A.G. Barr P.L.C. (LSE:BAG) — Full Year Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the AG BARR PLC full year results investor presentation. 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 our responses where it's appropriate to do so on the Investor Meet company platform. Before we dive into the live q and a session, we would just like to play a prerecorded video covering the results. Hello, everybody, and thank you for being here, and welcome to the AG BARR results presentation for the year to January 2026. I'm Eunice Sutherland, Chief Executive Officer, and I'm joined today by Stuart Lorimer, Chief Finance and Operating Officer.

0:50 Over the next thirty minutes, we plan to provide a full review of the twenty twenty five-twenty twenty six financial year covering both financial results and the progress we are making in executing our strategy. We will also provide a summary of the outlook for the business and our expectations for the FY twenty twenty sixtwenty twenty seven financial year as well as our early perspective on the new brands that we have recently acquired. Mindful of your time, we have a lot to update, so this will take us the full thirty minutes today, and we hope you find this both informative and useful. Turning to Page three. FY twenty twenty fivetwenty twenty six was another year of strong and consistent financial progress for AG BARR as we are shaping our customer value proposition to be aligned to current and future consumer needs.

1:42 The business delivered a robust set of results across revenue growth, operating margin improvement and consistent return on capital employed, in line with our commitments. This performance underlines our belief that shareholder values are best delivered with a consistent set of simple financial metrics, understood and lived throughout the organization from factory floor to the boardroom that also ultimately resonate with consumers and are driven by innovation, culture and clarity. The AG Bar employee value proposition has also seen significant improvement as we align everyone with our goal and create a high performance workplace. Colleague engagement scores have step changed over the last two years, reaching an all time high in February this year.

2:29 We have three levers for top line growth: driving our core soft drinks brands, supercharging innovation in existing and new categories and executing focused M and A. Overall, the business is stronger and more diverse and better positioned for growth than it was twelve months ago. Before looking at FY twenty twenty fivetwenty twenty six results in more detail, I wanted to reflect on our longer term track record. Over recent years, this business has delivered a consistent multiyear growth profile while maintaining rigorous financial discipline. Revenue is 66% higher than it was four years ago. Our 4% growth this year was in line with our long term target of at least 4% growth per annum.

3:16 Our core brands are performing well in a competitive market. And with the recent acquisitions, we expect low double digit revenue growth in FY twenty twenty six, twenty twenty seven. In the last two years, we have successfully driven operating margin back up to 14.8%. The 120 basis point expansion in FY twenty twenty five, twenty twenty six moved us firmly into our target 14% to 16% range and reflects our decisive action on pricing and our relentless focus on supply chain. With this, our PBT has grown double digit in the year for the second year in a row. Our return on capital employed remains strong at 20.4%, even with the significant upfront investments we've made in our supply chain and our recent M and A activity, and we remain within our 19% to 21% target range.

4:10 The takeaway here is that our financial framework is working. By consistently hitting these three KPIs, we create the positive circle you see at the bottom of the slide. Consistent delivery leads to reliable growth in profits, EPS and dividends. I'll now pass to Stuart, who will take you through the financials. Thank you, Ewen. Today, I will start with a review of what the business delivered in twenty twenty five-twenty twenty six, a year of strategic transition, disciplined execution and strong financial delivery. I will conclude with an outlook for the year ahead before handing back to Ewen to provide an update on the delivery of our strategy and the integration of our recent acquisitions. This is our financial scorecard.

4:57 We will cover many of the metrics on subsequent slides, so I'll only call out a few headlines here. As Eun has covered, we delivered another year of profitable growth, making further progress across all three of our core metrics: revenue growth, operating margin and return on capital employed. Looking at the broader financial KPI set, 25%, 26% was a year focused on transitioning to our new higher growth strategy. The transition was characterized by core brand pricing realignment and operational efficiency improvements. Together, these delivered 120 basis points of margin expansion, double digit profit growth and an 11% improvement in EPS. We continue to be a strongly cash generative business, delivering over £60,000,000 operating cash flow in the year.

