Zigup (LSE:ZIG) — Interim Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the ZIGUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so. And before we begin, as usual, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to head of investor relations, Ross Hawley. Ross, good afternoon, sir. Hi, Jake, and thank you very much for that intro, and welcome to everybody online today. This is our fourth IMC session, which we've run, and this one comes after our half year results, which we announced last Wednesday. So we're currently on a roadshow talking to various institutional investors.

1:03 The format for these, which has worked well, is really a fireside chat format where I would look to weave in questions, which hopefully you'll be putting to the Q and A tab throughout. So do please put those in and I'll remind people every smartphone. But I think before that, probably best if I ask Martin and then Philip to give some overviews of our first half performance from an operational and a financial perspective. So with that, let me hand over to Martin, CEO to give some introductory thoughts. Thank

1:32 you, Ross and good afternoon everybody. I'm just going to cover the first three slides before handing over to Philip. So if we just look at Slide one first we just take a look at the the h one performance during the period. So good performance across the board and we're delivering on strategy. These results are in line with expectations, the market expectations. So what we've seen in the period is good operational momentum in terms of what we're doing across all of our business lines, and that's sort of combined with healthy demand and improving supply as well in terms of sort of coming back to what I would see as more normalization post the pandemic. As we anticipated and signaled to the market, we saw disposal profits normalizing.

2:22 It's a story of two parts with Spain and The UK and I, but I'll come and do a bit more on that shortly. We are investing in the business for further growth and strong returns, you know, and we've got positive momentum as we exited this period into the second half, which we can come on talking about as well. I just look at the financial performance. Let's say Philip's gonna give a deep dive, but just to pull out what I think is the summary here. You know, as I said, good set of results of a strong underlying business. You saw revenues up 5%, you know, with a group on course to deliver the underlying PBT in line with the market expectations for the full year.

3:10 And for those that haven't got access to that, market expectations are around a 161,000,000 PBT. We're at 82,000,000 for the half year. As I said on that strategy, we we see continued benefit of the integrated platform. Revenue growth came across all of our sectors, The UK and I, Spain and our claims and services. In this period, I'd call out Spain has been a standout performer. You know, it's got a very strong economy. It is supporting the demand, and we're seeing a growing demand from a variety of customers across the piece. And if I look at van rental particularly, we've had our highest new business wins since 2019, so a very strong position in this period.

4:00 And as I say, we continue to invest in our platform. By that investment, I'm talking about not just investing in the fleet, I'm talking about investing in our tech stack and investing in our people. We saw strong cash generation as well, which has enabled us to continue that investment. You know, since point to point, we've grown the fleet over 4,000 vehicles. The fleet now stands at a 132,500 vehicles. And of course, when we're buying a fleet, you know, we've got a CapEx outlay, but don't forget the value of that fleet was on the balance sheet as well, which now stands at £1,400,000,000 of assets just on the fleet alone. And through that investment, we've seen the fleet age fall as well down two months versus the prior period. So all of that sort of been leading to some excellent shareholder returns.

4:51 So obviously, we closed off the share buyback, the third program of share buyback in the period. So that's 92,000,000 in total. We've supported dividends full year and now another dividend at the half year of 8.8p. And we see that, you know, as a sustainable continued progressive dividend based on the visibility we have of the cash returns. So, summaries on this page, I'd say strong balance sheet, you know, growth in our underlying EBITDA. We've done all of that whilst also maintaining leverage at 1.6 times. To be clear, we've had the leverage has been 1.6 for the last five years. So though we've added to the value, we've added to the earnings, the leverage has been consistent.

5:37 And if I look at the next slide, just to sort of have a little deeper dive with some of the businesses and I'll turn to rental. We talk about fleet growth momentum. Simply, we have seen that continued demand as suppliers come back online, particularly in The UK and I. So we've got customers now taking on that new supply. Some of that is growth, but it will cover some of the growth aspects of that. And in Spain, where the economy is very, very strong, you know, we have seen continual growth in that in RVOH of the fleet. New wins. I talked about having our highest new wins since two thousand nine two thousand nineteen on the rental side. That's reflected not just, you know, that demand in the market, but also the integrated sort of services we're offering on our platform.

6:29 You know, it's not just about a commoditized piece of metal. You know, there are a service rep that goes with the products that we have, and that's what customers and prospects are attracted to. So we've got good momentum on continuing to grow that. Talked here about cross sell as well. People ask us what opportunities have you generated by having this sort of platform and the different businesses linked together. Well, just in this period, we talk about an additional seven fifty vehicle rentals that have come across from different businesses as a result of having that crossover. And we've been investing in our charged EV business. This is the business that is installing electrical vehicle charging points. We announced in the set of results two significant contracts with Scottish Power and British Gas and we expect to continue to invest in that business because clearly that's supporting the transition to electric vehicles as we move forward and that's both on domestic and commercial customers.

