Van Elle Holdings (LSE:VANL) — Review of Interim Results and Prospects

0:02 Good afternoon, ladies and gentlemen, and welcome to the VAN ELLE results presentation. To start with, if we could cover a couple of housekeeping items. 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. However, 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 or if anyone has dialed in via VAN ELLE at warbrookpr.com. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where appropriate. These will be available via your Investor Me company dashboard. Finally, we'd like to remind you that this presentation is being recorded.

0:48 I'd now like to hand you over to chief executive, Mark Cutler, and chief financial officer, Graham Campbell. Gentlemen. Thank you, Tom. Good afternoon, everyone. It's me and Graham again.

1:01 We're just gonna we're gonna run through presentation slides with you. We won't take, hopefully, too long to do that because there'll be several familiar themes, I'm sure, for those of you that have joined us before. And then we'll hope to have a good q and a at the end. So we've had a we've had a a good first half of FY twenty two. We're we're pleased pleased with progress. It's a combination, I feel, of several of the initiatives that we that we've talked about on previous meetings starting to come through and show show the benefits in group wide performance and the integrated sort of model that we have of a range of specialist services, broad a customer base across the full UK built environment, helping us through, you know, the normal cyclical peaks and troughs of of different different subsectors.

2:00 So record record first half in terms of revenues, margins up in percentage terms, not as much as we want to get to ultimately. That's a journey we're on, but we we know how to get there, and we're making progress. But but good year on year improvement in terms of the first half performance. Lot of our growth is driven by housing and general piling activities. So housing sector been absolutely flat out as we would have mentioned previously and have been now for eighteen months. But we we all appreciate that there will be a dip, and we're already just starting to see the early signs of house builders, reflecting on their their their short term plans, which we'll come on to later. But very, very busy first half for housing, and also a busy first half for our general piling activities, which has primarily been driven by, commercial, industrial type builds and bigger residential.

3:04 And the industrial sector sheds logistics and the like still an important area for us where we do expect to continue momentum. But all of our end markets are moving in the right direction. So infrastructure, of course, is is is the is the other big area where we're we've got a big exposure. We've seen good progress in rail, steady progress, I would say, and, you know, very much in line with what we said we'd do. But it's a a market where, you know, we we as we talked about before, we're in a cyclical control period cycle, but we are, you know, making the the best of the c p six programs. And we've we've got ourselves embedded in, two major electrification programs and make good progress on bidding and delivering other works across The UK in stations and slopes and and the like where we get heavily involved often as a partner of choice.

4:02 But the the kind of the underlying trend in the business that's going to support our future growth and reliable performance is the longer term infrastructure frameworks that are building up behind the scenes and are not yet delivering on-site. And we've been busy designing, pricing, mobilizing in highways and rail several of these newly won but long in the gestation programs. The smart motorways program we've talked about before,

4:34 is moving forward. We should start work on-site in earnest, this summer. And, the Transpennine route upgrade, we've been we've been in the early stages of pricing and budgeting and and and the like. Probably not gonna start site on-site there until 2024, but they're all building up, you know, in in the right direction. We also have other major, infrastructure opportunities that I expect to, compensate for the dip in housing, notwithstanding some timing inaccuracies that are inevitable. We still have headwinds in the supply chain. We're not unique in that. We've overcome them to the most part quite successfully.

5:19 We see hotspots around The UK and in certain areas, and I'm happy to talk about examples of that later or Graham will. But, generally, we've mitigated those and factored them into the pricing of new work. We're pretty adept now at dealing with price increases. But we know there are still some shortcomings in in supply consistency in different parts of the country. So there's some some headline numbers there, which, again, I won't repeat what Graham's going to say, but you can see the headline numbers. Our order book is down a bit. I'm not worried about this, a general trend over the last couple of years of growing order book. What this, tells us is that there is a there is a quieter period over the winter, and maybe it's quieter this winter than last.

