Flowtech Fluidpower (LSE:FLO) — Preliminary Results

0:01 Good morning, ladies and gentlemen, and welcome to the FLOWTECH FLUIDPOWER PLC full year results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just 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 we'll publish those responses where it's appropriate to do so on the investor meet company platform.

0:32 Before we begin, I would just like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from FLOWTECH FLUIDPOWER PLC. Mike, good morning, sir. Good morning, and thank you to everybody that's joined us this morning, and welcome to the FLOWTECH twenty twenty three full year results presentation. I just wanted to start by just making a a thank you to all of the investment community. Thank you for your continued support towards FLOWTECH and also towards myself coming on board now, almost twelve months in the business.

1:09 We've really appreciated your time, those that we've met personally, those that have also come to visit us. We've really welcomed the opportunity to showcase the business more readily with you and the improvements that we're making.

1:21 But, equally, thank you for those of you that are joining today, and we hope that this is a useful presentation and gives you a bit more clarity on on where we're heading as an organization. I just wanted to just quickly whiz through the agenda. But before I do that, I'm Mike England. I'm the group chief executive officer. As I said, I I joined the business in early April last year. So it's been a really exciting twelve months, and we're we're looking forward to updating you on the progress that we're making. Russ, would you like to just introduce yourself? Yeah. Russell Cash, the chief financial officer, and I've been with the business for just over five years. Great. So in September, we provided a update, and we're going to stick to a very similar agenda.

2:08 So just a very quick overview for myself. Russ is going to just give an update on the the the last the last year's financial performance for 2023. And then I'm going to spend some time explaining a bit more about our performance improvement plan, which we put in place in half two twenty twenty three. But more importantly, just talking to you about some of the progress that we're making because we're very confident that the work we're doing and and the direction we're traveling in is certainly starting to deliver some some more positive results. We're also going to spend a little bit more time helping you to understand our strategy and, ultimately, and most importantly, how we how we believe we're executing against that strategy now moving forward, and then we'll just conclude with some current trading and outlook statements, at the end.

2:57 If I just, spend a moment talking about, FLOWTECH. When joined this organization, I was really excited to be part of a company which is very much a specialist and a leader within within the industrial part of the market, which is FLUIDPOWER. But, equally, what I started to identify very quickly was this opportunity across the group by being a provider of both products and services and systems to be actually far more for our customers in the world of motion. Ultimately, Ultimately, we we exist as an organization to help businesses and to help industry to move and to do that more efficiently, to do that more safely, and to do that more sustainably.

3:42 And I'm really excited to be talking a little bit more today about our journey towards one FLOWTECH. We're currently in the process of rebranding the whole company under the FLOWTECH, a world of motion brand, and creating a a very strong identity in the market. And so you'll start to see very much a different look and feel of the business as we go forward. And some of the imagery within this presentation is just a guide towards the fact that we, as an organization, are always with our customers, always supporting motion across industry. And we do that as a business, whether that's sourcing the right product through a very capable high service distribution

4:23 part of our business, but we also do that by designing and installing and building complex engineering solutions. And so we really can help our customers to deliver end to end technical solutions, and we're very proud of that as an organization, and we want to make that much simpler to understand, including our value proposition, which I'll come on to a little bit later on. In terms of an overview, I'm not going to, steal rush his thunder in terms of some of the financial numbers. But I guess from my side, 2023, other than coming in and really understanding and learning about the business, and most importantly, spending a significant amount of time with our customers, with our suppliers, listening and understanding, you know, how do they perceive us as a company, what do they think we do well, what do they think we don't do so well, and ultimately making sure that we become a much more customer centric, customer first organization.

5:19 For me, this has been all about fixing the basics and really trying to identify and unlock near term self help self help opportunities that that can drive improved performance, whilst at the same time recognizing that we've got some foundations that we need to build to be able to give us the scale that we need to drive accelerated growth in earnings, which we certainly feel that there's there's good opportunity here to do. We've we've met our our commitment around our EBITDA performance, which we talked about in September, and we've done that through a very strong focus on improving our gross margins, but also looking at cost management within the business. And Russ will talk a little bit more about the journey on these topics. And we've also been incredibly focused focused around working capital optimization and, ultimately, cash generation, and we're very pleased with the progress we're making. Still plenty of headroom to improve, but we're pleased with the progress that we're making.

6:17 I'll come back to the topics of the half two performance improvement plan, but we're very pleased with the the early results that we're seeing. And most importantly, the assemblement of a new leadership team that's now very much embedded in the organization, bringing some new core capabilities to the business that will help us to scale for the future, also being very, very clear internally within the business and externally with our customers, our suppliers, you, our investors, around our strategy to make sure that everybody understands how we're going to go on the journey towards what we believe the opportunity is midterms operating profit margins. So, Russ, I'll pass over to you, if that's okay, to talk us through the financial performance.

7:03 Yeah. Thank you, Mike, and good morning to everybody and to echo Mike's. Thanks for joining us. Thanks for your interest. So as I briefly said, I have been with the business for just over five years. I guess, certainly, in in relative terms, the world was a nicely stable place at that point. I'm not sure I had ever heard of the word coronavirus, so it's been an interesting five year period. But, roughly five years ago to the day, I was sat here, with the former CEO, just a minute or so if I may, I'm reflecting on the past. I think it's relevant. Looking at the 2018 performance. And in that year, the business delivered a 111,000,000 of revenue and an EBITDA margin of 11%. The balance sheet did have 25,000,000 of debt in it at that point in time, including some deferred consideration relating to the 15 acquisitions that had been performed in the previous four years. The share price a few months prior to that had been at £1.80.

8:01 So the the reason I say that is that five years on, I e now, with a fresh team, with a multitude of fresh ideas and plans to deliver bottom line profit growth, but with the business with the same DNA that it's built up with over a forty year period, which I know is a point Mike's gonna come back to in a really important point, there is absolutely no reason why this business cannot get back to that 11% EBITDA multiple and actually materially beyond that. Our stated ambition is to achieve achieve a mid teens profit margin, bottom line profit margin. So, you know, we've got the confidence in our in our ability to do that. So that's a little bit about the past.

