Victoria (LSE:VCP) — Interim Results

0:01 Good afternoon, ladies and gentlemen, welcome to the VICTORIA PLC Interim Results Investor Presentation. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review your questions submitted today, and we'll publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. And I'd now like

0:32 to hand over to executive chairman, Jeff Wilding. Good afternoon. Good afternoon, everybody. I I'd just like to introduce you to Philip Hammers, who's sitting on my left as CEO, and Brian Morgan, who is the CFO, who's joined us in in late August. So I will begin by just a quick overview from me. I'll then hand over to Brian who will take you through some of the financials for the half year, and then Philip will give you some operational highlights. So as everybody will no doubt know by now, revenues for the half year was 776,000,000, EBITDA was just over 100,000,000, and the pretax profit was 53,000,000.

1:19 And effective the business needed to cope with very high inflation in the first half, and we've done that firstly through thoughtful price increases where we've needed to. We have increased price prices to protect our cash margin. And by our cash margin, I mean the amount of profit contribution from the product. So that is how we've managed to maintain our earnings or grow our earnings to a 100,000,000 for the half year. We've also done some product engine reengineering. We do this in cooperation with our customers, so to hit certain price points, and Philip will talk you through that a little later. We've had a certain amount of hedging and contracted pricing into our input costs that has helped mitigate some of the very high inflation we've seen particularly in energy.

2:13 And lastly and again, Philip will I won't steal his thunder. He'll talk about the service offering that we provide that our customers, which makes them very loyal to VICTORIA. Going forward into and and I'm looking forward to the next twelve or eighteen months, We expect to see the operating margin of the business improve considerably from where it sits today. So the EBITDA margin for the half year was 13%. We are comfortable that we can see that getting back into the mid to high high teens over the next twelve to eighteen months, and there's a number of factors that will contribute to it. Firstly, is the synergy gains from the various integration projects that Philip is running for primarily in Balta, but we've also got projects running in Italy and in Turkey.

3:08 There's also some gains to be made in in in The U in The with our businesses in The US. So, again, I'll leave Philip to talk you through that, but those synergy gains will add add to our our our margins. The second area where we're expecting to see gains in our op in in our margin is a reduction in our cost of goods sold. Now the the this is the input costs into the business, primarily raw materials, and you can see from those two charts, the left hand chart, which is is a proxy for the price of polypropylene fiber, which makes up nearly 50% of our cost of goods sold for the soft flooring products, which is carpet and rugs.

3:55 And you can see that we were paying around 1,400 sterling per ton in earlier this year. The period at the top there covers basically from April through to June. Now the price has been steadily trending downwards since then. And but, of course, the product that that we are currently selling today was manufactured using raw materials that was purchased for around 1,400 sterling a ton. Once that product has been sold through, which it will be in the next month or two and the next turn of inventory comes through, the product that we are currently manufacturing has been made with with raw materials costing us between 800 and £1,000 sterling per ton.

4:44 And so because our cost of goods sold will come down dramatically, needless to say, the operating margin will go up. Now some of that, we will give back to our customers in terms of price reductions, but some of that we will also keep. And the consequence of that, as I say, is we expect our operating margins over the next twelve months or so to to be back up into the high teens where they have been historically over the last few years. The chart on the right hand side covers the cost of shipping containers, which are also important, particularly for our US business, which imports a a lot of product that sells from the Far East, primarily Vietnam, but also China and to Taiwan.

5:33 So the cost of those shipping containers are falling dramatically, and, again, that will feed through into our cost of goods sold that you'll see in the next calendar year.

5:48 Demand has is highly variable across the different markets that we operate in. We are seeing soft demand in The UK, but that's being made up by stronger demand in The US parts of Europe and The Middle East where we also export, and this is the value of being a highly geographically diversified company. And as a result, if if we were to look across the business as a whole, we are seeing relatively solid demand for product. And, again, that can be that's reflected in the fact that our like for like revenues grew in h one by 7.7%, although the overall growth was 59% because of acquisitions.