5:47 We ended the year with just over £40,000,000 in the bank, 22,000,000 lower than the prior year following strategic investment in both our asset base and M and A, which I will cover later. Shortly after the year end, we invested a further £40,000,000 in acquiring the Fentimans brand. Reflecting the strong financial performance, the good progress in executing our strategy and our highly cash generative model, the Board is proposing a full year dividend of 18.71p, an 11% increase on the prior year, delivering £21,000,000 to shareholders. I believe the scorecard underlines a very credible financial performance and a strong commercial delivery that provides momentum as we go into 2026. Ewen will provide more depth and flavor on our brands shortly, their current performance and future plans.

6:37 From a financial perspective, I would highlight a pleasing 4% overall revenue increase with growth across the portfolio. ION Brew, which was 38% of the company revenue three years ago and is now 32% has grown revenue 16% over this time. Rubicon has grown 40% over the same time period. As we flagged last year, the aim for both brands in 2025 was to price reposition key formats ahead of major brand redesigns and then advance significant media investment going into 2026. This was successfully delivered in line with expectations. The price changes had a negative impact on H1 performance, which unwound in H2.

7:22 Both brands exited quarter four with good sales momentum and strong media campaigns. Ion Brew with Gerders and Rubicon with Big Flavor. The new Ion Brew branding is now in trade and delivering encouraging results. It's pleasing to note that Boost delivered a standout performance with fantastic double digit revenue growth following its own similar pricing repositioning and brand refresh in 2024. Our Portfolio Brands segment, representing 35% of revenue, delivered an aggregate growth of just over 5%. The impact of continued revenue declines in our Funcan on trade business and the disposal of the Strathmore brand were more than offset by strong performances from KA, MoMA, Simply Fruity and the midyear acquisition of Innate Essence.

8:13 These brands benefited from a combination of innovation, distribution gains and improved supply. In addition to delivering commercial top line growth, we remain intensely focused on the bottom line. We pride ourselves on our disciplined cost control. The successful management of our $370,000,000 plus cost base is fundamental to both our margin expansion this year and for creating the conditions for future sustainable growth. We have delivered efficiency improvements in our operations, while invested in future growth through a deliberate up weight in marketing investment, talent refresh and longer term innovation. Input cost prices had generally stabilized after the peak inflation of twenty twenty three, twenty twenty four with the notable exception of aluminium, which has seen its price rise significantly in H2 twenty twenty five.

9:04 We experienced an element of mitigating relief from other key commodities like sugar and PET as they moved out of their cyclical peaks. We have good cover across all commodities for much of calendar twenty twenty six. Our aluminum price pressure is a combination of industry capacity, sustained demand growth, speculators and now conflict related energy spikes. The Iran conflict is a fast moving situation, and we can't predict its intensity or duration. However, the direct operational and financial impacts have so far been limited. We have no revenue exposure to The Middle East, no supply security concerns and any logistics impacts appear manageable. Looking forward to twenty twenty six, twenty seven, we expect operational efficiencies to continue from a combination of capital investment benefits and the financial elements of our Boost in sourcing program.

9:58 Our robust brand performance and strong cost controls contribute directly to profitability and specifically the makeup of our 120 basis points expansion in our operating margin that takes us from 13.6% to 14.8%. The capital program is a key enabler of the operational efficiencies, including our margin improvement. It is laying the foundation for future growth. The program, which is now over four years old, is being delivered on time and within budget. Cash CapEx of just over £30,000,000 in twenty fivetwenty six was focused in Cumberland, where we successfully completed the fifth and final phase of our line refresh program with the installation of our new high speed line can line.