7:32 If I look at claims and services, yes, we grew our revenue. Margin outcomes are different. We've talked about sort of different mix of business in our claims and services. So where we're growing, for example, in our repair body shops. So there's a plenty of opportunity to take on repair work. We have the capacity to do that within our network and our extended independent network. So that will grow the top line, but it does have a different revenue mix. So that's why you see in our results, the margin mix has changed. We've got a broad day support in terms of what we're doing across that platform. So it's not just about non fault accidents, which is where the genesis of the business is. It is about providing more more product and service from roadside accident recovery to courtesy car, through, the body shop work, through the legal legal recovery, incident, and fleet accident management as well.

8:30 And we've been building on our digital services as well, adding in tech where we can take some of the strain from, you know, a lot of heavy lifting work. So using digital to help with more self-service on our portals. And also, for those of you that recall, we talk about protocols. So protocol for insurers is where we have an agreement bilateral effectively with each insurer where we have a set of rules that enable them to pay a claim very quickly without any friction.

9:07 And it's an agreed negotiated upfront settlement so that you don't have to go through a lengthy process to make a recovery. That aids our cash recovery and lowers our operational cost in collecting cash. We're up at nearly 70% now in the business, which is near a record high. And if I look at the third quadrant, they're focused on customer delivery. In March this year, we brought our UK and I management team together as one. So we had what was the claims and services side, the ready side, and the Northgate management team. They came together as one team. So we have sort of one joined up management structure now to deliver a simplified customer service across the business. We focused on the customer first. We think that's extremely important because it's customer feedback that drives business to our door.

9:57 When you look at our Trustpilot scores across our businesses, we are rated as excellent and that compares to some of our competitors who are rated as poor. I wouldn't normally bring that out, but it is an important point that we invest in customer outcomes. We're very focused on that delivery. I said our Spanish business has been growing demonstrably. Good set of results you see when we go for the deep deepening dive, but we have been broadening our services in Spain as well. Slightly different to what we provide in The UK, but it's a broader set of services than Spain has traditionally offered. So that's also extending the growth trajectory for Spain. And then finally there, just on the sort of the ongoing investment, you know, we talked about opening new sites and locations.

10:45 So in The UK is a further site that we opened in Dundee. That's a body shop site. Why is that important? Well, as we sort of transition from some of the locations that we operate on, we're able to find our sweet spot in terms of site size, capability, in terms of workflow, productivity, delivers efficiencies the way that we can move vehicles through. It's a modern, well equipped site, and this is typical of what we are setting up we have in the past and we're setting up as we go forward. It just makes us more efficient in terms of being able to deal with repair capacity and productivity. And in Spain, you know, we opened two sites previously. We've talked about this new site in Cadiz in this period. Again, it just opens up more service points which customers polarize towards.

11:31 When we talk about tooling, you know, ADAS, sort of advanced driver assistance services, you know, we roll that out across our body shops. It's just using the latest tools, repair technology to make us as efficient as we can so we're at the sort of leading edge of what is possible out in the market, and that attracts our customers to what we do as well. We're investing in our people, so over 400 apprenticeships now in the business across The UK and Spain. So we've got the next generation of technicians to support what we do. So overall, quite a lot of things going on in the business, as I said delivering on the strategy and we're seeing that through the momentum as we exit the h one period. Yes. Fantastic. Thank you. I think, can you just put these results in that financial context and then we'll start to tease out some of the technical issues. Yeah. Sure. Good afternoon, everyone.

12:28 So at top line, our revenue grew across all of our businesses, so we're up 5.6%. And then the EBIT and the profit before tax are really reflecting predominantly the normalization of disposal profits, which we spoke about at the year end and over the last eighteen months or so. So the results are exactly in line with what we expected. And as Martin said, if you look at our results half year and half year, we're generally around $50.50. So we're exactly in line with what the market's expecting for the full year. Now importantly, our fleet net book value increased by 200,000,000, and our debt only went up by 27,000,000. As Martin also mentioned, our leverage is unmoved at 1.6 times. And then our dividend per share up 6%, that's reflecting the our dividend policy, which is to pay out as an interim dividend 50% of the full year dividend.

13:20 Now if we go and just have a look at the revenue, you can see that this chart here bridges the revenue from last year to the current half year. The first block there represents The UK and Ireland revenue. Now UK and Ireland's been cycling against the tough comparator from a vehicles on hire perspective, and we'll come and talk about that a little bit later on. So vehicle on hire actually went backwards 4.6%, but despite that, revenue grew at 1.7%. And we're able to grow that revenue, one, through sensible pricing through to the market, but also growth in ancillary products and services, additional revenue. In Spain, a different picture. So we've had good supply for a long time in Spain now on new vehicles, and VOH is growing 7.4%, and rental revenue one of 8.6%.

