Sdi Group (LSE:SDI) — Interim Results

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

0:34 Hello, and a warm welcome to today's half year results ending 10/31/2025. I'm Stephen Brown, CEO of SDI GROUP, and joining me is CFO, Amir Sharma. In terms of the agenda for today, reviewing half year '26, I will provide an overview of the group and our dual pronged strategy to drive growth. This will be followed by an operational review for the period. I'll then hand over to Ami, who will cover the financial results. Ami will then pass back to me for a wrap up with a summary, and I will then run through the outlook going forward. We will, of course, leave time for Q and A at the end of the presentation. First, let me reintroduce you to the SDI GROUP and our business model.

1:30 We are a buy and build group with currently 17 established businesses and roughly 500 employees operating from 19 locations worldwide. We maintain a lean and supportive group structure, operating at a centralized model that fosters growth, autonomy, independence, and agility. Our focus is on high growth scientific niche markets, and we have a proven strategy of combining organic growth with earnings enhancing acquisitions, having made 20 since 2014.

2:06 In FY 2025, we achieved the total group revenue exceeding £66,000,000 and our current guidance for FY 2026 showing growth to around GBP 75,000,000. With our operations being geographically diverse, we estimate that we export approximately 70% of our products internationally, with 40% from direct sales and the further 30% of UK distributor sales ultimately shipped overseas. Importantly, our buy and build model relies on a compounding cycle of growth. Turning to slide six, and for those of you less familiar with SDI and what we do, I'd like to briefly explain our business model.

2:54 The key takeaway from this slide is that the group is a sustainable and robust platform with a clear strategy to drive growth. We then simply define the strategy in two parts, organic growth and inorganic growth. Looking at organic growth, this is driven by our ability to build and sustain revenues and profitability across our strong portfolio of existing businesses. Inorganic growth is our ability to identify and execute accretive acquisitions that add value to the portfolio. We will also offer synergies and cross selling opportunities for the existing portfolio of businesses.

3:37 Cash flow generated from organic activities feeds our capital allocation strategy and drives inorganic growth where we seek to acquire complementary profitable businesses in niche markets. This feeds back to create a compounding effect.

3:58 Now to provide a bit more detail on what we delivered during the half year. This year has been focused on continuing momentum from last year, and we delivered excellent progress against our strategy and continue to see our plans come to fruition. This financial year, we expanded SDI's management team, increasing our capacity for organic growth and effective portfolio management with two divisional managing directors. This strength increases our ability to facilitate knowledge sharing and synergies across the group, supporting portfolio leadership teams to ultimately deliver. Strategic acquisitions have continued to contribute strongly to our financial performance this half year and the successful acquisition of Semra Thermal Solutions.

4:52 In short, our business model has demonstrated its resilience against a highly visible backdrop of challenging and uncertain global conditions. And finally, we are delighted that we have restructured our debt financing with a renewed debt finance facility with HSBC, which is committed for the next three years. This will support our future inorganic growth.

5:23 Now to go into a bit more detail on some of our key group organic growth activities. This year, throughout the group, we are focusing on operational excellence, leveraging the sum of our parts. We have invested across the group in new ERP systems at Fraser, LTE and Peak with their learnings expanded across the rest of the group, and we continue to invest in R and D, enabling new product launches and have benefited from revenues being generated from new product commercialization from last year. The drive to foster synergies from market access across the businesses has continued with numerous collaboration initiatives. For example, we repeated lab innovations for the second time, bringing five companies together to promote a unified product offering.

6:18 Fraser and the SPEC Vision are working together for expansion into the EV automotive sector as well as targeted geographic access. And we have exploited several internal customer initiatives such as ATC supplying several thermal.

