Sigmaroc (LSE:SRC) — Conditional Acquisition of European Lime & Limestone Assets

0:03 Good afternoon ladies and gentlemen and welcome to the SIGMAROC presentation on the conditional acquisition of the European Limestone assets from CRH. Before we begin, we would like to submit the following poll, which you will see on your screens. Throughout this presentation, investors will be in listen only mode and the presentation will be recorded. We will be looking at some questions and answers at the end of the presentation. However, please note, given a degree of sensitivity ahead of the general meeting next week, there may be some questions that we cannot answer at

0:33 this stage. I would now like to hand you over to Chief Executive, Max von Orkin and Chief Financial Officer, Carth Palmer. Gentlemen. Good afternoon, everyone. Thank you very much for joining this investment company presentation in relation to the proposed acquisition of CRH's Lyme and Limestone assets across North Europe. You will have seen over the last two years that we've traded solidly across quite turbulent times, at least in Europe. The reason for this solid trading is because we have increasingly become a lime and industrial limestone group, and that's through the acquisition of Nordcalc and the development of our business in The UK and in Belgium in that same space of time.

1:18 Lime and industrial limestone have these characteristics, which is high barriers to entry, good pricing power, it's an essential mineral for all manner of modern life, and we'll illustrate that through a few slides further into the slide deck. And on top of this, it's a sector which will be increasingly important as we transit away from fossil fuels and make our economy more sustainable. A lot of the materials that we will need for that transition will be requiring lime and industrial limestone to be produced. And what we would achieve therefore with this proposed transaction is to form out of our business plus the proposed acquisition assets, North Europe's leader in lime and industrial limestone, with really attractive market positions across all markets that we operate in.

2:08 For shareholders, this means double digit earnings announcement from the start, and further down the road, a compounding growth vehicle with enough cash flow, free cash flow, to be able to sustain long term growth as we develop the footprint further, de gear and pay dividends. The map is obviously the best way to look at these things. The map on the right of the slide, the blue footprint is in large part our current footprint. We have some assets in The UK, obviously, and in Poland, primarily of different types. And the orange footprint is the addition that comes in through this acquisition. It consists of three different deals, the German, Ireland and Czech Republic first, the assets there, then The UK second, and a third deal, which is Poland.

2:57 Pro form a on a 2022 basis, it's over £1,000,000,000 in turnover, over £200,000,000 in EBITDA, and 2,700,000,000 tonnes of mineral reserves. Number one status in many markets and number two status in a few others, and as you can also see from the dots and the squares and triangles, nice co location between the production facilities and the various big customers of this product. The transaction, as I said, is three separate deals. Deal one is the German, Czech and Irish assets. This will close at the beginning of January. These are standalone businesses and are available immediately. Deal two is The UK assets. This is a carve out set of kilns, based in The UK, and is available at the end of Q1.

3:47 Carve outs take a bit of time to prepare. And then deal three is again a carve out in Poland, slightly more complicated, takes longer to prepare, and therefore a third deal somewhere in Q2 of next year. When we look at why this makes sense from our perspective, there's really three columns here on this slide with a set of arguments which we'd like to put to, which is first and foremost the equity story. We've been developing this group since 2016, from a blank sheet of paper, with the same team of five managers which is still running this company today. The equity story was to aggregate and consolidate across the quarry space in Northern Europe, and to hopefully one day end with a footprint around North Europe, the North Sea, the Baltic Sea, preferably in minerals that have a higher degree of predictability, higher margins, higher quality.

4:44 This transaction gives us that scale, that footprint, and really makes the equity story a very clear and simple one. A leader in lime and limestone in Northern Europe, across the North Sea and the Baltic Sea. On top of that, we've become a much larger partner to OEMs, big manufacturers of big products, for example, steel, paper, energies, electricity and so on. That is important when we look at the future, it comes to carbon capture utilization and storage. And on top of everything else, the returns are very attractive, double digit earnings enhancing at the start, and then more to come as we develop the second column, which is the synergies, both on top line, in costs, and then market growth to get to ROIC numbers, return on invested capital numbers, ahead of our own present targets of 15%.