14:09 So alongside that VOH growth, we've had pricing as well as some additional products and services as well. Claims and services, Martin mentioned we had good revenue growth there. It's contributing 25,800,000, and that's a different mix from that which we've seen in the past with a greater mix on accident management rather than credit hire and credit repair, and that does impact margin, which we'll kind of look to in a minute. And then the vehicle sales, a reduction of £48,800,000 is just reflecting the normalization of disposal profits and the ongoing normalization of residual values in the marketplace. So if we go on to the next slide, we can just look at, okay, what does that look like from a profit point of view? You can see we're bridging from the prior year to the current year, and you can see there's disposal profits there in in the lighter purple color there. That goes to the middle of the chart first of all. What you can see there's an 8,900,000 reduction in disposal profits half on half, and that's split across both Spain and The UK, just representing a normalization of those residual values.

15:11 If you go to the left hand side of the chart, you can see that the growth in Spain offset the reduction of VOH in The UK, So we had a rental volume growth of 2,700,000. The rental margin movements, which is still very strong in both The UK and ICE, The UK is at 15.7% and Spain rental margin very strong at 19.3%. And then they came down a little bit year on year, and that reduced profits by 3,200,000. But also within there, you've got a 1,000,000 headwind on foreign currency translation of the euro to sterling as well. And we did have a cyber incident at the beginning of the year, and we had a one off trading impact there on our profits of 4,200,000, which is equivalent to about 70 basis points impact on claims and services margin.

15:59 And in terms of the additional volume, that delivered us 1,000,000 of additional profit. And again, as I mentioned, that's reflecting mix effects, a higher mix on slightly lower margin accident and incident management versus credit higher as we saw a quieter summer on the volume of incidents and accidents referred to us for credit hire. And you can see that in the mix effect there on 5,500,000 on margin, and then we had an additional 1,000,000 from interest charges reflecting the higher level of debt throughout the year. But when you step back, direct in line with what we expected and predominantly reflecting the normalization of disposal policy in the first month.

16:39 Fantastic. Thank you. So look, that I think has been very helpful to just kind of set the scene. I won't say quite a shout out, but thank you Julia and Chris and a couple of others. So I've some lots of questions and I'll try and weave them in. But I thought we ought to start off and probably back, Martin, to you. So I think on the roadshow when we've been came out, like people if I'm thinking about The UK and I, actually some of the comments we've said about UK rental demand being the strongest for five years, Obviously, we just had budget and perspectives on that. But really, where's this demand coming from? Is it structural trends from ownership to rental? Actually, is it just there's people starting to look for more supply which they've not been able to get in the past few years? I think it's both of those Ross to be fair. So if you look first of at that sort of structural piece, you know, our evidence still points to that sort of usership over ownership. So that's the structural trend that we've talked about.

17:36 And And then if you sort of categorize that and sort of bring it to life with what we're seeing on the ground. So I think I might have mentioned at the full year, you know, you've had businesses that have run fleets under ownership. You know, post the pandemic, they were unable to get supply to be able to replenish the fleet and therefore they've held that fleet over for longer than they'd anticipated. Now it's come to us at a point where you have to sort of replenish all of the fleet. So if you imagine you're an FD in a small medium sort of size business with a fleet of fifty, sixty vehicles, that's a very large check to write to buy your own fleet. So there has been that sort of support as well in terms of what we're seeing where those customers want to come into an operational model.

18:22 Don't forget, it's not just about buying a piece of metal. You know, when we do what we do, it's all the services that go to support that to keep the customers mobile, you know, from having the workshops, to be able to fix things very quickly, keep the vehicle legal and roadworthy, to have a replacement vehicle when there's something that has gone wrong and you need to be back out on the road, and as I say to provide all the services that support that in terms of accidents and incident actions. So so we've seen that sort of growth coming from that structural side. And also we've been successful in winning new business. So if look at that sort of that record that I said since 2019 for new business wins, It's coming from market share as well, so we're seeing we're seeing where we need it from some of our competitors that don't have that full service rep.

19:11 You know, I talked about a trust pilot and that we're invested in those customer outcomes. It's important. Know, You and if you go to one of our rental branches, for example, you know, you can go in. There's a queue code there in branch, and we get real lifetime feedback from from the people. This is in our premises to tell us about the services. We're very honed in on making sure that we have a very good turnaround time. So that's where we're seeing that demand and of course, you know, supply is coming back. That's why I talk about momentum and that momentum for growth. Yeah. And and in in some ways, if I switch geographies, we'd sort of seen this kind of demand and supply dynamic working well together in Spain. Philip and I were down there in September. We took some investors and some analysts down, and, you know, it it's been an amazing growth story when those two things work together on that.

