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

0:01 Good afternoon, ladies and gentlemen, and welcome to the AG BARR PLC 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 will publish your 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. Good afternoon, and welcome to the AG BARR results presentation for half one twenty twenty six twenty twenty seven. I'm here in Sutherland, and today, I'm joined by Stuart Lorimer, our Chief Finance and Operating Officer. Over the next thirty minutes, we'll provide a full review of half one, covering both the strong progress we're making executing our strategy and our financial results.

0:55 We'll also provide an update on the outlook for the business in terms of the full year and leave plenty of time for your questions. Turning to the headlines on Page three. In the first half of the year, we made strong progress against our strategy. Our core brands are carrying good trading momentum with IronBrew, Rubicon and Boost all performing well in the market. Additionally, the product innovations we launched over the past year are outperforming our expectations and driving incremental growth, which I will cover later. On the operational side, we successfully completed the integration phase of Fentimans and Frobishers with synergies coming through from half two. Financially, the business continues to deliver even with short term supply constraints during the peak summer trading period.

1:44 Revenue grew 8.5%, reflecting core brand momentum and the contribution from our recent acquisitions. Critically, we maintained a strong operating margin and ROCE, in line with our established financial framework. Looking ahead, our positive brand performance has continued into the early part of half two, and we remain on track to deliver full year results in line with market expectations. Before diving into the business in more detail, I want to provide a brief overview of the soft drinks market in the first half and how we performed within it. The total soft drinks market grew by 6.7% with higher growth in the second quarter due to the favorable summer weather. This performance reinforces that soft drinks remains a highly resilient consumer category.

2:32 Growth in the market was driven by energy and sports, still and juice drinks, water and dairy, all of which were up between 1015%. The carbonates category grew at 3%. Against this backdrop, AG outperformed the wider market, delivering 7.2% growth with Boost and Rubicon the primary engines behind performance. England saw the biggest increase in share for AG Bar growing at 11% in the twenty six weeks, driven by Ironbrew Zero, Rubicon Sparkling and Boost Sport. We believe these metrics prove that our commercial strategy is successfully driving consumer demand, giving us good momentum and confidence for the second half of the year. Turning to Slide five. We continue to execute our plan across each of our five strategic growth platforms in the first half of the year. We will cover many of these points on this slide later.

3:28 So at this stage, I will summarize that I'm pleased with the progress we've made in half one, strengthening our business today while adding to the foundations for sustainable growth over the long term. Before shifting focus to our plans for the second half, I want to provide an update on the supply chain program and the one off issues we highlighted in our recent trading update. During the first half, we executed several complex operational projects, which I'll cover in more detail on a later slide. To summarize, these included the final phase of our manufacturing line refresh program at Cumbernauld, the integration of Fentimans and Frobishers and the rollout of a new demand and supply planning system. As we move through the second quarter, it became evident that embedding this system had created some operational bottlenecks.

4:16 In response, the team took corrective action, and I'm pleased to report that the issues are now resolved with both inventory and customer service metrics normalizing. With the heavy lifting of the Cumbernauld transition behind us and our manufacturing upgrade in Milton Keynes proceeding to plan, we are confident that we have a strong, stable and more efficient supply chain for half two and beyond. Moving to Slide seven. We entered the second half of the year with a clear plan to benefit from the commercial momentum we've built. We remain fully focused on maintaining our brand momentum in the market. Current trading is on track as we drive volume and value growth across the portfolio, including in the newly acquired and integrated brands. Operationally, we are in a stronger position with much of our change agenda complete.

5:03 This gives us robust foundation we need to meet growing customer demand. The one operational project of scale in half two is adding our second can line in our Milton Keynes factory, which will further support our brand commercial ambitions. This project is progressing well. With our brands performing well, our operational footprint secure and our investments landing well, we are confident in our plan and achieving the full year expectations. I'll now pass to Stuart to take you through the financials. Thank you, Ewen. Today, I will start with a review of what the business delivered in the first half of twenty twenty six, twenty twenty seven, a period where we continued to make strong financial progress. I will conclude with an outlook for the second half of the year before handing back to Ewan to provide some highlights on business activities and plans.