8:47 Turning to the recent past in 2023, I'm gonna talk about both revenue and gross margin under the heading of the story of two halves, if I may. So revenue and 2.3% down year as a whole is actually the story of the two halves there is 2.8% up in the first half and 7.5% down in the second half. So it it's clear, a limited number of points, mate. It's clear that the market conditions did soften as we entered the second half of the year. That manifested itself in certain of our OEM customers, sort of reducing the volume of orders. I can see a question coming through, actually, so I'll address that now. But, you know, so that the business temporarily declined, but it will come back. And at least in some of those cases, there are already signs that it has come back. So that customer has not moved away from FLOWTECH.

9:47 It's just sort of, reduced its, its order requirements for a short period of time. Over and above that, so the market softened some certain of our customers sort of then fell away in terms of the short term demand. But there is no getting away that we did score some end goals within our GB product distribution business, the heartbeat of our business that

10:11 traditionally has delivered significant return on revenue metrics, 20%, if not more, back in the day. And interestingly, its sister business in the Benelux continues to deliver those sorts of margins. The good news is that we definitely believe that we've diagnosed what were the root cause of the problems were, and therein lies opportunities for us to not only get back to yesterday's revenue levels, but to build beyond that. In terms of the gross margin, again, given I've been I've been in the business five years, I've therefore done 10 of these presentations, including the half years. And I, for some reason, remember saying that the gross margin has varied between 33.835.7% in that five year period.

10:58 So it's obviously brilliant to be able to deliver a message for the year as a whole. The improvement is a 111 basis points. But the even better headline beneath that is the first half figure was 35.5%, and the second half, 38.3%. So I'll say that again, 38.3%. So put another way, we exited 2023. We entered 2024 with a gross profit margin that's three or four percentage points higher than the typical gross margin that we've, enjoyed in the previous five year period. So, you know, the overriding message, I guess, on the p and l is that whilst the market hasn't been our friend, I think we've been friends to ourselves by controlling that gross margin quality.

11:51 And that's underpinned by the input from a number of my new senior leadership team colleagues, to be fair. The other area that, of course, we can control is our overhead base. And, given that two thirds of our overhead costs relates to people costs, just a couple of headlines within that, the year as a whole, our headcount was modestly lower than 2022, 3% on average. But importantly, in the second half of the year, we reduced the headcount by 7.6% between June 23 and December 23. So, again, put another way, we enter 2024 with a cost base that's nicely lower than that in which we entered the prior year.

12:38 Included within that, in that within our Skelmersdale Fulfillment Center, we've actually managed to improve the efficiency of the unit and at the same time, take 30% of our costs out, in achieving that. So moving on to the cash generation, I guess, underlying EBITDA has been £2,200,000 lower, the fact that our cash generation is 3,200,000 higher fairly obviously, and I'll come on to a debt bridge in a couple of slides' time, fairly obviously represents the fact that our ability to control working capital has eased in 2023. In 2022, there was obviously some disruption in supply chain given the actions of mister Putin and Ukraine earlier in that year. But pleasingly, you know, supply chain stability has returned is returning.

13:36 And, given that and given our utmost focus upon all aspects of working capital in '24 and beyond, we're very confident that that control will continue and, fairly obviously underpin our stated ambition of, broadly speaking, halving that bank debt position over a two year period. If I just talk briefly about the performance on a segment by segment basis. You'll note that we've introduced three new segments, geographical segments, Great Britain, the Island Of Ireland, and The Benelux. Had we reported under the old segmentation of FLOWTECH solutions and services, the key messages coming out of that would have been identical.

14:27 Those key messages are that we're pleased, very pleased with the growth which the businesses in the Island Of Ireland have achieved, And there's significant plans to improve that performance further, in particular, when it gets the ability of understanding what all other parts of the group can offer when we come together as one FLOWTECH. The growth in Benelux has been modest, but, again, a healthy underlying operating margin, but we believe we can build on that significantly. But without a shadow of a doubt, the problems which we have already begun to address and which will come through strongly, I believe, is in Great Britain and in particular within the product distribution part of the business, the business that used to enjoy those 20% return on revenue measures, and we'll get back to those sorts of levels.

15:23 But just before handing back to Mike, in terms of, the movement in the debt in 2023, if you're old fashioned like me, you talk about bank debt, which reduced by 1,300,000. If you're slightly more, fashionable, you include the lease debt, which reduced by 1,200,000. So take your pick. The debt either reduced by 1,300,000 or 2,500,000. Those, those red boxes do add up to £8,000,000. There's clearly not a lot you can do about having to pay tax and interest and lease liabilities. We choose to pay to pay the $2.2.0.1, 2.2 p dividend, and we choose to invest in capital projects in 2023, that figure is 2,000,000.

16:13 Pleasingly, the green bars, the cash profit, and supported by the working capital initiatives outweighed that. And if I was to look forward to what will that graph look like in 2024, in in a nutshell, I'd say that the, the the reds will be bigger because we're planning to spend more on capital projects and for all the right reasons for the greater good. But equally, the green boxes will be bigger, and in particular, it comes back to that focus on working capital. And for those that have, seen the guidance in the marketplace, the old fashioned bank debt number, as I said briefly before, is set to half over a two year period. I think the number, to be precise, is 7.1 in the marketplace as opposed to the starting point of 14.7.

16:58 So I'm I'm sort of five years on from joining. As I said, coming back to my real headline, I think we've got a refreshed team a whole host of ideas, a multitude of opportunity to grow the business. And within each of those baskets, you know, subcomponents of each, which I'm in danger of stealing Mike's thunder now. So that's a segue to hand him back to Mike. Thanks, Russ. So let's get into the performance improvement plan. So I I guess coming into the organization last April, having been a customer of FLOWTECH, a competitor to FLOWTECH, but but also a supplier into FLOWTECH over the years and having spent over twenty seven years in industrial distribution, I guess I had a fairly good understanding for the FLOWTECH business. What I hadn't really understood as clearly was was the construct.

17:53 And, actually, whilst this business has forty years plus of a very, very strong reputation in the market, Actually, it's also gone on a journey through lots of acquisitions, 2014 to 2018, and has a degree of complexity within the business and has been going on a journey to see how it can drive more synergies from those acquisitions, but also harness the the opportunity within the group and unlocking the real potential. So from my side, quite quickly, I'm getting out and seeing customers, talking to key strategic supplier partners, and really just, most importantly, sort of talking to our people on the ground, it became very evident that there were some, you know, low hanging fruit, self help, and just some fundamental basics that we need to put in place in order for us to be able to take this business to the next level and ultimately improve our earnings value creation.