20:02 It's been a great story. More to come? I think so. I mean, I open the KPI sheet every day and I've seen about four or five visitors to Spain at different locations to see that sort of on the ground activity, which does fill you with energy in terms of when you see how much of this going on on the shop floor there. But I think more to come. As I said, I open the KPI sheet every day on Spain, and I it's just continually more on rent more on rent. We put the hand brake on. Don't forget. We put the hand brake on, talked about this at the full year because, you know, the market's sort of very worried about that average and all risked in. Think, you know, we're 1.6 times. Our competitors trade at three and three and a half times leverage, you know, in a private setting and and and some even more. So look, you know, we put the handbrake on just to sort of say, we work within the confines of our leverage ratios, etcetera.

20:54 You know, we have put more facilities on to provide more headroom as well as to trade, and we've seen that that demand is being filled. So as we look forward, if we're gonna meet that demand, we've already indicated, we signaled that we would have further CapEx throughout twenty twenty, twenty five, twenty six as we expect to fill that. And let's not forget that this is a correlation. As in, you spend your CapEx, you put value on the balance sheet, you get all the future earnings and cash flows that come into that. So it's a business that when you're investing up, all that future visibility on what you're generating as supporting the dividend and supporting that sort of continued growth. Yeah. I saw that Gary when were talking about Spain just in terms of sort of some of the new facilities. So when we add a new facility, how do they, you know are they day one firing up? I mean, certainly in Spain, there's been a desire. When you've been looking at investment and Jorge says we'd like to open up some somewhere, how do you think about that? What are they actually demonstrating in terms of the growth?

21:54 So yeah. So what they show is that when we look at all of our footprints in Spain, we've got very good coverage. So what we look at is the concentration of where the customer meets and where we're underrepresented as well. The model works really really well. It's a bit like what I would say Northgate UK was sort of fifteen years ago. You open up a new site, a new branch or a service point and customers polarize around that sort of service point. So before we hit the ground running, our account development teams are aware of which companies and organizations we're underrepresented in, fit the quality profile for credit ratings, etcetera, and we're able to start those discussions. So we do hit the ground quite quickly. So, you know, and and those on rents for that branch are c plus o, but we hit the round ground running with already sort of a ready made patch of on rents to get to service. And it's the same offering. It's just basically rolling out that capacity.

22:49 It's the same offering that's doing very, very well in Spain. As I said, it's a good service rep in terms of what we do. We see that as the same when we go out and try to see that customers in our branches and get that sort of feedback. So exactly that. And it's it's it's something that is in demand. So on the rental scale, demand side, we've kind of touched in both areas and clearly strong and a lot more to come. And when one thinks about the supply side, you sort of be messaging saying it's back to normal. There's obviously a couple of caveats around that, but just in terms of the vehicle availability and what we're seeing there, do you want to just cover that off? Yeah. It's back to normal. Look. We we only talk we only talked about availability, but there isn't availability post pandemic. But going forward, shouldn't really be a conversation, I guess, in the sense of you'd expect to be able to acquire your product, your fleet, etcetera. So as I said, there's only been a talking point post the pandemic. There's a lot of sort of constraints, particularly in The UK.

23:44 I think people were asked the question as well, you know, so when supply all comes back and it's all normal, does that mean sort of pricing comes down? Does that mean demand comes off? Well, if you look at Spain, so Spain's had normal supply now for the last couple of years. We've talked about that. Pricing has not come down. Demand has continued to go up. So it is about what we are doing specifically in the market. And in The UK, yeah, supply is normal. We would expect to be having conversations with our manufacturers as we are around that sort of volume volume discounts that we would expect to be able to achieve from that. And also remember, we talk about margin. So we've said, you know, margin 15% on the rental side, sustainable midterm. We said that when we get to the full year this year, we're gonna look at that to see whether we need to revise it upwards because we're seeing Spain staying higher for longer, and obviously, is is over that as well. So we expect to see good returns, and we maintain that amount. We can maintain that margin where the input price goes up or the input price goes down. We've demonstrated that we're able to maintain that margin with the period that we've been talking about. And and, Christopher, I think you asked question about margins. I think you asked UK and I. We'll we'll touch on claims and service margins a little bit later. But Philip, just to bring you in, I think one of the slides which we had up, which we've looked at a number of times, really on this point, which I want to say about how supply constraint has been in chat. There's a quite good visual to see quite the

25:14 difference between UK and Ireland and Spain. Can you talk through that? Yeah. Look, I mean,

25:18 so this slide here really showing our vehicles on hire for this year, year to date versus last year because it's a different story both in UK and Ireland and Spain, and that's really reflecting the evolution of vehicles by which Martin was talking about. I'll talk about The UK first of all on the next day. So last year, we explained that actually VOH was shrinking point to point, and that was reflecting the of vehicles, which is more restricted in The UK last year, which meant as we were defleeting our office vehicles, we weren't able to replace them as quick as we wanted to, and therefore, the average vehicles are high and never to the decrease line. We use that to our advantage, making sure we are servicing the customers who are highest quality and highest margin for us as well at the same time. So it means that this year, we started the year 3,000 vehicles behind where last year opened. So on h one to h one point of view, you can see actually we've been tracking below, but you can see the trend now as that access to vehicles has improved almost back to normal from a volume perspective in The UK now. We're now catching up. And actually, by the end of November, we crossed where we were last year. So what does that mean for the whole year? Broadly, I would expect us to get to the nearest similar point where we started the entrance prior year.