6:34 Secondly, the another point that's worth mentioning is Victoria is one of the most cost efficient manufacturers of flooring in Europe, and we've got very modern, well invested factories. And the fact that we do have industry leading margins gives us the capacity to absorb both cost of increases in raw materials and also declines in demand should it happen. But whereas some of our competitors will really struggle. And we have seen, for example, in the last few months, quite a number of our competitors in the ceramics industry have shut down their production. Now the market might be slightly softer, but because 30% of our competitors have stopped production, the our market share has grown, and that's what's maintained our revenues and our operating margins in the ceramic space.

7:28 The other on on the right hand side, we've just talked about the fact that VICTORIA has low operational gearing. The reason this is important is that our cost base fluctuates with our revenue. So or if there was a period of softer demand across all our products and across all our markets, if that did happen, about half our cost base is fully variable. It's essentially raw materials. Another 30% is semi variable, which which we define as something that we can vary with management action within ninety days, and only 6% sorry. 8% of our cost base is truly fixed. So just talking about our balance sheet very quickly. We have a lot of liquidity. We've got over 250,000,000 of cash and undrawn credit lines.

8:16 Our debt facilities consist of long dated fixed rate covenant light bonds. Our interest rate at the present time that we're paying through until 2026 in one instance, in 2028 and the other is is 3.6%. So we have and that's a fixed rate. On the right hand side, we refer to the to our cash flow in h two. We expect over a 100,000,000 of net positive cash coming into the company in the current half year. That's going to come from a number of areas. Firstly, the normalization of the inventory levels. So last year and earlier this year when there was quite severe disruption to supply chains, Philip very wisely bought a substantial amount of raw materials so that we were able to keep our factories operating at full capacity, and that's one of the reasons that our organic growth was so strong last year.

9:14 But that did mean that we invested a lot of money into raw materials. Now that that's normalizing, we are reducing our purchases of raw materials back to normal levels, and we will run down the x the higher levels of raw materials that we've been carrying for the last fifteen months. The second area of inventory normalization relates to ceramic tiles where earlier this year in July and August, particularly, there were very severe concerns about gas rationalization oh, sorry. Gas rationing and very high gas extreme gas prices over winter. So what, again, the the management team did was build up levels of ceramic tiles so that we could maintain our supply to customers with abnormal levels for three months even if we had to completely suspend production because there was no energy through gas rationing or because the prices got so high, was uneconomic to produce.

10:16 So clearly, the concerns around that have now diminished significantly, and so we will start with in fact, we're doing it now. We're reducing the finished goods as well. So that will generate substantial portion of the 100,000,000 in the current current half year as we go back to normal levels.

10:37 Of course, there's also operating profits in h two. We confirmed yesterday that we expect to make another 100,000,000 of EBITDA in h two. So that will that will contribute to cash flow. And lastly, with some of the rationalization and integration projects that Philip has underway on the operational side of the business, we will be left with surplus assets that are no longer required, which we can sell, and that will also contribute to the to the cash flow. So what I'll do now is just hand you over to Brian to to run through some of the details of the actual financial statements that were issued yesterday. Thanks, Joe. Hi. Good morning. Good afternoon, everyone. Let me just quickly run through the group financial slides and then Philip will take you through the detail on the divisions.

11:25 So this has been another record period for VICTORIA and we expect that to continue into the second half. As you can see from this slide, we delivered revenue of $771,000,000 That's the underlying revenue, which is an increase of 58%. To the underlying growth, it was 7.7% for the group. The like for like growth is shown before the impacts of acquisitions and also on a constant currency basis. The majority of divisions, and again, Philip will come back and talk about this, showed double digit growth even when compared to the same period last year, which was a record for us coming out of COVID. In terms of EBITDA, we achieved over $100,000,000 a 19% increase on the same period last year, driven by a mixture of organic growth and the acquisitions we made in the period.

12:13 We completed two acquisitions, the largest being the carve out of the rugs and broadband business of Balta, which is based in Belgium and also has two factories in Turkey. We completed this in April. And then in June, we also completed the acquisition of a further small roads manufacturer over gold in Belgium. These acquisitions made us the largest soft flooring manufacturer in Europe. So if we move on to the next slide, please. This bridge shows the the group underlying EBITDA margin, and we're comparing where we ended up at the end of h '1 with the full year 2022. And as you can see, we finished last year with a group underlying margin of 16%. There have been two major impacts on our margins, which were pretty similar to last year in terms of the type of impacts, the acquisition mix effects and also the cost inflation pass through.