18:49 And for me, at the heart of that is creating a more customer centric, a leaner and more scalable platform for growth. And I introduced this framework back in September and very, very simple in terms of its construct. The first is being simple to simplify the business. The second is becoming much more customer centric. This is very much around driving decision making and activities much more around the customer, but also getting into that growth focus and putting in the right the the right ingredients to drive greater growth within the organization. And scalability is getting back to doing the basics brilliantly whilst also looking at the efficiency of our operations and looking at our technology infrastructure so that as we do grow to the future and we look look to to expand expand this organization, we've got infrastructure, and we've got the basics in place to allow us to project from. So what I'm going to do here is I'm just going to take you through just some examples. And for each of the three, I've picked out three, what I think to be, you know, some of the bigger areas where we've been focusing on.

19:53 And and for each of the three, we're going to talk about what needs improving, what we've done to improve, and ultimately some of the results so far. And we say the results so far because this is a continuum. It doesn't stop. The performance improvement plan continues, but we're pleased with the progress in in a number of areas. And and in simplicity, you know, I'll just start with what's written at the bottom. You know, this for me has been very much around a significant step change in leadership, key personnel, and building core capability in the company that perhaps we were lacking, but also driving a material culture change with the customer at the heart of that, but also a culture change, which is focusing on high performance and building scale. And so, you know, if we just think about these three areas, moving from an operating model house of brands, you know, it's not a bad model. And for many businesses, this model works well.

20:45 We'd we'd we'd moved ourselves into a divisional and quite fragmented structure with services and solutions over on one side and, ultimately, our product distribution business on another side and not as much clarity within our country structures as probably we would need. Also, that created some silos, some inefficiencies, and and most importantly, some confusion in the marketplace in terms of, well, who are we? Because in many instances, the business is seen for the brand and the localization of that brand rather than the the the whole power of the group. And so we've been on a journey to be shifting the operating model towards a branded house. You know? So in the first instance of that is moving to a simple country and functional structure in readiness for us to rebrand to one FLOWTECH, which is happening during q two twenty twenty four. We're already moving forward on that journey as I expressed earlier earlier on. On. So we've now got a much more simplified and scalable platform in order to build growth and scale for this organization.

21:48 And, importantly, the heart of that is moving from over 10 cash generating units to three. And, you know, looking at it through Russ' eyes, you know, having to produce over 60 statements of operations, moving that down to three, very, very much simplifying the way in which we can operate as a business. But importantly, start to standardize processes, ways of working, and becoming very much centered around a common purpose, a common vision, and ultimately a common set of values and behaviors that we expect from our people across the one FLOWTECH organization. So we're very excited about the the brand launch, which is kicking off in earnest as we come into the into the next month. Leadership capability and organizational effectiveness is really identifying where we've got gaps. You You know, know, today, today, we haven't built in house capability around our digital and and insight power up. We've been very reliant on third parties to provide us with those with those with those capabilities.

22:46 But, equally, we've not invested in areas such as procurement. You know, the the question in the chat around how important our strategic supplier partnerships are, they're incredibly important to us. We've been engaging with our suppliers in a slightly more fragmented way, and we're building a a professional, you know, single procurement and and product organization where we'll be able to be talking on behalf of FLOWTECH and on behalf of the group with our strategic suppliers who as a as a distributor to market and as a service provider to market are intrinsic to our growth strategy moving forward. It's also important that we understand any any supply chain disruption, and we need to make sure that we're alert always very quickly to any changes that are happening so that we can we can pivot to maintain great service levels for our customers.

23:35 And so embedding a new leadership team and organization has been a a key part of the last the last six months. We had the new leadership team in place from October. We went through a complete reorganization and a restructuring in the second half of the year to make sure that we had the right people in the right roles with the right capabilities. And some great examples of individuals that have been with the business for many years who perhaps have not been in the right role but through the right conversations are now in in in the role that that we believe is best for them and they believe that's best for them, delivering some fantastic results, as well as pairing up with some external hires that that bring greater capability into the company and certainly many people that have operated in larger organizations that that we've been able to attract through the through the story here and through the opportunity story, which we're really proud of.

24:27 I I guess the result of that, as Russ mentioned, is a reduction in headcount by around about 7.5% whilst we've been investing in new capabilities as well. And, ultimately, that's helping us to manage our cost base effectively whilst getting into the right shape. And then finally, in terms of simplicity, doing a lot of work to understand, you know, what we have within the business in terms of our value proposition, what we do offer our customers today in the various different businesses that we have, and how do we bring all that together under one single value proposition so we can bring the full strength of our offering to our customers. And that's something now that we're we're very pleased to say. Whilst we've not done the rebrand yet, we've now got our teams organized in a way that means that we're going to market talking about a singular value proposition.

25:13 We've removed the silos that stop collaboration across the group, and we're seeing some really fantastic cross selling and upselling opportunities being shared, not just within the geography, but equally with customers that are in Ireland that ultimately have opportunities within within GB and vice versa. And so we're quite pleased with the progress we're making here on on simplifying the business. Still lots to do. If I move on to customer centric, I guess three areas I'm just going to call out. Selling effectiveness, so, you know, quite siloed sales structures around the different businesses that we've been operating. We haven't really had what I would class as being best in class sales processes in place, things like having a a group wide sales pipeline, for example, you know, the right performance management, the right accountability being clear in the way that we're driving our selling effectiveness.

26:04 We've restructured our sales organization at the back end of last year. You know, that has meant that we've we've gone through quite a rigorous change and and a rigorous assessment of our sales organization. We've brought in new leadership. We've started to embed CRM so that we're now able to track activity of our sales teams, and we're we're putting some of the basics in place so that we've got much better visitor visibility of where the new business is coming from in terms of sales pipeline, how we're driving our quote conversion, and also visibility of our order book moving forward. You know, we believe that we've materially improved the quality of our sales effort. We still have some gaps because of the changes that we've made, and we're hiring up new capabilities to to support that goal. But we are seeing an increase in customer interactions and activity, we're seeing a much more positive view of the pipeline.