10:45 The new line replaces an end of life asset, but also delivers a 50% uplift in capacity as well as additional format capability. It is currently in the middle of commissioning and performing well. The capital program is a rolling five to ten year plan that has already taken Cumbernauld from a 25,000,000 case output in 2022 to 46,000,000 capacity in 2026. Looking forward, we expect CapEx to peak circa £40,000,000 in the coming year twenty twenty six, twenty seven. This will fund the final payment for the Cumbernauld refresh program, the infrastructure and capability expansion to in source the Boost sports range in Cumbernauld, the implementation of a second independent can line at Milton Keynes, which is targeting commissioning for early twenty twenty seven and support scaling up manufacturing capacity for innate essence.

11:40 We are also advancing our ESG agenda with heat pump installations commencing in the next nine months to support our net zero initiatives. Beyond 26,000,027 million dollars we expect CapEx to normalize in the range of 30,000,000 to $35,000,000 per annum over the medium term. We recognize that we have a highly cash generative business model. We do not take it for granted. We run a tight operation, collecting and protecting our cash, and we operate a disciplined hierarchy when it comes to capital usage. Our capital allocation framework prioritizes organic investment, strategic M and A and dividend growth, all of it underpinned by our commitment to maintain a robust and efficient balance sheet that will deliver return on capital employed in the range of 19% to 21% and a long term net debt to EBITDA ratio of no more than 2.5 times.

12:35 We started the year with $63,900,000 in net cash and generated around $55,000,000 from the business, giving us a pre allocation cash flow of almost $119,000,000 We deployed capital in line with our framework, around $30,000,000 in capital investment, 28,000,000 in acquisitions within the period and returning just over $19,000,000 of cash to shareholders via dividends. Our M and A is the combination of our investment in Innate Essence at the end of H1 and the acquisition of Frobisher's Drinks at the end of H2. It does not include the Fenton's Drinks acquisition, which we completed just after the year end. Ewen will walk you through all three of these deals shortly. We closed the year with just over £40,000,000 in net cash, which we invested in the Fentimans acquisition just after the year end.

13:27 Our capital program and seasonal cash requirements indicate a net debt requirement for most of 2026. We are currently in the final phase of agreeing medium term debt facilities, likely to be a two to three year revolving credit facility. All our relationship banks have expressed their enthusiasm to support the business. Turning to the year ahead and the financial outlook for twenty twenty six-twenty twenty seven. We entered the year with good momentum. We believe that we have the ability to deliver significant sustainable growth through powerful marketing, strong innovation and deepening retail relationships across our core brands. The recent acquisitions have further broadened our portfolio, taking us into higher growth segments, while supply chain investment and M and A integration should drive incremental margin, further accelerating the flywheel momentum that has been building up in the last year.

14:22 What this means for twenty sixtwenty seven? We are expecting elevated low double digit percentage revenue growth, supported by around £35,000,000 revenue contribution from our Frobisher's and Fentimans acquisitions, while maintaining our operating margin in the range of 14% to 16%. The integration of Frobisher's and Fentimans is commencing. As anticipated, initially, these will be slightly return on capital employed dilutive, pushing us towards the lower end of our 19% to 21% target range, becoming ROCE accretive as the proposed integration completes firstly in 2027 with the integration benefits on overheads and then later in early 'twenty eight with benefits from Fentiment's insourcing savings. We're expecting one off integration costs of around £4,000,000 in 2627 as we rationalize and integrate Fentiment's and closures.

15:15 As I have said, our CapEx cycle will peak at around £40,000,000 in twenty sixtwenty twenty seven. Finally, following the completion of our strategic M and A and our growth investments, we expect to return to a small positive net cash position at the end of the financial year. The twenty six-twenty seven plan and indeed our whole operating model are designed to deliver consistent top and bottom line growth today, while ensuring we have the brands, capability and capacity to sustain this growth over the longer term. With that, I will hand back to Ewen, who will update on our strategy progress. Thank you, Stuart. We will now explain in a bit more detail the progress we have made towards our overall strategy and the priorities that offer considerable growth opportunities ahead.

