Luceco (LSE:LUCE) — Half Year Results

0:01 Good afternoon, ladies and gentlemen, and welcome to LUCECO Half Year Results Investor Presentation. Screen. Simply type in your question at any time 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 your questions and will publish any responses where it's appropriate to do so on the investment company platform. Before we begin, we'd like to submit the following poll. And if you could give that your kind attention, I'm sure the company would most grateful.

0:32 I'd now like to hand over to CEO, John Hornby. Good afternoon. Thank you very much, Mark. Hello, everybody, and welcome to the interim results presentation for LUCECO PLC for 2023.

0:48 Slightly ahead of where we thought we would be in the summer, revenues of 101,000,000. However, that is a reduction on last year of approximately 5%. An adjust of adjusted operating profit of 10.8, which is approximately 6% below last year. There was, however, in the first half, approximately £5,000,000, which was the end of the of the customer destocking. So without that, the performance would have been a couple of million pounds better at the operating profit level. Adjusted EPS, of approximately 5p, which is 14% down year on year. However, we have a very unleveraged business with a balance sheet of 1.3 in terms of the net debt ratio, which should be below one at the year end.

1:44 The, the business has improved as the year has gone on. The first quarter, we were experiencing the destocking, and the second quarter was significantly stronger. The markets in which we operate, however, are weak. Some of the non residential infrastructure businesses we have, however, have outperformed. But overall, the decline in revenue has been less than expected as the noncyclical businesses have, outperformed.

2:21 And input costs, particularly freight and other raw materials, have been subsiding, and our gross margin as a result of the price increases that we put through in 2021, and 2022 was significantly higher in the period. Some of the businesses that we have bought recently, particularly the EV business and the DW Windsor lighting business, has performed strongly in the first half. And the EV business is a is an exciting proposition with a strong pipeline of new products. So the outlook for the for the rest of the year, in July, we thought that our trading would be in line with last year. We now think it'll be approximately 1,000,000 ahead of last year, and that's an upgrade to the guidance that we had issued before.

3:19 However, we do remain mindful uncertain macroeconomic environment and the potential impact this may have on our business next year and beyond. And with that, I will hand over to Will Hoy, who will take you through more of the financial numbers.

3:37 Thanks, John, and good afternoon, everybody. Let me start by pulling out some of the key themes in our numbers. Overall, revenue decline of 5% and on a like for like basis, percent. We've seen a slowdown in underlying demand in the DIY sector, which drives about 30% of group revenue. But demand from other areas of the construction market has remained relatively robust. Our Our gross margins have continued to recover following the lows of 2022 as much of our raw material bill and our freight costs have reduced. This has in part been offset by higher operating costs, especially wage inflation. We said earlier this year that our median pay rise was seven and a half percent coming into 2023.

4:29 Overall, just about maintained operating margin at 10.7% to the prior year. We were pleased to be able to confirm that the post pandemic destocking, which was such a theme of the second half of twenty twenty two, appears to have come to an end during the first half of twenty twenty three. I'll get into the numbers in detail on the next slide. The income statement, slide seven. Reviewing the income statement, you can see that revenue came in at just over a £101,000,000. That was 5% lower than the first half of twenty twenty two, less of a decline than we had anticipated. The reduction in DIY demand was expected.

5:17 Against that, we have enjoyed a stronger performance in in the the LED space and especially in lighting projects. The high cost of energy is encouraging demand for energy saving lighting projects. Gross margin for the half was 39.4%, pleasing to see this recovering back to levels we expect at LUCECO. This recovery is more of a feature of the easing of input cost pressure, including freight, which has returned now to pre COVID cost levels. Most key raw material costs have eased, perhaps with the exception of copper, which is proving somewhat sticky. Production volumes have recovered at our manufacturing facility, and as a consequence, recovery levels are improving.

6:05 There'll naturally be a lag between this happening and it showing fully in our cost of sales because the improving cost profile has to work its way through our inventories. Overheads were £29,000,000 with the majority of the increase year on year attributable to the higher wage and salary costs implemented towards the end of last year and a return to more normal sales and marketing activities, which were constrained during the COVID period. Inflation has been running at higher levels, especially in The UK, and there is consequent upward pressure on payrolls. Adjusted operating profit was £10,800,000, slightly ahead of that anticipated in our July trading update.