26:55 And a lot of that, by the way, is existing customers who are expressing that they have opportunity to do much more with us. And that's great because that gives us a lot of headroom as about growth for the future as well as starting to fire up the engines to attract more new customers to come to us as well. Our marketing effectiveness, it's been more limited around product distribution. We haven't really powered up marketing efforts around our our our engineering solutions businesses. You know, certainly within our Irish business and Benlock's business, there's a lot more we can be doing. So we've effectively looked to be building out a group wide marketing muscle and capability, bringing in house and building digital and insight capability, which we're really proud of. And we have a new digital marketing leader who's got some extensive experience in in in building out the right platforms for the future. And importantly, really doubling down in the last number of months on building a new catalog, which is really important to the FLOWTECH business.

27:53 It's very important to our distributor partners who have relied on the FLOWTECH catalog and service for over forty years. We didn't do a particularly good job with our previous catalog. Our customers have given us that feedback, and we're really excited now to have over 40,000 catalogs on order from over a 100 of our distributor partners, which I think is a testament to the changes that we're making, but also the confidence in the brand and in what we stand for. And we're really excited to be launching that in in later April. But, also, we've done a lot of work to assess where we want to get to with our digital strategy. We've now put that in place very rigorously. We've assessed our journey map there, and we're looking at a digital replatforming project, which is in flight with phase one launch of that in in q three twenty twenty four. And our focus initially is on creating a very strong white label website opportunity for our distributor partners whilst building out the capability to replatform our existing web our web environment. And then then on on customer care, something that I'm personally very, very passionate about, which is really how are we measuring and understanding customer satisfaction, how are we ensuring that we're managing end to end sales after sales support?

29:10 And in particular, dealing with customer complaints and putting the right processes in around that. We've powered up with leadership within our customer services environment, and we're making some very good progress. Customer complaints are are down at the end of the year by over 50%, and that's continued through January, February, and and through this month. And we're really proud of that because that frees up our teams also to be much more proactive in the way that we want to operate with our customers. And we've also now started work with the institute of customer service to start looking at customer satisfaction metrics. We've done some surveys before Christmas, and at the end of the year, our satisfaction index was at 73.1, actually quite pleasing given where we're coming from. But we've still got a long way to go, but we do have a benchmark now, which is part of the part of the story here. So vastly better performance measurement and accountability and very much, you know, listening and understanding our customer feedback so we can feed that directly into our strategy and into the work we're doing. And then on scalability, this is about doing the the basics brilliantly.

30:15 In industrial distribution and services, it's all about doing the basics brilliantly. Brilliantly. We operate with over 2,900 suppliers. We're carrying over 30,000,000 of inventory, and we're carrying over 70,000 lines of stock. And we need to make sure that those are accessible to our customers, and we do talk about very clearly next day delivery up to 10:00 at night, certainly if we look at our UK product distribution business. And so that's something that our customers wholly rely on. Our stock availability had had we had let slip. You know, we were seeing that the the availability of our fast moving products, top 15,000 products, are making up 60% of revenue within our product distribution business had slipped in a drop down in July to around 88%.

31:05 That means that 12% of the time, we're not getting it right or the product is not available, which isn't good enough. We did make a decision to invest in over a million of fast moving stock to recover the service, and we're very pleased that from December, our availability on our fast moving products is back up at 97%, which is best in class and where we would expect it to be. And it stayed very, very rigorously there through the first quarter of this year. I'm also pleased to say that whilst we have invested in one point in in over a million of inventory in order to recover that service, what we've also done is done a lot of work to also manage our working capital down. And in the first quarter of this year, we're seeing some very good progress in in reduction in working capital. Underpinning that as well is operational effectiveness, making sure, particularly in our GEB fulfillment center, that we're driving greater efficiency, that we're making sure we're increasing our pick accuracy, and making sure that the goods that do go to our customers are are going out on time in full, but ultimately that the quality is there. We've stepped up leadership in this area. We've done a lot of restructuring in the way that we operate our material flow and processes within our UK fulfillment center.

32:17 And I'm really excited to report that we've seen a 22% capacity increase per operator. We've seen a 30% reduction in touch points. Why is that important? Well, the less that we touch the product, the the more more chance chance of of it it not not going wrong when it before it goes out to the customer. And we've also been able to drive a 35% reduction in headcount, and we've got further targeted efficiency improvements as we roll out our throughput project invest in automation in our distribution center, which will increase capacity, you know, by two x within our fulfillment center and drive some cost benefits as we come through 2024. And that headcount reduction is is is almost exclusively a reduction in agency labor. And we're really proud that we've got, you know, fantastic permanent full time employees in our fulfillment center, very passionate about the improvements we're trying to drive and the continuous improvement culture that that we're we're building. Building. And that's important that we're less reliant on agency, and we want to make sure that our people are passionate every day to make sure that we're serving our customers. Then on visibility

33:19 and measurement, we have had some lack some some of our visibility measurement lacking in some core areas. And so, you know, I'm a big believer if you if you can measure it, you can manage it. And so we have put a lot of time and effort in putting some data integration in place across the diff across the different parts of our business so that we now do have single view of inventory across the group. So all parts of our business can see all of our inventory. That's materially important. We also have a group wide view of the customer order book so we can understand the flow of orders coming through, and we can also expedite that more readily within within the time scales. And we've also made sure that we're starting to roll out our CRM tools that we have more readily across the business so we can track activity more readily in the organization.