16:04 We have a clear and ambitious strategy, which we outlined at last summer's Capital Markets Day and is grounded in our long standing capabilities. We are building on the strengths of our business model and focusing our energies on five clear growth platforms that together can deliver our ambition. Firstly, more from core. We're driving higher penetration in our three core soft drinks brands, Iron Brew, Rubicon and Boost, all have significant headroom for growth across The UK, and we're using refreshed marketing, bold brand development and customer channel growth opportunities to capture that. Secondly, excellence in sales and marketing. In the last twelve months, we've upweighted our talent and commercial capability.

16:49 By strengthening our sales teams and the tools they are using, we're ensuring higher quality execution across all channels from major grocery to local convenience stores, and we will cover more of that later. Next, leveraging our supply chain. We're investing ahead of the curve in both assets and people to absolutely drive operational efficiency and effectiveness. This is key to achieving our operating margin target, and we will have completed the Cumbernauld factory by this summer, and we have already begun work in Milton Keynes. We have significantly strengthened our innovation capability and pipeline. We're moving faster to meet evolving consumer preferences across all categories to ensure our brands are at the forefront of market trends.

17:38 And finally, M and A. Our recent acquisitions Innate Essence, Frobishares and Ventamins demonstrate our intent to access higher growth segments and broaden our market through a targeted and meaningful M and A strategy. We believe that these five platforms, when they fire together, will consistently drive revenue and profit growth and increasing returns for investors. Overleaf, and as we've previously set out, we are targeting growth across three specific areas of the market. Today, I want to show you the concrete evidence of our progress in each. The majority of our business remains in the large and growing soft drink segments, where we're focused on accessing significant headroom growth.

18:23 We're currently rolling out major rebrands for Iron Brew and Rubicon, and we're expanding the product range with these brands through new product development. Critically, we are seeing these core brands start to win in the grocery channel, where we still have significant under penetration compared to our impulse heartlands. Secondly, we've recognized the step changing consumer desire for functional drinks and have added to this. We moved beyond simple refreshment into functional, healthy hydration, both expanding our existing brands within Rubicon and Boost and also acquiring a majority stake in Innate Essence, which we'll cover later. Finally, we're broadening our reach in premium socializing soft drinks, capturing the opportunities from lower alcohol consumption.

19:11 By adding Fentimans and Frobishers alongside Funken and Bundaberg, we now have a comprehensive premium ready to drink and social portfolio. There is minimal cannibalization across these three segments. Each pillar accesses a different consumer needs, effectively broadening our total addressable market and driving incremental revenue. Moving on to covering our soft drinks brands. Over the next four slides, I'll provide an update on the progress being made on our Iron Brew, Rubicon and Boost brands, along with an update from our core channels: Retail, Impulse and Out of Home. In 2025, 2026, we upweighted our above the line creators for Iron Brew.

19:57 Our first major milestone was achieved in the summer through the award winning Made in Scotland from Gerders TV campaign and outdoor media. Post the campaign, spontaneous awareness increased significantly and one in five nationwide consumers exposed to the campaign either bought Iron Brew for the first time or increased their purchase frequency. In the year ahead, we will build on the success of the MISFG campaign and are excited about our World Cup plans, which are being finalized to support the first time Scotland has been in the World Cup for the last twenty eight years. Flavor extensions are a key part of the Iron Brew strategy. In March 26, we launched Ice Cream and Raspberry Ripple in Tesco, landing a combined seven eighty seven stores with Ice Cream being ranged in three seventy six England and Wales stores.

20:49 Total grocery distribution growth on IronBrew flavors across all customers now exceeds 2,500 new distribution points. Relaunching IronBrew with a refreshed packaging and a focus on driving zero sugar is a core building block for twenty sixtwenty seven. We have already secured new listings in Tesco stores for zero and across the market have added additional new distribution points with further confirmations of distribution growth expected in the months ahead. Turning to Slide 17. In 2025, we also refreshed our above the line creators for Rubicon. We focused our communication strategy on big flavor behavior, which is a brand message that translates across the full Rubicon portfolio.

