Sigmaroc (LSE:SRC) — Interim Results

0:00 Good afternoon, and welcome to the SIGMAROC 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. Please just simply type in your questions and press send. Before we begin, I'd like to make the following poll. I'd like to hand you over to the management team, Max. Good afternoon, sir.

0:22 Good afternoon. I hope everybody can hear us well. Thank you very much for joining SIGMAROC's first half twenty twenty six results presentation. We've got slides for you on the screen. You can download those slides also on our website as well as more materials. Short presentation of half an hour with the four usuals chapter headings from the next page, an overview of the group's performance, finance review by Jan to my right, subsequently strategic delivery, and then outlook at the end, and we're happy to take any questions you, might have. If we go to the first part then, group performance for the first half. Fantastic first half of twenty twenty, six.

1:08 Strong results. EBITDA up 11.3%. EPS up 12.2%. Margins, EBITDA margins at 25.1%, an evolution of 200 basis points. All of that pointing to a great first half in terms of trading, volumes, evolution of our business. It didn't start smooth. There were some headwinds at the start of the weather, but that was recovered very nicely in q two. Balance sheet strengthened further, 1.66 times leverage at the end of the first half, very nicely at the bottom end of our target range, and return on invested capital on a LTM basis at nearly 12%, again, half percent up, from last time. And therefore, confidence in the full year outlook.

1:56 And strategic delivery was also solid. Operational excellence, as as you can see from the margins, continue to be driven through. Synergies program has delivered, and there's more self help to come. We've done a phenomenal acquisition with the help of our teams. I'll come back to that point in a minute in Dolomitic limestone, Dolomite. The Belgian aggregates production setup, new aggregates plant is only there to be launched on time, on budget for a fantastic 2,000,000 ton of production capacity in Belgium. We've extended our quarries in Klint Hagen on the island of Gottland in Sweden with high quality mineral, and then we keep focusing on the quality of our business through the rating, the MSCI rating at triple a at this point in time. We move on to the news of the day, which is the Dolomitas acquisition in Lithuania. To give you a bit of a a background for the slides on this deal at the end of the slide deck, but some quick points.

3:02 3,500,000 tons of dolomitic limestone dolomite per year. It's a high quality limestone product that we sell we will sell into the Lithuanian market. Forty five years reserve and resource planned, permitted, and further to come, and then beyond that, of course, as well. €70,000,000 turnover, 25.7 margin percent margin for an EBITDA of 18,000,000. We've paid a £110,000,000 euros for this business, which equates to a six times multiple, a very, very attractive multiple. Therefore, immediately earnings enhancing, and that is pre synergies. And very interesting as well is that the sellers requested to be paid in part in shares at a very attractive prices at when this deal was done. Again, all those points I will come back to in the further sections of this presentation.

3:58 If we move on to the performance of first half. First half was solid, as I said. On slide six, an overview for the group and then by geography for revenue EBITDA and EBITDA margin. Every single region performed very nicely. Two little points to note, the two red arrows that you can see, 1% year on year revenue drop in The UK and Ireland. That's a mix question in terms of residential construction. Same point, in fact, in the region West where we sold more aggregates, like lower margins, slightly less dimensional stone. But these are tiny, tiny changes versus the fantastic performance of the group put in on every other metric. And you can see some attractive double digit growth figures in EBITDA and some very attractive increases in margin as well.

4:57 All of that very positive regional performance. If we look at the same performance numbers but now split differently, split now by segment on page seven, revenue up in industrial and environmental applications and quite solid increases there. Industrial predominantly driven by the steel sector. As you may have read, the steel sector received some support from the European Union in the form of quotas tariffs, and that has made indigenous steel in Europe quite a much a more attractive proposition for the local steel producers, and that translates for us into more volume and better sales. The other segments, pulp and paper, chemicals, mining, and so forth, were good.

5:43 Stated stable, steady year on year. Looking at the environmental segment, second segment where we apply our products, again, as a purifier to waterways, to flue gas, as an agent in agriculture. Again, very nice revenue increase 7% year on year, and that's driven, again, water treatment is one, and then secondly, the performance in the flue gas treatment segments. And then the last sector, construction, 42% of group revenues. Softness, obviously, there. Residential construction in Europe has been weak for years. It has shown some tendencies of recovery, but those tendencies have not yet translated in a full recovery of volumes of pricing, and that's what you see in, that last bracket. The signal there is clearly that when this will recover, there's quite a bit of upside to be had in the construction segment.