34:08 But this is all about getting back to the basics, which is, you know, for us, getting the service levels back to what our customers will expect, and that's certainly bringing back trust and confidence in product distribution, and we're seeing that feedback very readily in the business. So that's just an update on the performance improvement plan. Progress, lots to do. In terms of strategy, our journey to the future, we laid out very, very clearly that, you know, we we believe that this is a very big and fragmented market across Europe, a 30,000,000,000 market in the world of motion, in the world of power, motion, and control, which means that we have a very low market share, and we see a huge opportunity for higher growth over time as we fix

34:52 these basics and we get ourselves on track. Certainly, we believe that there's an opportunity to extract higher quality earnings, and we believe that we can move up this business to become best in class in our field and ultimately across the industry. We're very proud to work across virtually all vertical industry sectors, and we're working with customers that are designing, building, maintaining, and improving industrial industrial plant equipment and operations. And so, you know, I would say today, whether direct or through our partnership programs, two thirds of our business is in maintenance repair and operations, which typically is less cyclical,

35:27 and a third of our business is is servicing OEMs. And and, ultimately, I think one of the questions was, you know, are we seeing with some of those bigger down trading OEMs that Russ mentioned lower demand, or are we seeing that they're buying from somewhere else? I'd say that almost exclusively, it's lower demand in certain segments. We are, though, seeing, more positively in some instances, some recovery. And in fact, one customer recently, has given us an indication that they think that they're going to be firing up the engines and we're very encouraged by that. That's not to say that we think that there's there's there's there's going to be an immediate market recovery. I do think that the markets are going to remain the industrial markets are going to remain suppressed through certainly the first half of this year into the second half of the year. But we do we do see some green shoots, but this is a volatile world, and so we have to make our own success,

36:21 which we will continue to do. In terms of our strategy for growth, our business is all about providing power, motion, and control solutions, keeping industry moving, and creating a more sustainable world. And we're doing that by focusing on three fundamental pillars. The first is customer first. It It is is driving a diverse customer base, which I'm going to come on to, and it's about driving an omnichannel approach. So harmonizing the power of digital and data with the human touch, which this business has a really great capability of doing that both in terms of the supply of product and engineering capability. And by doing that effectively in what is a very traditional industry space, we believe that over time, we can be we can be outperforming the market by two x. The power of one is is about about bringing together that differentiated value proposition, but, ultimately, it's about operating as one FLOWTECH across our organization as one team.

37:16 There are efficiency gains to drive through this as as well well as as driving the top line and margin gross margin, and we believe that this is going to be a key enabler towards mid teens EBITDA margins. Albeit, we also know that areas such as own brand is critical to that. A world of motion then is the recognition that we're already dominating a very, very strong position in the world of fluid power, which is primarily the transfer of energy through air, which is pneumatics, and and fluid, which is hydraulics. And and there isn't an industrial application on the planet that doesn't have some form of pneumatics and hydraulics. But attached to those products is also filtration, is also motors and pumps and gearboxes and and controls.

38:01 And in in an increasingly digitized world, there is also a push towards sensor technology and more electrification of industry around sustainability. And so it's important that we put one eye towards our growth opportunity, particularly within customers where we're already supplying a broad range of technical products and engineering services, and we can expand that over time. It takes us into that 30,000,000,000 market opportunity, all of which we're very much embedding over with the digital and data capability that we

38:32 have as an organization. So I wanted to just put in focus the power of one just to bring to life one of those strategic pillars, and then I'll get on to strategy execution and and the growth engines. The power of one me is how we're going to unlock the the true unique differentiation of this organization and something that right from the start, I certainly saw this as being a real reason why I wanted to be part of this organization. And the reason being is that customers are ultimately increasingly seeking a specialist solutions partner. There's less engineers out there. There's less skilled people in industry, and so they're they're leaning heavily on specialists to help them and to support them. We're also seeing supply chains starting to to come together more readily, and so we're we're getting involved much more with customers who are looking for us to subassemble and manufacture products into systems as part of their wider assembly lines that they're driving.

39:30 And so, you know, they're looking for partners that can support the design, manufacture, assemble, and maintain their systems, but they're also wanting to access the brands and products needed to manufacture, assemble, and maintain their systems. And I believe that the secret sauce for this company is is having the products so we can supply kit and modify a very vast range of products across what we believe to be some of the biggest brands in the industry.

39:55 But, equally, we design, we manufacture, and assemble, and maintain systems through our solutions and engineering capabilities, which allows us to go at the value curve and allows us to create more sticky relationships with our customers. The primary channel for this business is very much through our distributor network and our partner network and our service provider network. It's something we've been doing brilliantly for over forty years. This gives us an enormous reach to market. And by working with our distributor partners and our service providers and having capabilities such as white label websites, white label catalogs, and even putting our distributor labels on the boxes that are going to their customers, This is a unique opportunity for us to partner and work very much together to support them in supporting their end user customers.

40:43 We also work directly with original equipment manufacturers across the group. Sometimes that's through the distributors and partner network, but but also also that might be direct with original equipment manufacturers. And that increasingly takes us into the design, manufacture, and assembly of and maintenance of systems. And then where it makes sense to do so, we will work directly with end users, but we won't do that in in the sense of of creating channel conflict with our distributors and service providers. And, actually, by bringing ourselves together in a simpler operating model, by having one sales organization across the organization, does also allow us to control much more our channel strategy to market. And as we digitize, we can manage that much more effectively through the channel going forward. Over the course of the next month to two months, we're bringing together over 17 different brands that we operate across in GB, the Island Of Ireland, and The Benelux, and that's gonna come together all under one FLOWTECH, a world of motion.

41:40 And so we will be moving away from these brands to one clear brand, FLOWTECH, a world of motion. The groundwork has been done, and we're ready for that change. And that doesn't mean that we're going to be linking all of our systems together under one, but we are building data integration layers, and we are building tools to allow ourselves to operate across the group more effectively as one FLOWTECH whilst we work through our decisions, as it relates to harmonizing our our fundamental enterprise systems over time. And with that, we're also, launching to market a very simple value proposition that brings together the unrivaled choice of high performance brands and products with a huge expertise that we have across power, motion, and control with our people and our engineering capability, sector knowledge and specialism that we have across the organization, bringing together the design and engineering expertise and the in house capabilities that we have to our engineering solution centers, our FLOWTECH engineering solution centers as they will be branded, and our aftermarket services and support packages to help our customers in the maintenance repair and operations world.

42:48 And so this, we believe, is going to be a really key turning point as we start to roll this out into market over the coming months. Months. What this does mean is that it gives us an opportunity to cross sell and upsell more of our products and more of our our services to more of our customers, which gives us an opportunity for further growth. And as I called out in September, we've defined very clearly six margin engines for the organization, which we are really wrapping around in terms of our strategy execution. So I'm not gonna go through every single line but it's really just to demonstrate that we've got now some very specific components to each of our growth engines. And this lays out very clearly our three year plan in order to get us to the mid teens operating profit numbers that we've been talking about.