6:52 Our tax rate has stepped up somewhat in the first half of twenty twenty three. Continue to take advantage of various government incentives. As we said earlier this year, there were some one off benefits in the 2022 tax rate. The increase in the tax rate to just over 18% together with approximately £4,400,000 increase in our finance charge, led to a reduction in earnings per share of approximately 14% to five p for the first half.

7:26 This slide provides a bit more detail on the drivers of our revenue performance. The most significant change to our revenue for this half compared to the first half of twenty twenty two occurred in our retail space and especially our portable power offering. Retail suffered as The UK consumer turned away from residential DIY facing the pressure from the increase in the cost of living and so reduced discretionary spend power. The hybrid channel recovered during the first half of twenty twenty three from the customer destocking experienced in the latter parts of 2022. However, the retail side was still suffering from destocking during 2020 the first half of twenty twenty three.

8:14 Efforts over recent years to rebalance our revenue toward professionally installed products, particularly those installed in nonresidential settings, allowed us to mitigate the slowdown in DIY and benefit as the high energy prices drove strong demand for LED retrofitting. Professional wholesale and projects now make up over 50% of our sales, helping to cushion us somewhat from the short term consumer demand changes. There's been much comment recently concerning new house building. It's difficult for us to be precise about our exposure to this space because we don't have perfect sight of who our wholesalers sell to.

9:02 We We do, do, though, estimate that our overall exposure to new house building is under £10,000,000 of sales. The reason acquisitions and closures is not larger positive given the improvement from our recently acquired EV business in in this this chart chart is that 2022 saw the end of our German and French operations, which delivered sales of nearly 3,000,000 in h one twenty twenty two.

9:32 This slide shows the key drivers of our adjusted operating profit performance. Overall, the story comes in two parts for understanding the like for like operating profit increase of 7%. I'll pick pick this this up up in more detail on the next slide. Currency has been a headwind during the first half. And from the forward contracts we have in place, we can see that it will continue to be so for the remainder of this year. Without currency impact or on a constant currency basis, we would be ahead of the adjusted operating profit level by about £1,000,000 in the half. The small effect of acquisitions and closures reflected here is similar to the comment I made on the last slide.

10:21 Looking more deeply into our p and l comparison back to 2022 shows the continuing progress in gross margins. It's pleasing to see that our gross margins are back towards the the thirty thirty nine nine plus percent. This has delivered through raw material cost reduction, the improved freight market, favorable product mix and efficiencies at the Jiaxing manufacturing facility, now able to operate at more sensible volume levels and so make better use of the automation equipment that has been installed there over the last few years. This improvement was in part countered by the increasing cost of living, especially in The UK, and as a return to more normal levels of variable pay.

11:08 Together, these increased our payroll by just under £3,000,000 this first half. We did mention earlier in the year that the median pay rise for The UK was about seven and a half percent with actually the the lower lower earners gaining over 10%. LUCECO has historically enjoyed higher sales in h two than in h one. Last year was an exception to this as customer destocking affected the normal seasonality. We expect this year to follow the more normal pattern. But, of course, we do remain cautious given the uncertain economic world we're operating in. Finishing up on the summarizes our working capital, cash flow, and debt performance.

11:55 In short, as we mentioned in our July trading update, our business has returned to normal post the customer destocking seen heavily in 2022 and continuing to some extent into the first half of twenty twenty three. The customer destocking reduced our sales below the level of the natural market demand. The lower quarter four sales meant much lower trade debtors at the 2022 year end. The end end of of the the post pandemic destocking means sales have returned to more normal levels for the second quarter of twenty twenty three. And so our trade debtors naturally have returned to more normal levels. The cash flow consequence of this has been an outflow of some £11,000,000 from trade debtors normalizing.

12:46 Our overdue debtors metric has not deteriorated, and our inventory has been well controlled during this transition. With the exception of 2021, which is affected by the first phases of the pandemic, LUCECO has typically experienced a working capital cash outflow during its first half of each year. 2023 is a typical year in this respect, only amplified by the recovery in our trade better position I just mentioned. The cash outflow we see in the first half of twenty twenty three is therefore unusual scale, and we expect positive cash flow for the second half of this year. With that, I'll hand back to John to talk through our business review and outlook.