6:41 And then lastly, a third sort of cut of the same results, but then now by product type and volumes. 1% core volume increase, and that is a first in many years. The the volumes have decreased over the last year predominantly because of weakness in European industrial and construction markets, but now we see a core volume increase. If you take all volumes combined, there's a discontinuation in certain businesses, and that translates into some reduction in high grade volume. That's where we stopped certain contracts, certain production to sell volume into higher end applications when those become more available. That's what you see there. All in all, a very attractive performance also from a volume perspective.

7:30 So that hope that gives you a flavor for the business' performance in the first half. And now for some detail on the financials, I'll hand you to Jan on my right. Thank you. Let's move to page 10 where you see the metrics, how we track them to assess the performance of the group financially. Couple of them were already mentioned in the intro. All green arrows here except for free cash flow at the bottom end there. We'll get to that in a minute. Very nice progress over time. Very good growth year on year in the right direction. Debt down. Business related metrics up, very nice increased percentage as well year on year. So we're we're doing very well on that with a range of leverage where we want it to be, where we're at 1.66 times of leverage, which is nicely in the band that we like to be in.

8:24 The only thing that is is red here is on the free cash flow side, which is the pre growth part, which we usually show. If you look at including growth, you'll see later on. We went actually up from 45% last year to forty six. So it's it's still very nice cash generation for the group when we make operational results, which we use then to, possibly, to fund the the acquisitions when we have an opportunity to do it. This is a status at the moment, though. What I like is the, is the set of graphs on the next page, slide 11, where you see the same metrics portrayed over time, all developing very nicely in the right directions. The CAGR values are very, solid.

9:12 ROIC is very solid over time. You you see there in the middle block at this at the bottom part, there's a slight dip in in '23, but that was because of a lot of acquisitions that we did in that year. So the rest is performing really well over time where you see from '26 to '25, that point five increase that was listed on the front page. EBITDA EBITDA percent very well, and our leverage, you see how we operate within that band of one and a half to to. So all metrics in a good shape. If you look at the next page, I'm going fairly quick here as the metrics are showing good numbers. Revenue on the left side and the EBITDA bridge on the right side by region.

9:58 UK and Ireland somewhat down year on year in in revenue side, which is the the construction industry primarily, and all other regions, very well upwards. Nice growth there. And then some help on foreign exchange rate as well as the euro strengthened over over time. You see the same thing on the right where EBITDA is listed all regions up, including Ukraine and Ireland. Part of that is because of a change in contract structure of our haulage fleet that we changed now. It's now one of the the leases where the cost base is now ending up in the depreciation line. If you take it out, there was point point 4.8 in that bar. There's still two left, which is nice 7% growth in EBITDA year on year in that region. So well done with the team on the ground in a difficult market. Same applies for West where construction is also difficult, and in particular, residential is still fairly weak across the the European landscape.

11:00 So showing and delivering these numbers is a good performance on the team on the ground, same for Nordics, and in particular, on the central block where pricing was actively picked up and delivering. So all in all, growth on the top line, even more growth relatively on the bottom line on EBITDA. So very good good shape there by region. The next page has it by component, the driver from one one seven eight to one thirty two. As you can see, volume slightly negative. Overall, volumes were down 3%. Now this is the effect of that on the bottom line, but all other items are positive in particular pricing, in in in a difficult market. So very well done by the team, very well managed, commercially.

11:51 And then we continue to work on our synergies and self help projects. It's delivering. As you can see, we're not fully done yet. There's more to come as we execute the whole list of project that we have listed. So it's favorably delivering, which is nice. And then we have a reclass on the whole list, which we've separated out here to be transparent what it triggers to EBITDA. So it is a help there, but not an EBIT, but it's here, it's a help. And then we have a few others. That leads to our own p and l on the next page, slide 14, where there's a lot of detail. You see the top line growing from $5.10 to $5.23. Operating profit up from $81.04 to $81.07, and then we have done quite a bit of work on the items below operations.

