Costain Group (LSE:COST) — Q&A session relating to the 2023 Full Year Results

0:00 Good morning, and welcome to the COSTIN GROUP PLC Q and A session relating to the 2023 full year results. Throughout this recorded Q and A session, investors will be in listen only mode. Questions are encouraged and should be submitted using the Q and A tab situated on the right hand corner of your screen. 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 publish responses where it is appropriate to do so. Before we begin, I would

0:32 like to submit the following poll. And I would now like to hand you over to Investor Relations Director, Paul Sharma. Good morning to you. Good morning and thanks very much and welcome to the Investor Meet question and answer session. With me today, I have Alex Fawn, the CEO and Helen Willis, the CFO. Before we start, just a couple of things. You may have seen that we we do publish our consensus now on the website, and we expect that to be updated next week once we have the results from some of the analysts to come through to me. And secondly, I'd like you to go to the slide two and just note that we have a cautionary statement, and this is also on page 33 of the presentation and also on our r and s.

1:19 So now I'd like to pass through to Alex Horn, who is our CEO for some introductory statements, and they'll be followed by Helen Willis, our CFO. And Alex will be covering some of the top line points from yesterday and also our preferred book and order book status, and Helen will be covering off some of the issues regarding the pension. Thank you, Alex. Thanks, Paul, and good morning, everyone. Thank you very much for taking the time to join this call, and we look forward to receiving any questions that you may have. If I if I just sort of reflect on the results for 2023, you know, we're really pleased with the continued momentum that we've built in the business over the last few years. It's another strong financial performance for the business, and it is ahead of the market estimates that were out there.

2:12 And if we look at it from an adjusted operating business point of view, which I think is the right measure to look at the underlying performance of the business. We've had a 10 and a half percent increase in the operating profits of 40,100,000. We've now broken through the 3% delivering on a margin basis, adjusted operating margin of 3%, and we're on track to meet the margin targets that we published for 2024 and 2025. And I think something that's a real feature of the business today has been the cash generation, and we've had a 30%, which is a 40,600,000 increase in the net cash balance of the business, and the business now enjoys having a cash balance of a 164.4.

2:58 So a really strong set of results. And I think with that momentum, we look forward with a lot of confidence to the future of the business. We have a forward workload, which is now three times the revenue that we have, of the annualized revenue of the business. We've had a number of notable wins, extensions, and growth on secured frameworks that gives us a really positive outlook across across the whole business, and we're very busy tendering work at the moment. So, you know, the forward the forward momentum of the business is really growing. And if I look at, you know, what's exciting about the future is that COSTIN is operating in critical long term investment markets,

3:45 and our markets represent the critical national needs that The UK has in order to drive economic growth, deliver positive social change, and meet the the decarbonization targets that The UK has. The National Infrastructure Commission recently published its second national infrastructure assessment that turned around and talked about the infrastructure that is critical to be invested in. And the government recently published its construction pipeline highlighting over £700,000,000,000 worth of investment over the next ten years. You know, and we've purposely positioned our business to work and deliver under those major investment programs, and we've got good long term visibility in those markets. So it's a really exciting space for us.

4:35 And we've made we've made some really good progress on some of the strategic priorities that we've got as a business. If I look at that £3,900,000,000 worth of work that we've got secured and the quality of the tech work that we're tendering at the moment, it's of a really good quality, lower risk, higher margin. And I think that's demonstrated by the fact that we're delivering 3% margins already today, and we've set out the targets of of where we're going. The group is also very positively positioned in significant growth markets. So if we look at water and energy, both of those are gonna go through existential growth going forwards to meet the challenges that that that we have for them. And if you looked at that, that's only 28% of the business today. So we for for us, it's gonna become a very significant part of a larger business as we move forward and presents, you know, a very exciting opportunity for us.