5:37 And we're able to de gear. Balance sheet will be strong, the cash generation will be significant, cash flows will be good, and there's some non core assets, obviously, we cannot book out selling. Put that all into numbers, you get the table on the left, good top line growth, solid EBITDA margins of 20% or more, good cash conversion, synergies which have been identified between our operating teams and consultants of 30,000,000 to 60,000,000, free cash flow of 100,000,000 plus, going up to 125, ROIC ahead of 15%, we de gear quickly to below one, CapEx and reinvestment at the same levels as we have today, 85 or so percent of D and A, which allows us to spend some money on further development of the business, primarily organic, degearing at half a turn a year, and dividends as soon as we are below one and a half times leverage.

6:33 Now we speak a lot about lime and limestone, and some people ask us why is that? Well, everything you see on this separator slide needs lime or limestone to be produced, and it's things that you might not think about. For instance, eggshells, anything that has to do with liming of land, the filtration of water, paint in the walls, concrete in the floors, all of those things need limestone, and in many cases, there is actually no alternative. On top of everything, the limestone component in the production process is small number, both in volume and cost, which makes it a very attractive industry to be in. Yes, we're essential, but we're not an enormous ticket item in procurement bills.

7:21 If you put this in a bit more sort of structure, there's really six sectors that you can look at: food, pulp and paper, steel and then environment, which is cleaning up various types of emissions and waterways and so on the chemical industry, fillers and then construction. It all starts with the quarry on the horizontal, and as you systematically add processing steps, and therefore cost to the material that you extract, more of the industries become available to be sold into. And that gives us the reliability of our earnings forecast, the stability of our business to date, is the additional industries that we can sell into, and the fact that all of these industries have their individual different cycles, which aren't all synchronous and at the same time.

8:11 If we look at forecasts for demand, and these graphs are value statistics, so limestone values, so volume times price, lime value again the same. Over the next ten or so years, what we see is a market which has quite a bit of growth in it, in these European geographies that we have identified. Limestone is much more of a construction material, therefore the CAGR numbers at the top are closer to what you'd find in GDP numbers. Lime is more of an industrial mineral, and therefore the numbers grow faster. Not captured in these statistics, or not really captured, are all the aspects which have to do with the cleaning up of the economy, and there's sort of three main categories there. Electrification, clearly number one. If you want to make a lithium battery, you need to produce lithium hydroxide, and to do so, for every tonne of lithium hydroxide, you need 80% of that, 0.8 of a tonne of lime, as an example.

9:15 Same for the electrification and power network, which needs a lot more capacity to be able to go further electric. Same with the decarbonisation of the construction industry, the environmental protection aspects, changing cement for other binders, using less CO2 intensive products and therefore more limestone, ocean liming, lake liming, air pollution control, all of these aspects are not captured not captured enough in the statistics on the previous page. Something that is not widely known is on the left of this slide. Yes, Lyme and the Lyme production emits CO2, and that is, you know, take calcium carbonate and you hive off or separate the CO2 of that to carry calcium oxide, which is Lyme.

10:04 But as you then apply the quick lime or the lime, it then reabsorbs in most applications the CO2 that was emitted from the stone. You see that on the left, in some cases, actually in many cases, instantaneously or very short amounts of time. It's not something that is widely known by the market or the consumers. Interesting, therefore, if we manage to make our lime production net zero, catch all the CO2, the product that we will have created then, the QuickLine, is a carbon sink. That's something that is quite an appealing proposal for the future. So if we then sort of wrap these various arguments into a set strategic arguments, strategic rationale behind this deal. First and foremost, the opportunity is unique.