12:39 Finance costs have gone down with the refinancing, so a significant help on the cost side there. Last year, we had a few other gains, positive at that time. They don't repeat typically, so we have a few left, which is the c o two results. So we still have an expert center that drives volumes there and, well, and and benefits. But the others are missing. And then we have tax expense is going up because of improved profits, which is a good thing. On a percentage basis, it reflects roughly 20% of profit before tax, which is somewhat lower lower than what we typically guided, which is at 22%. So we had few refunds from previous years, which were favorable for us. So we'll take it, and underlying profit in in good shape.

13:27 Now EPS up as a consequence as well, 12% plus in in a in a market that's still not helping. We're very proud of it. If you look at this chart on the right, it's an area where we get some question in particular around the variable cost split. So you see five buckets there, and in particular around energy, fuel, and carbon, which represents around 26, 27% of total cost of sales. We have mentioned it a couple of times in communications. We deal with it, in a in our way that is on the next slide. So how do we do that? One, we do it in the first bucket there at the top. We do it quite successfully because during the times that these energy prices manifest themselves, we were able to increase margins in both cases. This is a reflection of the Ukraine crisis at the bottom there, the 10 basis point. And then the second now, where we're in the middle of the Iranian and Middle East crisis, and we were able to push prices up, push margins up, sorry, with over 200 basis points. So the prices in the market of energy are clearly going up. They're visible, but not so much for us, though. And why not? That is because we have put hedges in place where we basically secure pricing from a certain point before it happened this year, and and we're paying those, not the market prices. So we're we're taking action on the on the cost

14:58 side. That's one. And then secondly, we've put them into the contract with customers, and we push the prices that we have to pay, push them through, basically securing us from negative margin impact. Now there are a few other things that we do to minimize the fuel expenses. We're trying to make our kilns much more efficient than they what they already are. So working on programs there on efficiency itself and then biomass conversion because they don't direct c o two credits. Now if you look at what we do versus what others have as a statistic, we've said we've included two charts on the

15:39 right. The the left of the two is the indication of our company with an intensity of energy in gigawatts per million pound of EBITDA that is about fifteen fifteen, 16 points. Other peers in our material group are actually substantially higher. In this case, it's it's 40% almost based on their intensity versus ours. So we're not overly exposed to energy versus what others have. So we're we're actually in a not not in a bad place at all if you look at this this intensity picture. And then combine it with the actions we can take and we have taken on the left, we're we're we're in good shape. Same applies for carbon.

16:28 We're dealing with it as as we should. And if you look at our carbon intensity relative to others, we're lower. Less lower than on energy, but still substantially lower in in in, you know, over 30%. So overall, if you talk about exposure to energy and and other relevant costs, it's it's mitigated. It is actually less than others in in our in our peer group, and we're managing it really well. And you see it on the facts, which is the margins that we were able to deliver.

17:00 Now if you look at it over time, which is always a good position, these are two charts on the next slide that represent first on the left side, margins over time from 2,008 on of the line business. So this that is a a portion of what we have today, but that is a line. Now as you can see, it's it's hovers around 20% plus every year, and there were crisis in those in those periods. So it's it's steady business. It has diversified end markets. It has a diversified customer profile.

17:37 Regional split is helping, so it's very stable and delivering good results. Now at the after 2020, we were able to purchase Lime and combine it with the rest of the group, which was more aggregate based. So if you combine it, the average margin has come down to 18% as a start, and that's where we were able to move it upwards up to 25.3 this year up in '25, and we're at that point more or less again at midyear.

18:06 720 basis point up. Not in easy years. Nowhere near. Ukraine crisis were in the current position in in Iran is is is this business and very nice trajectory. So we're able to do good deliveries on the margins and absolute amount, so we're dealing with it in with it as we should. Moving on to the last part of finance, which is helping Max in his his third case, we're generating very healthy cash flows in our with our business. From EBITDA perspective, around 50 to 46% if you take all cash flows that we have to pay. Of course, we have sometimes an investment in working capital. Next quarter can be a contribution, which is always going a little bit back and forth. We pay our taxes and CapEx.