5:33 And we've also been very successful in building a much stronger, broader tier one customer mix, which brings great resilience and balance to the business. So we've been, you know, rather than being very focused on an HS two program, which is going really well for us, you know, we've been growing our positions with other customers, including Heathrow and Transport for London,

5:57 Manchester Airports Group, just to name a few. So, you know, we are building a really strong, resilient, and balanced business, and we're very excited with what's gonna go ahead. So I look forward to any questions that that you've got around that, but I'll hand over to Helen to talk about some of the financial highlights. Thanks, Alex. Good morning, everyone. So I've just been focusing on cash and and the pension, as Paul mentioned, and the impacts on on dividend. And I hope I can bring some clarity to that for you, but welcome any questions if if I haven't managed to do that. So on cash, really strong performance for the year, as Alex mentioned, a 164,400,000 cash at the end of FY '23, 40,000,000 up on the previous year end.

6:45 And that's split into two parts as cash that we hold in in joint operations of £59,000,000 that is COSTIN cash still, but it is held separately, and a 105,000,000 of of of cash in in our own bank accounts.

7:01 Really consistent performance through the year. So we report average month end net cash, and we've just introduced a new measure measure of average weekend net cash. And both of those are a £141,000,000. So you can see that that is is is steady throughout throughout the year, and and it's a a clear indication of how, consistently we pay our our suppliers, which is really important for us. And I pulled out in the presentation yesterday that we are still one of the top top fastest payers in construction, and we we we view that as very important for our supply chain and and it's a really key part of us securing the best possible supply chain for for the work that we do. So really strong cash, building, year on year.

7:48 I'm I'm really pleased with how that's how that is moving. That, of course, strengthens the balance sheet and gives us plenty of options, in terms of where we would like to to invest at and indeed for dividend.

8:00 So just moving on to dividend, we introduced dividend at the half year, and we are hoping to pay 0.8p the full year as we announced. There's a natural ceiling of about £3,300,000 to the dividend, and this comes from something called dividend parity, with the pension scheme contributions. So I'll just just explain what happened with the pension scheme negotiations this year and and hence hence this ceiling of 3.3. So we agreed the triennial valuation with the pension scheme during the summer of twenty three and managed to significantly reduce the contributions from about 12,000,000 to about £3,000,000 per annum. So that's a really nice uptick to our our cash, and that became effective in July of last year. So that in itself was was a really good move forward.

9:00 But in in years years gone by, we had agreed a dividend parity between the pension and the dividend, which means that any dividend paid must must be matched with by contributions into the pension scheme. So at the minute, we have annual contributions into the pension scheme of £3,300,000, and therefore, we're choosing to pay dividend at to the same level. Any additional dividend that we would pay would have to be matched into the pension scheme. The really important point though for us is we also managed to agree an annual check with the pension scheme. So each March, there's a test that's done.

9:45 And if at the point of that test, the scheme has tipped into an actuarial surplus, and we believe we're close to that, the following year's payments to the pension scheme would pause, so we wouldn't have to pay the £3,300,000. And, importantly, the dividend parity for that future year would pause, and therefore, we wouldn't need to make any dividend matching payments into the pension scheme. And so that gives us much more flexibility in team in terms of potentially increasing the dividend or potentially thinking about other other types of dividend. So that that's a really important point for us. It gives us flexibility, but we will have to carry out that test if every year.

10:32 I think that's probably all I'd like to pull out at this stage, but very to take any questions that might might help to give further clarity on on that. I'm gonna hand back to Paul. Great. Thank you, Alex. Alan. So there's actually quite a few questions come in. So I'm really just gonna start at the top with a chronological order. This will work way down. So there's quite a few questions from John h. So first one's basically asking about, given more than 1,000,000,000 of business secured for '24 and the volume of bidding and tendering you have,

11:01 can we expect to do a revenue increase for '24?

11:05 Well, thanks very much for the question, John. We certainly got a really good solid volume of work. I think naturally, we're probably expecting and guiding a slight reduction in revenue for '24, and that really is us being very cautious around, you know, as we move into the election, the sort of cycle around decision making, and that we just we just feel that we need to be very prudent from that side. However, know, we do see operating profit profits should increase, and, you know, the opportunities are building that we'll then see as we get through then into the next parliament, we'll have we'll have revenues increasing. And also from John, Balfour Beatty's numbers were out this morning, and they were discussing about UK power transmission and distribution starting in '25. Do think that's a they think it's a good big growth area.