21:38 Campaign results showed the creative scored in the top 20% of all adverts, a major milestone achieved for the Rubicon brand. We saw strong growth in awareness post the campaigns in the summer. In 2025, we focused on expanding the brand into healthy hydration space, launching squash into Sainsbury's in 600 stores in a brand new category for Rubicon. During this first launch weeks, two of the flavors launched were ranked in the top 10 squash SKUs with more distribution planned for other customers through 2026. This was followed by the successful launch of Rubicon Twist as a first to market exclusive in Tesco, a flavored water that we executed across the whole of The UK.

22:26 Rubicon Twist has performed ahead of initial expectations with plans in place to extend the range into other outlets and formats. For the Rubicon brand, raising our presence in core soft drinks fixtures across grocery retailers is a key building block of our strategy. In addition to the innovation, we have launched we have also secured new distribution in core sparkling, tropical and cherry flavors in Morrisons and Sainsbury's. In the months ahead, we are launching Rubicon Blends, a new steel juice flavor within Tesco as we partner on building a more prominent and sophisticated ambient juices category. Combining all of the new wins already secured for 2026, we have significantly stepped forward our distribution in grocery for Rubicon brand in the mainstream soft drinks fixtures.

23:19 Moving on to Slide 18. On the back of our success on Iron Brew and Rubicon, we're refreshing our Boost brand above the line creatives and have created a new partnership with the Rugby Super League to become their official soft drinks partner. We'll be focusing on our communication strategy, Boost Straight Up, with high levels of social content and outdoor media. Boost brand awareness has grown from the work we've done over the past year with two out of three people in The UK now aware of the brand. In 2025, we focused on expanding the brand into healthy hydration, launching Boost Hydration Waters into the convenience channel and Boost Powders into the ecom channel. Boost Hydration Waters had an outstanding start with distribution achieved across the entire symbols and independents sector of The UK.

24:11 The strength of performance since launch will create further opportunity to expand the range and explore further distribution opportunities in other channels. As part of the Boost growth plan, we aim to build brand presence in grocery retail in the coming years. We now have Boost Energy in Morrisons, and we've recently secured listings in Tesco Northern Ireland and Scotland and ASDA Express nationally as we deliver on our opportunity to expand Boost into grocery. Moving on to Slide 19 and focusing on the channel and customer activity. On the back of the successful Iron Brew campaigns and distribution wins in Tesco, we also delivered an improved Christmas in The UK's number one retailer, where we outperformed the category over the twelve week Christmas trading period.

25:01 Ironbrew distribution in Tesco has increased by 15% since October 2025, with the majority of new distribution landing in England and Wales. This is setting us up to win in this key customer going forward. Impulse has always been a strength of AG BARR and whilst we are building momentum in other categories and channels, we have not slowed down our performance in the Impulse channel. At the end of twenty twenty five, we were outperforming the market and our growth continues into 2026. We've embraced technology within Impulse, and we've recently invested in further technology driving activity that will enhance our support of key wholesale customers and the channel overall. This investment has helped us to unlock significant net incremental distribution gains.

25:51 In the out of home channel, we recently secured the Legends global pouring rights for funk and cocktails, unlocking 23 venues across The UK, including Wembley Arena, the AO Manchester Arena and others. The partnership also secures digital media across all venues and creates sampling opportunities to help us build the Funkin brand. Now moving on to functional and healthy hydration. Within Innate Essence, our lead business here, we're focused on structurally growing our brands within health led categories, where we have a clear right to play and long term relevance. On Slide 21, The Turmeric Company is built on performance and recovery, particularly within sport, which gives us a strong and credible foundation to extend beyond shots into adjacent spaces like hydration and protein.