19:00 Maintenance is about 20, and we have the cost of financial funding that we have to pay. And then we have a few cash outflows on on leases that were previously in in EBIT EBITDA now part of EBIT. So overall, free cash flow conversion, pre growth CapEx over 50%. And then if you take growth CapEx into account, it is particular spent on a a large project in Belgium for an aggregate pressure. You take that into account with 46, and this metric was 45 at the midyear last year. So good progress there. Very healthy CapEx, which then feeds our acquisition trajectory. And the last part here is that we do that with degearing in the back of our head, and we're we're carefully managing both. So far, we're in a very nice range moving from 1.8 time at the beginning of the year to one sixty six.

20:00 And you see the buildup of that. There are some cash outflows, but overall, very controlled and very manageable towards managing cash in in in both from a funding perspective and then performance perspective. Thank you very much, Jan. That was a good summary. We are now moving on to to section three on to slide 20, the strategic delivery of the business. We'd like to take you back to the Capital Markets Day we did in May 2025 when the team went on stage and set out a series of objectives. And these objectives were, first and foremost, deliver the synergies program that we launched and to keep improving our business from thereon.

20:45 Results today show you that that program was successful successfully implemented with a fantastic evolution of our margins. The second thing that we said is that we would invest in our assets and make sure that the assets stay in good shape. And that is clearly successfully implemented to date with 64,000,000 tons of high grade mineral added to the Gotham operations in Sweden and an additional crushing aggregates plant back in Belgium, which is on budget being launched as we speak pretty much. The third thing we said is that we would continue to develop our footprint through very attractive m and a. And the attractive m and a clearly today is a first step into that direction again with the Donomitas transaction, which I'll come to in a minute.

21:36 Further aspect we set out were keeping our balance sheet healthy, refinancing very attractive terms, keeping it go deliver leverage going down to 1.66 times, and then the overall quality of the group, emissions, safety, relations with our neighbors. And there, again, we invest time and resource to make sure our business is well set up for the future, the triple a rating with MSCI gives you that confidence. Now if you look at the m and a piece, which is the news of this morning, we have a good track record of m and a. We've done a lot of work in the segment. Plenty of deals all the way between the start of the group and then 2023. Then we did a very large transaction, the CRH deal, where we bought Lime and Limestone

22:23 assets right across Europe. We implemented the synergies and integration program, streamlined the portfolio with some divestments at very attractive multiples in 25, and then now in '26 have gone back on the m and a trail. And that is with a feel of size, the DollarMetas Group. The details of that are on 20 page 22.

22:47 So we're talking here the of Lithuania. We're talking Lithuania, which is the country you can see with all the dots in it on the map. It's one of the three Baltic states. We have a very attractive and well set up Baltic business already, and this business will fit right into that mix. The group the group is the Baltic group is run and managed by our head of the Baltic States who had an intimate knowledge of the business we've just bought. He ran that business for many years before joining us and kept a very good relationship with its prior owners, the two gentlemen who have sold us the Group. And what is the Dolomitas Group? It's a it's the largest quarry group in Lithuania. It's the largest limestone based group in Lithuania. It's the largest dolime dolomitic lime, dolomite group in Lithuania.

23:41 It sells predominantly into various, infrastructure, industrial, and environmental applications. One of those, which it doesn't sell to yet, would be green steel. Dolime, which is lime made from dolomitic limestone or dolomite, is an essential ingredient in electric arc furnace based steel. It's essential because it protects a refractory brick lining in that electric arc furnace from degrade from degradation as you produce steel. And this particular product, this high quality limestone, subgroup of limestone, is an essential ingredient in exactly that production. Now if you look at the business in detail, the one that we have or agreed to purchase this morning was set up in the nineteen sixties, has 40 different types of limestone products and dormitic limestone product and grades that it sells in the various end markets.

24:38 Sells for about €70,000,000 in terms of turnover generated in 2025, 18,000,000 in EBITDA. Reserve life is solid, twenty five to thirty years existing reserve under permit permission and ownership and a fur further fifteen to twenty, where permits are required, which we will obviously obtain over the years to come. Three and a half million tonnes of production per year with the capacity to do more at 25.7 EBITDA margins.

25:08 We expect this to complete at the end of q three and into q four as the regulatory findings are going through. Obviously, the the management team is very solid, and we have intimate knowledge of the business through our staff member who who ran the company for a long time. The two owners were very pleased with with the fact that they requested to take shares and take have taken those shares at a clear premium to the price of which this was agreed, 129p per share. And then in particular here, and I know that somewhere on the phone here as well with you, this transaction was entirely run and managed by the teams internal to SIGMAR, a fantastic effort, a fantastic process, well run, well executed.