13:34 Thank Thank you. You. Thank you, Will. I'll just add that on cash flow, the average the average free cash flow margin over the last five years since 2019 is approximately 10%. On a billion of sales, we've generated about a $100,100,000,000 of free cash flow. And the average operating margin is 13.5%. In terms of the markets in which we operate, it's a it's a mixed picture. So you can see in the top left, the consumer and the spending on the DIY home improvement sector, that, as we know, experienced an enormous an enormous boom during the lockdown periods of COVID.

14:20 And as we came out of COVID, the start of the graph of the dark green line on the left hand side, you can see the market was very weak. It has been improving a little bit on the on a year on year basis, and actually went positive in June before we think probably bad weather, weakened the market again in July. I mean, my personal feeling is that the consumer for our products is a little bit stronger than they were before. Certainly, on a like for like basis, you know, what we're seeing when we monitor sales out of our large customers, the position has improved a bit as we entered the second half. Moving down to the chart on the bottom left, you can see that residential RMI that we, estimate is approximately 55% of our business. That market, is forecast to decline at 8% this year, so a significant decline.

15:15 And non sorry. New residential housing forecast to decline even more, near 20%. But, fortunately, as Will said, that is only a relatively small part of our business, less than 5% of our sales going to new housing construction. On the infrastructure side and the nonresidential RMI side, the markets are about flat, and these are the noncyclical areas of our business that have been performing strongly. So DW Windsor, Kingfisher Lighting, our own internal LUCECO lighting projects team have all had a very strong first half. Overall, we think our market in The UK is down by about 5%, and we believe we will outperform that market decline this year.

16:12 Overall, our sales this year will be significantly up on last year, but you need to consider that last year's sales were reduced by £20,000,000 of customer destocking. And this year's sales will be reduced by approximately £5,000,000 of customer destocking. But if you look through the customer destocking, we think our sales this year will decrease by approximately 2%, and the market is down somewhere between five to 6%.

16:44 So we believe that we have gained market share and outperformed the market, especially in these in these nonresidential areas of our business. The graph on the right hand on the right hand side shows the overall construction market, which in The UK has remained relatively stable. How do we grow how do we grow this business? Historically, NPD, new product development, moving into adjacent product categories has been a key driver of our growth. The EV charger market, we entered via a small acquisition earlier last year, and we have been investing a lot in the team, in the technical know how, and in the product range.

17:39 And we believe that we we can can significantly grow our market share of a market which is forecast to grow at 50% between 2023 and 2025. Furthermore, changes in the regulatory environment are boosting the electrical sales in the residential space. And within lighting, ever increasing efficiency of LED lighting means that the ROI on a retrofit is becoming ever shorter. We also point to the climate emergency and the electrification that is going on in the residential space. And although, you know, we don't, we don't make or, install things like heat pumps, and solar panels, we do make the connectors, the inverters, and the other, infrastructure

18:37 that is needed around those products. And finally, m and a, as I said, you know, the business generates approximately 10% free cash flow margin per year, And we pay we pay a 40% dividend, but that does leave cash for acquisitions. Since IPO, we have made we have made three acquisitions. The first one I'll talk about is Kingfisher Lighting we bought for for less than £10,000,000 in 2017 when it had operating profit of 1,200,000. This year, we'll have operating profit of near 2,500,000. So and we've owned the business for just under five years.

19:23 The DWN is a business that we bought in 2017, also performing strongly. And the Sync EV business, although it's early days, is also performing strongly. It is an exciting area of future growth. As I said before,

19:40 n MPD new product development innovation and range extension has been a very significant driver of our growth, and you can see here some of the examples of activities that we are and have been involved in. I would particularly point to further work in the EV space and the three phase hurricane protection range. Currently, we only have a single phase low voltage offer, but it's a big cash queue for us worth approximately £20,000,000 per year. And we're we'll be launching an expansion into three phase in the in the second quarter of next year. We've been investing ongoing in in our relationships with the contractor base, trying to market more and more to our customer's customer. Although we don't actually invoice the contractors, and we don't deal with them on a commercial basis, they are the end users of our products.

20:43 So trying to get beyond the customer to the customer's customer and to form a relationship via social media, etcetera, has been a big focus for the business. Investment in people, as as Will said earlier, we gave a significant pay rise at the beginning of this year, and we've invested in over 4,000 training sessions for our staff. In terms of the climate emergency, we are now operationally neutral as a as a business within our own operations. So the what I mean by that is that any any energy that we use ourselves, we either get, from renewable sources or we buy offsets.