26:46 Starting with functional shots. This is a category that is scaling quickly. The UK functional shots market is projected to grow significantly over the next decade, and we have a strong growing brand and a good authority here. We're not entering this space. We're already a recognized player, which gives us a platform to expand from a foundational position. Hydration is the next natural step. It's a large and established category, but importantly, it's evolving. There's a clear growing opportunity for more natural functional formulations, and that aligns directly with how we will build our products. This isn't about competing in traditional sports drinks, it's about shaping hydration through a new premium health led lens.

27:35 Alongside this, we're seeing increasing demand for products that support balanced nutrition and overall well-being. This is being driven by both consumer behavior and wider trends, including the rise of GLP-one related awareness, which is accelerating interest in protein and fiber based solutions. So as we look at these three spaces together, shots, hydration and protein, it's a connected ecosystem through our vertically integrated manufacturing capability built around daily wellness, performance and recovery. Our strategy is to grow where we already have credibility and expand into adjacencies where consumer demand is growing and our proposition is differentiated.

28:22 Turning the page. Within The Turmeric Company, brand and our overall vision is to make turmeric a credible everyday health intervention, something that moves beyond being seen as a supplement and instead becomes part of how people manage their health day to day. When you look at the scale of the problem, the opportunity is clear. There are over twenty eight million people in The UK living with pain and inflammation. That's not a niche issue. It's a widespread and growing health burden that impacts quality of life, productivity, and puts increasing pressure on the health care system. This is exactly where we are focused as a brand. Following tens of thousands of customer testimonials, it is clear that we exist to support pain, inflammation and recovery through natural, accessible solutions, products that people can integrate easily into their daily routines rather than depending purely on reactive treatment, with clinical research beginning to support our product ranges.

29:30 Alongside this, we've invested in building real credibility. We've been building a dedicated team of scientists, dietitians, nutritionists, and we're actively working with health care professionals, elite sports partners and pain charities to ensure that we are build that what we are building is both effective and trusted. Over time, our ambition is bigger than just selling products. We believe that turmeric can play a role in shifting behavior away from purely reactive health care towards more preventative everyday solutions that empower people to take control of their well-being. And so in summary, we've built a product suite that is designed to deliver growth both now and into the future. Functional Shots remains our core engine.

30:17 The focus here is executional, continuing to expand distribution across UK grocery while accelerating our presence in out of home channels. This is about scaling what already works and driving penetration. In hydration, we're at a different stage. This is about unlocking scale in a much larger category. The upcoming brand refresh of Raw Hydrate is a key moment for us, sharpening the proposition, broadening appeal and setting the platform to drive faster distribution and rate of sale. Within protein and fiber, Earth Protein represents a new growth platform for the business. We're building this category with a clear plan to enter The UK grocery market in late twenty twenty six, giving us access to a developing growth space with increasing consumer demand.

31:07 When you step back, the strength of this portfolio is in the balance. We have an established category that is scaling, a second category with significant headroom and a third that creates future upside. Together, this gives us a structured pipeline of growth across short, medium and long term horizons rather than relying on a single product or category to drive our business forward. Now concluding with a couple of slides on outlook. First, touching on the two most recent acquisitions of Frobisher's and Fentimans. We've already said that we believe the premium socializing soft drink segment is one that will grow significantly as alcohol consumption declines, GLP-one usage increases and the wider health agenda expands.

31:53 So building brands here makes a lot of sense for a GBAR. It also makes sense where appropriate to utilize our manufacturing capabilities production as much as we can in the same way as we did with Boost. This enhances margin, controls quality and achieves high levels of consistent customer service and satisfaction. We acquired 100% of the Probishers brand for onetime sales, and we've moved quickly to integrate this smaller business into AG BARR. Given our first volumes are smaller, we are not insourcing this yet until we reach critical volume targets. We expect both revenue and profit growth during FY 2026, 2027. Post the year end, we also acquired 100% of the Ventamin's brand for 1.5 times sales, and we've entered consultation with the team there to enable integration into AG VAR.