25:54 And that shows the capabilities we are developing internally. And, obviously, obviously, on the side of the sellers, they did a fantastic job too. Now a few slides on what dolomitic limestone and dolomol means. A dolomine versus lime. Again, the critical difference is the magnesium oxide content in that particular product, and that helps with steel production, helps with feeding soils, pH control, and it also helps just as a hard stone limestone variant for construction. Now dough lime itself is, on the next page, a fantastic material to be part of. It is scarce when you look at the European footprint. There's not many pockets of this material available, and we now start to be part of that club that produces this product.

26:42 It's a subgroup, the whole line that is which is in demand and growth in the volumes are clear when you see the predictions on the slide, 4% per annum, which is quite nice and outpaces this usual one, one and a half percent volume growth that we have flagged in the past. And that is all because of the trend towards electric arc furnaces. And I we've given you a slide on '25 where those electric arc furnaces are placed, where we have the various dots, dolomitic line production, where we obviously now are placed ourselves with the inclusion of dolomitas. Plenty of our electric arc furnaces already up and running and plenty more coming. The last point that is important is with the dolomitas Dolomitas Group, we also purchased a large section plot of land in the economic free zone of the ports in Lithuania, which will allow us to double both import and export of product into the region.

27:44 All in all, a phenomenal acquisition, a fantastic synergistic acquisition, which fits perfectly within the remit and the objectives that we set for our our group. And that leaves us the last few minutes of this presentation for questions. The outlook. While the outlook is is a positive one, we have a fantastic business, great staff, great resources, scarce resources, inflation proof in that in some say resources right across Europe. We have fantastic customer base who we serve with both product and additional services. The business is predictable through cycle, and the reason for that is that we don't have just one sector we sell to. We sell to pretty much every sector of the economy, and those sectors evolve with their own cycles, and that makes this business so predictable and so smooth.

28:36 And then we're very well placed, therefore, for Europe's reindustrialization and the tailwinds that come from additional infrastructure. And as a result, second half, which is typically a stronger half than the first, has started well ahead of last year. We're obviously watchful. The Middle East crisis, which we hoped would end in the summer, is obviously still continuing, and we are keeping an eye on how that impacts end demand. And the reason for this is if interest rates go up because of inflation fears, does that impact any housing demand? Those sorts of things we keep an eye on. So far, we're trending very nicely as you can see from those results. The CMD priorities for last year are nicely being executed. And as a result, the board's view and our view here is that we're on track for another solid performance as a group. And now with the additional benefit of m and a, the synergies that will bring, the earnings enhancements, fantastic deals like the Dolomitas deal we have announced this morning. And on the back of that, I'd be happy to hand it over all to you for any questions you might have.

29:45 Perfect. Thank you for updating investors today. And can I please remind investors to submit your questions placed in the Q and A tab situated on the right hand corner of your screen? Max, as you said, have received a number of questions during today's presentation. So if I could just hand back to you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Thank you very much. Yep. Melissa will take us through those questions Yeah. Screens. So first question is from Henrik. Please explain the corporate cost in the chart on slide 21. Does it only relate to dollars or cumulative m and a? The corporate costs are just the slide 21. That's a different slide. But generally speaking, corporate costs in the in the waterfalls that we have in Janek and Expand is just all the central functions that the group has.

30:36 So you have a buildup of the various EBITDA components and then and then the corporate cost by by division, by by region, and then the corporate cost over the top. Great. Steven P, could you expand on the courtship of Dolomitas, and were you in competition? No. This was a a very a very nice transaction as you the ideal scenario. Two fantastic sellers who were happy to consider what the next the best next step would be for their business, a business they've been running for decades, that their family has been owned had owned for decades. They obviously knew our CEO Baltics from his previous tenure with that business, and so it was a direct a direct relationship there.