21:30 Turning over to the a bit more information on the outlook, The markets in which we operate, as I say, housing, RMI is down, but the rest of the markets are relatively stable. And, again, that leads us to be relatively optimistic for the outlook for this year. We have the FOB order book up until the end of October, and it's FOB, I e, where we supply the big customers directly from China where most of the volatility in the revenue line has historically sat. Normally, we're a second half business, as Will said. Last year was the first year in a very long time. In fact, the the only year I can ever remember when the when the first half was stronger than the second half because the second half was severely impacted by customer destocking.

22:29 This year, I'm expecting a return to more like 53% in the second half against 47% in the first half. And we have an order book up until the end of October, at least on the FOB side, that would support that view. In terms of gross margin, we expect that to improve in the second half. And overall, therefore, we expect, a significantly stronger second half than first half, both against, the first half comparator, but also even more so against the comparison of the second half of last year, which was very weak. Having said that, our markets, our core markets are are obviously weak, and we remain mindful of what the macroeconomic environment may bring for next year and into the future.

23:26 So with that, I will hand over to any questions. In fact, I say hand over. Think it's my job to be the man. Please, let me let me just give you a few moments. John Will, thank you so much for updating investors. Ladies and gentlemen, please do continue to submit any questions you may have using the Q and A tab just situated on the right hand corner of your screen. But just while John will take a few moments to review those questions submitted already, I'd just like to remind you that the recording of this presentation, along with a copy of the slides and the published Q and A, will be available via your Investor Meet company dashboard. John, we will see you've had a number of questions from investors this afternoon. Thank you, everybody, for your engagement thus far. I think you've touched on some of the matters perhaps before after the questions came in. If I could just hand back to you, John, maybe just to read out any questions where you feel it's appropriate.

24:13 Yeah. Thank you. Thank you. Thank you. First question from Tom.

24:21 Your investment in the EV market following the acquisition of Sync, can you see further investment in that market? Is Sync fully integrated, and is it meeting your expectations? I can't rule out further m and a in EV. I think it's unlikely. It would probably be outside of The UK if we wanted to buy an EV business internationally. They're not easy to come by. So I think it's very unlikely, but not impossible.

25:00 In terms of further investment, though, yes, we are investing a lot in the product range. We are investing a lot in the technical support. We will be investing in a warranty engineers of our own, we will be investing in a commercial operation outside of what we have already. I mean, basically, what we've done currently is integrated the business and using our existing commercial teams to sell into the electrical wholesale channel. There are there are lots of other channels

25:40 where we're not as yet operating. So we've owned the business for for just over a year. You know, the first sort of phase of that was to really understand the product, understand the market, understand the technical complications, and it is quite a complicated product, and expand the product range. So now that we've done that, we're gonna be we're gonna be a bit more on on the on the front foot from a sales perspective. We've recently recruited a very high quality individual from one of our competitors, and we have very high hopes for this business in the future. Has it met our expectations? I think the market hasn't met our expectations. So, you know, the uptake of EV cards is slower than everyone was forecasting and anticipating.

26:32 However, I think our performance in the market is pretty much in line with our expectations. But as I say, the market is weak. Okay. And the next question from Nick. Obviously, organic growth is critical, but what are your views on new acquisitions

26:50 any particular area of focus? Will, do you wanna talk a bit about acquisitions? Yeah. Sure. I mean, we you know, as we've both mentioned in the call so far, we have a good core business that's cash generative. We do pay out, you know, a sort of dividend ratio of about 40%, but that does leave, you know, plenty of cash flow to invest in order to grow organically or through m and a.

27:23 We we we're perhaps a little bit more enthusiastic about the outside world at the moment than perhaps some others, so we are looking at some acquisition projects now, now. And it would be nice to be able to bring one of those home, you know, perhaps later this year. And, you know, the sort of things that we're looking at are things that would have, you know, strong synergies with with our existing model. So, you know, either things that we could perhaps manufacture in our facility or perhaps near adjacent products that would, you know, ideally go into the distribution network that we have very good relationship with. So, you know, I guess, watch this space where we're back out looking and, you know, we feel like the there's a number of opportunities for us to go after.