10:51 Not often is it available to a business to have two complementary footprints that can combine into a leader of a market, and that's the case here. We clearly build a sector leader across Northern Europe. The market diversity that we are working with increases further. It's already quite diverse as we are, but it becomes even more diverse as we go forward. We've become an even bigger partner to large OEMs, which is a critical point for carbon capture and storage. I'll come back to that later. And then there are clear synergies identified for the combination of these two businesses of 30,000,000 to 60,000,000, which we will come into later as well.

11:35 So first and foremost, the complementary footprint and the market leadership. That's again the same map as earlier. It's clear if you look at the geographies here and the number one and number two status, and then in particular, the co location of line production assets with main customers, you see that they are nicely combined in a compact footprint in an area with lots of users of our product, a lot of infrastructure density, a lot of people, a lot of industry. We obviously also did quite a lot of work in the due diligence phase to look at the assets that are being bought, both the plant and machinery and the quality there, and have these been maintained properly, that's on the one hand. And then the mineral reserve and the quarries on the other hand. This is a good review of mineral reserves by country.

12:26 Mine life everywhere is good. The reserves are of good quality, in particular Germany has a unique reserve of 1,000,000,000 tonnes in one location. Generally speaking, the group now goes from 1,600,000,000 to 2,700,000,000 tonnes of stone in the ground, which is ample supply of our group for years to come. And on top of that, further resource in the shape of long term supply deals, which also come with this transaction, and that's not mapped in these reserve levels. A third point to make as a strategic reason to look at this transaction is the diversity of end markets, is what essentially helps us to trade so smoothly currently.

13:11 On the left, by sector, on the right, by geography. We are currently 60% exposed to construction, 40% to industry. The targets are the opposite. And so if you combine all three deals into one business, you end up with a business which is fiftyfifty industrial, 50% construction. Further diversity there. When it comes to geographies, the same thing happens. Further markets come in, and as a result, less dependent on specific geographies. And that is something that we like. This diversity helps both predictability of revenue and against violent shocks in particular markets or segments in our chosen geography. Our further argument to look at this transaction is the whole carbon capture and storage aspect.

14:00 There's a slide with lots of text, I invite you to read that separately. I think it's easier to show you what I mean in a series of maps on the next page here. This may sound counterintuitive, but to be able to capture and be efficient at capturing CO2, in our case, we need to become a bigger emitter of CO2. A big emitter which is well connected and well locked into large other emitters, for instance, steel plants, energy plants, paper mills. These large emitter hubs, these big hubs of industrial activity, are going to be connected up to various carbon capture and storage facilities or infrastructure pipelines, for instance, or storage facilities in the North Sea. As an example, the Hartz Cluster in Germany, the Peat Cluster in The UK, or the clusters elsewhere.

14:53 Being a part of that industrial fabric and a key supplier to these industrial groups increases the probability that we will be captured into that CO2 infrastructure and therefore able to deal with the CO2 emissions of the group more effectively and more rapidly.

15:15 And then lastly, when it comes to the strategic logic, it's obviously synergies. We're building a leader across Europe, a very clear business with a very clear aim, a leader in limestone. Synergies were looked at from a top line perspective and a cost perspective. The bulk sits in operational improvements in site networks. We've never had a network of sites. Our business has been mostly quarries in diverse locations. We will move to being a lime and quarry operator in a concentrated setup, which means that there is more ability to shift volumes from one place to the next, to switch down capacity which is not efficient, to utilise the network effect across CO2 credits, and all of those help with the cost picture and the cost base of this group. 30,000,000 to 60,000,000 of EBITDA addition expected by around '27 in a ramp up phase, which will take a bit of time to implement and then benefit from, as was also the case when we did Nordhark.

16:16 So that's the main strategic logic of the group. I'll hand you over to Garth for the finance aspects. Thank you, Max. Good afternoon, everyone. Taking a look at the group on a the enlarged group on a pro form a basis for FY 2022 and initially revenue, we're generating revenue over £1,000,000,000 That will be across our regional structure that we introduced after the acquisition of Nordcalc. We'll retain the Northwest Region and the West. The Northeast will be separated into two new regions, the North and the East, and then we'll add the Central Region, which by revenue at 30% will be the largest in the enlarged group. The smallest will be the West at 8%, and that's a function of product mix and its relatively low Lyme exposure.