13:04 The acquisition mix effects comes about as we tend to buy businesses with lower margins than our own. And during the integration period, we expect to see a drag on the overall group margin as we complete our synergy projects. This can be seen this year with 110 basis points reduction in reported margin. The most significant impact is on our UK And Europe Soft Flooring Division as we continue to integrate the Vault acquisition. This business will be fully integrated into our overall operations in the coming twenty four months and will provide us with significant opportunities in The UK and US markets. The second impact, which again we highlighted when we announced our full year results in July, is driven by the sometimes double digit inflation on our input costs and how we pass these up to customers. As Jeff said, we continue to see inflationary pressures in raw materials, labor, and energy across all of our businesses in h one.

13:53 To mitigate this, the management teams have implemented price increases where necessary, being laser focused on cost and synergy initiatives, hedged or managed key input costs where available, and worked on product engineering with our customers to mutual benefit. To support our customers, while we increase prices, we passed on the cost without adding additional margin to the cost inflation. This has helped us maintain absolute margin and market share, but has a negative impact 130 basis points on the margin as reported. This leaves us with a reported margin for the first six months of this year of 13%, and we expect this to improve in the second half as we've already seen raw material prices stabilize, synergy projects will continue to deliver, and we'll see the benefit of cost savings. Moving on to slide 12.

14:40 This slide documents our exceptional and non underlying items, and I'll spend a little bit of time here just talking through some of the the major ones. These items are either irregular and therefore included in the assessment of the business performance would lead to a distortion of trends or their technical adjustments, which ensure that the group's financial statements from compliance of IFRS, but do not reflect the underlying operating performance of the business or they're both of those. There are only two items here, which are cash items and total 6,200,000 and the rest are non cash. The two cash items are the acquisition and disposal related costs. This is fees that we paid to advisers in relation to completed and aborted acquisitions in the period, and this was predominantly the completion of Valsa, the acquisition of Regal, and also a recently completed acquisition of IWT, and the cost is down year on year as a result of lower volume of acquisitions this year.

15:36 The other acquisition the other cash cost is the reorganization cost as we integrate our acquisitions into the business, and the majority of this relates to Valsa. It should be noted that there will be more cost in h two relates to Valsa as we go through the reorganization, but we expect these costs to be cash neutral over time with the disposal of surface real estate assets once the reorganization is complete. One or two other items to point sorry. I'll get back to Jeff. Sorry. Thank you. One or two other items to point out here, the amortization of acquired intangibles is a large number coming through here, which relates to the amortization of the fair value of certain intangibles that we we we get when we acquire businesses. And we put this in here to avoid any double counting as we also incur cost to maintain those customer relationships or brands across our business.

16:27 And finally, on this slide, we have also been required to adopt hyperinflationary accounting in our Turkish businesses under IFRS as the rate of inflation on a cumulative basis over the last three years has been in excess of a 100%. This means that we have to reinvest the balance sheets of those businesses and also the income statements of those businesses. And this year, that's resulted in a 1,500,000,000 gain at EBITDA level and a 1,400,000,000 monetary gain in finance costs. Given these businesses that we have in Turkey, one of which is a ceramics business and the other is part of Balsa, the predominant amounts of their revenue is in euros and US dollars. We don't believe that adopting the hyperinflation accounting reflects the true underlying performance of the business and, therefore, we back those out.

17:19 If we move on to cash, you'll see that as a business we generated 22,100,000,000 of operating cash flow before interest tax and exceptional items to the period. And the key driver on the reduction of this has been the investment that we've made in working capital in the first half. There are a number of drivers out for this. One is the fact that, as Jeff mentioned, we've invested in raw materials and also finished goods to maintain the service levels to our customers. And we're now seeing supply chains return to normal levels and also the the lack of requirements on inventory in the ceramics division as we don't see any capital of gas rationing requirements in that market. So in the second half, we will start to to work that through to to produce cash. The other component that's impacted inventory sorry, working capital is in relation to the purchases that we made in the first half, which are gone through raw materials and finished goods, and they're now working their way through our receivables balances.