12:01 You know, do we think it's a growth area? Are we positioned in that area? Yeah. Well, again, another great question, and we certainly see the whole energy space as a significant growth market. And, you know, yesterday, we saw the government make announcements around gas energy generation, you know, COSTIN's core capability has come around from gas process engineering. And we're very active with BP on carbon capture and then, you know, working with another number of energy companies around hydrogen, and and we certainly see opportunities in the electrical transmission market as well. So I think that marketplace is very exciting. We're very well placed, and we look forward to taking advantage of the opportunities there.

12:46 So this is really a question for Helen. It's on the operating margin. So the second half operating margin adjusted was 3.8. We basically said we're gonna be achieving a run rate of 3.5 during f y twenty four. So, basically, any reason why we can't be getting to 3.5 and and this John didn't ask this question, but some analysts have been asking, you know, can we beat 3.5 in in FY twenty four? Thanks thanks to John. It's absolutely the question. We we issued the milestones this time last year and came to show our confidence in in the margin progression. We did use the the terminology of of three and a half percent during FY '24 and four and a half percent during FY '25. Clearly, that's a run rate.

13:35 Yes. We we hit 3.8 in the second half of of of FY '23. I think it's important to note that the half one, half two split, typically, we will recognize more more profit and and and hence, higher margin in the second half of any any year as as we move through the year and are progressively more confident in in contract outturns. So I think it's important to look at the f y twenty three full year number of 3% and compare that to the milestone of of three and a half. But I guess what I take from it is that we are doing all the right things to move us up up that margin walk and and and moving in the right direction, and three and a half percent during FY twenty four feels for absolutely feels achievable.

14:24 This is another question for Helen. We're talking about one off costs. So, basically, a $3,030,000,000 of transformation costs, etcetera, in '23. Just say, obviously, we report both adjusted and

14:36 and and reported EBIT. Mhmm. FY '24 is gonna be 5,000,000 of transformation restructuring cost. That's in the r and s. So the question is, assuming that's the case, will the statutory accounts for '24 be much more aligned to adjusted figures than it was in '23? The answer to that is yes. So we have pulled out the adjusting items as a a for '22 and f y twenty three on page 10 of the presentation just just for your information and and in the RNS. We've been driving the transformation program over the last two years, and f y twenty four will be the last year of it. As Paul mentioned, we've we've pulled out in the RNS that we expect about £5,000,000 of of adjusting items as we as we come to this final year of the transformation.

15:26 And therefore, the difference between the adjusted profit number and the reported will be that 5,000,000 and therefore much closer. When we get to f y twenty five, they should be very, very tightly aligned. We we we anticipate that those adjusting items will be absolutely minimal. The next question is also from John h. Helen did cover this in her her kind of intro, but maybe we're just asking this again. Is it correct the review of the pension level for the pension scheme is due to be funded imminently? And and the answer to that one is is yes. If so, should the funding level exceed the 101% threshold? Is there a prospect of a special divvy given this suddenly low share price? So if if we do exceed and took into actual surplus, it gives us scope to consider those options, and that will be something that we will discuss as a board. And we absolutely recognize the the the importance of coming back and talking about that. Yep.

16:29 And this is really a follow on question just to have from from Daniel d. In the probable event that the surplus scheme is in surplus, can you talk about the capital allocation priorities in terms of dividends versus buybacks? So if you are on surplus and we've got a pension holiday,

16:44 you know, would we choose to basically do some well, do nothing, do a buyback, or or or do a special dividend? So our capital allocation policy, we're we're we're very clear that we are prioritizing investing in the business to drive our strategy and our growth, and that's demonstrated, for example, by the investment in the in the transformations we've been talking about. We are spending CapEx as well as we as we digitize the company, so we are investing in ourselves in in that regard. And we're of course, we've reintroduced the dividend. So we are making sure we're considering how

17:24 we how we allocate our capital across all of those requirements. If we tip into surplus, obviously, that that will allow us to to to think again in terms of of of dividend away from this natural ceiling that we currently have as a 3.3. And this is a really more for Alex. So when Alex stands up, he discusses, you know, how the world of business is doing and the activity we're seeing.

