Macfarlane Group (LSE:MACF) — Half Year Results

0:00 Good morning, and welcome to the MACFARLANE GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Peter Atkinson, CEO. Good morning, sir.

0:32 Good morning, everybody, and welcome. I'm Peter Atkinson, the CEO of MACFARLANE GROUP. I'm with our CFO, Ivor Gray, and we're gonna take you through our interim results presentation this morning. And before I do that, I I recognize some of you may not be familiar with the MACFARLANE story. So a brief introduction to MACFARLANE. The company is almost 80 years old. We've been on the main market since 1974, and our business is a supply of protective packaging to businesses. And we have two divisions, a distribution division where we're a classic, wholesaler of protective packaging materials, and we're the market leader in The UK in that particular division, and we're also a new entrant into Europe. And our second business is we have run a specialist design and manufacture business where we provide protective packaging for those companies with very high value or sensitive items.

1:24 So let's move on to the presentation of our twenty twenty four h one results. And if we got the agenda, I'll make some opening remarks, and then Ida will cover off the the key metrics. I'll come back and cover the individual divisions and put some color to the numbers. Ivor will cover off the pension scheme and where how we're progressing with that, and then we'll make some concluding remarks. We obviously welcome your questions, and we'll pick those up later on. So in terms of a summary of the first half, we indicated to you with our full year results for 2023 that h 01/2024 is going to be challenging, and this has very much been the case. The market has been difficult.

2:10 There's been weak demand, and that's existing existing customers buying less because of a macroeconomic environment and also existing customers buying less as they drive sustainability programs in their business, and we've also seen price deflation. I think the features that we're describing in our business are well reflected in the in our peer group across the industry. So the story of h one for us has been implementing actions to offset the weak demand. And and as we'll go through the presentation, we'll talk about our new business progress, which is 10% ahead of the previous year. We'll talk about the fact that we improved our gross margin and our net margin through effective price management and also better sourcing. We maintain good control of costs, and we've also had the benefit of acquisitions, the rollover of twenty twenty three acquisitions, and the benefits of early early progress in acquisitions in 2024.

3:05 So despite the weakness in the market, the impact of the actions has only meant a marginal change in our profitability for this first six months of the year. If we move on to the next slide, it just talks about, you know, why is our business so resilient, and I think we've shared this slide with you before. I think it's about the breadth of the markets we serve. It's about the focus and depth of our expertise in protective packaging. The fact that we don't do product and price, we're offering customers a value added proposition. We've got well established supplier relationships over a long period of time. Our business is all about performance. Everybody in their business has got a performance metric around profitability, which they are measured on and and motivated against. And then the bespoke nature of our business, both in terms of the product and service, differentiates us from our competitors.

3:54 I'll pass over now to Wiva to talk you through the key metrics, and then we'll put a little bit more color on the presentation by talking about the divisional performances later in the presentation. Good morning everyone. I'm just going to take you through just some of the key KPIs for the first six months of the year. As you can see at the top left hand, revenue is down 8% year on year. We moved forward 3% with the benefit of the acquisitions we made in 2023 Gottlieb, Suttons and B and D and also our Allpac at the beginning of this year. So our organic sales are actually down 11% and that is just down to what Peter described earlier, that's down to weak demand from our existing customers and some price deflation that's been flowing through at the back end of this year and to the start of this year.

4:42 That's been offset, you can see to the right hand side, the top right hand side, our profitability has only gone down 2% and due to kind of good control of our gross margins and good control of our operating costs, the effective impact on our profitability is only 2% and that breaks down minus 6% organic plus 4% contribution from acquisitions. Moving down to returns on the balance sheet, you can see that we're actually in cash funds at the end of June and that compares to of $800,000 that compares to cash funds of 500,000 at the end of twenty twenty three, so a positive cash inflow for the year and I'll cover that in a bit more detail later. The pension scheme, surplus has increased marginally. As we explained before, the scheme is well funded and from the start of this year the company is no longer putting in any cash contributions into the scheme and as we move forward we work with the trustees towards preparing the scheme for a potential buyer at some point in the future.