18:22 Again, we expect to see this unwind in the second half as the input costs have been producing back to historical levels and also management are taking actions overall in the inventory. On the next slide, you'll see a graphical representation of our movement in net debt in the period. We ended the period with the net debt of 651,500,000. And the the reason for the increase on this was to do with the acquisitions that we made in the period. So the large block on this graph is the 154,000,000, and this represents the purchase of Valsa and also the Golden period. The other item worth noting on this is the 27,500,000, which is to do increase in our net debt. That's a translation impact as a result of weaker sterling. And finally, me on the last slide, the previous slide, you saw the net debt.

19:11 We have not increased our gross debt in the period. We have got our senior secured debt, our long term tenor and low coupon bonds. Those are still the same as they were at the events other than a translation impact because they are euro denominated cash. The reduction in cash has been for the purchase of the dolls and the gold, and we also picked up a small amount of finance leases in in the acquisition of Valsa. This has left us with 3.4 times leverage, which is in line with our overall group financial policy. And also on the slide, you can see that we have 73,500,000 worth of cash, and that along with 150,000,000 worth of undrawn RCF plus other smaller facilities that we have around the group, leads us in a very comfortable position of having $250,000,000 worth of liquidity as we ended the period.

20:05 So with that, I'll hand you over to Philip. Thank you, Brian. Just on the operational overview, for the record, we report on four divisions. We have UK and Europe soft flooring. We have The UK and Europe ceramics division. We have then separately Australia, and the the fourth division is US. So the focus is entirely on operations and acquisition integration. We are convinced that we can have significant synergies, which will drive material earnings and cash flow growth over the next couple of years. So the two things, if we look at the first division, UK and Europe soft flooring, as we see on the slide here, the two

20:51 projects I would like to talk to you about is Balta, and I can see already few questions popping up with regards to to Balta and the the status of the acquisition. And secondly, the logistics. I wanna talk you through some of logistic projects which we're having in The UK. But first of all, if we talk about Valda, just a reminder, when we did the acquisition of Valda, about 350,000,000 of revenue, which we acquired, two thirds of of that was RUX, one third was Broadlum Broadlum about a €100,000,000. 70% of that sold into The UK, 30% on the continent. So let's focus on on RUX for a moment.

21:36 So we want to redesign the footprint for RUX. So we want to do less in Belgium and focus more on the Turkish operation. Just for the record, has three plants in in Belgium, and RUX has two plants in Turkey and two distribution centers in The US. So in redesigning the footprint, we want to do less in Belgium and more in Turkey. So we have decided to close one plant, the Avanha plant. We are in the process of negotiation with the trade unions, so we should be finishing these negotiations, and we will be laying off 240 people. Sorry. 260 people and 140 people will be transferring to other plants in Belgium. So the Turkish operation will be expanded, and most of the order manufacturing, which was now happening in in Belgium, will be done in Turkey as most of the components of the goods sold are cheaper in Turkey.

22:39 With regards to the section, this is one third of the business. So it is our intention to make it slightly smaller in Belgium and push some of the quantities which we are making in the Belgium plant into The UK plant. We think about four, five million square meters, which will be pushed into The UK plants. We still have a bit of capacity in UK plants. We have two manufacturing plants in The UK. And so we are trying to bring Baltabroad room closer to the market. As an end result, we we will be having for The UK market. We will be having three plants, three manufacturing plants of which one in Belgium and two in UK. We are having four distribution centers in The UK, and we are running seven brands. Balta, the acquisition of Balta is giving us the seventh brand.

23:32 And on top of that, in terms of the Valtra integration, there was also a corporate office in in Valtra. We're also looking to trim that down to fit the current size of Valtra. Some about logistics. I've been talking briefly about logistics. I want to remind everyone that logistics is a key differentiating factor for VICTORIA. So we not only manufacture, we also distribute in The UK market. This is important to remember. And we have just commissioned a purpose built warehouse in Worcester, a 190,000 square feet warehouse, which is which is gonna be net zero carbon, and we will take access of that in February next year. We've just started to take early access to to start mounting the the cutting tables. So all of that is in the process of happening. The service proposition for the record remains over 90%, and the service proposition of next day delivery remains over 90%. A reminder as well, with VICTORIA, we're in the medium to high end of the market. We're by no means in the volume end of the market, so which giving us a bit of price protection as well because of the service we are able to give to our retailers.