5:52 Starting with our standard financial scorecard, we will cover many of the metrics on subsequent slides, so I'll only call out a few headlines here. I believe the scorecard demonstrates another period of strong financial results. Revenue grew 8.5% to 247,400,000 led by our acquisitions and core brands and despite around £10,000,000 impact from supply constraints that had a temporary but significant effect on service. In a period of significant change, we maintained a strong and sustainable operating margin of 15, and we are on track to deliver year end ROCE within our target range of 19% to 21%. Revenue growth and sustained operating margin were partially offset by higher interest costs, resulting in profit before tax growing 2.6% to 36,100,000 Gross margin was diluted by the impact of recent acquisitions as well as corrective action to support service recovery.

6:52 We are forecasting a stronger gross margin in H2 as integration synergies and improved operating efficiencies come through. We will cover the balance sheet and cash flow in a moment, but our $47,000,000 net bank debt is in line with our expectations and reflects the active deployment of our balance sheet over the past twelve months on acquisitions and CapEx as well as normal working capital phasing relating to summer trading. Combined with continued market share gains, encouraging innovation and the actions taken to resolve the supply challenges, we entered H2 in a strong position and remain confident in delivering market expectations. Looking now at brand revenue performance, where our core soft drinks brands continue to underpin the performance of the group.

7:38 Ewen will be providing more insight into our brand activities in a moment, so I'll only share a few headlines. I Am Brew remains our largest brand, accounting for 29% of group revenue. While revenue was broadly flat in the period, the brand exited H1 with encouraging momentum, supported by continued brand activity, good performance in England and promising growth in Ion Brew Zero. Rubicon, which represents 19% of group revenue, delivered 1% revenue growth, supported by continued brand investment and new product development. Once again, Boost was a standout performer, delivering revenue growth of 8%, reflecting continued penetration in convenience and grocery and the expansion of the brand into healthy hydration through the successful launch of Boost Water Plus.

8:29 Within portfolio brands, which represent 29% of the group, revenue was down 6%. This primarily reflects softness in Funkin' and BARR brands and necessary portfolio prioritization during the summer supply disruption. Finally, Fentimans and Probuchers accounted for 9% of revenue in the period and drove our overall growth. With both brands now fully integrated into the company, our focus is firmly on realizing the commercial and operational opportunities we can bring to these brands. Overall, the mix of our portfolio continues to evolve. Our overall portfolio is in robust health and well positioned for growth in H2. Turning now to cost and margin on Page 11.

9:16 We are not immune to the external cost headwinds affecting UK businesses. Energy costs, supply chain disruptions, environmental regulations and government revenue raising actions are all recognized challenges. We have been proactive in our response to these cost pressures, strengthening resilience and locking in certainty where possible while ensuring we protect growth capability. We have upweighted our procurement team and created more optionality through dual sourcing of key materials and putting in place a robust co packer network to provide additional capacity during peak periods. We have continued to drive efficiencies in our cost base with our ongoing program of manufacturing and sourcing and effectively integrating acquisitions at pace.

10:04 We are continually balancing margin protection and growth opportunities and are pleased to report sustained 15% operating margins while progressing our strategic agenda. Looking forward, the external outlook remains challenging, and we expect that current inflation, interest rates and oil pricing will stay high for longer. It is therefore important that we continue to manage costs on multiple fronts. Our hedging program and contract management continue to provide cost visibility over the medium term. We have long term contracts in place for cans, electricity, water, CO2 and other key materials. We have hedging cover for major commodities like aluminium, PET and sugar, and we have full hedging cover for the balance of 2627.