6:35 We have improved knowledge sharing across the group also. For example, the group marketing function established last year has supported many portfolio companies with the launch of new websites across six businesses and rebranding initiatives perhaps more prominent at Monmouth, Avid Cameras, and Collins Walker. Now looking at each of our operating divisions in turn. I'm pleased to report that we've seen revenues in lab equipment increase 12% to over £12,000,000. This is reflecting improving conditions in the life sciences and biomedical markets. Also, the organic initiatives we drove last year are having impact, particularly with Mama Scientific allowing second half momentum from last year to follow into this year.

7:30 SafeLab had an exceptional performance through contract momentum. This was cemented by them receiving a substantial £1,300,000 government contract for the delivery of high performance stream coverage to be delivered at the end of this financial year. There have been further significant contract wins across the division, including Severn Thermal, who has two furnaces in production for a key nuclear contract with a value of of over £300,000, an increased order intake by LTE for environmental rooms, as well as a new LabClave l product.

8:09 There have been numerous new initiatives across the division, including, as I mentioned, LTE's new range of autoclaves for a focus on sustainability, smart performance, and safety, among this drive for improving product mix through growing their clean room revenues and capability.

8:32 Again, we developed revenue growth with the Sensors division growing 6% to 9,000,000 and boasting solid margins. We saw solid performance from SendTech with increased demand from both new and existing customers for products and bespoke solutions. Encouragingly, they have strong capability and tenacity for market expansion. In addition to last year's strong order intake, in January, they expect to receive an annual recurring order of £2,000,000 for blood gas sensors from one of their key OEM customers and can boast a further life science giant awarding them recurring contracts on the back of a new relationship. Astell's had a strong recovery in demand for their chemical dosing systems and are executing a strong order book this year.

9:26 GROUP continues to perform well with an excellent order intake in H 1 for execution in the second half with solid demand for core products. In addition to this, they have received a notable order, the supply of two gas meter calibration machines valued at around £1,000,000, again, for delivery in H 2.

9:50 Again, we see solid performance this time across our products division with revenues up 12% to £13,000,000. I'm pleased to see ADDIC for one continues to perform well, executing on its market expansion strategy. They're adding to the life sciences revenues by growing into the buoyant professional astronomy market. This has been evidenced by a significant project valued at $4,000,000 that commenced delivery earlier this year, with further delivery expected across the second half. They look forward to further traction in this market. Applied Thermal Control has been facing market headwinds in the first half, relating to regulatory use of refrigerants, predominantly in The US.

10:36 However, in response, ATC released earlier this year updated G and H series products to meet the changing market requirements, and they continue to develop the range.

10:50 We also had a number of new products launched across the division. In addition to ATCs, these include Attic, who launched a new XGB 60 camera for multi camera installations.

11:08 Moving on to our inorganic strategic development. This year, we have completed one excellent acquisition so far in line with our key criteria. I'm pleased to welcome Severin Thermal Solutions to the SDI GROUP. Completed in June, Severin will be kept autonomous as part of a decentralized model. They manufacture and sell high temperature furnace systems and environmental chambers for advanced material processing and testing. They are focused in innovative high value markets such as aerospace, semiconductors, and nuclear. Since joining the group, the integration of Severin has already exceeded our expectations with the team showing a strong alignment to the group and rapidly fostering the collaborative spirit we have across the portfolio.

11:58 Now over to Ami for a financial overview. Thank you, Steven. Hello, everyone. Looking at the financial highlights for the period, I'm pleased to report that we've had a good first half with 10% total revenue growth, which is made up of 3% organic growth and around 7% acquisition growth. The stronger sales performance led to a good profit performance compared to the equivalent period last year. Net operating margins improved from 12.6% to 13.5%. We saw growth in adjusted PBT and adjusted diluted EPS as well as all the income statement measures.

12:44 Net debt increased primarily due to the acquisition of seven Thermal in the period. Turning to the income statement. We saw organic growth of 3% in the first half, as I previously mentioned. This followed on from 2% organic growth over the second half of the last financial year. We expect to see this improving trend continue over the second half of FY 'twenty six due to some of the contract wins Steven outlined. The £2,100,000 acquisition growth came from Inspect Vision, Collins Walker and Seven Thermal. I'm pleased to report that our gross profit margin increased by around 100 basis points to 66.3.