26:29 So net net average vehicles are probably about the same as what we were last year. But importantly, we'll be on that upward trajectory as we go into the following fiscal year. And then in Spain, you know, Spain is really representing the fact they're on the lines, which are all going upwards. We've had really good supply for the last two years. So last year, we're able to grow average VOH and point to point vehicles were high. And this year, again, demand is really strong. Vehicles are supplying really good, and we're taking that opportunity to continue to grow. Perfect. So fleet CapEx, and I'm just going to ask it in a couple of different ways or maybe you can answer. So a few replacements as part of that, and that's probably what we're seeing, and we can talk a bit about aging maybe. Yeah. And and that and then how's kind of returning to growth? So when we think about CapEx, your comments about this year, FY '25, I think that's Yes. So it's playing out as we expected is the first thing that I would say. And we went back to the year end in July, and I said that as vehicle supply is improving, I would expect our replacement CapEx, that's what we spend just to keep the fleet at a constant level, or increase by about a third this year. And that's reflecting the fact that vehicle supply is coming back. We're taking the obvious fleet off, which don't forget is not as operational efficient. It costs us more to service and maintain those, etcetera. We're taking those off and replacing them with new vehicles.

27:48 As we're doing that, we're reducing the average age of the fleet. So you can see in the presentation, we've got the average age of the fleet in The UK. It's come down about four and a half months. So just over thirty one months now. And in Spain, we're down about just over two months, so almost twenty nine months now. So that's coming down as we expected. What I'd also said at the year end is that we have exactly how much to spend this year will depend on what the demand is and what supplies are we like, and we're gonna box ourselves in. What we've seen is really strong demand and really good supply now. So I'm expecting we'll spend a little bit more in that second half, so we'll end up with a little bit more than a, well, more than a third for this year. But don't forget, we're managing that. We're gonna leverage leverage range of one to two times. Yeah. And then just looking out further, I'm kind of doing this sort of CapEx profile. Yeah. Which will just without necessarily being full numbers, but just in terms of how you see that that kind of profile over the over the next couple of years. Yeah.

28:43 I'm gonna think yeah. So let's reflect that. It's playing out as we expected, as I said, and look. We're investing in fleet, which is a net which is a a tangible asset going on to our back ship, which is gonna be market value as well. That investment in that fleet generates us a good return, and we can see that from the piece we're delivering, which are above our weighted average cost of capital significantly, and it will generate significant fluctuations going forward. And what we said is that net that net cash that we generate just from replacing that fleet will increase and increase year on year. So the time we get to f y '27, we would expect everything else being equal sort of generating over 200,000,000 of cash flow, which we can then choose how we want to invest. And that's assuming we bring the age down to around about twenty eight months. We're not aiming for twenty eight months. We'll just go to what the market requires and the energy degree and output in place.

29:37 Fantastic. I'm going to turn it to Martin then on CapEx and then we'll probably get a little bit faster going to, but CapEx is good. CapEx means you generally you're growing or doing something good on the fleet. So, if you look back in this business many years ago before the merger, CapEx in the North Bay business,

29:59 low margins, low returns, not very much about the weighted cost of capital. You look at where our returns are, as Philip said. So if you're disciplined in terms of where you're making investments and where you get new returns, of course, CapEx is good. And I'm gonna say about this business, you look at the way that this business is valued, tangible net asset value at the minute. Dollars 1,400,000,000 of assets on the balance sheet through the fleet. So there are two ways to look at it. When you're growing, you're growing your and you're growing your CapEx, you're growing your fleet, you're growing your earnings, you're growing your cash flows. Okay? So good on a growth cycle. If the economy in the markets are are on a down and, know, they need some downturn, you've got a business here that's very, very strong and defensive because when you're not growing, your fleet is throwing off excess cash.

30:48 So in two way, I think from two aspects, you've got a sort of a very strong position. But the valuation for this business, my view, is completely wrong. We've got nearly a bit nearly $1,000,000,000 of revenue coming through on banking services, which is, you know, multiyear contracts with blue chip insurers, body shops and dealerships and so forth, you know, which is a multiple effect. So, you know, so when we look at CapEx, yes, CapEx supports the fleet, and the fleet is core to all the things that we do, but we've got this claims and sensitive, we've this sort of service revenue that's coming through. So there's fundamentally changed and shifted the shape and outputs characteristics of this business. So I think there's there's a lot to look through here beyond just sort of the CapEx and the normal parts of the conversation.

