Island Of Ireland expansion. I think I wouldn't really look at it more through locations because I think you're looking at that more through locations. We're quite well spread. Cork, Dublin, Dungannon, and Belfast is a pretty decent spread. Actually, I think what we're doing is building out our capabilities within within that market. You know, we've we've historically been very hydraulics orientated within the and fluid conveyance orientated within the the Irish market. Actually, bringing more of the pneumatic capability into that market, I think, is important and possibly looking at opportunities within that space and that wider world of motion. You know, the Irish market is a fast growing market. We see huge opportunities in areas such as data centers.

30:44 We still have access and opportunities within the world of pharmaceutical, which is a growth market, as as we know, in the Irish market. And do a lot within agriculture and off highway, so the opportunity remains very strong. I I think bringing the digital platform into that market is going to be critical, but we will be looking and we will continue to look to see how we can expand our our our product and our technical offering in that market. If that does pick us up some new locations, great, but we also will want to be looking to see how we maintain a smaller footprint as possible because we wanna drive economies of scale as a business as well. Russ, anything else in there that you saw that you wanted to answer? No. I think you've adequately covered that, Mike, in my opinion. I think, Mike, if I may, just let's have some headline comments on our policy on future acquisitions.

31:35 I think as we've described, we are prepared to be opportunistic. We are prepared to move quickly. We are prepared to do things that we firmly believe will be earnings enhancing. We are going to stick within our area of expertise. We believe our expertise is relevant to the parallel with where we currently are, so world of motion concept. But I think our philosophy will be to be agile, not to bet the farm and to make sure that what we do will be genuinely earnings enhancing for shareholders. So unless you want to add anything to that, Mike, in terms of our policy?

32:24 I think there's three there's three areas. You know, would an opportunity help us to expand our product offering? Would an off would an opportunity help us to expand our service offering within within the world of motion, and would an opportunity help us to expand our geographical reach? And and to your and to your point, if we can move quickly, you know, if we if we make sure that we're earnings enhancing. And and, ultimately, we want to see businesses that, you know, we believe in our hands can really benefit from our platform and drive those synergy opportunities out, whether that be growth and profitability or cost, you know, but that's that's how we're looking at these things. I I do believe that the the market is presenting more and more opportunity, but I will just stress that as a leadership team, we absolutely are not allowing ourselves to get distracted.

33:14 We're staying very, very focused on the organic growth as our principal priority, but, you know, we we would be wrong to not look at opportunities. And if we take Helly Peds, for example, you know, that's immediately earnings enhancing to Russ' point. We also believe that they're a very fantastic strategic fit with what we do within that world of motion as well and gives us access to some industry segments and some customers that ordinarily we haven't played with. Mike, the next question is inflationary pressures. Ross, do you want to take that? Yes, can do. Mike may build on it. But first, as it relates to OpEx inflationary pressures, Two thirds of our OpEx is people costs, actually.

34:01 And I think as we're all aware, there's been some material increases in national minimum wage over a period of years, actually. And that's very, very significant for us given the demographics of our workforce. And equally, the domino effect, if you're increasing minimum wage, obviously, you need to consider layers immediately above that level. So our like for like headcount, we think, has been managed quite effectively, and it's gone some way to mitigating the impact of what various governments have implemented. But, you know, the increase is really, really significant. I think it's in the region of the 70% increase in that national minimum wage over something like a seven or eight year period. It's dramatic.

34:48 All the the the balancing one third of OpEx, you know, we generally like to think we're we're pretty good at looking after the pennies, and those penny savings will add up to pounds. Sometimes, of course, the savings are limiting increases, unfortunately. That's the world we live in. Clearly, there's inflationary credit pressures as it relates to product cost as well. We think that we're pretty I'll use an old fashioned northern word here. We're we're pretty savvy at the way that we manage that across all areas of our business. But equally, on occasions, there are need. There is a need to sacrifice a few points of gross profit margin, the benefit of gross profit per notes, of course. But certainly in the last, four months since the troubles in The Middle East, a significant number of our suppliers have put through not insignificant price increases.