13:30 This is on materials only. We have grown our gross margins over recent times through our focus on pricing, and this focus continues. On a like for like basis, our cost base increased by over 4% due to inflation, national insurance increases, bonus provisions, and a strengthened central team. Lower interest rates and net finance charges were only marginally up on last year despite the higher level of borrowing in the first half compared to last year. The tax rate on the statutory profit before tax is estimated at 26.8%, whilst the tax rate on adjusted PBT is estimated at 23% for the first half, which is similar to the FY '25 tax rate.

14:20 Looking at below to below the line expenditure, share based payments were around 100 k lower than a year ago due to the f y twenty three LTIP boards lapsing in the period. We also had lower acquisition costs due to aborted acquisitions last year. The next three slides provide a bit more detail on the financial performance of the three segments. We start with the laboratory equipment division. This division showed organic growth of 5.9 with a further 700 k of revenues as a result of the acquisition of seventh Thermal.

14:59 Monmouth had a very strong first half, as Steven mentioned. LTE Scientific and SafeLab Systems both saw some growth, but Synoptics saw a slower market. Net operating margins improved to 11.7% as a result of the addition of seven Thermal.

15:22 Next, the sensors division. This division showed organic growth of what, 5.6%. ASIL grew strongly as is CENTEC. The latter seeing strong demand for its pH sensors. Cello instruments also grew, but MPB had a slower period of trading as it had tougher comparatives. Margin is largely held in this division at 21.7%. Next, the products division. This division had 1,400,000 of revenues from the Inspectvision and Collins Walker acquisitions. Beyond this, organically, the division was largely flat in the period with a small decline of 1.2%.

16:09 ATTIC saw strong revenue growth as it executed a $4,000,000 professional astronomy order. However, Scientific Vacuum Systems saw a slower period of trading as it worked on one large program over the first half compared with two in the comparative period.

16:27 Fraser improved their cost control and increased their margins in a flat market. This led to margins improving to 21.6%, up from 19.8% in the comparative period. Turning to cash. Cash generated from operations reduced from 4,700,000 a year ago to £4,200,000. This was due to an increase in inventories of £1,200,000. A number of our businesses built up inventories in anticipation of a strong second half. The largest increases came at ATTIC as they deliver their professional astronomy contract and at SafeLab Systems as they prepare for the large government contract they are to execute in the second half.

17:15 Other businesses saw smaller increases. Monmouth through increased level of trading and Seven Thermal as it executes its in furnace contract for the nuclear industry. Customer advances of £2,900,000 were broadly flat compared to April 2025 on a like for like basis. CapEx grew due to capitalized r and d spend, most significant at Synoptix and Fraser. Excluding acquisitions, our working capital as a percentage of sales, therefore, increased to 21%. The acquisition of Seven Thermal cost £4,800,000, which was funded through additional borrowings. This is more clearly illustrated in the next slide.

18:03 This slide shows graphically the movements in net debt. The £4,200,000 of cash generated by operations is on the left hand side of the graph, and our utilization of that cash is illustrated on the right hand side. We ended the period with £18,000,000 of debt, excluding leases, compared to £13,800,000 at the beginning of the financial year. Our leverage at the end of the half was circa 1.3 times net debt to EBITDA, which is within the board's preferred range of one to 1.5 times. At the period end, we had a headroom of £5,500,000. And as Stephen mentioned, we renegotiated our bank facility over the autumn with some improved terms.

18:53 This was signed last week and provides committed funding for another three years with a further two option years available. The accordion option has been increased from 5,000,000 to £15,000,000, which will give us additional flexibility in the future as we grow. And now I'd like to hand back to Steven, who'll take you through the outlook.