6:12 But, also, a lot of the focus we've put onto frameworks is not yet reflected in our order book and will be as those works orders flow through. Don't forget we're in a situation where work is allocated, not tendered against competitors, so they will naturally fall through to the order book in a way that is not typical of the way our order book is built in the past where we've tendered so many projects so rapidly, this will be an improved model for us going forward. But that won't be the majority of our work. It will be, though, a good underlying base base load. And a strong balance sheet. Again, Graham, we'll talk about that in in in more detail. Return on capital, absolutely moving in the right direction. We're we're we're ahead of our internal plan actually in terms of return on capital metrics.

7:00 Don't forget we're aiming for a 15 to 20% range in the medium term, and we're well on the way to that first threshold that I would expect us to achieve by f y twenty five or or or earlier within that year. Within f y. Yeah. That's right. And we're we're reinstating an interim dividend to follow the final dividend that we we reported at the full year.

7:30 K. Thanks, Mark. So I'll, as usual, just take a quick run through the group results and then by division, and then I'll quickly wrap up by by touching on the balance sheet and debt and cash position. I mean, overall, we're really pleased with the revenue that we've delivered in the in the first half, 35% up on prior year. Clearly, an enormous challenge to to get that work delivered across the divisions. We've grown headcount in the period. We've worked very hard to retain our people in what is a pretty challenging market conditions with lots of demands and lots of opportunities for geotechnical expertise around the around the around the country. Overall, of course, the highlights from from this result are, I suppose, the bottom line, the operating margin increasing from 3.8% in the prior year to 4.3%.

8:22 So albeit with that much greater revenue, not not drop not as much dropping through to the bottom line as Mark mentioned, but still good progress year on year. And that's with a, I suppose, an adverse mix with with more work coming through some of our our lower margin activities, which I'll I'll touch on in a second. In terms of the gross profit percentage, again, a a decrease year on year, I suppose a number of factors here that have that have impacted. One is naturally the supply chain challenges that that that everyone across the whole sector, well, in fact, across the whole country is facing. And although that has moderated, it still is a it still is a challenge for us as well as cost cost price inflation and and availability.

9:09 We've also got the mix effect I just mentioned, and that is that across the housing sector, as Mark mentioned, we've seen very, very strong levels of demand, and that is at the bottom end of our overall group range of of gross margins. So really good work, really positive delivery to the group, but it does it does swing the the blended margin mix downwards slightly. And then there's been a couple of one offs. Probably the the largest, I would say, is the the rail strikes. The rail strikes have impacted our rail division. Less so latterly, but in the first half, you recall the first one back, I think it was in June, was not the the the the infrastructure works were not planned as well, and we got late cancellation. And therefore, we're not able to backfill the work, and that that probably impacted us by somewhere between 3 and 500,000 to the bottom line. So overall, other than that, I think, you know, we're reasonably pleased with with what's dropped through. We're in good shape. We we are a business that's now geared up and is able to deliver at those much higher levels of of revenue.

10:10 And as the mix improves, which we expect it to to mark point with more infrastructure works coming through, we should continue to see some some more improvement and and and better throughput to the to the bottom line. The three segments that we operate in or three divisions starting with general piling. I mean, overall, strong levels of demand, high levels of activity. What's what's been interesting here is we've delivered a number of large contracts large contracts, you could say, for VAN ELLE. Anything above 5,000,000 would be considered a very large contract compared to historical performance. And we've delivered a very large contract in in Canary Wharf, deep CFA piling activity. And we've also completed completed in the second half of the year, but we were active in the first half on an energy contract in West Brom. Both completed successfully, and that's given us a core of workload, which has driven the top line. So you'll see there the the revenue on screen, and 18,000,000 in the prior year jumped up to 29,000,000 in the current in the current period.

11:20 Not immune, of course, to the inflationary cost pressures that we've mentioned a couple of times. So that has impacted the overall margins. However, we do get better recovery at those levels of of revenue. So pleasing to see overall operating profit improving from just short of 1,000,000 to 2,300,000 in the period.