5:44 The dividend is now 0.96p for the first half of year, that's the interim dividend for 2024, that compares to 0.94p interim dividend last year, so a nudge forward in the dividend. To the left hand side our diluted EPS is down 4%, that's a bit more than the profitability and that's principally due to the fact that tax rate has increased from a blended 23.5% last year to 25% this year. Moving on to the results for the year, Peter will pick up some of the revenue movements across the divisions in the later slides, but I just want to pick out a couple of things in this slide. You can see that the gross margin has moved forward just over 3%, and that's due to the manufacturing division. Margins have stayed relatively stable at 44%, but the manufacturing business has had a stronger first half of the year than distribution, so there is a mix impact with a stronger gross margin for our manufacturing business impacting the overall margin of the group And the distribution business has increased its margin from just over 34% to just under 38%, and that's really a flow through from the back end of last year. In half two last year, the margins had improved to just over 30 just over 37%, so that has continued through the first part of this year. So good performance in terms of the gross margin, that's helped offset some of the weakness in the sales line.

7:15 And the other line, just want to pick up here, is operating expenses have increased by 500,000. 1,100,000 of that is the impact of the acquisitions I referred to earlier and 600,000 reduction in operating costs for the organic business, primarily related to employee costs within the business.

7:36 Just moving on to cash flow. Again, you can see we've had very strong operating cash inflow for the business. It is a feature of the business that we have good strong operating cash flows, which allows us to reinvest that money into capital expenditure, into acquisitions, and ultimately to pay dividends to our shareholders. So it really just to pick out the working capital continues to be managed well, generating good allowing the profitability of the business to drop through to post cash flow, and we've invested that money in the first part of the year primarily in acquisitions. So 2,100,000 of that is due to the acquisition of Allpant that made the beginning of the year and 2,000,000 is due to earn out payments for Sutton, Scotland, and Pacman as all those businesses performed well through the earn out periods.

8:22 The capital expenditure of 1,400,000, that's primarily two two areas. We're we're going through a site consolidation in our East Midlands business, so we're consolidating four of our operations in East Midlands into one new site, which will open at the start of next year. But currently, we're spending money fitting that site out at the moment. So about half of that capital expenditure is the fit out of our new site in East Midlands, and then 200,000 of that capital expenditure is is in implementing solar panels at our our manufacturing site in GWP, so that should give us some benefit in terms of utility costs as we go through the back end of the year. But as you can see, positive cash flow, good investment in acquisitions and CapEx and strong operating cash flow from the business.

9:12 This is a slide hopefully you're familiar with and it's really just setting out our capital allocation priorities. The priorities that we have as a team are to invest in capital expenditure to drive organic growth and efficiency within the business, to then focus on earnings enhancing acquisitions, followed by continuing to pay a sustainable progressive dividend and finally if we have surplus cash left over after the first three, then we would look to return some of that cash to shareholders. As you can see to the right hand side, think I've covered this in previous slide, but we invested £1,400,000 CapEx, 4,100,000 in acquisitions, paid the final dividend in the first part of the year for $20.23 pounds 4,200,000 and we made a small amount of share purchases so that we've got shares to satisfy LTIPs and any deferred bonus payments in future years.

10:06 What we've done historically is we've issued shares to satisfy LTIPs and deferred bonus while we've taken advantage of some of the cash inflow that we've had in the year to buy some shares so that we can satisfy the amount of own shares going forward and not dilute the holdings of our existing shareholders. So I'll pass it back to Peter now to cover some of the divisional performance in a bit more detail. Thank you, Eva. So let's begin by talking about the performance of our packaging distribution business. I think you're familiar that packaging distribution is our main division and represents around about 85% of group revenue. If we begin with the chart on the right hand side, revenue in the period down by just over 10%. And as I've indicated, that's a mixture of the positive benefit of acquisitions this year and prior year, volume decline and price decline.

11:01 Offsetting that, we've improved our margin by over three percentage points, and that's a mixture of a better customer mix and more effective sourcing and effective price pass through. Our operating expenses, we've held tight, and I'll talk more about those later on. And the impact at the end of the period is our adjusted operating profit was probably flat on the previous year despite the sales weakness. Good news is our adjusted profit margin is now up at over 8%, and as we always indicated, the objective in this business is to get our net margin to around about eight to 10%. We always, communicate on Net Promoter Score. I think most of you would be familiar with this as a measure. It's a it's a measure of, of how effective you are in servicing your customers and and good progress going forward in terms of our Net Promoter Score from 56 to 61.