31:35 But, yes, good CapEx means generally good growth. Okay. And and I think that's an important message. So let's move away from kind of the the CapEx and the metal onto what we'll be doing elsewhere. I think one of your requests from IR is to make sure that the message is simplified and understood for people to really get to that. But you've been simplifying within the business and being the customer first and the one road programs in terms of streamlining that that engagement with customers. Do want to? Because it's been a great success, hasn't it, in the first six months of of that. Can you It it is. I mean, you know, we we want to we make the point that if you've got, you know, a happy customer, everything else sort of follows. And what we do is not complicated, you know, integrated mobility. So let's when we break that down, what do we what do we mean? Well, we're providing core services of replacement vehicle, whether that's a courtesy car, a like for like replacement car, an insurer pay car. We're providing repair services to our body shops so we're fixing people's cars after they've had an accident or an incident.

32:34 You know, we've got peripheral services like roadside recovery after the accident and fleet management. So these things are little things, you know, in an individual vertical, easy to explain. What we've done is combine them together. It's how is that country? Is that different? Well, no. It's actually it's a good outcome for customers because if you think you're going through a journey where you have an accident at the side of the road, you're one company that comes and makes a recovery for you. They take your vehicle to a storage yard. You have to move it to another company as well. We've joined this up and said, you deal with us, you get your service through from start to finish, make it simplified. So for our partners, there's no data leakage, there's no conversion issues, customer journey is nice and smooth. So that's what we're investing in to make that a very solid story in terms of what we're delivering. And and yes, the feedback from the customers is very, very strong based on that. So we're invested in getting the most good outcomes, particularly in claims and services, consumer duty regulations came in, you know, beginning of this year.

33:37 The insurer is very focused on on getting that right in terms of getting good outcomes for consumers. We're very much about leaning into that and investing in that position. And if you've got low complaints, excellent ratings or dissatisfaction, then you know everybody's sort of happy in that process and that's what we aim for. So you touched in that when I'm moving over to the claims and services side sort of in terms of headwinds tailwinds and actually things have broadly come through as you said, in terms of that environment. Do you sort of feel that we're now at a place where those headwinds and tailwinds within claims and services are broadly through from our expectations? Yes. I mean, signaled on our AGM statement. We talked about sort of lower and higher lengths and faster cycle times than repairs.

34:24 You know? So post pandemic, there were supply constraints, which parts getting through for body shops across not just for us, for everybody. It just takes longer to repair vehicles, obviously, you have higher higher lengths. So, you know, that makes it a, you know, a slightly elongated process. What we're seeing now as we sort of exit through this period, we're seeing normalization. Yes. We're going into winter, but typically there is seasonality in claims and services because during the winter more incidents tend to happen, things take a little bit longer again. But, you know, what we would expect to see. So it's correlating to what we would expect historic trends and historic norms in terms of higher length and repair cycle times. There'll always be things to do to to become efficient and make sure that we sort of stay on top of our game in that, but, yes, I would say close to normalization.

35:10 Okay. And then staying on claims and services, if we kind of look out a little bit further into the future, think, you know, sort of strategic conversations which you have with those insurance partners otherwise about what we can deliver in terms of the technology opportunities for them. Clearly, we've put up a slide with quite a lot elements on that. But how do you see that digital digitization digitalization that the tech stack actually serving our customers well? Well, think it's it's important, you know, insurers are spending a lot in providing digital services to their policyholders and, you know, next generation like to be served digitally. Some people like to have voice. What we say is we have a blend of these things. So think about claims and services. Normally, it's not a, you know, stressful sort of position when you've had an accident particularly if you're at the side of the road with a mangled vehicle or any anything else that's going on. You want to be able to speak to somebody. So we provide voice contact.

36:05 So you can get through to us, you can speak to us, and we can put all the services in place. But equally, we wanna make sure that we're efficient. So where we're dealing with things that are a little bit more mundane, that just need need to be things processed and booked in, we can use our sort of digital stack to be able to self serve. So we talk about self-service portals, self reporting, and people can administrate some of those aspects themselves. But the key thing is, as I said, is that we retain our ability to have voice in our contact center to be able to help customers through a very difficult journey. That's a very attractive proposition because in a day and age where everybody is trying to digitize and use the AI and all the rest of it, and whilst we're doing that for certain aspects, we will have that ability to provide the empathy that you need as well to be able to handle those claims. And and so in an insurance market, which is going through its own changes as we talked about in terms of, you know, consumer duty and other kind of consultations, etcetera, there's actually a lot of opportunity for us to be that trusted partner for Indeed. I mean, we're doing all of the services for for our partners. We we talk about partners because, obviously, we invest in long term relationships.