17:48 Can you give us some idea of when you might see some contract wins? We we see contract wins from Kia and Gala for Tri. So, you know, what what cadence of RNSs do we expect to see, you know, from now till the to love next results, basically? Yeah. A really good question. And, look, we've we've obviously enough made some announcements on some wins sort of this year or last year, which which has been really pleasing, but I think, you know, we expect to be making further announcements. So over the next six months, we should be making announcements around energy, the progress that we're making there, around AMP8 in water, building on the Northumbrian water wind that we had at the beginning of this year.

18:34 And also then, you know, looking at some of the rail projects that we're tendering at the moment and and the fact that we're in the procurement cycle on those. So we would expect a number of announcements to come through. I think it's also you know, one of the other things that we're very good at is that we unlock opportunities from the frameworks that we've already secured. So we've got large number of frameworks that we've secured, and we are, every single month, unlocking opportunities from those that we don't publicly disclose. So, you know, contracts for people like Transport for London, for Heathrow Airport, you know, people like that, you know, we're unlocking that. So but to come back to your question, you know, you can expect as we come through the next six months to see a number of awards coming through.

19:21 Next one is from Colin Sea. So given the adjusted operation profit increase of 10.5% and the significant net cash balance increase, What specific strategies or initiatives do you attribute these to? And how do you plan to sustain or enhance these results moving forward? I mean, one for Helen, but just to say also, as I mentioned in my intro, we will be doing a publishing consensus probably middle of next week, towards the end of next week. Now we'll give you some some more numbers to kinda hang a hat on as well about one there. So I guess the the top top line, Alex has has just spoken to some of the sort of interesting, exciting opportunities as we as we work through our work winning and bidding and building the order book for the for

20:08 the future. In terms of the profits and the margin, we've been working very hard over the last few years to to drive operational excellence through the business and and much better risk management and assurance. And I think you can see the the the sort of proof points of that is is the improving margin to to three percent and and three and a half percent in the second half. So everything we're doing is improving the performance in in our contracts

20:38 and controlling our costs and and hence hence, the 40.1 of adjusted operating profit and that that 10 and a half percent increase. So we will continue that work, which will drive us forward in in in better operational excellence in more efficiencies, being more effective, and hence hence, pushing the margin up and and indeed the operating profit in due course. And we do have to be wary of the the timing of some of the contracts and so on and and hence the shape of of the top line that we've we've talked about. And you will see some the the consensus coming through, as Paul said, that will give you some more clarity on that. But we absolutely think this is just this is just oh, I can't speak. Sustainable.

21:24 This is from Mark Ellis for Helen. Can we clear with the with the cash balance how much is unencumbered group cash, contract prepayments, and how much is needed to give customers comfort and confidence in the business in the

21:40 long term? So so how much cash is unencumbered? How much is contract prepayments? And how much is needed to give customers comfort, you know, in in the business? What cash level do we need to think we need to have, basically? So the cash is is unencumbered apart from the joint operations cash as I as I already mentioned. It's it's our cash. It's on deposit. We're earning interest from it. There aren't prepayments. We we do call out in the in the presentation in the r and s some working capital positive timing differences of about £25,000,000, but that really is just the difference between receipts and payments on a on a fairly regular basis. I think the shape of of of the industry has changed over the years, and and and what was more typical a number of years ago with advanced payments is is not not no longer the case.

22:35 So that cash is our cash. Our balance sheet is is is very strong. Certainly throughout my tenure of three years, the balance sheet and the and the levels of cash hasn't hasn't curtailed any bidding activity. So we we are we are absolutely in the right place and unable to think about where we use that cash as as I was just mentioning earlier. This is Nigel, and it's also a working capital question. So the year end cash position was enhanced by working capital. As as Helen mentioned, we've got 25,000,000 of of working capital positive working capital there. Are you able to quantify how much would have been on a usual working capital position? Are there any plans to return some shareholders the cash given the large amount of cash we have in the business? And that also probably relates to the question of the dividend matching scheme as well, isn't it? Absolutely.