11:54 Just to give you an idea, the average Net Promoter Score for customers in b to b is about 25, so we're way above the average for b to b companies. Moving on to other features of our revenue line performance. New business revenue is up by 10% to 4,500,000, which will flow through to 11 or 12,000,000 for the full year. Good progress, in both the ecommerce new business wins and industrial new business wins with particular success in the health and beauty sector. I mentioned gross margin and the effective job we've done there in terms of improving that through the more effective sourcing and the price management, and I've mentioned the net promoter score. So the only other thing to comment upon in terms of the packaging distribution division is the progress we're making in Europe. Europe now represents about 10% of our total revenue in this division, and both the follow-up customer program is progressing nicely and also the performance of our first acquisition in Europe, Pacman, is also progressing well during the period.

13:00 The next slide just tries to break out for you the revenue change and really is just a simple demonstration of the the impact of the volume the volume features of the business and the impact of the acquisition features of the business. And, you know, broadly, volume is about half the decline and price is about half the decline in terms of the the revenue performance during the period with additional 2% coming through from the acquisitions. If we look at our cost structure, as I indicated, we've done a pretty good job in offsetting price wage inflation. So wage inflation in the year was 4%, but we've managed to offset that by keeping a lower headcount and reducing our temporary costs. Our headcount is down by around about 3% versus 2023.

13:49 And also because a big part of our employee cost line is our bonus pool, That's flexed in line that's flexed in line with the the weaker sales revenue. We expect as we go into the second half of the year to get additional cost benefit benefits coming through from actions we've taken in the first half of the year. And then just over the page, we've talked about what's been happening with pricing. This gives you an idea of the the key indices that we work to in terms of measuring the input prices. So 75% of our business is, fiber based, so it's the paper index, and 25% is is plastic products, so it's the polymer index. And as you can see, these are very volatile indices. What we're now seeing as we move into the second half of the year is price inflation coming through. So while the story of h one has been price deflation, the challenge we now have is actually recovering price increases from our suppliers that we will be passing on to our customers, and then we're well into that program. And, for those of you who know us, if we took this graph back for the last ten years, you would see the volatility.

14:59 And, you know, one of the success in MACFARLANE is very effective price management, and we've got good pass through of input prices into selling prices. If I move on to acquisitions, right at the bottom of this chart, we completed one acquisition in the first half of the year, a local infill acquisition at Berris and Edmonds, a company called Allpac Direct. The environment for acquisitions is very strong at the moment. We probably turned down the first six months this year 20 acquisitions that for various reasons didn't quite fit. So the pipeline is strong, and really you've got two things happening. You've got, firstly, a lot of private owners coming towards retirement without succession family succession plans, So they're making their businesses available for acquisition.

15:48 And then the second feature, which I'll touch on later on when we talk about sustainability, there's a lot of government driven legislation coming down the pipe around sustainability, information capture, information reporting. And I think this is motivating a lot of privately owned small and medium sized businesses to actually look at early exit because they realize the burden of legislation is gonna get even more more intense. And, you know, what these guys have been really successful at is buying and selling packaging, and the management of information and the reporting information is something that they they they don't feel is their their strength. So really strong pipeline, and we in the manufacturing division, which I'll talk about later on, we've completed another acquisition at the beginning of the second half of the year.

16:39 We are unlikely to complete another acquisition this year just because of timing, but we're pretty confident that as we move into the first part of twenty twenty five, we will likely be announcing more acquisitions based on the pipeline that we're working with at the moment. In terms of the action plan, the priorities, I think we shared with this with you, last time we met. Nothing new on here. We've got a clear plan across the business. Probably one of the the most important things which will benefit us in q four is the relaunch of our website, our trading website. We've recognized over time that the the website's become a little bit too clunky. It's not as competitive as it should be relative to some of our peers, and so we will launch that website effectively in September.