31:28 And there, I would say that both the seller and our m and a teams have done a a stellar job. We did all the diligence with some support, obviously, on legal and finance from outside counsel, but all the other one other other work streams were in house, and and it was a very it's a very good, well executed deal. Another question from Steven P. You have not declared any synergy ambitions regarding Dolomites. What areas are the most promising? We we have a sort of a blanket synergy ambition for any deal we do, and that's not new. It's been yet there for about ten years, which is to say that we always hope to achieve about 25% EBITDA increase on any deal that we do and that we then hope to in to outpace that that increase in the years following transaction.

32:22 So that's the guidance that you can take, and you can look at the deals we've done in the past. That's always where we've ended up even much higher. And what's the ambition or what's the the the the main source? Again, prior deals, it's always been a combination of operational market presence, integration into the wider structure. It's never a recipe that is exactly the same, so it depends on every time on the local context. And, again, here, that will be the same. But take those numbers as as a guidance. Question from Peter W. You state that the synergy program has delivered €45,000,000 of EBITDA improvements to date. How much was incremental in h one twenty twenty six? How much remains? And when will the program be substantially complete?

33:12 Yeah. Well, I can take the first one. The incremental part was on one of the slides on the bridge. It was 5,000,000 for the first half. We've said on the full full program of synergies that we have delivered the minimum that we've said we would. We lifted the minimum twice from €30,000,000 to 40. So we've done that last year, year end. This is another five on top, but we continue to work because they're still not fully finalized yet. And we said we will we will do our best to get to the 60,000,000, which means that there's 50 more to go after. And the 60 by the way, to complete Jan's point, 60,000,000 in synergies on the CRH deal would be near enough 50% EBITDA uplift from the acquired EBITDA. So we are well in our target range already, but obviously, the target is to to get to the full 60.

34:09 Question from Mason s. Today's acquisition is very exciting. Can you comment on the strength of the pipeline for further acquisitions and the likelihood of closing another deal in the next twelve months? Alright. So next twelve months, no doubt. Yeah. There's just no debate. This the pipeline is is full. The pipeline is always full. What you wanna do as a business of of our type is to want you want to buy the best companies at the best value. This morning is an example. I mean, the valuation is attractive. The quality of the group is exceptional. The deal process was fantastic. The sellers took equity and fully subscribed to all of us and what we are all trying to do here and and and the confidence in the limestone and lime sector in Europe.

34:55 You want to do those deals. You can you could obviously buy anything and everything that you that comes around the corner, but then you don't buy build a quality business, and that's not what we're after. Question from Carl P. Could you give us a bit more color on the £8,200,000 other and FX contribution in the h one revenue bridge? How much of it is FX? How much is other? And what is included in the other component? Other and FX is 8.2. The bulk is is foreign exchange. Others is, for instance, if we charge some revenues to to customers that is not related to to to volume, which is incidental, and you put it there, but the majority is foreign exchange.

35:49 Alright. Question from Vishal B. You spent 27,000,000 of CapEx in h one. This includes growth. What is the annualized run rate of the group here over the medium term, please? Annualized number based on the current size of the group, which is around if you exclude leases, is around 65 ish dependent on growth. With the new acquisition added, it will will will go up slightly, but because they have CapEx needs as well. But that's, I think, 10% plus is is is is So you'll you'll pre leases at 56 $65.70 ish.

36:38 Probably is a good number. Question from Connor m. Thank you for the excellent presentation. When do your energy hedges mature? And have you modeled what kind of an impact this will have on earnings when you need to put on new hedges given current prices? Yeah. Well, look at that actually right now. This is the period where we normally would look at it following the budget process for next year. This the hedges that we have put in place vary in terms of expiration date, and they vary also by country because every country has a different energy profile, and thus you need to do that on a country basis. Today, what we don't wanna do is is lock ourselves in at prices that are at current levels. So we'll be a little bit more we'll have a different approach now towards hedging, more layer based than than at a moment in time.

37:38 So we'll be active we'll be acting cautiously on on the hedging just for the sake of being mindful of cost developments. That's one. But on the other end, the prices will be going up with it because of the contract structure that we have. So there's not an an an exposure per se for us, but we are still mindful managing the cost base because if we can avoid pushing it through customers, that is well received by them. So it's it's a it's a bit of both. Another question from Vishal B. You invested 14,000,000 in working capital in h one, and you will now also integrate Dolemitas Group.