28:18 Thanks, Will. What sort of market share does LUCECO have, this is Mark, in each of its end markets? And how does this limb limit the runway to growth in these areas, either organic? I mean, we operate in so many end markets. We have perhaps just interrupting, John. We have we have attempted to do a market share, and it is in the yeah. It's small text, but in the appendices, it's sort of about slide 25 onwards. We've quoted an approximate market share in some of the categories, but we've not talked to UK. That might limit things. Yeah. Well In In the The UK market. I mean, we operate in Mexico. We operate in The Middle East. We operate in Asia. We operate in Spain. We operate in The UK in multiple different categories, multiple different products, in multiple different market segments.

29:06 And we have very different market shares in all of those. I mean, the key highlights would be BG has about a 20% market share in UK wiring accessories. Master Black has about a sort of 35 to 40% market share in portable power. Our lighting total market share is about 5%. In projects, it's near 10%. But these are all UK. When you get outside The UK, our market shares are close to zero in most markets. Yeah. There will be areas like Middle East or Mexico where it'll be a bit higher than that, but our global market shares basically ran to zero. So I don't think market shares limit our growth really anywhere. Wiring accessories in The UK, we are market leaders. That is harder to grow. But, equally, you know, we have a very we have a very strong position, which is driving a very high operating margin in that space.

30:03 But, you know, we are kind of highly diversified, and none of our market shares are very prohibitive to growth.

30:13 Any thoughts on dividends from Nick Not sure what kind of thoughts. We pay a 40% dividend. I think in the first half of this year, we paid the same dividend. I mean, our interim dividend is the same as it was last year, so it's a tiny bit more than 40% because our performance is a bit weaker, but we think, you know, that will rise itself by year end. I don't know whether you think you we wanna pay more dividends or less dividends or no dividends. But that is our current policy, and I don't think we plan to change it. I mean, we pay a lot of tax on dividends, but, you know, we think it's a it's a good discipline to pay cash out of the business. Can you comment on your thoughts with China plus one from Scott?

31:04 Well, you know, my current thoughts are that Chinese currency is at a fifteen year low. It's gone from 6.2 against the dollar to 7.3 in the space of about eighteen months. So China has just got, you know, 15% cheaper, and it was already the cheapest place to manufacture in the world. So although the labor rate is obviously not the cheapest, the productivity and the the manufacturing expertise that they have in China makes it the cheapest place, and we have done quite a lot of work looking at this. Equally, you know, there is a concentration risk coming all your manufacturing in one location, whether that's China or or any other single location. And there's a geopolitical risk around China, which maybe, you know, doesn't exist if you're looking at India or Malaysia or Mexico or Turkey.

31:58 So there's a four other countries that we are looking to do some kind of China plus one. We're not going to we're not gonna build a factory and take work away from our existing facility, but we are looking to buy a business with its own revenue stream in its local market, which we can then use as a lifeboat in case there is a problem with buying from China. I read in the newspaper the other day that $3,000,000,000,000 of trade goes through the South to China Sea every year. If there is a a geopolitical event there that will prevent that, you know, the world's gonna have very, very, very big problems.

32:47 So, anyway, we'll have to see. But, yes, we are actively trying to mitigate our concentration risk. We as of is China. Question for Mike b. With the FOB order book, has this been building throughout the year? Are you willing to give any year on year growth figures where it currently sits, Satta h one? I mean, the way this works, Mike, is that we get orders for two months forward, basically. FOB is on a average sort of seventy day lead time. So we have we have now the orders up until early November. And I can tell you that the order book for September, October is more than 50% up on what we invoiced in September, October last year.

33:44 I don't know the exact I don't have the exact number to handle. I know it's more than 50%. So it's much, much stronger. But that is what happened in the second half of last year. FOB sort of cratered towards the end of the year, which resulted in us having to issue profits warnings and miss our guidance and and generate lots of cash, which was a good thing. But that was all about destocking. Customers, as they got close to their financial year ends, realized they were overstocked, and they and they scaled back their purchasing, and it hit us very badly. I'm pretty confident that won't happen this year. We look at customer stock figures and the rest of it. We can be out as we can beat. That won't happen this year.

34:30 I can't absolutely guarantee it won't happen Guarantee. Because we don't yet have the orders. There's a bit of background noise. It's not me. But it looks you know, so far, it looks it looks pretty strong. A question re auto EV auto sales has been weaker than many expected. Do you still forecast 50% growth in this market? Is this still possible? If so, how has EV charger market decoupled from EV sales? The big difference between EV EV sales and EV chargers is that new regulations have come in that mean that new housing construction needs to have an EV charger installed at the point of construction, which is a new regulation which is hitting about now.