17:28 We'll benefit from that in the in the back half of the year. And I've touched on the property consolidations. So the next property consolidation is the East Midlands, which is Nottingham, moving four sites into one. That was planned for the, second half of twenty twenty four. We've now decided to move it to the first half of twenty twenty five, slightly delay, the move of that site for practical reasons. Nothing, no no sort of major drama in that. And then the the final point I make is that we've talked about UK acquisitions. We are moving, at a relatively good pace in terms of European acquisitions. Again, nothing likely this year, but a degree of confidence as we move towards the back end of '22, '25, and now 2026, we will be able to execute a European acquisition. Our target acquisitions in Europe are are tending to be larger than those we've done in The UK because UK is very much buy and build.

18:27 In Europe, you know, we're clearly wanting to

18:28 buy something that will give us significant infrastructure that we can then build around. And by the very nature, these acquisitions take a little bit more time, hence, the reason why we're the the timescale is a little bit elongated. Moving on to our manufacturing operations, representing around about 15% of our revenue. As you know, we have significantly booked up this business, particularly through acquisitions, and the business is performing well. They've had a good first half in terms of revenue growth. They've been able to maintain their gross margins as you could see on the on in the in the table. Operating expense is slightly higher than we'd have liked them to be, and that's mainly that's mainly due to the acquisition impact, and they will flex in the second half of the year. And adjusted operating profit just slightly down on the previous year.

19:17 Clearly, the attractions of this business are the high gross margins, close to 45% gross margin. And even though the adjusted profit margin slightly dipped at 15%, that's where we expect this this this business to be. It doesn't reflect in the numbers, but we're also making good progress in using this business as a supplier to distribution. It it looks as that 12%, 13% has gone down. But in reality, the big factor there is volume is up in in terms of, in house buying, but pricing is down because we do immediate price pass through in a deflationary environment. The the the second key feature for us in terms of this year is clearly the acquisition of Polyforms that we we completed in July, so it hasn't played a part in our first half year.

20:05 It clearly, you know, have a big impact in our second half year, and that's a really exciting business. It gives us particular particular opportunities in terms of synergies in from a purchasing point of view, and Polyforms have a particular relationship with a particular supplier that as MACFARLANE, we've found it difficult to engage with. And through the acquisition of Polyforms, we will get immediate ability to use that supplier across the MACFARLANE business, which will benefit the broader MACFARLANE business. So good progress in terms of our manufacturing operations and now become a significantly important part of the group. And I touched on acquisitions. We've we've we've acquired Polyforms. We've probably got one more acquisition to make in The UK, and, we're advancing that one quite nicely.

20:53 And the the other evaluation we're doing at the moment is the opportunity to move the manufacturing business into Europe because certainly a number of their key clients, a bit like in the distribution business, are now asking us about our capability to supply them in Europe. And currently, we're doing that on an export basis, but they're asking us to, you know, have a location and be able to supply them more directly through Europe. So that's something that we're working on at the moment to see how that would that would fit within this business. But, no, we're pretty happy with the manufacturing division, and it's making good progress. And just over the page, similar schedule you've seen before in terms of the action plan for manufacturing.

21:38 We're starting a process of integration, bottom left hand corner of the individual sites. So we have just closed the B and D site in Southampton and relocated that into GWP. So you'll start to see over the next sort of twelve, twenty four months consolidation around locations. And as I mentioned, we've got one more acquisition to do and the potential to to consider whether we actually extend this business into Europe based on customer demand.

22:07 Let me move on to sustainability, and there's really a number of features to this I just wanna cover. It's a complicated chart, but a couple of things I'll pull out. In terms of our own carbon footprint, the the the key thing for us is we have run our own delivery vehicles. We've got around about over a 100 delivery vehicles. The majority of those have been diesel, and we're in the process of transitioning those to electric. So we've now got around about 10% of fleet electric, and that will extend further in the back end of this year and into 2025. We're also implementing solar panels on a number of our facilities, and we completed the GWP installation this year. And we've got more sites that we will install solar panels in during the process.

22:53 And we've now got to a stage where more than 90% of electricity we use comes from renewable sources, certified renewable sources. So we're doing a really good job in terms of managing our own carbon footprint, and we've just scoped out scope three of the carbon footprint reporting, and that really is predominantly about our suppliers. So we're now beginning to work with our suppliers to help them and support them in terms of the reduction of their carbon footprint to improve our scope three returns. A key feature of our environmental program is obviously supporting our customers. And as you know, we have the innovation labs, and we have, significant six program where we do a very, very effective job in helping our customers, use less packaging, and the less packaging they're using, making sure that's packaging that has the sustainability tag behind it. And and we've got lots of really good case studies to to validate what we're doing. So the industry is moving towards even further sustainability.