32:49 Beyond the wider consumer segment growth opportunity, we see opportunities for insourcing significant volume, resetting the brand and adding higher growth innovation to the range. These opportunities will begin to be captured from the end of half one, but will likely land more significantly in 2027 and 2028. In the meantime, we are rightsizing the international business and we will rationalize the tail of SKUs in The UK to ensure manufacturing efficiency and profitability. Over the medium term, we would expect Fentiman's business to deliver significant profit growth from these measures and following the operating margin accretion we've seen from the Boost acquisition. We expect both of these brands to deliver strongly over the medium term.

33:39 So to summarize, AG BARR delivered strongly in FY 2026, 2025, 2026, and we have momentum for the new financial year. We have three clear routes to growth: core headroom growth, innovation NPD growth and M and A capabilities with confidence in integrating businesses and brands. I hope we've evidenced what we said we would do last summer already, and we intend to do more of all three. We've invested in improved capability and capacity in physical and human terms across back and front of the chiller, supply and commercial, and the returns are being evidenced. We are also clear there is a lot to go for in FY twenty twenty six, twenty seven as you've heard, and the team is really focused on achieving this.

34:26 Given the acquisitions at the beginning of the year, we expect low double digit revenue growth percentage in FY twenty twenty six, twenty seven, while maintaining our mid teens operating margin target and return on capital employed to be within our range of 19% to 21%. We continue to be focused on and well set to deliver our consistent flywheel of shareholder returns now and in the future with exciting growth ahead in realizing our long term ambition of doubling the business. Thank you very much for joining. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. Ewen, Stuart, if we may just dive straight into the questions. The first one that we have here reads as follows.

35:13 Will you see cost pressures and supply issues resulting from the current Middle East conflict? Great question. Obviously, very topical. I'll pass to Stuart who can cover that. Yeah. Well, first thing I would say is, Luke, it's the war is a fast moving situation. It's not one that we'd ever try and predict its in intensity or its duration. What I can say is, as it stands today, first of all, most importantly, we have no revenue exposure to The Middle East. We have no supply security concerns from the the conflict situation. Our exposure is confined to the energy spikes that we're all facing. We have strong coverage across all our core commodities, things like aluminum, PET, sugar, etcetera, and the exposure to logistics fuel is a manageable cost for us. So we feel appropriate placed, but, clearly, we're watching the situation.

36:11 Perfect. Thank you. Just turning to the next question. What are the execution risks to the strategy? I think that we're constantly looking at those. I think that we we like to think that we are narrowing down execution risks. We've got the right team in place. We've built credibility, experience, and understanding in our back of the chiller supply chain teams and in the front of the chiller commercial teams. We have proven upsides, and we're taking it step by step. Of course, you can't rule out all execution possibilities and all risks. We think that, actually, this plan is incredibly simple. It's core to what we've always done within AG BARR.

36:57 It's step by step as we go through the next, five years kinda medium term outlook. And, you know, I guess, excusing any kind of world events which are beyond our control, we are minimizing the execution risks. So, you know, I don't have trouble sleeping at nights. We're really focused on execution excellence, and step by step delivery of the plan. Thank you. And we have a question here on Ironbrew, and I know you touched on this during the presentation. But have you tried to penetrate England before with Ironbrew? And do you believe that expansion there is possible? I I absolutely believe it's possible. And the the my thoughts and conviction in that kinda go to the first half of the question, which is we have never really, as a business, consistently targeted England and Wales. We've always ended up spending our marketing money and investments in Scotland.

37:56 We can we consistently outperform everybody else with significant market share in Scotland. There isn't there there are no barriers through our major customers to growing Iron Brew in England and Wales. It has been purely down to our consistent investment story. We now have that in place, and we have a long term commitment to be able to do that. We're making significant distribution gains in England and Wales. And I guess last bit of the answer, would point to a similar type of brand in Doctor Pepper, which has gone before us, a similar type of, I guess, nontraditional flavored carbonated soft drink, which has made significant gains in England and Wales and The UK as a whole. So I think if Doctor Pepper can do it, then Iron Brew definitely can.