35:26 So EV charger sales are now a function of new house bills, which are also weak, as well as sales of EV cars, but that is why there's a decoupling. You might be right. If EV sales are very weak and EV highs and new highs build is also very weak at the same time, that might mean that the 50% growth figure is still I mean, it's it's quite challenging for the market, but that remains to be seen. I still I mean, you know, unless the government changed the laws that they've got in place around the 2030, you know, ban on non EVs, the market's gonna be huge. It's just about when. And in fact, the fact that the market is a bit slower helps us because we needed a bit more time to get our products and to get our understanding and get our technical ability in place.

36:31 Mike, be any tax rate guidance for full year '23. Will, are you still there? I'm not sure Will's still there. So tax guidance, yeah, I think it was 18% in the first half. I think it'll be 20% for the full year. That's what we're guiding to. Will's back. Will, the question on tax, I think it's I think we're guiding to 20% for the full year. Right? Not sure Will can hear me. Okay. I'll move on. Sorry. I'm back on now. I I had a technical problem. Okay. Tax guidance for the full year. It was 18%. Thought. Yeah. 18% was in the first half. I guess I'll be disappointed if it went above 20, but it's certainly, you know, creeping up versus history.

37:21 I think everyone on the call is aware that The UK corporate tax rate is now 25%. So Well, I think in your model, if you've got one, you can put in 20% for this year, and it might be a bit less than that. Are you exploring any new projects in the infrastructure? We do have a business in The Middle East. We do have business in. We do have distributors there, but the are very keen on buying their own their own Saudi products. If we really wanted to get big into Saudi, we would have to do a JV. We'd have to build a factory. We'd have to say made in Saudi. Because most government projects and a lot of a lot of Saudi infrastructure spend is being led by the government, they will favor locals.

38:17 Some of our larger competitors have done that. They have done JVs in Saudi in order to get around the get around the made in Saudi requirements. We We haven't done that. But it is a market in which we operate, and it's a market in which we do okay. And if there's a huge amount of infrastructure, we should be able to do slightly better, but we can't be a major player without a JV. Are you seeing are you seeing potential acquisition multiples? Yes. I think we are seeing acquisition multiples compressing due to the tougher macro environment. The businesses we're looking at sort of six to seven times, whereas before they might have been eight times.

39:08 So yeah. Rosita says, our our previous CFO has moved XP power. They are about three times our size. You must be a shareholder, Rosita, have three engineers on the board. I wonder why you thought we didn't need any. Well, that's a very interesting question. Will, do we need more engineers on our board? I think we should we should consider it. I guess, my history, I spent twenty five years at a group called GKN, which was a heavy, you know, engineering based business.

39:54 And I spent most of my life working very closely with with with engineers. I guess the product here at LUCECO is perhaps less complex, and the sort of lead times and the design complexity and the failure modes are perhaps a little bit less severe than, you know, where I've been before. But, no, we're sort of often enough regularly looking for additions to the board. And, you know, I'm sure at recruitment times in the future, we'll consider a variety of different qualifications. Yeah. I mean, I it's interesting. That's an interesting interesting question, and I am in touch with Matt. I remain on very good terms with our previous CFO, and I will talk to him about his board and the added value that his engineers bring to it. And maybe that's worth something following up on, so thank you for that thought.

40:52 Ewan, would you ever change the dividend to paying quarterly in future? I think that's the answer, that's probably no. We wouldn't. We'd have if we I think if we pay the biz dividend quarterly, we'd have to do all sorts of other things quarterly, which We probably wouldn't. Yeah. I mean, do other people pay dividends quarterly? Do, for example, Vodafone pay their dividend quarterly? I'm not sure many businesses pay their dividends quarterly. So I think think that's very unlikely. Well, that's it. I might just jump in there, John Will, because you've taken every question from investors, and thank you to everybody once again for engagement. John Will, thank you for updating investors this afternoon and for your time. Ladies and gentlemen, please, could I ask you not to close the session as we'll now automatically redirect you to the opportunity to provide your feedback in order the management team can really better understand your views and expectations.

41:46 This won't take a long for you to complete, and I'm sure be greatly valued by the company. On behalf of the management team of LUCECO, we'd like to thank you for attending today's presentation, John, Will. Good afternoon to you both. Thank you very much. No, Hans. Cheers. See you again. Thank you.