10:50 We are in the process of building our hedge position for 2728, albeit at more elevated pricing levels. Looking now in detail at our cash flow and cash deployment. We started the year with £41,600,000 of net cash and generated £33,900,000 of profit before tax during the period. The major operating outflows during H1 was the increase in working capital in support of trading activities, a combination of trading seasonality and the timing of the final month end payment run following in the H1 period this year. Last year's H1 close date was the July 26. This left us with a preallocation cash position of $33,900,000 at period end.

11:36 Our capital allocation remains aligned with our well established framework. CapEx at twenty three point four million pounds reflects what is a peak investment year for the group, including around £10,000,000 at Cumbernauld, where we complete its multiyear refresh program, 10,000,000 at Milton Keynes as we commence its expansion plans and £3,000,000 relating to Innate Essence, where we are insourcing high pressure processing capability. M and A spend of $40,500,000 related to the Fentimans acquisition, which completed in February. And we are pleased to continue our progressive dividend program with a $17,000,000 final dividend paid in June. As a result of these investments, we closed the period with $47,000,000 of net bank debt.

12:21 This reflects the deliberate and active deployment of our balance sheet to support both organic and inorganic growth. It remains comfortably within our leverage target of up to two to 2.5 times EBITDA, and we have significant debt capacity headroom. While M and A continues to be a core element of our long term strategy, we are not currently in any processes, and we do not foresee any specific opportunities in the near term. We are a strong cash generating business with a clear, consistent and disciplined capital allocation framework backed by a robust balance sheet. On my final slide, Slide 13, I'd like to remind you of our financial framework and confirm our expectations for the full year.

13:09 As set out previously, we have a simple and well established financial framework, which aims to deliver strong, consistent business growth and returns for our shareholders. The three key metrics we target are revenue growth of at least 4%, operating margin between 1416% and ROCE of between 1921%. Following a good first half, we remain on track to deliver against all three metrics. We expect revenue growth for the full year to be around 10%, driven by recent acquisitions and supported by improved trading in H2. Operating margin will be slightly above H1 performance as integration and insourcing synergies more than offset inflationary pressures and the incremental cost of service remedial actions.

13:58 ROCE is expected to be within our guided range, albeit at the lower end as acquisition costs and expansionary CapEx come onto the balance sheet, with the full benefit of these being realized over the coming years. Additionally, we expect to have a net bank debt position of between 10,000,000 and £20,000,000 by year end as working capital phasing unwinds and the business continues to generate cash. As previously communicated, this is a peak CapEx year, and we expect cash CapEx of approximately £40,000,000 Lastly, we expect around £3,000,000 of adjusting costs, primarily related to the nonrecurring integration of Fentimans. All this ultimately translates into an expected PBT performance for the full year of between £71,000,000 and £72,000,000 in line with market expectations.

14:51 The twenty six-twenty seven plan and indeed our whole operating model are designed to deliver consistent top and bottom line growth while ensuring we have the brand's capability and capacity to sustain this growth over the long term. With the progress we have made in the first half and the actions now in place, we remain on track to deliver our full year expectations. With that, I'll hand back to you. Thank you, Stuart. I'll now explain in more detail the progress we have made towards our strategy. Overleaf, our framework and commitments are unchanged. There are strong proof points of progress starting to appear, which I want to highlight over the next few slides. I want to cover growing portfolio scale, core brand growth, especially in England and Wales and into the main grocery soft drinks aisle, value for money and incremental pricing headroom, early distribution gains in key customers, integration, DRS and supply chain investment.

15:51 We have confidence in our strategy and are focused on execution. Our objective is to create a strong and consistent flywheel of growth. We are confident we have the right growth platforms and enable us to deliver our targeted financial outcomes consistently across the years ahead. Turning to Slide 16. Our portfolio strategy is focused on building a broader and more balanced portfolio, which has the engines for long term growth across multiple market segments. In the last two years, the portfolio value of AG BARR has significantly increased. At the heart of our business is everyday refreshment. This core pillar, led by core brands, Iron Brew and Rubicon, provides us with significant scale and deep consumer resonance.