23:26 So so I think if you if you look at that cash balance, the the month end and and weekend average cash of 141, I suppose that that sort of gives you a clear indication of of of cash levels throughout the year. Absolutely. It's it's the the point that we have a very strong balance sheet. We have strong strong cash balance. We've repaid our term loan, so we are able to think about where we use that cash. But there is this sort of natural ceiling, as I mentioned, at the outset of 3.3, which is the annual contribution into pension scheme. If if we were to pay more dividend than that, we would have to put more contribution to pension scheme and and and and that would be that would be that would be sunk.

24:12 So, absolutely, we can think about the level of a dividend, and we can think about buyback and and specials, but that will be something the board needs to consider as and when we do tip into surface. This is one for Alex. That's from Steve and Kay. The forward work position is described as high quality around three times f y '23 revenue. Can you discuss the criteria used to evaluate quality of the work and how this forward work aligns with the long term strategic goals, especially concerning diversification and risk management? Yes, Steven. Good question. Yeah. So, look, in how we evaluate that, you know, we have a look at the sort of risk profile. So, you know, we've made a lot of changes over the years to set very strict criteria about the type of work that we're willing to sign up for.

25:03 So, therefore, as we go through governance on every single tender, we're making sure that the risk profile of the work that we've got and the returns that we also demand from that work meet the strategic criteria of the business in terms of the full direction. And that's why that that's what gives us the confidence to be able to turn around and say that we're we're highly confident. I think coming back, a lot of that forward order forward work of 3,900,000,000 is what underpins the future, and and a lot of that will drive the growth. I I didn't say at the start, but also that excludes about 50 frameworks that we've got, which are consultancy frameworks, so they're zero value.

25:50 And every year, we secure commissions under those frameworks, which is over and above the order book, and and that is at the higher margin consultancy work. So that's how that comes through. So I think that also then gives us the added the added layer that will help us drive those margins at at a at a really high level. So this is a question, I think, for Alex from Daniel d. There were a lot of takeovers in The UK the last eighteen months. COSTIN should be an obvious takeover target. What's the impediment to you getting taken out, and do you think that impediment still exists today? Yeah. Thanks, Daniel. Well, look. Let me just look at what how we're approaching how we're approaching this. Look. Our job as the leadership team running this amazing business is to run it as well as anyone can run it. So we're running it very, very hard, and that's about, you know, delivering excellent services to the customers that we work for, securing good volumes of the right type of work, positioning the business really well for growth in the future and capturing that growth and delivering, you know, really strong returns by being as efficient as we can in how we run the business, investing to make the business better, and delivering, you know, delivering those margins. So that's our single-minded focus, you know, and that ought to be the focus of any business is making sure that we're running our business as hard as possible. Therefore,

27:22 if anyone was able was to pop up and was interested, then, you know, it would be good value for the shareholders. This is, I think, one for Helen. With adjusted operating margin targets of f y twenty of of 3.5 during '24 and four 0.5 during '25, What are the key risks and challenges do you see in achieving those targets, and what measures do you have in place to mitigate them? So we have been driving improvements through through the business as we've talked about, and and and that really is what underpins the those two margin targets. So working very hard on excellent delivery, working very hard to be more efficient, more effective, and to manage risk at a contract level.

28:12 And therefore, as as a portfolio level, we need to aggregate all of those contracts knowing that we are driving margin improvement. Alongside that, we've been investing in in in other skills and capabilities and and looking at our cost base overall to to to to maximize the benefits from from that, get get full value from it. So the the risk is is is absolutely about operational delivery, and that's what we work very hard on every day, and we've been investing in in in the right right people and right skills to to drive that very hard. So we're we're very confident that we're moving in the right direction. There's two questions on cash. There's one from Massimo a and Stephen k. So I'm just gonna put them together about you don't two if you don't mind. So how much you've got a lot of cash.