43:38 So customer growth is very, very much around the top line growth, and it's around driving our channel strategy digitally and also, you know, through the the the sales organizations, the marketing organizations that we have. Commercial Commercial excellence, I'd say, has been very much one of the engines that we've managed to get fired up in the second half of the year. I'd say more on the selling well and driving greater commercial discipline, which is improving our gross margins. We're also building a capability to be able to to procure more effectively across the group, harmonizing all of our buying so that it's not being done in a fragmented way. It's being done much more through procurement experts within the company, putting a lot of work into starting to improve receivables and data days where that can certainly generate improvement in cash flow, and and optimize inventory availability in stock turns is an absolute key component of that, making some progress, lots to do.

44:33 Products and service expansion comes a little bit later. We're doing range filling at the moment with our existing lines and our existing suppliers, but this is about, over time, new product launches and brand expansion, and it's about introducing new services and in in the the future, geographical reach. Our own brand is critical to us. It's it's currently about 15% of our revenue today, you know, and we've been operating to 12 different brands. We're bringing all of that under one brand over the coming months, and so there's gonna be a lot more there's gonna be a lot more around that into the marketplace. And we see this be as being a critical pillar of our growth strategy as we go forward, as we introduce new ranges, and we're working very closely with our strategic supply partners as we build out our own brand ranges.

45:19 And by the way, own brand is something that we've been working as a business around for over forty years. And so we have a lot of expertise in this area, and we believe there's an opportunity to take that to the next level. Operating for less is about distribution efficiency and productivity, which we've been making good progress with some capital investment coming through this year in order to put some light touch automation to drive greater productivity. We're also starting to look to see how we optimize throughput and manufacturing capability within our engineering centers, which is a key focus for this year and into next. And we're going to be putting a lot more emphasis around improving our sustainability and environmental impact credentials around the wider ESG agenda. And then finally, good progress being made, but lots to do in terms of people, talent, and capability.

46:06 Employee engagement's a critical measure, improving diversity, and building an inclusive culture, which very proud that we're making good progress around, and ultimately, always at the top of this, the health and safety and well-being of our people. We're going to be launching some clear key performance indicators of which we're going to be measuring ourselves around and we'll be reporting on. The financial indicators are are pretty straightforward. Revenue, adjusted operating profit margin, ROCE, cash flow conversion, net debt. And then nonfinancial, now we have a benchmark around customer satisfaction. That's going to be very important to our our business. Obviously, health and safety, our employee engagement, of which we're building a benchmark for that shortly.

46:52 The carbon emissions, we're very pleased to have reduced our like for like carbon emissions over 23% in the last twelve months, but lots of work to do there. And and we're going to be looking to track our percentage of women in leadership as a key metric as we go forward. And all of that has been laid out very clearly in a strategy execution plan, which which we we believe that, you know, is a sensible plan where we're firing up the growth engines that I've just gone through, the six growth engines, in a sensible way over the coming three years. Last year, '23 was about the performance improvement plan. Embedding the new leadership team and and the new operating model, getting ready for the for the consolidation to one FLOWTECH. It was launching the strategy, and it was getting the basics fixed. And so we've initiated all of the growth engines, arguably, with an emphasis on operating for less at heart the heart of of that, that, particularly with the restructuring.

47:45 This year, it's about one FLOWTECH. It's about driving selling effectiveness and commercial effectiveness across the business. It's about investing in in the the digital replatforming, which is an important part of our capital investment program this year, building some data integration layers so that we're effectively making sure that we're getting more traction across the group in in more areas, and the investment we're making within the fulfillment center with some automation, again, another part of the CapEx investment in order to to drive greater efficiency on around about an eighteen month payback on that investment. And so we're we're developing more of the growth engines, and we're advancing our commercial excellence engine this year around improvements continued improvements to gross margin and and working capital gains, but also continuing to focus on operating for less whilst we get the growth engines more readily fired up.

48:38 Equally, the the 2025 is about the digital ramp up. That's about, again, selling effectiveness and marketing effectiveness. It's the own brand power up and the offer expansion work that we've talked about into the world of motion, and and it's it's then then moving towards systems upgrades and starting to make sure that we synthesize our our enterprise systems. And you can start seeing that we're advancing and embedding our growth engines with a view to 2026 where we're into steady state, you know, continuing to look at improvement, offer expansion, further systems upgrades, and ultimately, you know, through 2025 and 2026, start to build out opportunities for inorganic expansion knowing that we've got our growth engines embedded. And all of that, we believe, can deliver improved margin for this group. We don't think that the market is going to be particularly helpful through the remainder of 2024, but we think things will improve into 2025 and beyond. We've got plenty of headroom through all those opportunities that I've just narrated around self help, and we believe that that will certainly take us through to 2025.

49:44 The CapEx projects that I've just mentioned around improving throughput and efficiency and service through the digital replatforming and building greater data and digital capability and looking at some of our systems upgrades, we believe we'll start to drive greater gains as we go forward into '25 and '26. And all of that, we believe, combined, takes us from our current EBIT margin up to what we believe to be accelerated growth in earnings as we get through 2025 and through to 2026. And so, you know, today, you know, we're very much passionate about this being our execution plan, and the team are very, very focused, incentivized around executing against this plan.

50:31 A word to ESG. We've been focusing very much on setting in place our ESG focus and embedding that across the business. I'd say that we're still quite embryonic. We have seen the reduction in carbon I mentioned. We have been increasing quite significantly waste being recycled, both hazardous and nonhazardous. And we've also been doing some work to make sure that our fleet is now over 50% hybrid and electric, and so, you know, some good results there. We've had zero redores, and our near miss reporting on health and safety incidents has has increased by over a 100%, something we're really proud of. That's a big cultural shift for the company. We've now got over 50% of the top tier leadership leadership are women, and I'm really proud that we're starting to be trailblazers in this industry to make sure that that whole piece around diversity and inclusion is import is is being driven through very actively. And we're increasing the number of training activities attended by our people, and we will continue to invest in our people for the future. And on governance, we're reviewing all of our group policies as we move towards one FLOWTECH, and we're looking at our governance and our processes across the business.