11:41 Specialist piling and rail. I suppose important to say here that this is coming off the back of a very strong performance in the previous year. For those of you that joined presentations by us before, you will recall that specialist piling bounced back very strongly and very quickly after the worst impacts of COVID. And so the comparative here, 22 point 22,000,000 in the prior period was was a very strong base operating at nearly at capacity. So pleasing to see the revenue continue to increase. We've we've continued to deliver lots of work. And I suppose the downside is the slight decline in the operating margin there from 1.6 to 1.1. Again, nothing really to worry about too much here. It's mainly around a couple of challenging contracts with perfectly normal in our sector, of course, But but also the impact of the rail strikes and and the and the inflationary cost pressures that we've seen. But I think what's important here in specialist piling and rail is the longer term visibility. We've hoped from for a number of years that through through long term partnering, through framework agreements, we'll get longer term visibility of of workload, and that is starting to come through now.

12:55 So although a little bit of pressure cost pressure in the period, I think the longer term is a good risk. We're we're feeling quite optimistic. And ground engineering services, 90% of this division, the revenue comes from our house housing division and then a smaller part from Strata, which is our ground investigation division. As Mark to Mark's point, housing has been operating at near capacity absolutely flat out really for the last twenty four months. So, again, really, really strong performance from the team here to to grow revenues. We've looked geographically at where we get the best returns, and we've expanded our geographic capability down to to do more work in the South and Southwest.

13:40 Got some meaningful revenues from the Southwest for the first time in the in the group's history. So all in all, performing very strong performed very strongly in the period. We've had some improvements in in gross margin as well through working hard on our efficiencies. And and the only challenge really is the the short term, and Mark touched on it. We'll talk a bit more in the in the outlook statement. But overall, we do expect housing revenues to to dip following announcements from recent announcement from house builders, the impact, of course, of rising mortgage rates, building regulation changes. But overall, we're comfortable that infrastructure will will step in and fill and fill that void as as that that that work comes through. Strata, really pleased with the performance. It's right at the upper end of our margin gross margin range.

14:33 And Strata's made good progress in the year, appointed to the Highways England GI framework, and it's really starting to deliver some meaningful works under that framework now. So overall, a good blended position and a good strong improvement from a 1,200,000 half 1 profit in the prior year to 2,500,000 in the current year.

14:54 The balance sheet, I think, is, suppose, stable and strong. Not too much to point out here. I'll pick out two key highlights. One is that fixed assets, we've grown. We've continued to invest in the rig fleet. Now if you were to look back about at our historical financials in the in the worst of the COVID period, so f y 2021, we kept a very tight lid on capital spend. And so spend was of the order of 2,000,000 per annum in both of those

15:23 years. To put that in some context, depreciation is approaching 6,000,000. So sustaining the fleet will require that level of investment. So we are a little behind, and therefore, we are now catching up on our capital spend. You look at the cash flow in a second, you'll see that we spent nearly 4,000,000 on on capital spend. And that is simply investing in opportunities for growth and making sure we we continue to run The UK's largest and best maintained maintained fleet. The other point I'll just pull out is the working capital increase from 8.1 to 12.4. So reasonably significant increase from the from the end of the financial year, and it's mostly driven by there's a little bit of timing, but mostly it's driven by the increase in activity. We track working capital as a percentage of revenue that has stayed broadly flat right throughout the the the the volatile and growing revenue base. So no no major concerns there. And we look very hard at our debtors as well. So debtor days have stayed relatively flat. We typically trade on sort of debtor days of 60 to 65, somewhere in that range. And we've not seen any adverse change to that. So so all in all, I mean, the working capital really is explained by just being busier in the in the second half of the year right through to the to the period end.