29:01 How much can we consider the surplus cash, if any? So, basically, how much cash you need to run the business? How much could be distributed to shareholders? Should that be allowed? And this also really similar question from Stephen Kay. Could you elaborate on the on the considerations regarding, you know, dividends, m and a, surplus cash to shareholders. So I think the real question is, you know, how much cash you need to run the business with that surplus cash? You know, what's what's your list for, you know, shopping list for dividends, special buybacks, m and a, etcetera? So I think we have we have more more than enough cash to to to run the business as it is saying that the cash generation has been very, very strong over the last couple of years, and and the level now at a 164.4, and, you know, we we plan for that to increase in in '24 and beyond.

29:52 That means that we do we do have surplus cash in in my mind. We've talked about the investments we're already planning in terms of of of people and skills, in terms of digitizing ourselves, in terms of their recommitment, you know, returning to dividends, which is at the half year. How much is surplus? I think if you there's a chart on slide 14 of the of the presentation, and that shows you that there isn't there wasn't a very significant swing through the year, and that that gives me some some feeling for the peaks and troughs, I guess, on cash. So I think we have we do have surplus cash. We do absolutely think about where we where we would like to use that and where best to use that as we drive the strategy and drive the growth that Alex has been been talking about.

30:43 So I think it really does come down to the the ceiling that the pension scheme sort of I I wouldn't say imposed, but but gives us a 3.3. I think the the we will think about dividend levels. We will think about buybacks and specials, but but, really, for us, it it would be when when we don't have to make the dividend matching into the pension scheme. So this is another question from Helen from Daniel d. Can give an approximation of how much your revenue and EBIT comes from COSTAIN? Have you thought about splitting off consultancy before either reporting it separately or having it as a as a separate business? So we we have considered all of all of that.

31:30 Absolutely. We've done a lot of work over the last couple of years to, to to be very clear on our strategy, on consultancy. We've restructured digital, at the half year and and really honed in on on what those digital consultancy services are as well. So we have a a really clear proposition and and and that is offered to our customers across all of our our sectors. So there's a mix of services that we're providing into our customers, and I think it's a continuum across the sort of life cycle of of of any customer thinking about where we provide consultancy, where we might partner to to help our customers with delivery, where we provide construction complex program delivery. So it's it's really a continuum of services that we provide to the customer.

32:24 The way we organize ourselves is is by by division, by customer and sector, and hence, that's the way we report. But we absolutely drive drive the the business through those different service lines, and a really key part of our margin progression is is to drive the volume of consultancy to to our customer base through through the, you know, the the next few years so that that you you will see that coming to fruition through the margin improvement. Alex, I think you might want to build on that. Yeah. No. Just absolutely everything that Helen said is is is where we're at, but I think just in terms of coming back to the separating, separate running it as a separate business, you know, what we sell as consultants is COSTIN people, and those are the same COSTIN people that will be delivering major programs, contracts as a contractor as they are a consultant.

33:18 So, you know, the real value is the is the core expertise that we have of of people in this business. It's just how we go to market and sell those skills, that expertise is is different when we come through a consultancy proposition. So, actually, to really grow it and leverage it, it's really important that it remains part of the core business. And as Helen said, you know, we're organized around our customers, and it's making sure that we really understand what our customers' needs and are able to to help meet those through, you know, that broader proposition. This is off from Nigel. I I think we've covered this before, but it's worth going go over again. Is there any consideration of buyback given the market value of the business?

34:05 Absolutely. So buyback specials, level of dividend, all all in our consideration. But as as I mentioned earlier, until we've tipped into that actuarial surplus, It's not something that we would likely do because we would have to to match into the pension scheme. This is from Massimo for Alex. So is inflation materials, labor, etcetera, sort of risk in business, or do contracts protect us from inflation spikes? And just actually to add, Massimo didn't ask this, but we were asked this on the roadshow. You know, is is there is there a shortage of people at moment as well, so in the market? Yeah. I think I think two two strong two strong issues for for us all, actually.