35:40 So as I said, I think we've done a good job of being balanced in our approach and our response to that. There are opportunities to capitalize on that as well as opportunities to be concerned. Mike, as I said, you may want to sort of build on those two points I've made. Yeah. It's a perfect storm for any business right now. You know, not your overarching cost base is rising, and, ultimately, you know, that your your as a distributor and a service provider, you know, whether it be labor or whether it be product costs, they're all rising. So at a time when also the market is a bit more compressed in terms of growth and has been for a number of years, so it's a very competitive environment out there without question. You know, we we absolutely don't want to be the the cheapest. We want to stand for quality and value, and we talk with our suppliers around that.

36:30 You know, we do also, you know, work with our global suppliers to make sure that there aren't businesses out there that are eroding profit margins, you know, with within within the structure of a market because that can happen at these times. You know, digitization and and opening up more more channels and more routes to market for products, you know, is also a risk. So we've got all of this at play. We I to Russ' point, I think we're making the right decisions. We're looking to protect our gross margins, but at the same time, we're also looking to protect our customers. You know, their costs are rising. You know, we we we have to make sure that we're remaining competitive. We we continue to help our customers to remain competitive, and it's a careful balance to strike. I think we're balancing it about right, and we will continue to monitor. I'll also say that, you know, we we haven't seen a huge amount of supply chain disruption despite the the rising cost of fuel, for example, and and shipments.

37:25 But the longer this goes on, the more that will continue to impact. And and companies are having to make decisions. Our supply chain are having to make decisions in terms of, you know, their production runs, the routing of of goods. And and, again, you know, we have started to see some impact just in terms of lead time, and that's very, very clear in the public domain. You read anything on the PMIs at the moment, you know, we are starting to see an increasing amount of supply chain disruption more broadly, and we've got to monitor that very, very closely. But here and now, I think we're doing a fairly decent job to manage what is a very complex set of ingredients out there in the market right now. And then we've got one final question, Mike, which is from Martin. It's specifically about data centers Yeah.

38:11 And the sustainability issues around data centers. I mean, this is something I'm aware of, acutely aware of from other businesses that I'm involved in. And bear in mind, Martin, our primary focus and opportunity here is in the initial CapEx. Once a data center is established, the ongoing maintenance requirements for our sort of kit is relatively minor. So I guess in that context, if it proves to be a boom that is subsequently a bust, doesn't make a whole lot of difference to our business. But I do get your point. There is sensitivity, obviously, around the sustainability of data centers from the point of view of electricity supply and particularly electricity distribution, neither of which are areas we're particularly involved in. But we should see how the chips fall on that. Either way, it's not something that we can control.

39:15 Yep. So the there are no more questions. Just wait a few seconds to see if anything else pops in. Perhaps just a summary, Roger, from from my side then, if that if that's okay, just in terms of outlook. We've we've continued to see good momentum building. Clearly, we've we've been monitoring the external situation very closely as we've described, but the order book and sales pipeline are very robust, and and our forward order book is strong as we look to the second half of the year. We've still got the flow through of some of the larger major projects as well and the two bridge projects in Ireland. We'll certainly continue to be contributing well in the second half of the year.

40:01 We're pleased now to have had six months of the new digital platform up and running within The UK market, and and we've described that we're going to be rolling a thousand to our other two markets in in in the near term. And we're pleased with that progress, and that will continue to grow momentum. And of course, now we've had that running, we've got more data, we've got more insight, we've got more intelligence, we've got more knowledge, and that can all help us to make more informed decisions. And we didn't have any of that visibility previously. We are continuously focusing very strongly around our improved cash generation. And clearly, we have got through quite a lot of the heavy lifting of the transformation, and so we are looking more proportionally at capital investment this year. And clearly, we've got that balance of working capital because we do believe that stock availability is critical at a time when markets are are struggling.

40:51 And that that's been very much something that our customers, you know, are asking us to do is to maintain our stock levels strongly. And as I've said before, in particular, the Q plus acquisition, we're very, very pleased with the progress of that since we came to market in January and we concluded that in February. And the other acquisitions, to Russ' point, we believe we'll continue to grow stronger momentum as we go into the second half of the year. So Roger, that's really my update, and Well, I'll pass back to thank you for that, Mike. So in the absence of any further questions, I'd just like to thank all those shareholders who have joined us today. We appreciate your support and engagement and to wish you a very, very happy weekend.

41:38 Let's hope we have some fine weather and can enjoy that collectively. So thank you very much, and the meeting is now concluded. Fantastic. Roger, Mike, Russell, thank you for updating attendees today. Could I please ask attendees not to close this session as you now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's Annual General Meeting, and good morning to