16:38 At only 3% UK market share, we have significant growth headroom, and our strategy is focused on maximizing that. Alongside this, we are intentionally increasing our participation in the high growth daily performance space, which spans energy, sport, and functional drinks. We are unlocking the highly attractive structural growth here as consumers increasingly pivot towards functional benefits and healthy hydration. Our third pillar, elevated experience, stretches our presence into premium occasions. This segment represents a significant long term opportunity, which we have materially accelerated through the acquisitions of Fentimans and Frobishers. Crucially, these segments target distinct consumer needs and separate occasions, ensuring no portfolio cannibalization.

17:29 Turning now to the highlights from our commercial progress we've made across our core soft drinks brands. Starting with Iron Brew. The brand is experiencing growth driven by two key priorities: expanding in England and accelerating the rebranded Zero variant. A major milestone in the first half was our highly successful summer football campaign, designed to increase penetration in both Scotland and the rest of The UK. It did exactly that, with the System one market research platform ranking Ironbrew as having the most effective World Cup advert after it achieved over 5,000,000 views on YouTube, 58,000,000 impressions, and even an endorsement from the mayor of Boston. We also completed the rollout of the IronBrew brand refresh in quarter one.

18:18 Since being rebranded, IronBrew Zero has performed strongly, delivering 7% revenue growth and 10% RSV growth in the period as consumers increasingly recognize it as Ironbrew's lead zero sugar alternative. Ironbrew's expansion into England also continues with 7% RSV growth in half one, underpinned by a strong 19% RSV growth in zero. We continue to view England as our primary scale opportunity for IronBrew, and these results give confidence our strategy is working. On Rubicon, our focus is to increase the brand's mainstream presence supported by the recent brand refresh, high quality marketing execution, expanded distribution and continuous innovation.

19:05 Our main soft drinks aisle strategy is delivering strong results, yielding 16% RSV growth in sparkling with 13% RSV growth in mango sparkling and distribution of our new tropical and cherry variants into major grocery customers. Innovation is also a core engine of growth for Rubicon's growth, and the new range of twists and dilutes are delivering £2,000,000 of incremental revenue in half one, backed by important listings across both Tesco and Sainsbury's. We continue to see significant growth runway for Rubicon. Thirdly, Boost continues to carry strong growth. In half one, we saw 6% RSV growth in Boost Energy and an outstanding 24% RSV growth in Boost Sport.

19:53 Crucially, we are starting to convert this demand into valuable grocery distribution gains through customers, including Co op and Morrisons. On innovation, Boost Water Plus has made a great start, outperforming our expectations to generate £3,000,000 of incremental revenue during the period. This is more impressive considering it is currently only in the in the symbols and independent convenience channel. Further growth in Boost Water Plus is a sizable opportunity for half two and for twenty seventwenty eight. We expect Boost to continue to be a key growth driver for the group. Whilst we don't detail Funken's performance on this slide, I want to call out that it continues to show a sales decline with challenges in both on and off trade parts of the business.

20:42 However, it's also important to note that the brand's profitability has been significantly improved over the recent years through full integration into AG BARR with the brand now broadly in line with the group's operating margin. Moving on to Slide 18, I want to highlight our approach to brand pricing. As you can see, even after retaking price over the last two years, we have clear price headroom versus key competitors across our core brands. Looking at the data, our Ironbrew and Rubicon 500 ml products sit at an accessible £1 29 below key category comparators like Coke Zero and Fanta. We see a pronounced competitive advantage within our functional ranges.

21:27 Boost 500 mil energy propositions at one pound compared with Monster at one pound 75, while Boost Sport offers incredible consumer value at one pound compared to POWERADE and LUKAZADE. Structurally, this position delivers three critical benefits for the group. First, it maximizes our value return while maintaining our market competitiveness, especially as we have in sourced production. Second, it ensures an accessible price point for consumers against those premium benchmarks during a tighter economic climate. And finally, as we continue to grow our brand equity, this gap creates significant pricing headroom and flexibility for us moving forward. This highly resilient position that protects our volume whilst leaving us well insulated for the future.