19:18 Thank you, Ami. Now looking ahead to the rest of the year. For the future, our strategy remains consistent. We will continue to drive organic growth by investing in new product development, promoting synergies, and driving operational excellence across the portfolio whilst also pursuing high quality acquisitions.

19:41 We remain mindful of wider economic uncertainties, but are confident in a resilient business model and long term opportunities and drivers in our markets. Inorganically, our acquisition pipeline remains robust and actively managed, and we continuously maintain and review the pipeline.

20:03 Our focus inorganically is to execute on the significant contracts we have. As expected, we remain second half biased, but we remain positive in delivering FY '26 results in line with market guidance and are confident in our ability to generate sustainable long term value for all of our stakeholders. SDI remains a dynamic business, and we very much look forward to communicating further as we continue to deliver to our model. Thank you for listening. Steve and Amy, thank you very much for your presentation. And if I may just bring back up your cameras. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the 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 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 presentations presentation.

21:03 Steven, 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. Right. Okay. I'll I'll take it here. Thank you. Yeah. First question, what's your what's your biggest challenge? Steven, do want to answer that? Yeah. Certainly. I I think by far the biggest challenge, it won't surprise anybody to hear this, but it's geopolitical. It's it's the uncertainty. We don't really understand what's gonna happen tomorrow, let alone, next week. So I think that's definitely the the the biggest challenge and really how we navigate that. However, we do feel as if our business model is robust enough to fill most of this. We are able to pivot between markets, not only, you know, geographic markets but also physical markets as well.

21:49 But yeah. Absolutely. Geopolitical, 100%. Alright. Next question. Why are directors not buying shares? That I'll take that one. The last couple of years, we've both taken our bonuses of shares and those will vest over the next two to three years. So you what you ought to see is our both of our shareholdings increasing over the next couple of years. And this is available at the end of the back of the presentation as well. You'll see our shareholding increase. And the option holdings, increasing.

22:18 Next question. Can you tell tell us more about the recently appointed divisional directors and what their roles are? Yeah. Absolutely. So we we recently appointed two divisional directors. One has got responsibility of the product division. The other one's got responsibility of the lab division. And the reason for doing this is so that the the the businesses that we've got in the portfolio have gotten much closer attention.

22:42 As we scale, we're currently 17 businesses. And quite frankly, the the bandwidth that we've that we had before was not adequate to give the the businesses enough attention and to really support the leadership teams to to deliver.

22:57 But really with with with bringing the structure in place with two two of the regional MDs, that means we we've got roughly six businesses to each director, which that that intensive

23:14 focus and is is really starting to come pay dividends. You'd see enough enough financial results. You'll see it more come in the second half as well. So we're seeing the businesses which were slightly lower last year as really starting to come to fruition despite the challenging markets. So so it also gives us as we continue to grow and scale as more businesses come into the group. We are an acquisitive group, so so that will continue.

23:41 We really need to have that we need to have that structure to allow us to to to develop and scale. For us, organic growth is really important and that's something that we will always have that focus on. So so that's that's the the main role for those those divisional directors. Of course, well, they do fit into the inorganic piece as well in the due diligence and making sure that we do make the right acquisitions. Mhmm. So that's that's that's the secondary to their the main role.

24:07 Okay. What impacts have you seen from the recent budget changes? Okay. I'll I'll take that one. The main the main one was the rise in the minimum wage. Quantify that, that's about 80 k per annum. 80 k per annum. So it's not massive, but it was still an impact nonetheless. That was the main thing that I saw from the budget. Next one. Please, can you provide an update on the m and a pipeline and potential timings? Steven, do wanna take that one? Yeah. Absolutely. So so the the the pipeline remains very strong. We we are in a quizlet business, as I said. That that will never change and that will never stop. We've done one successful acquisition so far this year. Hopefully, there there will be more.

24:54 But, obviously, I I can't I can't communicate too much more than that. But but all of them, we are we are a acquisitive business and we will continue.