38:23 Should we expect you to continue to invest in working capital this year and over the medium term as well? No. It it it's it's an investment now. Last year, it was an investment of half the size. There will be a benefit at some point. So working capital is working capital. It's not always going negative. If you add, of course, a company, then you have just the balance sheet that comes along, and then you'll go up. But it's it's not an endless an endless put in that sense. So we're we're managing it from a operation standpoint where we have an eye on on the, you know, the typical receivable days and and the likes and payment days. So but overall, if you look at what it reflects, it's it's five to 10% of revenue, which is which is a and and steady, which is very manageable, I would say.

39:17 Just just to add one point, we own our resource. And if you compare a business like ours to a business that doesn't own its resource, where it has to buy its own input, you have major working capital swings in absorption. And, obviously, this this the working capital, whether it's 10,000,000 or not, it's effectively a nonevent in in in in in that context. So it's a very manageable point. We also ramp up and ramp down stock. We ramp up things depending on what we see in terms of demand. So those sorts of where you position the business to take better advantage of certain fluctuations in in certain end markets. And those things sometimes come along in that working capital figure. But all in all, it remains a nonevent.

40:03 As Jan said, 5% to 10% is revenue. Okay. Other question from Vishal B. On the $1.29 p agreed for the share component of the acquisition, can you please give any transparency as to the process to arrive at this price Yeah. To the shareholders who willing to accept? Does this also become a blueprint for future bolt ons? If there is a a share component, it's a direct issue to target companies. So so this if this the 129 is the the the VWAP, the volume weighted average price set at the point when the deal was closed and completed essentially, which is Thursday last week. And at that point in time, the opening price that day was 120 or something like this, and the VWAP was 129.

40:56 And so the the shareholders accepted immediately a price 9p ahead of the price at at the point where we fixed this. And so that's a fantastic statement of or a testament of confidence in in the group. Is it a blueprint? No. In this case, we have two private individuals who own the Dorometers group who are obviously limestone fanatics because they've been in that business for their whole life pretty much, and who wanted to continue to hold exposure to our sector in Europe. And so it's a fun it's it's it's more than anything a vote of confidence both in the sector, in the group, in their own business to put a substantial amount of the money you've got in into into the business now.

41:45 It was the price the day before the deal completed. Yeah. Thursday. Yeah. The deal the deal was closed finally, but you need to, at some point in time, fix fix these numbers to to feed that all through all the all the SBA's documentation. That's the day before we close the transaction. Two questions from David Tee. Could you update us on your dividend policy and any further thoughts on the pros and cons of AIM versus full listing? Dividend policy, if as we said this morning, if we can buy companies as we have just done this morning with, it is obviously the most attractive way to spend the free cash that we generate.

42:32 Very attractive business, very attractive multiples, adds directly to our footprint synergies to be extracted. So if you pay six and you have a good run on synergies, you may be ending up at four, four and a half. That's where I think the the ROIC growth potential comes from. And so if we run out of ideas, then the dividend becomes a a logical second option. But for as long as the m and a piece generates this kind of value, that's where we should that's where we should go. Question from Richard e. If we look at page eight, high grade volumes up 8.5%, but revenue up only 2%, suggesting prices down.

43:18 This seems surprising. Could you explain why? Aggregates and stone revenue up 11%, up on flat volumes. How have you pushed through such high pricing? Sorry. Where is the revenue up and the volume down within page eight? No. I'm not sure if that's correct. Plus, we've sent year on year revenue in the Yeah. So the revenue rep so the high grade volumes that you see there include discontinued business, and so business that we have stopped the supply. And then there's a bit of a shift also between the columns high grade and aggregate stone, and so where some contracts were stopped and other contracts were picked up. Why is it up? Because we obviously sell at a better price. Volume down, but we sell this at the volume that we do sell at a better price.

44:07 And then aggregates and stone is both construction stone and industrial stone. And there, the industrial stone goes into some industries that have a good a good run. A question from. Could you remind us how exposed you are to steel overall? And within that, how much is flat steel sold into the automotive industry? Twelve twelve percent of turnover is steel, and that is steel in in all the markets we operate. So that's Germany, Czech Republic, Poland, and the Scandinavians, a little bit of The UK. So it's right across the amount of that going into automotive. It's not necessarily clear to us because your the orders of the client portfolio that our steel customers have is not disclosed to us in in detail.