17:04 But we expect that that will balance out as the joint venture with ArcelorMittal comes online and should put the West Region around or slightly ahead of the East.

17:14 And then cutting across the regional structure will be three core product groups, lime at just above 55%, stone at 30% and then products at 15%. It's all quarried material. The key difference between stone and products is essentially just the extra processing addition of other materials that go into those products for the value added products. So sort of well balanced footprint on a revenue basis. And then in terms of volume for FY22 pro form a, 26,000,000 tonne of material be produced and sold across this footprint, well balanced again. The rankings shift somewhat, that's just a function of product mix and the relative selling prices of lime versus stone.

18:05 Lime is in the region of 10 times more expensive than quarried aggregate material.

18:13 And as we said, that sort of gives us further diversification across the group with the addition of the target, the further industrial mineral exposure, but still fundamentally a quarrying group at its core. And then on the pro form a full income statement, both underlying for full year '22 and six months to '23, looking on a sort of run rate basis for '23 revenue of over 1,100,000,000, EBITDA over $230,000,000 and profit after tax approaching 120,000,000 across the enlarged group and EBITDA margins over 20%. Below the EBITDA line, D and A we expect to track just a touch above 5%. Net finance costs will be around 8 percent, that's including non utilisation fees and some other lease liability related items in addition to the new senior facility that we bring in.

19:07 And then corp tax, we're expecting to track at about 24% of profit before tax. That's obviously higher than where we are now. The incoming group has a slightly higher average tax rate. And then in terms of adjustments that we've folded into this, fairly minimal, just some standalone costs, additional raw material inputs, some electricity rebates that we won't benefit from moving forward. And then mostly it's just administrative expenses for the two carve out businesses, back office,

19:39 IT, insurance and the like. So overall, much doubling the group on a combined basis. Looking at sort of trading history, this is specifically for Germany and Czech. We have the standalone historic financial information for those two businesses going back to 2008. The other businesses are integrated into the current owner. But this is really just to give an overview of just how resilient and stable this business is trading through multiple sort of global financial crises, two thousand and eight financial crisis, 2012 sort of European debt crisis, the impact of COVID in 2020 and then the inflationary period we've just experienced over the last twelve to eighteen months.

20:26 Lowest EBITDA margin through that period of time, fifteen years of 22% and trending up to sort of mid 20s and thereabouts. It's a very solid business, consistent with what we've also saw when we acquired Nordcalc, and there's a site on that in the appendices. Moving to balance sheet and CapEx, well maintained asset base, our technical teams and our consultants spent quite a bit of time at the various sites during the diligence process and they reported back that as you'd expect, well maintained plant and equipment across the group. Slightly lumpy in terms of expenditure, but that's just over the last four years, but that's just a function of the lower spend in 2020 off the back of COVID that was caught up in '21 averaging seventy seven percent over the prior four years.

21:16 And we're assuming moving forward will be about the 85% of DNA, which is the state for the current group as well. Lastly, just to round out, so an illustrative slide, just given the financial metrics that we expect and Max touched on earlier in the presentation, margins over 20%, cash conversion of 95% and free cash flow sort of around a 100,000,000 initially and that will step up close to 125 and then beyond as we build through synergies, but then how that then translates into the debt profile, we should be debt free by 2027,

21:53 the years very quickly. And then a sort of illustrative example of how ROIC would look, 12% sort of just off the back of the accretion of this deal and then sort of market dynamics plus some of the initiatives that we have in the incumbent group, no synergies, that sort of gets us around that 15% mark. And some of those other initiatives are listed on subsequent slide that Max will touch on. And I'll hand you back to Max. Thank you very much, Garth. So to round out the slides and to go through a few questions then, next steps from our perspective are very clear. We have the three deals to complete over the next six months, and then subsequently integrate those three businesses, these three groups of businesses into our wider structure. The integration process has been The preparation of their own has started.