51:40 We'll be launching new new policies across the group in q two twenty twenty four. And at the heart of all of this, just in summary of strategy, is culture. Some say that culture eats strategy for breakfast. I do believe that it does. You know, just some examples here, really, on on our determination to make sure that that we're putting a purpose led culture on one FLOWTECH and our people at the heart of what we do. Over on the right hand side, we brought our top 50 leaders together for the first time a few weeks ago to really launch our one FLOWTECH purpose, our vision, and and certainly the values, but that we as leaders are committing to work towards that really sets this business apart drive driving a progressive inclusive culture where everybody is is being aligned around common incentive plans and common objectives all working together for the good of the of the company.

52:36 And that's very much aligned on the on the incentive plans for the for every single employee in the company around EBITDA and debt as a as a key component across group incentive plans. And then, you know, just a bit of fun, really, on the right on the left hand side, you you know, know, bringing our customer consciences into the business and having actual customers with us in our meetings that we can take into our meetings so we've always got our customers at the heart of of what we do. And we got our employees to to draw, you know, their customers and their customers' needs, and we had them made up to 26 life-sized customer consciences. I'm having a bit of fun in the business, but the serious undercurrent here is, you know, if we're not delighting our customers every single day, then we're not going to succeed as a as an organization. So that just brings me now to the current trading and outlook.

53:25 And I think it's a fairly simple message. Current trading is in line with expectations. We feel very confident that despite industrial markets remaining, you know, pretty suppressed and those headwinds will continue, this is about making our own success. We've got very, very clear focus on the performance improvement plan initiatives that are embedded now in what we're doing. We expect continued improvement in gross margins and further efficiencies to be delivered, and we're certainly seeing that in the first quarter of this year. We've got a a positive recovery happening within product distribution in GB, which has been a key focus. And the benefits benefits there there also also of the improved service levels that we've spoken about. But also the launch of our new catalog and the enhancements to the websites that are coming on stream are all indicators towards getting ourselves, you know, back on track, but actually beyond on track.

54:18 Those self help opportunities that we've been talking about, the rebranding to one FLOWTECH in q two twenty twenty four, we believe unlocks further synergies. And, also, it starts to accelerate those cross selling and upselling opportunities for our customers. And we we believe that many of the foundations now to recover performance and scale have been put in place. There are some bigger CapEx projects that I've just called out, but we're very confident that 2024 will be an important turning point for FLOWTECH for the future. So in summary, I'll just ask all of our investors and for those of you attending today that aren't in the investment community, do you think FLOWTECH can think differently? We very, very much are a business which is on track to to be be moving to the next level, and we're putting ourselves around this world of motion being very customer centric for the future.

55:08 And and I guess that leads us now to questions, which we're very, very happy to take in the time that we have remaining. Perfect. Mike, Russell, if I may just jump back in there. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Russell, Mike, as you can see there in the q and a tab, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But, guys, at this point, if I may just hand back to you to read out those questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end. Thank you.

55:57 Great. So, Ian, I think we covered off the strategic supplier partnership piece. Ben, I think we talked about oh, no. We've we've talking about those bigger OEMs, and we've covered that off as well. Ben, you've asked about how we're leveraging customer feedback to refine your operations and customer service strategies. Can you provide examples? Well, as I would say, you know, certainly from the second half of the year, we've been working with the the Institute of Customer Service. We've done a series of of customer surveys across The UK market, across the island of Ireland, and across Benelux. And as I said, we've now got that those that customer service index benchmark. But more importantly, we've got pages and pages of customer feedback.

56:44 We know very, very clearly what our customers like. We know what they don't like. When we talk about own goals, I think we know very, very clearly we've we've perhaps scored them. And we've we've been leading all of that into that performance improvement plan to make the improvements there. And so, you know, we'll we'll continue to share that customer feedback, but that's very much at the heart of the business. Just in relation to I think this is a a great question. Gary, how is the execution of the wolf strategic plan progressing, and what are the key milestones achieved to date? How are these milestones directly contributing to expected EBITDA growth? So for those of you who don't know, just a very quick story. Internally within the business, we've we we we came up with a really simple formula, which was using the flow from FLOWTECH, The f being fabulous performance or financial performance, and that being equal to the l being love our customers, the o being operational excellence, and the w being creating a winning team.

57:42 And Russ here had a a wonderful epiphany actually one day and said, you know, if you if you reverse FLOW, you get the wolf. And we sat there for a minute and we smiled. And I googled the wolf, and I realized that it that it is the apex predator in its territory by which it lives. It is one of the most resilient animals on the planet, highly intelligent, highly resilient. It hunts in packs, and it also looks after and protects the pack, supports the young, and looks after the elders. And so we decided that, you know, as part of our strategic internal strategic execution plan, we would introduce the wolf, and we're also using the wolf very much to epitomize the culture that we want within the organization. And so thank you to to Russ, really, on my behalf for turning the wolf in for turning FLOW into the wolf. I've gone through our our margin growth engines, and I've gone through our strategic plan. I think from that, you should see very much how winning team, which is assembled, operational excellence, loving our customers, ultimately, the work we're doing there through the performance improvement plan and the strategy is delivering improved financial performance. And a good example of that will be the gross margin improvements that we're seeing.

58:54 And, look, whilst whilst we had a little bit of fun with the wolf internally, it doesn't half make people remember what's at the heart of the strategy, whether or not it's wolf or FLOW. And it is embedded into everyday life there. There's a little bit of Darren Brown in imagery going on around the buildings, to be honest. So we're reminding ourselves constantly that the characteristics of the wolf aren't actually bad characteristics to have at all, and it just goes to prove that old fashioned accountants do occasionally have creative moments. Thanks, Russ. Brilliant. Look. On people matters and also linking that to inflation where there's a there's a good two or three questions around inflation. The first question on people, how do you retain your skilled resource? For me, I believe very, very strongly whilst we we have to, you know, look at some of the basics in terms of making sure that, you know, we're market competitive in terms of our pay and, ultimately, that we we harness, you know, and we build, you know, the right development pathways for our people. Ultimately, it starts with culture.

59:56 You know, more and more, and we saw this through COVID, people more people more and more are making choices about the type of organization that they want to work for. And that starts with association with the purpose of that organization. I'm a big believer in the Simon Sinek starts with why. You have to understand why you exist as a company. We exist to help the world to move. We help it to move more safely, more sustainably, and more efficiently. I think that's a great reason reason to get out of bed every day. And we're very much bringing that purpose and that vision to our people across the organization. And then it's about creating immersive culture. It's it's creating a safe environment for our people. Big believer in servant leadership, so less hierarchical in terms of leadership and more the fact that everybody's in it together, aligning our incentive plans and objectives so that we're creating an environment where our people can thrive and underpinning all of that, making sure that we recognize where we've got some pinch points. It's not easy. You know, there is a shortage of skilled engineers in in Europe.