16:45 And and funds. So with that working capital increase, we've used the or we've used the asset backed lending facility with ABN AMRO for the exact purpose that we set it up for in the first place, which is to manage those ebbs and flows of of working capital movements on the assumption that we would grow the business and require more working capital liquidity. So drawn 3,000,000 of the 11,000,000 facility. We've got still got clearly 8,000,000 of headroom there to to play with. And we've also signed up another 1,500,000 of HP lease liabilities. Again, we you will see from our strategic objectives, we intend to keep leverage beneath 1.5 times EBITDA. We're well within that range, of course, because we're in a net funds position.

17:34 I'm so I've said for for a number of reporting periods that I don't plan to take on significant levels of debt just to sustain the fleet's investment. So this is a modest take on for rigs that we expect to have high levels of utilization, high margin work, and it's on a variable rate as well. So what that means is that should we see a decline in in working capital and and and swift improvement to cash, we can pay these off with with zero termination costs. So it's a flexible arrangement, but it's just giving us that headroom in cash to to to support the the the more volatile cash flows as we get busier and grow the business. But overall, ended the period with 8,400,000 cash in the bank compared to 7.0. So and and and as I say, a net funds position, which is broadly flat year on year against October in the prior year. And that takes me on to my final slide, which I think we've covered off the key points. So I'll let you read that at your leisure, and and I'm very happy to take any questions on it. The only point I will pull out is it's a reconciliation of opening cash at the end of last year to closing cash. You'll see those movements of capital spend, increasing working capital, the drawdown of the funds. But the only point I'll I'll highlight there is, of course, we returned to the dividend role at the end of the last financial year.

18:54 We paid a 1p per share dividend, and that was paid out in October. So you see the outflow as the final, the right hand side red bar there of 1,100,000. And as Mark's mentioned, we've we've just recently, as part of the interim results, declared a modest naught 0.4p dividend at the interim, which is the first time we've paid an interim dividend since 2019. So I'll hand back to Mark to just talk through the outlook. Graham. So nothing's changed in terms of our confidence and outlook in the business in the medium term whatsoever. In fact, we've we've taken concrete steps as far as I'm concerned to deliver on that,

19:37 And we've talked about some of those highlights. In terms of the here and now, h two trading is is fine. It's in line with what we expected. We're in the depth of the the the dip that we always have in in December and January because of holidays and and winter freezing wet conditions. And that's all exactly as pretty much as budgeted and and forecast. And then we, as normal, will have a a stronger q four to finish off into the full year, which we remain absolutely bang online for. So no problem in terms of this year. And it's fair to say, you know, we've built up some reserves to help us with any little bumps in the road and things as you would expect. Looking forward, you know, it's it's it's no secret we would make faster progress if there was not a dip in housing in the coming twelve months. You know? So that's a shame. Nothing much we can do about it apart from innovate and sort of reposition ourselves a little bit to do our best to mitigate things.

20:41 But we've modeled a dip, and our forecasts are are out there and they stand. But, you know, clearly, we'd like all of our divisions firing on all cylinders. We may have to wait till FY twenty five for for that to, fall perfectly into place at last. But there are things we can do in housing and and pivoting slightly into social housing builds and and social housing customers, and also, hopefully making further progress with modular building, solutions where we we've been working on some partnering arrangements, you know, will help us. So we'll see whether we're able to report further progress when we we next come back to you. But otherwise, as we've said, the good progress we're making in infrastructure will certainly compensate for the dip in housing in the meantime, And we're we're pushing on with those opportunities, which, you know, we have roughly half a dozen significant framework or long running programs in infrastructure, rail, and highways, and power that we are looking to make a start on in,

21:47 f y twenty four or early f y twenty five. And I when I say a start, I mean, a start on-site. We're actually active on all of them in in some way or other, but mainly in the in the in the sort of pricing or or design phase.