44:59 Obviously, the German steelmakers have a large component in automotive. The other ones have large components into other sectors as well. Question from Richard e. UK revenue was flat, but EBITDA is up 24%. What were the key drivers here? Well, there's a so revenue EBITDA, if you net take it net net, it would be seven or so percent up EBITDA, flat revenue. The remainder is the internalization of the haulage function. Question from Richard f. Products, processes to reduce CO two, how are these developing? They're developing well. The predominant strategy is biomass, so conversion of fuel source.

45:49 That's a big component of the CO two inputs or output that we have. That we are in in progress with, and there's a whole plan and program for the next years to convert all our operations to biomass multi fuel, one of which being biomass. So that's all going fine. Question from Salam a. How do you explain the underperformance of the construction segment in what appears to be a relatively stable residential construction environment and a fairly supportive infrastructure market? Are you seeing any substitution towards alternative products, or have you lost market share? So the residential market isn't well, it depends. You there's pockets in those countries where it's different. The Holland is, for example, more stable, but there's other countries which are have which are tough. Residential markets are tough.

46:48 There is a increase in permitting and so forth, but it doesn't translate yet in actual house build. And The UK is very bad. The Finnish market is not great. The Swedish market's a bit better. So it's not a it's not a great market to evolve in. And as a result of that, you have a mix effect and you sell other products. So that's one. Infrastructure is stable. Yeah. That's a great statement. But it's stable year on year, and it doesn't actually actually do much addition at this point in time. And so as a result, the construction segment is weak. Now the down that's the the the negative. The positive is it's been here in at this level for four years now, three years and a half, four years.

47:33 And so we're still waiting for that recovery to come through. And once it does, then you will see a significant amount of additional volume through through that segment. Question from Lauren C. Can AIM continue to be a suitable place for the listing, or do you have ambitions to move to the main market? Yeah. I forgot to answer that question on the previous the previous question. We focused our our attention and time on on basically running the business synergies, development, m and a rather than being very excited about where we should be listed. The a market has done a great job for us over the last ten years. It's been a great home. There's some rules changes in the a market, which hope to make slightly more attractive.

48:23 It's a big job if you're gonna move. And so it's it's a it's a question of resource allocation, and we find that at this point in time, the resource allocation to, to m and a and developing the group is is is a better one. And and the benefits of moving to the main market is not clear. Yeah. Question from Vincent r. If the organic growth you have seen in q two continues in h two, is there any reason h two margins would be down year on year as guidance currently suggests, or are you just cautious regarding international situation? Caution. That's it. Nothing else. There's a lot of there's a lot of uncertainty around that is not just around. There's all sorts of other things that are there, and we prefer to be cautious and and keep guidance as it stands and then revise later in the year.

49:18 Question from Carl p. Could you detail the main drivers of corporate segment underlying profit? And what would be behind the £10,400,000 year on year year over year swing in corporate segment underlying profits for h one twenty twenty six? 5,250,000 versus 5,130,000 in h one twenty twenty five. Corporate cost, like Mark said, is just a cost in headquarters. What we do label in there are sometimes one timers, And you see it on the on on on the p and l slide where there was a £5,000,000 favorable other gains that didn't repeat. So that means that if you have a gain, a one time gain for insurance premium, you won't have it the year after, which happened this year. So we're we're not raising so we're not going up in corporate cost by the corporate team. It's just one timers that do not repeat lifting the overall.

50:21 Watch, bring the overall cost down, the consolidated cost level, but that is not because that is the an increase in the cost of the headquarters. It's just the absence of favorable gains that don't repeat. So it's not that we're structurally spending more. That's it. We've answered all the questions. We've answered all the questions? Yep. Okay. That's excellent. Thank you so much for your time and for taking time for us today. We have a fantastic business, fantastic asset footprint, fantastic reserve, great position to take advantage of all the tailwinds that are coming down in terms of European reindustrialization and then obviously an m and a transaction now, which was which is very welcome and will add to our already great setup. So thanks for your attention. Thanks for listening, and thank you for your support.

51:20 Perfect. Thank you. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback? Would you help the company better understand your views and expectations? On behalf of the management team of SIGMAROC PLC, we would like to thank you for attending today's presentation, and good afternoon to you all.