1:00:56 I won't I won't say The UK in Europe. It's a real problem for industry, and it's a problem for us. And And so so we have to make sure that we're working really hard not only to bring the best into the industry, but also to make sure that we retain them. And that's in part about giving them, you know, opportunities to thrive, but also create creating environments for them to be able to enjoy the work that they do with their colleagues. Lots of work to do on cultural change. Russ, you wanna pick off on how much was wage inflation last year and also how we're coping with the general Yeah. Inflation rising. Yeah. Mean, I I could just stress what Mike just said there. I mean, it's a piece around communication. It's two two way way communication. It's not just the leader. The leader's communicating, which is important, but it's listening to the communications sort of coming up the organization chart as well. And I think we've been pretty good at that recently.

1:01:45 To the wage inflation piece, we obviously have to respect that there are different pressures within different geographies and sub geographies even, but the simple answer to the question raised is, you know, on average, about 6%. We've equally recognized that the the cost of the new leadership team is is not that significantly incremental to the cost of the old leadership team, but it is incremental. But should we just say that we're extremely pleased with the payback that we're that we're getting for that investment? So, hopefully, that deals with the wage inflation piece. But to to the separate question around general inflation, well, yeah, it's been it's been tough, hasn't it? What I would say there is that we're having we've had we're having past tense, current tense, future tense, a long hard look at all areas of our cost base. I think I briefly alluded to that that two thirds of our cost is payroll related.

1:02:45 So, therefore, one third, about ten to twelve million, is not payroll related. So we've got new people, professional procurement people, looking at different categories of costs, whether or not it's carriage or the way we operate a company car scheme or utilities or travel costs. So by, you know, looking after our pennies in all of those different baskets, we're pretty confident that we'll do whatever we possibly can to look after the pounds. That's just the best answer I can give to that question. And just a number of questions, Russ, around capital intensity and and just how do we expect that to evolve over the next three years, you know, in terms of cap CapEx plans, the projects we're running, and a specific question around, you know, how how do we manage the the investment costs around our our IT investment on ERP?

1:03:33 Do you want me to just talk about that in terms of capital intensity? I can. Yeah. There's also a question about the dividend. I mean, I mean, look, you can't win with the dividend, can you? I mean, some people say, why on earth do you bother about it? Some people say, why on earth aren't you increasing yet? So, you know, I'm sorry, but we think the approach to dividends is proportionate, 2.0 becoming 2.1, 2.2. We reset it after the pandemic. It had got up to over 6p per share, which, you know, would like the idea of 4,000,000 going out of our cash flow for dividend, but we think 1,300,000 is proportionate and easily manageable within the constraints of our debt package. In terms of the CapEx, I think I already alluded to the fact that we've got plans to spend 9,000,000 over a two year period.

1:04:21 How do we do that? Well, the market expectation is for us to deliver aggregate 25,000,000 of EBITDA. And, yes, we have to pay interest and tax and lease payments and dividends, but there's provided that we're alert to that working capital management, and by the way, we are. It's definitely within my DNA. I come from a restructuring and turnaround background personally. And some of my new colleagues, certainly, it's within their DNA. So we're backing ourselves to do that. So, we, as I said briefly before, we are planning to reduce our bank debt to circa 7,000,000 by the end of twenty twenty five. That's well within our Barclays banking facilities, obviously. And, the £9,000,000 CapEx gives us what we what we want to spend. We don't feel constrained, and we think we've got some good projects with sensible returns.

1:05:17 And in the case of, you know, ERP systems, well, yeah, we need to do that to safeguard the future of the business as well as seeing some short term benefits. Yeah. Look. I mean, there's always going to be a concern on that, one in terms of business stability, you know, and maintaining great customer service, but also in terms of cost and investment. You know, we're not a we're not a significantly large company. You know, we we are building data integration layers so that we can really start to derisk dependency on on some of the ERP platforms. So at the right time, in the right order, and phasing that in a way that doesn't take the business, you know, off off track in terms of its customer focus, you know, we will make some sensible changes in the way that we want to upgrade our systems, which we have to do to, a, future proof the business and, b, to scale for the future. It's also important, certainly, if we look at inorganic opportunities in the future, that we're able to integrate businesses more seamlessly because, you know, we don't want to end up back where we started. We just have lots of of companies in Actually, we can't extract the synergy opportunities from them. So, you know, rest assured, you know, I think we we we have the right people on the pitch, and we'll also bring the right people onto the pitch to make sure that we don't make the wrong choices there, and we'll obviously keep you updated as we go as we go through that. Now, look, I I think that summarizes pretty much all the questions, actually.

1:06:41 So we're over time, so maybe I'll just pass back to our wonderful host just to close us out. Perfect. And, Mike, Russell, thank you very much indeed for addressing all of those questions that came in from investors. And, of course, we will be able to give you back all of the questions that were submitted today just for you to review and to then add any additional responses, of course, where it's appropriate to do so, And we'll publish all those responses out on the platform. But, Mike, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. So, again, I'd just like to extend a a huge thank you to those of you that have taken the time to to listen through. And, also, if you're valuable input, we really welcome it, and we learn all the time as a team. And so that's important.

1:07:26 After, you know, almost twelve months in this business, I'm more confident now than ever of the opportunity for this business to to accelerate and to create real value. And, certainly, you know, when when I look at that through the lens of of of that list of of of margin growth opportunities, you know, we we really are touching the surface over what is an enormous opportunity for the future. I'm really delighted with the traction we're we're gaining within the near term performance improvement plan and the self help that we're unlocking this year. And I'm very, very pleased with the way in which our leaders and our people are really rallying together now around one FLOWTECH, and I think that this is going to be a really critical turning point for this business through 2024 and to set us up for a very, very bright future. One team, stronger together, brighter future.

1:08:18 Thank you. Perfect, Mike. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team with FLOWTECH FLUIDPOWER PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all. Thank you.