22:18 Our confidence over future revenue growth is provided by several indicators, which we are showing positive progress on. Firstly, distribution of our brands is up year on year by 15% across grocery and convenience. We are winning additional space in our customers. Secondly, our sales team has worked hard to deliver improved in store execution, and we are seeing the fruits of this with brand displays up over 20% on our two biggest brands. These factors have driven higher penetration with double digit growth in the number of households buying Iron Brew, Rubicon and Boost, all of which pays into a stronger brand equity with consumers. In our recent YouGov survey, Rubicon and Iron Brew were first and third in in improved consumer consideration when buying your next soft drink.

23:07 Lots of positive lead indicators for us to build on in half two and beyond. Turning to value creation from acquisitions, where we have a clear and proven model for integrating brands into AG Bar and unlocking value over time. Boost is the most established example of that model. Since acquisition, we have successfully integrated the business, delivered cost synergies and accelerated commercial growth while gradually bringing production in house. This has given us a strong blueprint for how we approach our acquisitions, and we're now applying this blueprint to Fentimans and Frobishers. The integration of both brands was completed in half one twenty twenty six, 2027, in line with plan, with expected overhead cost synergies coming through in half two.

23:55 Half two also provides us with the opportunity to start realizing commercial growth synergies as we leverage our brand building capability and larger sales network to deliver growth. Beyond this, we see further value creation with Fentimans through bringing manufacturing in house in early twenty twenty eight. Frobisher's manufacturing is optimized at third party co packers, and there's no plan to bring this in house at this time. So while each brand is at a different stage, the model is consistent. Eliminate duplicate costs, leverage AG BARR sales, brand and innovation capabilities to drive growth, and where appropriate, bring manufacturing in house to reduce costs. This creates a flywheel of improving profitability and reinvestment, supporting further growth across the portfolio.

24:45 On Slide 21, I want to address the upcoming regulatory landscape, specifically our readiness for The UK deposit return scheme. Planning is already underway across the group for the October 2027 launch. As a brief overview of the scheme mechanics, consumer was will pay a 20p deposit on all plastic and metal drinks containers sized between 150 ml and three liters. Looking at the potential impact on the market, we've analyzed the data and learnings from the Irish scheme launched in 2024. Based on that rollout, we anticipate some initial short term disruption as producers, wholesalers, retailers and consumers adapt to the scheme. However, we expect limited impact on volumes over the longer term and anticipate any temporary impact to have normalized out by early twenty twenty eight.

25:37 It is likely the market will see some consumers shifting towards higher volume per unit packs, such as the two liter format. In terms of AG BARR's preparations, we are in a good position at this early stage. A key element of the project is the execution of the large scale SKU label change program as the new DRS logo is added. Financially, we estimate a one off implementation cost alongside a potential small adverse impact on working capital related to deposit cash flows. We will continue to update the market as the scheme preparations alongside our own progress towards launch later next year. Through the work we've done to date, we believe we are well positioned to navigate this transition smoothly and protect our market position.

26:27 As we continue to build our supply chain capability and capacity, I'm pleased to report that our major CapEx projects at Cumbernauld and Innate Essence were successfully completed in the first half. At Cumbernauld, our new high speed can line is now fully commissioned, delivering a significant step change in our core volume capacity. Alongside this, we've added new PET sleeving capability, which allowed us to in source Boost Sport and boost Water Plus volume from the end of half one. Moving to Innate Essence. The investments in the new high pressure processing equipment is fully implemented, unlocking manufacturing efficiency and capacity within our functional portfolio. Finally, our Milton Keynes site expansion is progressing well, including the installation of a second independent can line, which will step up both our capacity and technical capability from early twenty twenty seven.