22:44 Various teams are working already to make sure that we are ready absorb the various companies. That is together with the CRH businesses themselves, who obviously are preparing on their end as well to make this process smooth. It will involve IT systems upgrades, finance and other changes to make sure that the reporting is done as we want it. We then focus on reducing our debt levels to one

23:13 times EBITDA or less. When it comes to trading and outlook, we're obviously cognizant of the slightly subdued environment when it comes to construction across Europe. We have been trading through that, trading well through that for the last twelve months. That said, we retain our guidance when it comes to full year outlook and beyond, and with the further diversity of the group post this transaction, we certainly hope to be in stronger and more predictable position even though we are today. And to finish off the slide deck here and go into sort of Q and A, a reminder of the key points that I had up at the screen at the beginning of the slide deck, which really break down into three, a greatly clean equity story, a focused business on lime and limestone in Northern Europe, which delivers great synergies, can de gear rapidly and as a result of that, with profound growth to the benefit of shareholders with solid free cash flow, solid return on invested capital both initially and as a target, enough capacity to de gear and to reinvest and also pay some dividends or buybacks as we evolve.

24:31 That's the presentation from my perspective. Happy to take questions. Super. Thank you, Max. Thank you, Garth. Now if we could turn to the questions, we had a number of questions submitted ahead of

24:41 the presentation, and of those submitted during the course, we actually have a number of topics to duplicate, so we may group some of those together. Can we just start, Max, how did SIGMAROC originate the deal and become the preferred bidder? That's a good question. We got in contact with CRH. We post the transaction of NorthCalc and the acquisition of NorthCalc in the North. We obviously looked farther afield to see where else we could expand our group with a bit of the idea in mind that one day perhaps we could form a European, North European leader in limestone. In order to do that, we had to see what we were going to do about the footprint that CRH was running at that point in time. And so there was an approach to CRH direct, and there was a long discussion which then led to this transaction.

25:37 Super. Thank you. And I guess a continuation of that is, why is now the right time to do this deal and is this the right price? Yeah, so deals like these don't come about very often and you need a winning buyer and a winning seller, that's always clear. So transactions like these, when they are available, when both sides of that equation line up, is when these transactions happen. We are not in charge of that timetable. That just depends on many, many factors. So when it's available, we then have be very careful not to just dismiss it out of hand because the timing doesn't suit us per se for one reason or another. So that's been effectively the study or at least the debate internally over the early months of summer and over the summer months, was this the right time to do it? And if we weren't going to go ahead with this transaction now, what would then be the consequence?

26:31 We looked at this very carefully, both in terms of availability and also price paid, and in both cases, we came to the conclusion that it was the right answer to go forward with it now given potential business that we can create from this. The fact that it rounds off the story that we started in 2016 and it gives us an absolutely unique position across Europe that can never be replicated. But if you were to replicate it organically, would take decades, perhaps generations to do, so a really strong industrial logic. And then financially, even at share prices, which are obviously not ideal at this point in time, we could make these earnings enhancing double digit even at the start with significant synergies to follow.

27:17 And so therefore, from an investor return perspective, we could stand behind the logic there too. So these were the two tests that we looked at and as a result came to the conclusion that it was right to push ahead.

27:29 Great, thank you. Now you have touched on this in scale terms in the presentation but it might be worth reiterating. Is special about these assets and how big are they?

27:41 The Lyme industry is an interesting industry that is dominated by private businesses, carnivores and rust in Europe at least, and a few smaller ones scattered across the European landscape, and then obviously the CRH assets in Middle, Central Middle Europe, then also in the North. High quality assets in the lab industry of this scale and this presence are very, very hard to come. So therefore they are unique by definition, by their position. That's one. Secondly, if you look at the quality of the operations, well maintained operations, well maintained assets, that's a key driver and a key aspect. And then thirdly, production needs limestone quarries and good reserves. There's a billion plus tons that comes with the transaction, further supply deals in other locations.