24:53 Second reported division is ceramics. So we have three geographies where we have ceramics plants. That's Italy, Spain, and Turkey. So Italy, we have three plants in Italy where we've done significant investments, which have come to an end in the back end of last year. We're taking the full benefit of that in the first half of this year. As you may have seen, we've had record results and profit in the ceramics business. We've had a pent up demand, especially from the DIY. DIY business has been very strong in the continent, in Europe, and in the in The US.

25:39 On the back of some of the investments we've done in the back end of last year in in Italy, so we have had extra accounts which have given us the opportunity to have more output and to to make specific sizes, larger sizes mainly because we can see a demand in larger sizes in the current market environment. In terms of of Spain, the main focus in Spain has been the repositioning of the brand brand was is in fact a commercial brand which we're having. It's the only commercial brand we are having because most of the other brands, not only in ceramics, but also in soft flooring or residential, 85% of what we're doing is residential, about 15% is in the commercial area. We're also we've also introduced a new showroom in Alicante. In mid of December, we are thinking not thinking. We are we are we will be opening a new showroom in Madrid for salami.

26:39 The last geography in ceramics is Turkey. Turkey, we've done an acquisition last year, which was Graniser. Graniser was exporting 70% to Europe. And to The US, 30% was domestic sales. We are currently running a CapEx program in Graniser, which will allow us to increase the 70% export to 90 even up to a 100% because we are less interested in the local domestic market. We are more interested in the in the export. And this is why in order to meet quality standards, we have had to to run CapExes for quality purposes in terms of the inkjet printers and the packaging of the finishing lines.

27:31 That's the second geography, so we can move on to the third geography, which is Australia. Australia, we've seen strong organic revenue and EBITDA growth. As you may remember, Australia came out later than out of the pandemic. So and we've seen a very good solid demand in the first half year. Another another, how would I say, conclusion or effect which we've seen in the Australian market is that we have had a lesser supply chain disruption, which has a and also less inflationary pressure from the raw material components and the energy components or all components of the cost of goods sold have been less. So we've had to perform lesser price increases in in Australia than we had to do in Europe and The US.

28:27 A popular product group, which we are having in Australia is LVT. We have a distribution facility in Australia under the brand Dunnok, and this is growing very fast in the in the Australian market. Underlay sales are on track. We are at full capacity and underlay in our Sydney plant. And so okay. It's been sold. It's optimized in terms of quantities and price. Last but not least is the American market. Currently, it has been the the strategy of the VICTORIA group to acquire distribution outlets in The US rather than manufacturing facilities.

29:17 And in the distribution, we have the revenue currently across the group in The US is $400,000,000. This is split over Cali, which is an omnichannel distributor, which we bought last year. And then 45% of what of the Baltic revenue in rugs, so almost a $100,000,000, is also US business. We've done a recent acquisition of a distributor in Florida and Palm City who's working essentially in the Southeast Of The US, but having ambitions to become a national distributor in The US. And so if if we take all this distribution capacity, this means that we currently have, including the Boulder warehouses, we have four warehouses on the East Coast, and we are trying to integrate as much and looking for synergies and cross selling opportunities to sell as much product which we are making in the group.

30:19 So this includes outdoor rux. There's a a good demand that's in of outdoor rux in US market and also of artificial turf. Just want to remind you that we have a large artificial turf factory in The Netherlands, and we are exporting more and more into The US, and we will be using these distribution facilities to and to support this growth. I think this is it, Jeff. I would like to to hand over the presentation back to you. Mike, that's us completed on the presentation. We're quite happy now to move to q and a. That's great. Thank you very much indeed for your update. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen.

31:10 But just while the company take a few moments to review those questions submitted already, I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q and A, will be available via your Investor Me company dashboard. As you can see, Jeff, you've had a number of questions submitted by investors. Thank you to everybody on today's call for your engagement. If I may, Jeff, if I could just hand back to you to read out those questions and and pose them to the team and give a response where it's appropriate to do so, and I'll pick up from you at the end. Thank you. So if there were rather than read the question verbatim, there's a number of questions that I can see on different key topics. And so I'll paraphrase to to to make this simple because we can answer a number of questions at the same time.

31:51 So we've got some questions around the short interest in the company and the buyback of our own shares. So the look. I I'm not privy to the investment case clearly of the various firms that have taken a short position in Victoria. I think they they they clearly have a view on the outlook of the business, which the directors disagree with for the very fact that the we we think the shares represent good value at current levels, and we are busy buying back our shares. We are not buying back our shares in any attempt to to try and and squeeze out the shorts. We're simply buying back our shares because they represent a very good use of our capital at these current share prices.