37:16 So I've been able to do provide more of the back office facilities. So it's it's a it's a that's a conversation, I guess, for another day in terms of, you know, direction of travel in terms of strategy. It's been able to have that sort of platform that enables you to do the services that support mobility and the back office functions of for some insurance, you know, might come into those conversations about what we can do and how we might be able to, you know, to provide these aggregated volume necessary at scale to provide those services efficiently. Right. I've been looking at the questions. I've been weaving a a few in, but just one there. Shall we just quickly address the cyber incident in May? That's a question from Nigel, but obviously one which we're going to address anyway. So how significant was the impact? You didn't make an announcement at the time.

38:01 Do want to just give us a Yeah. No. We did we did make an announcement at the time. It's not a significant number in our overall results. There's no need for us to make an announcement. We dealt with the incident very quickly. We worked with our partners to give them insurance that we dealt with effectively, we also had every step of the way to take care of that client as well to make sure we're doing the best thing. But, yeah, it was it was resolved very quickly. The trading impact, as I mentioned, was 4,200,000. We did have some exceptional items which went below below the line of 2.8. And without that incident, you know, we've been 4,200,000 heights. We'd be having about 86,000,000 per month, but it was one off in nature. Okay. So, basically, not material, quickly contained, completely dealt with. Completely dealt with. Yeah. Okay.

38:49 So just on some of the some of the questions which are coming through, and obviously, growth and and that's we talked about the CapEx side. We talked a bit about opening up branches. Aspirations on the m and a side in in terms of just other geographies? Are there still ones that you'd like to think about? What's your ambition? Well, we've done six acquisitions since 2020 when we merged the business. And those, besides the sort of the body shop business, which was 2,300 people transferring in and 70 plus body shops. The rest of our acquisitions have been more bolt on in terms of scale capability, you know, Fidget Express, Blakedale, traffic management and so forth. So we've got a pretty comprehensive suite of services. So what what what I say is is that we're always looking for opportunities where we think there can be added value.

39:35 So if there's an opportunity that adds value to what we do and you can scale. I think scale is important in the market. If you're a sub 1,000,000,000 business, you know, in a PLC market with liquidity and so forth, I think, you know, adding scale definitely gives you some further advantage. So we're always on the lookout. You know, we have a dedicated team. We have a lot of things across our desk. We assess a lot of things. I don't think we've got currency in terms of our I look at our share price. That is not currency. So I wanna be very clear. You know, that is not something that I would I'd share was on because I say tangible net asset value is is wrong. Now that it may that's for the market to decide. But in terms of how we could use the capital in the business and the leverage, I think we've shown that we're quite cautious.

40:22 You know, 1.6 times now is quite cautious. So we're disciplined about how we deploy our capital. So as I say, m and a is going to add value and be very sort of, you know, accretive in terms of what we're doing. And there was a question about buybacks. You mentioned that at the start school just finishing off that and in terms of the board's perspective as to when they might come back into play, do you have any thoughts on that? We keep buybacks under review. We always keep buybacks under review because obviously it's nailed on sort of return on that sort of use of capital. You know, I'm being very transparent, you know, the mix of the use from shareholders about buybacks, you know, some of our investors, particularly in The U. S, talk about buyback not being a good use of capital because you lose the multiple effect when you're not invested in the business. We've got things we can do in business, you know, when there was capacity constraints in the market for buying vehicles in The UK, so you couldn't buy vehicles then, you know, the 90,000,000 program. So you could argue at certain points in time, you can put that capital to use when you couldn't sort of grow as a constraint.

41:32 But we haven't got constraint, so we can put capital to use to grow in our earnings, and therefore, that should have should have a multiple effect. As I said, the board will keep buybacks in the review just keep assessing sort of what the the best capitalization is. So Philip, I'm I'm gonna turn to you. It's your last results roadshow before you move on to a very interesting opportunity. Before I can't ask for any reflections, I think, actually, can you just remind people that this is not from a financing perspective? Because there been questions about what does the market not understand. We've talked about the CapEx, etcetera. Martin Kelly, know, CapEx in such situations is absolutely what we're doing. The flip side of that is how controlled we are over that leverage, over the financing, how that model works. Could you just I want to remind everybody, but just expressively in your view how that has worked and how you see that work. Yeah.

42:31 Look. We are a capital intensive business where we're running. We invest in fleet, and we use debt from that fleet. We use debt from that fleet because we can actually get access to their very, very low base of interest. We control it very tightly. Martin and sign up on every element of CapEx spend in The UK on a weekly basis and monthly in Spain. All meeting with them. We can see exactly what's flowing out when, and we manage that very carefully with our leverage. We can set our leverage as. And, you know, we we have very strong balance sheet. So when we are borrowing a pound from our lenders, we're putting a pound on our balance sheet in terms of the net value. So we're not investing just in tech or just in people. It's a physical asset there. And that's why the lenders we've got our balance sheet very effective, very strong balance sheet, only one point six hundred. It's very important.