22:00 What will stop us doing that? And that's a question I noticed on the screen. Will be will be the usual delays potentially outside of our control around budgets, government support, environmental challenges, and the like, which, you know, unfortunately, in highways, at moment, we're seeing a lot of environmental challenges that are slowing down the bigger projects for several months at a time. And, you know, that that's something we've got to be careful of. So we're gonna make sure we've got broad enough pipeline of these big infrastructure opportunities, which I've got a team working on, and and they're doing well. Supply chain disruption is still going to be a feature, I'm afraid. You know, we live in a post Brexit world where it's very difficult for us to get spares quickly for our rigs.

22:47 So rig breakdowns hurt us more than ever because we can't sort them out as quick as we used to. We we've got to do more to get all of the potential spares into stock in in this country and reduce our dependency on European rigs, which we've taken steps to do particularly in rail, which is why you're seeing increased CapEx particularly coming through in rail. We've we've invested in UK based rigs for our future generation, which which will certainly help us. Otherwise, wage inflation, I think, will still be a feature disruption from HS two dominating the the the the workload in The Midlands is something that we're very mindful of. So we are in the process of agreeing, hopefully, touchwood, a framework agreement to help for the next couple of years, which will help us to protect our resources.

23:38 Otherwise, we're gonna keep going, and we're very pleased with the actions we're taking and the opportunities we're creating in all of our markets. And what we should see as well, and it's not on this slide, is that to help us with the dip in in CP six as we approach year five of of the control period in the rail sector, we're we're still progressing with international rail opportunities. We've made tangible progress with our Canadian friends regarding the Toronto Metro expansion. Hopefully, next time we meet, I'll have some more tangible updates in terms of where we are with with that negotiated significant opportunity. We're not in competition with anyone there. We've we've been invited in as the as the sole partner capable of delivering what needs to be done for the technologies we've developed in The UK.

24:31 So that is that is important for us, but there are several governance gateways to get through until we're a 100% satisfied that it's it's it's a low enough risk model to to go and do that sort of work from a commercial point of view. Otherwise, we're we keep keep plugging away. We're okay. Happy with this year. We're happy with the forecast for next year. Lots of things to to do and do better. We've got quite a bit of business improvement and efficiency work to do. We may look to take a bit of cost out of the business just to give ourselves a bit of extra sort of wiggle room if we need it. But otherwise, we're pretty happy with progress. Good. Super. Alright. Thank you, Mark. Thank you, Graham. Now if we could turn to the questions, and in fact, lots of the questions you've touched on in part throughout the course of the presentation, but I wonder if there might be opportunities just to add a little bit more color to them in in each case. But thank you to Tom m. You referenced benefiting from securing a number of framework agreements, which will contribute materially in '24.

25:35 Can you expand on these? And what, if anything, is needed to turn these into hard revenue? That's a good question. So what are they? They're the Smart Motorways National Alliance Program, which is a ten year framework that we are embedded in, and their leadership team have been here this morning actually working through the workload projections with us. We should start on-site in the summer with the safety measures that have to be done over the next four, five, six years, and then there'll be further works beyond that. We just need to keep keep putting resources in, get the designs through, and get started. Transplant on route upgrade, which won't start for another twelve months on-site, but we are we're we're already advising on on the solutions, and that will just take its course. That's fully funded as well and shouldn't be a problem. We just need to go through the natural process.

26:38 We've got the electrification programs in The UK. We're we're active on Corvallee lines in South Wales. We've been delivering all through the last twelve months really well. So what we've got to do here is keep delivering very strongly, outperforming our other partner in that program because we're not alone in any of these frameworks. We tend to have a secondary partner alongside us, and we're we're performing very well. We need to keep that going. And we expect to also move into frameworks on high speed too. And and we've got another big one on another highway scheme in the South on the a 12 that we've just been awarded. Again, we've just got to help the help the help the client team get to get through the designs to get the budgets approved.