27:19 Importantly, this site expansion paves the way for our planned boost energy insourcing across twenty seventwenty eight financial year. From a financial perspective, our CapEx guidance is unchanged, £40,000,000 this financial year dropping significantly to around £30,000,000 in twenty seventwenty eight. Structurally, these investments mean we are systematically moving away from third party reliance, driving improved product margins and providing the business with long term growth capacity. Now to conclude with a summary before moving on to your questions. In the first half, we made significant strategic headway across each of our growth platforms, backed by robust underlying financial performance.

28:05 Importantly, we have resolved the short term supply chain constraints that impacted our Q2 performance. The operational changes are now embedded, and our half two performance is tracking to plan. As I outlined, our preparations for The UK deposit return scheme are at an early stage but well progressing. We have good understanding on the likely market and business impacts as we execute our road map towards the 2027 launch. Our in market performance in the first half gives us increased confidence to commit to our full year delivery of market expectations. While there remains plenty to deliver in half two, we have a disciplined plan, a resilient business model to back it up, translating to a full year results of approximately 10% revenue growth, a circa 15% operating margin and a circa 19% return on capital employed.

28:57 Looking beyond the current financial year, we are, over time, building a stronger, broader and more resilient AG bar. Through our broader brand portfolio, which has multiple routes to growth and our greater manufacturing capability and capacity, we have the building blocks in place to support sustainable long term growth and strong financial delivery. Thank you very much. We'll now open the room to take your questions. 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, I will just bring you up on camera for the Q and A. And we have received a number of questions. So perhaps if we dive straight into it. And the first question that we have here asks, are your medium term targets unchanged?

29:43 Perhaps if I jump in and take that, yes, absolutely. We are recommitting not only to the year end, but also to the medium term targets. We've got a very clear flywheel of growth that we're establishing. I'm, I guess, more confident now despite some of the short term supply chain issues that we've had in quarter two that we can deliver that in the years ahead. So I think, as I said in the summary, we've got a stronger AG bar, and I think we're able to capitalize on that in the years coming. Perfect. Thank you. We have a question here asking how confident are you in achieving full year revenue guidance? I'm very confident. We we stated that yesterday. Clearly, we lost some sales with the short term supply issue that we had in quarter two. We're seeing good availability and better customer service coming through every single week.

30:38 We believe that will be back up to where we needed to be at the end of quarter three, so leading us into a good place for quarter four. We've got strong demand as we've also tried to show in the presentation around the market share gains that the brands have made. So, yes, we're in good shape. Perfect. Thank you. What did the Fentimans and Frobishers integration actually involve? Do you want to handle that? Yeah. Sure. It's a very normal integration whereby and we take ownership on day one, So involved us putting an AG BARR team into the Fentimers organization, working with the team there who were excellent and very professional, I would say.

31:24 And over the last six months, we've been working with that team to transfer the brand into the AG Bar ownership and network. That means both the physical, logistics and warehousing, but also the marketing and sales and brand building. So as of now, the fact that the Fentimans brand is part of the AG Bar portfolio, the, old Fentimans organization has been disbanded and exited, and it's now our job to make sure we can build the brand, grow it, and take it forward. Thank you. And perhaps just sticking with those acquisitions, we have another question here asking, how much of the h one revenue was due to the acquisitions of Fentimans and Frobishers? I would look at the the revenue in the the first half into three segments. The first segment would be the core brands, Ion Brub, Rubicon, and Boost. They were all in growth that we showed in the deck, so a combined growth of 2% to 3%.

32:24 Then there was fentiments and publishers, which delivered about 8%. But underneath both of them, unfortunately, we had a decline in Funkin and the BARR brands, which were down in total, the portfolio brands were down 6%. So when you bring all that together, that's where you get our 8.5% growth. Thank you. We have someone asking, given the lack of obvious synergies with soft drinks business, what is the rationale for owning Funken and MoMA? Perhaps if I take that one. Look, I I I think that both businesses are noncore, and we're seeing very good growth from our core soft drinks portfolio. And we have clear growth plans around the core brands growing with penetration headroom. Lots of good innovation landing so far this year and a clear plan to drive m and a.