28:33 Combine all that together, you get something that is hard to replicate, and so as a result, unique in our view. Super, thank you. Equally, you touched on this briefly, but I think it's probably worth asking you again. What is driving the lime and limestone markets? Well, there's a few obviously graphs in the slides as you can see. Really 50% is industrial and 50% is construction. Construction is very easy to understand. It's just stone that gets used to build things with or as a powder, as an additive in concrete or other blends. Because more interesting is the industrial use, and that sort of breaks down into either it's a chemical agent where it purifies a process.

29:20 You can think of, like, for instance, the making production of steel. Lime is very much there to purify the steel as it goes through the converters and out comes the impurity bound into the lime and the limestone. Or it becomes a filler, and that is interesting because in paper and plastics because you use less of some other material which are either more expensive or more harmful, hydrocarbons when you make plastics.

29:50 And so a really versatile material which gets used in all of these different industries. Actually on the screen, as you look at the screen here, you'll see all the industries it gets applied into. And when you combine all that together, you'll find that basically none of modern life is really possible without flying limestone, or at least it might be possible, but it's going to look a lot less attractive than it looks today. Yeah, thank you, Grace. How will the synergies be achieved and how quickly?

30:25 We will do the same as we've done with every deal we've done so far, which is sort of a three phased approach. Phase one will be sort of mostly observing and preparing to work on these synergies. That's got to do with the fact that most good ideas are actually in the business already. Operators have been operating in quarry for a decade. They know what they could do better. Sometimes they either didn't have the time or didn't have the opportunity to go forward with the ideas they've got, so we want to make sure that we extract these. Then secondly, we start to, once we've aggregated the various ideas that come from the business we have acquired or that we have developed ourselves, we start to implement, and that's the second phase. That usually takes a year and a bit, and the fruits of that implementation only comes through after that. So you get sort of a two and a half year cycle, two to two and a half year cycle. You compare that to NORCAL, when we bought it, it was running at 65 ish million EBITDA, and we had some low hanging fruits that we immediately went after, that brought it to 69 at the end of twenty twenty one. Across '22, we moved to six from 69 to 72, so only 3,000,000 up. And then across '23, we went to from 72 to 80 to '80 one, '82.

31:46 So about 10 extra, and it's basically that ramp up as the ideas implemented in year one start to bear fruit in year two. Great. Thank you. One here, how does the SIGMAROC approach improve the returns on the assets? Again Garth, if there's anything you want to add there, jump in. I think the first thing that we try to always do is really respect the company that gets bought. We shouldn't have the idea or the thoughts that we're any better than them at running our business so many times, or their business, many times the good ideas come out of the business that was cross bought essentially.

32:35 I think that we do fairly well. We are very humble in the approach. We sit in the quarries with the operators. In Northcup, to give you an example, we didn't even visit headquarters in the first year. It really wasn't really of interest to us. We wanted to be in their operations with the operators and get from them the best view of how this business should be running better. That's the first thing. Secondly, and that's new in this setup, we've never had network effects or never had the scale to be connected between the various operations that we own. A little bit in Belgium and a little bit in The UK, but not really that much. The scale that we now achieve, and especially also the scale in Lyme, means that there is actually network effects that we had here which we never had the opportunity to harvest.

33:26 And so those two things I think will drive the returns. Great, okay. We've got a couple of questions on integration as well actually. What are the integration challenges? So we've set up an integration team already and that team is split down. It's easiest to tell you what we're doing. I think that will tell you what the challenges are. The team splits down into first geographies, so we have someone looking after The UK and Ireland, because that's one geography. Someone looking after the German and Czech business, that's geography. Someone looking after the Polish business when all these come through, that's geography again. So there's a person dedicated to make sure that everything that we need to do for day one and that these businesses keep running is in place. So finance is aligned, reporting structures are there, the people know who to speak to, that if there's any IT issues or any IT aspects that they are picked up, the pensions keep being paid, salaries keep being paid, etcetera. That's very much mechanical day one.