34:52 So inflation I think inflation does present a bit of a challenge because it's a challenge to our customers and the confidence that they have in what the cost of their investment is going to be. Now positively, it's it's much more predictable and foreseeable at the moment, so we're able to help them think about their budgeting and forecasting that gives them that predictability of the outcome. In terms of our contract risk, all of our contracts have protection for inflation, so we're not exposed. But as I say, you know, this has put quite a burden on our customers' budgets when they're not able to get the same return from all same budgets from some of the government departments. So, you know, it remains and it and it really comes back to how if we can work with them collaboratively, we can drive a much more value engineering, better solutions to be able to help offset the budget pressures that they feel from from inflationary prices. But as I say, it's much more it's much more stable at the moment, which is good, and we're totally protected as a business.

36:03 Coming back to the labor piece, I think we've had a lot of questions on this. We're not we are certainly not struggling with recruiting exceptionally talented people into the business and attracting some of the best suppliers to want to work with us and support us, which is which is fantastic. I think the benefit that we have is the type of work that we do and the fact that we work on long term programs. You know, we're talking about five years and in some cases, twelve years visibility. That gives us the ability to turn around and attract people with them having strong confidence of the forward workload. And one of the things that we've done coming up the transformation program is that we're investing a lot more money now in developing the skills, expertise, and and competencies of our team to help them develop their careers at the same time, including the number of apprentices and graduates that we recruit. So, you know, it's a it's a point that we take very seriously.

37:02 We're putting a lot of a lot of effort in, but it's not holding us back, and we don't foresee it holding us back at the moment. This is from John H. So beyond '25, will further growth and profitability be driven by revenue or driven by margin growth? So if so, does the company have the resources, particularly human, to grow or will need m and a bolt ons to basically, you know, capture the growth '25 onwards? Yeah. Look, I think I I think coming back to the answer to that question, it's gonna be a mix of both. You know, we're gonna grow we're gonna grow our revenues because as I as I spoke about at the start, if you look at the opportunities ahead and the opportunities in this marketplace for us to deliver economic growth for The UK, positive social change, and meeting our decarbonization targets are absolutely there.

37:57 So we will get top line growth, but the quality of what we're doing, and as Helen says, growing the consultancy, growing our consultancy business, and continuing to improve, you know, the effectiveness and efficiency and performance of our business is all gonna add to the bottom line as well. So that's, you know, that's pretty that's pretty exciting for us, and and the opportunities are significant. Last one is a moment from Daniel d, and I might actually have a crack at this myself, if you don't mind. So considering the share price, why not announce a strategic review to unlock shareholder value? As a Daniel, I think I mean, I don't I've been in the city now, what, twenty five years, and a strategic review is normally cut the company code for these problems.

38:43 And, really, really, this company is not in the situation where we would actually need to announce strategic review. I mean, we agree it's undervalued, but strategic review is not normally the, you know, route taken at this point. And I think that is it. So I'm gonna pass over to Alex to wrap up. Yeah. Thanks very much for thanks very much again for taking the time to join this call. I hope you found it useful, and thanks for a series of great questions. There's a lot of consistency with the questions that have been asked here with what we're getting from from the wider market, which is great and things that we're very focused on. I think I'll just come back to that we're really pleased with the momentum, and it's another strong financial performance of the business, and, you know, we're confident that that will continue to be a trend that we continue.

39:40 We've got a really high quality forward workload for the business, and we've got we're excited in the opportunities ahead. The markets that we've positioned ourselves in and the customers we're working for are absolutely the right markets and the right customers because that's where long term strategic investment is gonna be made, and we're making really good progress on the strategic priorities for the business. So exciting times ahead, and we look forward to keeping you updated. So thank you very much for taking the time to join the call, and have a good rest of your day. Perfect. Alex, Helen, Paul, thank you very much indeed for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations?

40:25 This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of COSTTAIN GROUP PLC, we'd like to thank you for attending today's presentation, and good morning to you all.