25:03 Okay. Next one's for me. What is your CapEx guidance for f y twenty six and beyond? Fair to assume two and a half percent two and a half to 3% of sales? Yes. That's that's about right. That's kind of it's between two and three percent, but, yeah, two and a half to three is is right for for twin FY '26. Next question. Can you comment on the typical size EBITDA multiples and target characteristics that you're prioritizing for future m and potential m and a. Yeah. I can can take that. So our multiples pretty much remain the same. We've always say I said that on EBIT, you look at EBIT rather than EBITDA, we're looking roughly four to six times. We're currently focusing towards the lower end of that rather than the higher end. We are seeing that that market dynamics means that we potentially look look towards that at the moment, so we're seeing opportunity at this point. So key characteristics, we're looking for profitable businesses.

25:59 We're look we're we're looking for, higher net net margins is also important to us. We're looking for for, niche markets and or regulatory driven markets. So we're we're looking those tailwinds driven businesses. We're also looking for strong order books. We're looking for resilient markets. We're looking for large significant exporters as well, which is also very important to us. We're also looking we're not locked to The UK either, so we are looking at on a global perspective. The EU is is particularly of interest to us and so too is The US, but more so the e for EU. And also, we're we're we're looking at businesses which which will increase our recurring revenue as well, which is also quite important to us as we as we continue to grow and scale.

26:47 And in terms of typical size, about a million EBIT above the camp. Yeah. A million and above is typical. Sweet sweet sweet what we're looking at at the moment. What we're really looking for is a creative acquisitions. So we're looking looking at acquisitions which are really gonna add value and and add to our scaling.

27:04 You previously said that the long term organic growth target for SDI is between 58%. Is this still valid in the midterm? Do you expect improved organic sales growth trend already in h two twenty six versus h one twenty six? We'll split it. I'll take the the first bit. So so are we looking at at five to 8% as as a medium to long term goal? Absolutely. Yes. And and you you'll you'll see that going forward. So I think that's still a realistic target for us. As I said before and said in the presentation, organic growth is important to us and it will always be a focus. Hence, the earlier question about the divisional directors, for example. So we are we are focusing on it. You wanna take a second, please?

27:45 Yeah. I mean, we are going to see strong organic growth in the second half. The reason for that is because of the contract timings as we talked about earlier. That will drive the organic growth, which will be quite significant in the second half. But then that is a function of the contracts and how they fall within time wise timing wise within FY '26. So you'll still see strong organic growth. Over the full year, you should see organic growth too. And so I think that one answers that question. Why is the profitability of the lab equipment business unit so much lower versus the other business units? Is this driven temp by temporarily softer market demand? Do you wanna try Yeah. Certainly. So I'll take the the last bit of the question first. Is it softer market demand? No. It's not. The the the market demand is is is definitely there. You can see with large contract wins I spoke to earlier, there has been others in in the moment business as well, which is which is being quite helpful to us.

28:41 The the lower margins is is purely market dynamics. It's there is there is competition in the market and that ultimately keeps the the profitability a little bit lower. But we we we are holding our own. We're we're we're actually growing market share within those markets and we and it is looking quite strong for us. It has come back quite quite strongly this year, and it continues to to increase. But are we gonna see large profitability coming in? Other than where we are, we can probably prove and prove on it a little with operational excellence, for example, with Severin Thermal going into the lab equipment division as well, will help the profitability also. But it's it's really done the dynamics of the market. Okay.

29:27 Next one, I think, is me. Expenditure and development and other intangibles increased compared to the same period last year. Can you share the reasons behind the higher level of intangible investments? Well, we had a couple of product developments that were in that are in progress. Expenditure on development increased, but certainly, amortization actually. And what I would the way I would look at this one is that you compare how much has been capitalized versus how much has been amortized, and the delta is 200,000 in the first half. 0.2 oh, and that compares to 0.1 last year. So there isn't, you know, these are not big numbers in the on a net basis. So the delta is 0.1 in the context of almost 5,000,000 EBIT, four and a half to 5,000,000 EBIT. So yes, it has, but it's not hugely significant on a net basis.