34:26 Then there is a whole piece around integrating the financial and reporting aspects, more than just getting the numbers out, but aligning it to what we need, sort of list of business, so we need to make sure that we report in line with what we have at the group level. That's primarily Garth and his team. And then there is sort of dovetails into that, there's a whole IT aspect. Businesses are all different IT systems. In some cases, we keep the systems they have currently, just a different instance. In some cases, we hire them onto our tools and our systems and that needs to be worked on and implemented. And once that is done, then we have a group of companies fitted into the SIGMAR structure. Then we can start to really work on the SIGMAROC piece. Great, thank you.

35:14 One question here. How will the collaboration with CRH work? So we have a We're co located on many sites in four countries with CRH because there's car buy businesses in The UK and Poland, those assets where we are already co located within Infinimin, for instance, where we supply them material or they supply us material. And so that collaboration is very much where they have the mineral reserve for many reasons, operational and other reasons, and we have the production plant or the reverse. We help each other with the supply of the right type of material to be able to produce and expand that production. That's in particular the case in The UK, in Poland and in Finland.

36:00 It's very much a cooperation to make our different businesses work best. Super, thank you. So just a couple on returns and divots. So regarding investor returns, how does the board feel about raising money with the current share price? Yeah, that's a good point. That's a good question. The share price, from our perspective, there's many different explanations or points to think about when we look at our share price, also share prices of many different businesses in The UK. We've had twenty nine or so months of outflows out of UK markets, pounds 7,000,000,000 left is particularly in small and mid cap businesses, of course ours. So that's not been an easy environment to operate in. We've seen that through fund manager changes where the change to fund manager implies a reduction in position because the new fund managers wish to have a different strategy on the fund. So that's one of the reasons why the share price has evolved as it has evolved. There's also potentially a further point, which is we are a small growing business. There's always this question mark, what's the next step you're going to take?

37:14 Is there a next fundraise to come? And this transaction effectively addresses both sides of that point, which is almost on one hand, it becomes a very clear business with a very clear mandate. It's a line of lifestyle business in a clear geography with enough cash flow to de gear, expand, bank growth, pay dividends. So there is no further equity raising required, one. Secondly, the equity story becomes much cleaner and much simpler, and as a result, it becomes a much more attractive proposition for new shareholders to come in. And that with this fundraise, we have seen. We never had American shareholders. We now have American shareholders. We never had a large number of Finnish shareholders, which we now have, European shareholders, which we now have.

38:03 And so, yes, it's not an ideal setup to raise money at a lower share price, but if we can solve the number of points that our business, our register had with this raise, then it's worth doing. And then it came up with a question to us, can we do it at this rate in a way where a transaction is earnings enhancing even at the current share price? That was the condition, and we managed to get a transaction and a valuation that answered all of these questions positively, and so as a result of that, went forward. Right, okay. And finally, and you have touched on this, it might be worth reiterating, what about dividends and potential share buybacks? Yep, so dividends, we've again in the presentation very clearly made that statement and also in press releases.

38:57 It's our intention to start paying a dividend as soon as we are at one and a half times levered or less. We will then very carefully look at the share price at that point in time. It might be that an initial buyback is at that point in time a better use of capital or more logical use of capital, but in any case, returns to investors will be then launched. Dividend, as classically the case, a starting dividend that will then grow over time as the gearing continues. But that's all very firmly announced and that's all in the paperwork with this transaction. Yeah, great. Okay, very comprehensive. Thank you very much. Thank you, Max. Thank you, Garth. Could I ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback? If anyone has further questions or would like additional information on SIGMAROC, please do get in contact via sigmarocwarbrookpl dot com. In the meantime, thank you very much for attending today's presentation.

39:58 Thank you very much. Bye bye.