27:26 These so these infrastructure programs typically slow in the gestation. They have multiple gateways to get budgets approved. Often, fail those gateways, have to go around and value engineer things again. Sometimes they might get challenged from an external third party. And once you get through all of that, then finally, we might start on-site. That can take two years. That's just the nature of it. Maybe two years is quick for some. But we're in the in the in the phase now where we've gone through some of those early months, and we're we're moving into almost like year two and should start on-site on the early ones, as I say, in the summer of twenty three. Great. Okay. You did touch on this earlier, but maybe there's a slight nuance to this that you might be able to expand on. But I'm going to combine two questions.

28:12 Have you continued to experience issues with supply chain and access to labor? And the second question is what impact is HS two having on recruiting? And I guess they might play off you play off against each other. So, yeah, recruitment's tough. HS two is not helping. The the the disappointing aspect of HS two, as I've told the directors of the the relevant sections directly, is that they're using agency labor with inflated rates to make up, you know, short term requirements, and that's no way to sort of regulate the the workload in the industry. And we we have our people being poached regularly, and we're having to defend their retention in the business. That's that's normal at the moment, and that will be the case until the piling work is finished on HS 2.

29:01 One of the mitigations is to be part of that team, and that that creates an automatic de facto non poaching arrangement. So better to be on the pitch than complaining from the outside. What we're also doing as well is realizing there's a shortage structural shortage of geotechnical and piling labor in The UK. We're we're recruiting a lot more green horns. So, you know, construction experienced people that we can train to become piling operatives in short order, and and we're doing more and more of that and reducing our own requirement for any agency labor because agency labor just does not work. It's not sustainable. People don't care. They have no skin in the game.

29:47 We're a direct employer up to 660 people now, that's what's made us successful. So we've got to bring more people up from from the from the from the Ground floor, apprentices and and new starts into the piling industry. Right. And are you already seeing evidence of the housing slowdown, or is your caution coming from house builders commentary? Okay. Thanks, Tamsen. Yes. We are. We we are seeing inquiries slowing down. House builder customers that we have reviewing their build programs, their plot layouts, their plot designs, and reevaluating, reducing their target builds in some cases. In other cases, house builders are doing the opposite, and they're accelerating because they see an opportunity to bring some of their projects forward because this capacity may be in the supply market.

30:44 One or two others think there'll be some short term disruption, and then they'll be through it by the summer. So it's a mixed picture picture. But, yes, we are definitely seeing house builders, in some cases, taking taking steps already to slow things down. Right. Okay. Question here from Richard. Where might you see acquisitions being sought? The ground engineering services division or the specialist division perhaps? Yes. Richard, you've answered your own question. Correct. Those are the areas we would look at. Yes. We've looked at half a dozen acquisitions, I would say, the last twelve months quite closely. Some in many competitions, some by simply one to one negotiations, not found something yet sufficiently attractive, but we are, you know, we're actively spending management time exploring acquisitions in that area of a bolt on size at this stage.

31:45 Right. Super. Two questions on a on a common theme actually. So we'll just read them both out. Douglas asked, do you foresee an opportunity in onshore wind? And Mark asked, is VAN ELLE open to investment opportunities in new drilling based green infrastructure initiatives? Douglas, yes. We do. There is one of the fastest growing areas in infrastructure that will emerge, we believe, is the transmission network in The UK. National Grid have already come out with a massive consultation on a delivery model for their future transmission investments, which is in the public domain. And we're working on as we speak. We had a meeting right today.

32:33 We anticipate a delivery model that might look like a partnering model of of the type of alliances that I've described earlier potentially, and we'd like to be part of it. And and that's connecting up new sources of energy transmission generation into into into the distribution transmission network. So, yes, onshore onshore wind, you know, I'm sure will be part of that. And if onshore wind does get invested in again, I think the government's taking the taking the blockers off it again, then we would expect to be involved in those sorts of projects. We've done them before directly. Mark s, I don't fully understand that question. Are we we're open to discuss anything that sounds like that. But, yes, drop us a line if you've if you've got some suggestions.