30:14 Next question, the interest cost on net finance, I think is still high despite the limited leverage, diversified group and strong execution?

30:24 Does a renewed RCF with HSBC allow for some lower cost of debt? How much? Yeah. I won't yes. The answer to your question simple answer to your question is, yes, our new facility is is cheap is lower in terms of cost than the previous one by a fair bit. So we we have improved terms. I won't say exactly how much, but it is going to be improved. I I would say that we do have I wouldn't say we've got limited leverage because we're at 1.3 times. However and and we managed to maintain the finance costs at a similar level to last year and the borrowings of average borrowings in the first half were a fair bit higher than the average borrowings in the first half of last year. But the answer to your question is yes, there are improved terms and you ought to be able to see that in the financing charges as we go forward.

31:17 Could you please comment on your midterm organic growth ambition? Do you still see 05/28 as the right range? And within your three reported segments, which do you believe offers the strongest long term organic growth potential? Yeah. I think the the first part of the question has been answered to the earlier question. But the the second part, good question. Definitely, it will be the product side because we've got more we've got most of our high growth businesses within that segment. So we will always see that that higher level of of organic growth there. Absolutely for sure. Okay. Next one. It's a working capital question. That's me. Working capital levels last couple of years averaged at circa 13% of sales, which is much lower versus the level in recent years.

32:04 Do you expect working capital as a percentage of sales to drop back from circa 19% of sales towards 15%. How? So there was a buildup of working capital in the in the first half. I sort of explained it during the during the presentation, which is due to an inventory buildup for the second half. I think you're looking at the references of 13% or a full year percentage, I I I think. We you ought to see it come back down again. As we execute these contracts in the second half, the images will start coming back down again and I think you'll see it as working capital as a percentage of sales. Under our own internal definition will will come back down from around the 21% mark, which it currently is, to near, you know, 20%, which is where it was in under our definition.

32:50 I'm not sure how I think it's a manual how you calculated that 13%, which which balance sheet lines you've used. But it ought to come back down, it's due to execution of those contracts, which will reduce inventories. Next question. How much capital do you target to spend per annum on m and a between 5 and 10,000,000? Is the pipeline strong enough to execute on this? I'll answer the first part. Steven, you'll answer the second part. So the first part is that we typically focus our free cash flow towards m and a. Historically, it's been around circa 6,000,000, and and we could move that a bit without leverage because we typically stay between one and one point five times. We could spend more than about six or seven if we move the leverage up a bit to towards one point five and one point six and it's quite and we may choose to do that in in in the future just to to it'll be a timing thing, you know, and and we can vary that. It's a management decision So anywhere from 6,000,000, it could be seven or eight, it could be more than that.

33:54 And but the leverage would reflect that in the short term, and then they will start coming down again. Is is a pipeline strong 100%, yes. So the pipeline is is looking strong as ever. We could we could execute a lot more than that if if we really wanted to. But absolutely, yes, the the pipeline is is reassuringly very strong. It gives us the choice it gives us the opportunity of choice as well, which which is very valuable to us. Do you see room to further improve gross margins? How? Interesting question. A 100%, yes. And and if the focus we've currently got on organic will will ultimately result in that. With the with the introduction of the divisional directors, who've got a wealth of experience, both operational as well as commercial coming in.

34:44 We we we will continue to really focus on businesses. So what's gonna drive that? What's gonna drive that is is an increase on commercial activity, increase in sales, organic growth ultimately drive that. We've also got a real drive as well for operational excellence as well. So we're looking at good business management with cost cost optimization is also very important to us. So we will continue to drive the efficiency of the businesses, which would ultimately improve that. Operating leverage will also contribute. So in other words, higher sales will drop through with the gross margins. Exactly. And the m and a also, we are targeting higher net margin businesses that we talked about earlier. Those will also have impact in the mix Exactly. Exactly. The inorganic will will shift the dial quite considerably actually because of the focus of the businesses we're currently looking at.