33:18 Both businesses are now profitable. Mama is in good growth. As Stuart said, Funken has had sales declines over the last three to four years. The profitability of Funken is actually good. It's at the company operating margin level, and we've significantly improved the profitability of Funken. That said, we have to think about where we focus our time, and, clearly, we've got good momentum within core soft drinks. Probably, we've got good momentum in Mama. We've got work to do in Dunkin'. So we continue to review those brands as part of the portfolio. Thank you. Just turning to the next question. Where do you see the strongest potential to take margins above 15% as current cost and investment pressures unwind?

34:08 If you look at the portfolio, 15% is across the whole portfolio. So already, we've got a number of brands that are well above the 15%. You know, iconic Ion Brew and the Rubicon, they deliver strong stronger than 15%. We've also got challenger brands and and more development to like, Mama and Boost, etcetera, which are below the 15%. So the 15% is an aggregate. We believe that we can grow that over time. Our choices right now, we invest margin into growth because we see that the runway in top line growth is attractive and worthy of investment. So over the medium term, we're saying 14% to 16% is the right balance between margin and profitability and reinvesting for long term growth.

35:04 Thank you. You have considerably increased CapEx since joining the business. Did you inherit a business that you considered underinvested? And what would you consider a medium term level of maintenance CapEx to be? I I think that we've been really sensible in the in the CapEx deployment that we put into the factories, and we're seeing the benefits of those coming through. We had a very clear plan over the last three years that we needed to upgrade the Cumbernauld factory and expand out the Milton Keynes factory. The Cumbernauld factory is twenty seven years old, and therefore, part of that CapEx was replacement, but part of it is also expansion and capitalizing on the on the benefits of newer production lines that are now available that weren't available back twenty seven years ago.

35:56 So I think it's a combination of those. I think we are in peak CapEx year, and that will leave us this year and next year very well set for the growth plan that we believe that we can deliver over the medium term. So I'm really happy with where the CapEx is now. I think it's being deployed very sensibly. I think when you get down to a maintenance level of CapEx, we're talking probably $2,025,000,000 going forward with the size of the estate that we've got. And we I guess we've always said that our CapEx would be lumpy. So if we get to a point where fifteen years have passed and we need to replace a new production line, that costs probably between 20,000,000 and 30,000,000. So that could be into the 2030s that we have additional years where there will be slightly more than that long term guidance.

36:46 Thank you. And perhaps one final question that we have here, which asks, what was the like for like growth rate in h '1? It was broadly flat. If you look at it, the the like for like, remembering that we had sentiments and publishers this year delivering about just under 8%, so probably about 1% from the core portfolio. I think the important point to kind of state in that is as as we've stated, we believe that we lost about £10,000,000 worth of sales across the board from the supply chain issue that we had in quarter two. That equates to about 4% of like for like growth. So if you strip that back out, we're probably in a place that was kind of four to 5% underlying.

37:33 We're certainly seeing good growth as we've gone into half two as those issues have now been resolved. So a slightly artificial depression of the like for like estate in quarter two, which kind of depressed the overall half. That's great. And thank you very much indeed for addressing all of those questions that came in for investors this afternoon. 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 just for you to review. 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 the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great. Well, firstly, thank you very much for making the time to be on the call. We're very happy to meet one to one if there are more questions and more details that would help in doing your numbers.

38:24 Clearly, we are very confident that we are building a stronger AG bar. We've got good momentum in the marketplace, strong market share. We believe that supply chain is very short term, and we're coming out of that strongly. And we look forward to updating you again at the end of January. That's great. Ewen Stewart, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected 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 evening to you all.