32:39 And you'll have also seen a number of our shareholders sorry, of our directors who've also bought shares in the last few months. So this is the the difference of viewpoint on on value and the outlook for the business, and I'm sure in time that will be resolved

32:55 one way or another. We've got a question on energy prices and and hedging. So we take the view on that our hedging is is commercially sensitive, so we don't we don't disclose it. However, I think it's fair to say that the fact that the company has confirmed that it is going to hit the market consensus numbers, which were about 200,000,000 of EBITDA for the full year, and we've also expressed a view as our confidence in the next financial year. I think you can take some comfort that we feel pretty comfortable with the position on our energy input costs. The Kitimonster warehouse is not one of the properties that is to be sold, and that will be retained as as a warehouse because of the growth of the business.

33:48 But the new warehouse is actually located in Worcester, which is just off the motorway in The Midlands, and it's a it's it's a very smart carbon neutral site. Good questions are sort of like in no particular order. They're random. The preferred equity, we we do not expect it to be converted into common equity. So the preferred equity is is an interesting instrument. The company can call it at any time in 25,000,000 sterling blocks, So we can we can buy the preferred equity back at 25,000,000 sterling at a time. There's 225,000,000 outstanding at the present time.

34:35 So and it can be converted after six years at at the preferred equity holder, which is Coke Industries. At their option, they can convert that into ordinary equity at the bin share price, so the share price at the time. However, as we have highlighted in the statement to the shareholders yesterday and also while you we were speaking with you today, it's our expectation that the company will pile up cash over the next eighteen months. Acquisitions are taking it back step compared to the focus on integration of the existing businesses because there are tens of millions of synergy opportunities to be realized in the existing business. So we expect to pile up cash, and then that gives us optionality in, you know, six, twelve, eighteen months whether we use that cash to pay down the debt, whether we use it to buy back the preference shares.

35:34 But in any event, there is no intention to follow the preference shares to be converted into ordinary shares.

35:42 So sorry. I I just need to scroll up because the question's coming in faster than than we can read them out. Right. Actually, there was one scroll down. Yeah. So sorry. I need to scroll down the other way.

36:00 Okay. I'll there's a question about the backing on the broadloom carpet, which can you Yeah. Well, there there used to be a different indeed, there used to be a different kind of backing in the original kitty mixer plant. We never sold that packing line for the record, but the most commonly used is latex for the moment. But we are working on new types of packing, which we are currently already using on rux, special packing, which do not hold latex and which are a 100 recyclable. Then there was another question on preferred equity, but I think you've dealt with that, Jeff. Yep. So we cannot see any other questions for now. That's great. Thank you very much indeed. And, of course, if any further questions do come in, then we'll make those available to you post today's call.

36:50 Jeff and to the rest of the team, I know investor investor feedback is particularly important to you and to the company, and I'll shortly redirect those on the call to give you their feedback. But I wondered if I may, Jeff, just come back to you just to close off with

37:02 a few closing comments, and then I'll redirect investors to give their feedback. Sure. So the key messages that or the key two messages that we would like investors to take away from the conversation today is, firstly, the focus is of of the company over the the next twelve or eighteen months. The focus is on operational integration and realizing the synergy. As I said a few minutes ago, there are tens of millions of synergy gains even the the closure of the the Algon site that Philip was talking about earlier that will happen next month. And the saving on that alone is 1,000,000 a month in labor charges. So there are some very significant synergy projects we expect to realize over the twelve or eighteen months, and that's where we think the best application of management time is.

37:54 And then the second area that we want people to hear hear is that we expect to generate a 100,000,000 of cash in h two, and we think we can continue with that rate of cash generation into the following financial year. And it is the group's or the board's view that the company will achieve its 200,000,000 EBITDA for which I believe is the the the market consensus number for the full year or it's thereabouts. We we are confident that we will achieve 200,000,000 of EBITDA for the full year. So those are the key messages we want you to take away from this conversation today. That's great, Jeff. Thank you very much indeed and to the team from VICTORIA. Can I please ask investors not to close this session as we're now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations?

38:46 This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of VICTORIA PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.