35:33 Is there a minimum size of acquisition in terms of the targets turnover or profit that you will look at? Yeah. What what we look for is typically accretive acquisitions and acquisitions that really move the dial. So for us to go much much below a million EBIT, it isn't really gonna have that impact. Of course, if if there's a if there's a really interesting business with with significant growth potential and a and a and a market which we really see the potential in, yeah, of course, never say never. But ideally, for us to make the impact at this point, that's we're currently looking at sort of a minimum of 800 to a million, ideally more. Can you comment on the growth in central costs over the last two years? Yeah. I will do I'll answer that one.

36:19 This one is due to the some of the additional headcount, head office to drive inorganic and organic growth, which we've talked about. We have we have a head of m and a to help us drive m and a the m and a cycle and we've got introduced divisional directors to help us drive organic and so the combination of of all of those things have contributed to this the increase in central costs. But we need it to drive growth for the reasons that Stephen outlined earlier in terms of management bandwidth and to grow to level and to help us scale as well. So that's the reason we've done that. The SDI GROUP will always be a be a lean and agile business. So any increase on head office costs Hi, guys. I think you've just frozen momentarily.

37:17 I'm just gonna refresh your browser and pull you back through. Hello. Hopefully, you're back. Hi, guys. We can hear you now. Thank you. Alright. We'll go back to the q and a. How do you manage capital allocation between your existing businesses? What is your target r and d spend? Does this need to increase to generate organic growth? In terms of capital allocation, we don't we do it on a business by business basis. We most businesses will put forward their budgets and strategic plans every year at which they will request additional capital to do CapEx or whatever they call r and d and we will generally approve it. We will look at each one on an individual cases. We never we will not say no just because we want to restrict that capital to any particular business. We've said this before. I've said this before in this very presentation.

38:31 We we don't we don't restrict capital to any of our businesses. They're just gonna put a business case forward and, you know, we are very supportive of our investments. That's why that's one of the great things about being part of the SDI GROUP. I think for all four companies coming in is that ability to for us to invest more than perhaps previous management did as in the lead up to sale. Yeah. And and looking at the r and d spend as well, and d spend is very important to us because what's the secret of organic growth is really keeping on top of the market and understanding market requirements. As as the markets require more, we we have to deliver and and and and essentially execute products and deploy products into those markets that the markets ultimately need and want that will need a a regeneration of the products and a revitalization of the products as well, which ultimately feeds into r and d spend.

39:24 So that's something which we will always be doing. We do encourage the portfolio businesses to keep on top of that. In fact, if we're not getting requests for r and d spend, we're we're asking the question the question why. So that's that's that's a real significant focus for us and and it is ultimately the secret of organic growth. Last last one for now. Could you sell would could you sell a company to raise to acquire? I I think would you dispose of something probable or improbable? I think it's meaning any subsidiaries, I think, is a lot is this question. I suppose the answer is nothing is impossible. Right? No. Right. Good. We do get inbounds on for our assets, and if someone is a better owner of one of our assets, then we would absolutely consider doing so. I mean, it's not really what our business model is, but I never say never. If it make if it makes sense, we will consider it. If it makes sense, we will consider it, you know, a you know, sometimes portfolio churn is necessary. It does happen from time to time.

40:27 So we will, you know, if it happens, you know, we will or we have we have a decent enough offer, we'll go for it. That's great. Thank you for answering all those questions you can from investors. And, of course, the company can review your questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Steven, could I please just ask you for a few closing comments? Of course. I'd like to thank you all for for listening. It's, very much appreciated, and, we very much look forward to communicating with you further. That's great. Thank you 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?

41:12 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 SDI GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.