33:27 Okay. Good. John asks, could you please elaborate on how you expect to achieve the anticipated significant increase in return on capital employed? Well, I can tell that one. I think, I mean, if we deliver what is out there in the market for this year on return on capital employed, we'll be approaching the 15 to 20% range that we've talked about. So you'll see from the first slide summarizes the result. We've moved from 4.4% return on capital to to to round about 12 by the end of the year. You can run the calculations, of course, but we'll we'll we'll be expecting to be 12 and a half, something around that level 13% return on capital. So the we are approaching the range that we expect to get into.

34:13 What will make a difference? Well, the investments that we make, we're looking we look very hard on to make sure that we invest in high return on capital rigs. So we set a benchmark of really not looking at any rig acquisitions that are less than 25%. So overall, that'll bring the blended average up over the course of time. But also, we get the mix impact of, you know, as we've talked about infrastructure works coming through. So as we see that mix start to improve, we should see more throughput to the bottom line, and our longer term forecast are for improved bottom line figures. And importantly, we shouldn't need any really significant investment in the fleet to grow. We've already got around about 125 rigs. It gives a very strong capability to deliver you know, revenues as you can see, 80,000,000 and a half year.

35:04 So so I think we've got the we've got the capacity. We've got people. If we get the mix right and we get our future investments right, then that'll just gradually nudge that that return on capital number further further north. Yeah. Okay. So this this last question from Nick actually, I guess you've part answered, but Nick asked, what are your plans for future dividends? Given the opportunity and pipeline in front of you, would it be more sensible to invest for faster growth? Well, the it's a good question. And the first thing to say is that we we haven't yet formally published a dividend policy, which which obviously some companies do have out there. And one of the reasons we're taking a little bit of time on that is to just make sure that the post COVID stable recovery, you know, continues and and and we build the confidence to actually set a clear and distinct policy. But in the short term, we return to the dividend role at at the last at last year's final accounts.

36:05 We paid out 1p per dividend. It's my view, of course, a dividend is is a a board wide decision, but it's my view that if you look at what other companies are doing in our sector, dividend cover of two to three is relatively normal. We are in the right we are at the right at the upper end of that range, so we're really planning We have paid out the the lower dividend that you would the lowest dividend that you would expect within that range. And the reason that we we we will do that is is is a number of reasons, I suppose. One is that we've had relatively low CapEx in in recent times, and we need to reinvest back in the business again. So preserving some cash for that. But also because the areas that we see with opportunities for growth, there are there are numerous. So it's important that we keep a bit of cash in the bank, I think, too, you know, to continue to have that capability, whether it's for for M and A, whether it's for investing in new rigs in in high growth, high margin areas.

37:05 But it is it is a very important point that some shareholders and some of our larger investors, you know, like dividend and we like to support that. So, you know, we we recognize that it's important for our shareholders. So not point 4p, absolutely a modest dividend for the interim, and I think we'll we'll continue along that theme for the for the short term until we ultimately we get we get long term stability behind us, and then we'll ultimately publish a a dividend policy, I think. Super. Okay. Great. Well, Before we ask investors to provide their feedback, Mark, maybe you just could you just give us a two second summary of your investment case as we stand today? Thanks, Tom. Yeah. Well, it hasn't changed.

37:52 We you know, there are still significant opportunities ahead of us in the group. I think we're making great progress. There are always gonna be challenges along the way. You know, that's what we're here for. I but I think the business has transformed since, you know, 2019 if we're doing something like this back then. And and we've we've progressed all of the actions and objectives that we we set out and still a lot to do. But we're we're we're getting on with it, I think the results are starting to come through. Great. Very encouraging. Super. Alright, gentlemen. Thank you so much. And for investors, we will be directing you to provide feedback. If you could provide, that'd be much appreciated. If anyone has further questions or would like additional information on VAN ELLE, please do get in contact via VAN ELLE at walbrook p r dot com, and we look forward to updating you again soon.

38:40 Thanks, everyone. Thank you.