43:22 And we've been able to we've had good relationships with all of our lenders. We've just taken out another tranche of private placement loan notes with our existing lenders. So we've taken out another €190,000,000, so an average borrowing rate of 4.4%. Now that's much cheaper than what we can borrow from the bank's app our revolving credit facility, so we replaced replaced some of that revolving credit facility with those loan notes, brings down the average cost of interest of 2.2%, which is right. So that gives us an advantage in the way we're able to price our product as well and make sure we're delivering return. And and 83% of our volumes are fixed over long ten years or a long term? Yeah. Up to ten years. Yeah. Yeah. So in many ways, the banks absolutely get it, and they look at us, and they really like what they see in terms of the asset backed side, but actually the growth and the growth in cash flows which we can offer. Yeah. And and to be clear, it's not securitized in any way. They just see the strength of the balance sheet as it sits today. Yes.

44:21 Fantastic. So I think I've actually run through a lot of the questions. I will be just checking through again now. But you had a bit of a conversation at the time when which is in our analyst presentation just about looking back on on your time already from the merger and what's really been achieved over over that time frame. Do want to tell Yeah. That is right. Happy to. I mean, yeah, the first thing I'll say is that we are a completely different company. Well, one company now, and we were two very different companies when we joined. We run the organization in a very different way, a different structure to that to work at the merger. Martin mentioned how much we've changed in The UK. We now have one management team for the whole of The UK and I business. We run it in a much more operational, efficient way, a in much more disciplined way in how we invest our capital and return against that and manage our leverage.

45:12 You know, I was picking back at our results since the merger. If look back to that first period in '20 when we bought it, you know, since then, our the net book value of our fleet has gone up by 500,000. As Martin mentioned, our leverage hasn't moved to 1.6 times despite that additional investment we made on, you know, and our profits this year are gonna be in line with consensus and market, be a 100,000,000 higher than they were in that period. So whichever lens you look through, we've had a very good set of results year on year up until today. You know, we we have the balance sheet, you mentioned, is in a really strong position to go on a fund for future growth, you know, growth fund balance, so should they grow very well going forward as well. Fantastic. So look, before I ask Martin to kind of wrap up, so the questions which have come through have really been about our aspirations, you know, opportunities, our interest in buyback, the insurance market, what the opportunities are there, touching on our valuation perspectives, margin opportunities. I think we've actually addressed, and I hope everybody on the I hope you're inviting any questions feels that we've addressed as much. If not, feel free to to reach out. I But think in order to kind of just sort of bring this to a conclusion, I think, Martin, can I hand over to you to just finish on the outlook and why you feel so confident in terms of what we can do second half of this year and also looking better forward?

46:32 Yes. Thanks, Charles. So look, I mean, I've talked about that sort of momentum as we sort of exited the period in terms of what we're seeing, our growth and our demand pipeline. So I'm very confident actually around that sort of delivery on the visibility that we have. As I say, there's there's a lot more going on in the business now than probably ever before. It really is sort of on the ground in terms of all the programs that we're delivering. There's more to do on this sort efficiencies, the tech stack inside of things as well, so that sort of play through. But the products and services that are in demand, you know, we we are feeling that that sense of growth. You know, we as I said, at that at the head, we expected profits on disposals to come down, know, so that sort of that expectation of a 161,000,000 sort of PBT, that's sort of the benchmark for a normal year, feels like that's sort of probably where we're landing in terms of normalization.

47:24 There'll always be it's never a straight line in business. There's always be sort of twists and turns. But as I said, if if if people said in 2020, what could this business deliver? Suddenly said a 161,000,000 in five years time, PBT. I said that's that's job well done so far. So we are ambitious. We do want to continue to grow. There's nearly 8,000 people in our business trying to deliver good outcomes, trying to deliver that growth, and we expect that to continue. What we will demonstrate to the market is this, you know, as we sort of spend in the business, the CapEx that we talked about, what sort of returns, what accretion of returns do we expect that to to deliver? And look at some point in 2027, say some point, we forecasted that, of course, in our models. In this business, throws off a wall of cash.

48:10 So you sort of normally get into AR with fleet. So a lot of cash generation that comes off the back of these investments, and then we've got that sort of lock through in terms of that capital allocation, probably want to sort of invest or reinvest that capital for for further growth. So very confident on the outlook, very confident on what we're seeing. And as I said, a lot of good things going on in the business. Thank you. And that to me feels like a very good way to wrap up. So thank you, Philip. Thank you, Martin. Jake, can I hand back to you for the final IOMC wrap up, please? Absolutely. Ross, Martin, Philip, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback, in order that the management team can really better understand your views and expectations.

48:58 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of ZIGUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.