23:57 The government legislation, particularly around EPR, is gonna drive that sustainability agenda strongly, and we're very well positioned to to be a beneficiary of that agenda going forward. So let me move on to the pension scheme and ask Guy to talk to the pension scheme, and then I'll make some closing remarks, and we can then move into answering some of the questions. Yeah. As I said earlier, the the pension scheme surplus has has increased slightly year on year, and that's down to the fact that the the discount rate has increased between the end of December and the end of June, and that's been offset by the LDIs, which are there to get up offset any movements in bond yields and inflation so that the assets and liabilities move in the same direction, therefore protecting the business from any significant movements in its surplus.

24:49 The the key thing is from a from the start of this year, the company is no longer required to put any company contributions in, and that's because the scheme is is in a well funded position. And as I said to you previously, we are working with the trustees and advisers to prepare the scheme for any potential buyout in the future, but we are a good couple of years off before that would that would manifest itself. I do want to just flag up one thing, and it is a court case going through at the moment. It's called the Virgin Media case. It was held effectively, in essence, what that case says is any amendments that were made between 1997 and 2016 that affected contracted out out rights of pensioners required an actuarial certificate to be completed, And if there's no evidence of an actuarial certificate being completed for that amendment and being available, then there is a potential that some of these amendments would actually be invalid. So at the moment, all we're doing is awaiting for the conclusion of the legal process, and at that point, we will then assess what the impact is on the MACFARLANE pension scheme. At this stage, I just really want to make you aware of that.

26:07 Thanks, Ivan. So let me just sort of summarize some key messages that, sort of conclude our, h one presentation. Firstly, it has been a challenging market recognized across the industry, and, we feel we've navigated the challenges pretty well, both in terms of new business growth, in terms of managing deflation, controlling our costs, and obviously, offsetting organic the organic growth position within organic growth through acquisition. The second half of the year, we'll start to see price inflation coming through. We'll benefit from the new business momentum we've created in the first half of the year. We've got full year the full half year benefit of the Polyforms acquisition. We'll get the q four uplift, the seasonal q four uplift. And as I referred to earlier on, we've made cost savings in the back part of h one, which we'll get the benefit of in in h two.

27:03 So we see ourselves as being well positioned as we go into H2. Our full year profit expectations remain broadly unchanged. And we as Ivor has mentioned, the balance sheet is in very good shape, so we're well resourced continue to continue with our acquisition program, and our ESG program is developing well. The only other thing to add, which you may have picked up, is the nonexec gap that we had through our retirement has now been filled. And,

27:33 and David Sterling, who's somebody you may be familiar with, will will start as our new nonexec, in January of, of this of next year. So I will pause there, and we can move on to questions. Peter, Ivor, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd 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 investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end?

28:19 Thanks very much. Well, we've we've perhaps a few questions that have been coming through through the course of Peter's presentation. So quite a few on acquisitions, Peter. If I can maybe just see if you could cover one or two of these. First one is how are the acquisitions that we've done over the last couple of years performing at the moment? Yes. So interesting question. All the acquisitions that we've done in the recent years with the exception of one have performed in line with expectations. As you know, we earn an earn out we have an earn out mechanism that motivates the the previous owners to to, you know, to drive the business forward during the, certainly, first twenty four months post acquisition, and that's been a big benefit to us in in sustaining performance post the earn out end.

29:10 The only business we've had one business, B and D, which we we bought around about, well, about twelve months ago now, and and that is operates in the space sector and the defense sector, and that's got slightly lower revenues than we're expecting mainly because of defense slowdown in spending because of the political changes that were going on. So we we see that just as a short term blip rather than anything more material, and we expect as once the, you know, the the MOD gets comfortable with its new its new leaders, then we expect that to to come on back strong. So that's probably the only of the recent acquisitions that hasn't quite performed in line with expectations, but not not far off.