38:46 I'm encouraged by the early steps that we've delivered. And I think over the medium term, we will see a transformation in the penetration of Ironbrew down south. Thank you. I'm just turning to the next question. What is your current m and a pipeline like? It's pretty good. Obviously, I can't divulge exactly what's on it, but the m and a pipeline is good. It tends to be a low barrier to entry into the beverage market and soft drinks market. It's quite difficult for brands to scale beyond a certain level. It's more difficult for brands to create a profitable business. They can create a reasonable sales base. The benefit that we offer is that because we're a vertically integrated business, we can in source the brand, maximize the margin, use that extra margin to then drive more marketing and supercharge the sales.

39:40 So not only do we get the sales growth, but we get the margin accretion as well. So given that backdrop, there's quite a lot of innovation of smaller brands coming in and around the market. About 50% of total soft drinks growth in the last five years have been driven by brands that were not around five years ago. So that's hopefully a strong indicator of the level of innovation in the market and the ability for us to be able to pick up very interesting consumer growth brands and make them much more profitable and supercharge their growth. Thank you. And we have someone here asking, how are you balancing core brand investment versus new or higher growth segments like functional beverages? I guess it comes back to our returns focus. So everything that we do tries to deliver over the returns hurdles that we've talked about in our simple kind of three step financial model.

40:34 We have strict allocation of marketing budget based on that, which makes it quite easy to look at where the incremental opportunities are. We do separate our brands into what we call core brands, so Ironbrew, Rubicon, and Boost, which we believe have the biggest opportunity in quantum and some of the biggest headroom. Having said that, we've got some very interesting smaller brands and some of the newly acquired brands that have got very rapid growth trajectories. It all comes down to what's the best return, to be honest. We're very economically rational here, which I hope everybody would want us to say. Therefore, we think we get the balance pretty much right. Thank you.

41:19 Where do you expect margins to land next year given integration costs and ongoing investment? You want to do that? Yeah. Sure. I think we've been fairly consistent with our the whole, three core metrics of revenue growth, mid single digits, margin of 14 to 16%, and ROCE of 19% to 21. And margins, we're we are confident that we can deliver as good as this year, 14.8% or slightly better with, as you say, m and a dilutive impact initially as we integrate the the two new acquisitions, but being offset by continual efficiency through our CapEx program and our operational initiatives to improve performance.

42:08 Thank you. Is 2.5 times a target level for debt to optimize the balance sheet? What is the maximum m and a deal size that we can expect? Go ahead. I wouldn't say it's a target. We don't we don't target, but what we're seeing is the capacity that we would have. If you look at our EBITDA today, it would be around 80,000,000. If any deal we did, it would obviously bring, hopefully, EBITDA with it. But based on that, you'd be talking something, you know, 150 to 200,000,000 of of dry powder capacity, but it's not a target. Perfect, guys. And that actually concludes all of the questions that have come in this afternoon. So thank you very much indeed for addressing those. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But Ewan, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and to the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great.

43:09 Great. Well, thank you, and thank you for joining the call. We hope you find it informative and helpful. We have an incredibly simple strategy. We work hard to keep it incredibly simple. We are focused on delivering the three financial metrics we've talked about consistently over time, developing a flywheel of shareholder value accretion. We're very committed to that plan. We're very confident in the execution of that plan with short and long term external factors such as the activity in The Middle East. I think this stock provides a safe harbor for really interesting growth in the short term and, obviously, accretive growth as we go through. So very happy to take your questions offline or to meet up with anybody who wants more information. But for today, thank you very much for joining.

43:57 That's great. Ewan Stewart, thank you once again for updating investors, this afternoon. Could I please ask investors not to close this session as you will now be On behalf of the management team of AG BARR plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.