30:01 And just following on from that, I mean, in the current climate, are you seeing a stronger pipeline of of opportunities? Yeah. I touched on that in the presentation. We turned down 20 probably so far this year, and, you know, we we've got a lot of privately owned businesses, small to medium sized businesses, where the owners are retiring with no succession. And as I mentioned, we've got this a lot of sustainability legislation coming through, which is from from the feedback we're getting motivating a number of these owners of smaller private businesses to to say, hey. I I can't I'm just got the bandwidth to deal with this. I'm I'm I'm looking to exit. So we're very confident that we've got a good flow of acquisition opportunities going into the into the next sort of two to four years.

30:52 And and continuing on the theme of acquisitions, are we confident that further European acquisitions you you referred to earlier, are they are they do you still feel they're more beneficial than UK acquisitions? Yeah. I mean, I think let's just go back a stage. The the reason that we are moving the business into Europe is about customers. A high proportion of our customers in The UK are part of European groups, or they have European subsidiaries, and it is they who are asking us to provide them with a a service in Europe. If we look at a number of our major competitors, they've already got a footprint in Europe. So if we don't have a footprint in Europe, then we do run the risk of being outsold by some of our European competitors.

31:45 So Europe for us is all about customers, and, the the program of acquisition really is all about speed. We can do it organically, but it will take us a while. If we can find the right acquisition, then we can immediately create a presence for ourselves in Europe and also, through that acquisition, bring in all the relevant skills in terms of cultural skills, language skills, and market knowledge skills. So it's not either or in terms of Europe or The UK. It's both. And just finally on acquisitions, Peter, we've just done the recent acquisition of PolyFARLANE. Is that improved engagement with some of the suppliers? Has that given us more access to to other product areas that we haven't previously had? Yes. Certainly, there are certain suppliers that we share with Polyforms, and we've immediately been able to get some extra better better pricing based on the incremental volume that we now bring to them. And then there is one particular supplier who is a strong supplier to Polyform, an important supplier to MACFARLANE, but not a strong supplier, unfortunately.

32:57 And through the Polyform's acquisition, we will get immediate benefits from that new supplier relationship. So, yeah. No. We're very excited about the supplier opportunity, and and some of it's coming through immediately, and some of it is in the process of coming through. And moving on to the theme of new business. What what's driving the increase in your business year on year, the 10% increase in distribution that you referred to earlier? Yeah. So I think there's there's a couple of things. One is we opened a new innovation lab in, the North Of England just outside Manchester. So we've now got two innovation labs, one in Milton Keynes and one in Manchester. And and the innovation labs are a really effective way of getting the customers to understand what we can do for them, to see the benefits we can bring them, and it's undoubtedly a key factor in terms of our new business growth that the, the innovation labs help with that.

33:54 Secondly, I think I mentioned the sustainability agenda. I think more and more customers are looking for suppliers who, you know, can do product and price but can also do things beyond product and price. And, again, our strong sustainability agenda, our strong track record of helping customers in terms of helping them achieve their sustainability objectives is allowing us to get access to more customers and and and win them because we're offering sustainability, which some of our competitors aren't offering. And you referred to the the new web offering. Do you you see that increasing the new business opportunities further? Yeah. I mean, this is mainly in the the smaller so about 10% of our revenue is in small customers. A lot of those buy through our website.

34:40 A lot of those buy through our our bricks and mortar sites, And it's probably that part of the market that we recognize that we're not as strong as we need to be. And in analyzing our our sort of transactional website, we've recognized that it's just not up to, you know, the standards of some of our competitors, and it's not up to the standards of some of the websites, you know, we all use just doing our normal sort of web web purchasing. So we launched the website in September, and we would see that as a big benefit, particularly in the smaller customer sector to to new business growth. Thanks, Peter. That's that's all the question we've had so far, unless anyone wants to ask any further questions. Peter, Iva, thank you for answering all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the investor me company platform.

35:35 Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Peter, could I please just ask you for a few closing comments? Yeah. So closing comments from me, pretty resilient h one. H two will have different challenges, particularly in terms of price inflation, but we've experienced these before and are well capable of managing them. And and lots of upside potential in terms of acquisitions, in terms of the new website, and in terms of our Significant Six and Innovation Lab offer, built around the benefits that we could bring to customer around sustainability. So, you know, we feel we're in good shape as we go into h two and particularly as we, move on to 2025. Peter, Ivor, thanks for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

36:30 This will only take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team of MACFARLANE GROUP PLC, we'd like to thank you for attending today's presentation, and good morning to you all.