Dillistone Group (LSE:DSG) — Review of Interim Results and Prospects

0:01 Good afternoon, and welcome to the DILLISTONE GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. Before we begin, I would like to submit the following poll. I would now like to hand you over to CEO, Gareth Hawkins. Good afternoon to you. Hello. Thanks, Alex, and good afternoon, everyone. Thanks for joining for today's DILLISTONE GROUP interim results call. As Alex said, I'm Gareth Hawkins. I became group chief executive just over two weeks ago. And with me today are Ian Mackin, our group finance director, and Paul Mather, who alongside being group chief operating officer, has recently become managing director of the Ikiru People operating company.

0:52 So these results we're presenting today cover the six months to June 30, and Ian and Paul are going to take you through them properly. But I suspect that many of you have joined to hear what's coming next. So, I'll start with being candid from the outset. This is a company in transition from a small software business that has worked hard to improve its balance sheet to becoming a group that intends to acquire, own, and compound great businesses for the long term. So here is the agenda for today, fairly standard fare. Ian's gonna take you through the financial review. Paul's then going to cover progress in Akira People, which is our current operating company, and what he and his team are doing to sharpen it. And I'll then come back to set out the new strategy, which by the way is still subject to shareholder approval at our forthcoming general meeting, and then we'll go over next steps. We're gonna leave time for questions. So please, in a normal way, do submit them through the platform as we go.

1:51 So a little bit of context, obviously, the disclaimer first. Please ensure that you're aware of it. I'm sure you've seen it many times before. So coming into this role, I found it helpful to frame the preceding half year in four milestones. Firstly, funding. In February, DSG raised 1,500,000 sterling of equity, which was 1,375,000 net fees. And that was at a premium to the prevailing share price and brought in with it P and R Investment Management as a strategic investor, which this capital allowed us to repay the CBILS loan in full and clear the overdraft. And for a company of our size, that reset was quite key because now we enter the next phase, without any legacy senior debt hanging over us. So second milestone is FileFinder.

2:37 That's a legacy product reaching end of life. Clients are now migrating to Telentis, and that migration process is well underway and should be largely complete before January 27. Now running two platforms in parallel is expensive, and the infrastructure and support costs of FileFinder becoming unsustainable. So retiring it should help deliver significant annualized cost savings, and Paul will say more on that topic shortly. Thirdly, leadership. Well, here I am, joined on the September 28, leading on the new strategy, as I'll go on to shortly. Paul, in parallel, being promoted to run Icaru people, and that's a deliberate division of labor with Paul focusing on the operating company and myself focusing on group strategy, acquisitions, capital allocation, and and growing out the group.

3:25 And finally, fourth, evolution. Pivotal to that evolution is our general meeting, and shareholders will be asked to approve this new strategy that I'll go on to talk about and convert outstanding loans into shares as per our recent RNS and circulars. So I'll return to all these topics towards the end. But in summary, DSG is funded, reshaped and refocused and now preparing to embark on a serial acquisition model. And so this is Ian's last presentation of results with us as he's leaving the firm at the end of this week, but I would humbly like to thank him for his steady hand through a demanding period, I'm sure. He's now going to walk us through these eight to one numbers. So, Ian, over to you, sir.

4:12 Okay. Thank you, Gareth. Just a quick run through of some of the headline numbers. So revenues falling in period by about 15% to 1,854,000, but the recurring revenues remained around 90% of that total. As a consequence of the revenue fall, the EBIT adjusted EBITDA has fallen to GBP 215,000 with just an 11.6% margin as the revenue dropped on a largely unchanged cost base. We'll go through that margin story soon. The equity raise, however, did move us from an overdraft to a positive cash position of 436,000 at the half year, and net assets have risen over 700,000 to stand at just over 4,000,000. Next slide.

5:00 So a bit more of a closer look at the revenue. The group revenue has fallen by 319,000. However, a large proportion of that reduction has come from discontinued or soon to be discontinued products. Of that drop, 61% of the whole drop is related to the file finder product, which we're in the process of discontinuing, and 17% is due to an old legacy contingent product called BDQ, which was withdrawn through h two in 2025. If we look a bit at the segment and sector splits, recurring revenue has fallen 15% in line with the overall total fall, but as I say, still represents 90% of the total. Executive search where file finder sits has fallen 23%.

5:51 It should be noted at this point that the recruitment market still remains very tough with over three years of decline in The UK, which is our major base of operations. Next slide. So as I say, a bit more on the margin. This slide illustrates the progress we did make during the previous five years over doubling the adjusted EBITDA margin between twenty one and twenty five. We made a conscious decision to end of life a major product due to its decline in revenue profile and its high cost base. Coupled with the product discontinued in H2 twenty twenty five, twenty twenty six was always going to be a transitional year due to that. Consequently, the adjusted margin EBITDA margin has fallen.

6:40 However, we expect this to be a low point for the half yearly margin with an increase in during H2 and recovering towards previous levels during 2027, with a target of again reaching the 25% level through the end of twenty seven when file finder end of life benefits are fully realized. Next slide. Due to all of those factors, the income statement shows the impact of the transition we're in. The gross profit, adjusted EBITDA, operating losses, and adjusted loss before tax were all affected by the 300 k drop in revenue, falling straight through to those lines. Should be mentioned adjusted figures ignoring the ignore the impact of acquisition intangibles and reorganization costs.

7:34 Consequently, the gross profit was down 311,000 at 1,638,000 with the adjusted loss before tax down 345,000 at a loss of $3,338,000. Because of the equity issue, the weighted average number of shares through the half year rose to 30,800,000, leaving the adjusted EPS at a minus 0.86p against a positive 0.15p in H1 twenty twenty five. We should stress, we do expect the first half the second half to be stronger than the first, with nonrecurring revenue particularly appreciably up on H1. Next slide. Net assets increased almost 1,000,000 from the year end position to just over 4,000,000.

8:25 This is obviously heavily influenced by the net 1,375,000 proceeds from the February equity raise. During h one, the remaining civil loan principal of point one five was repaid in full, and the year end overdraft of 211,000 was cleared. The loans at half year totaled 820,000. However, 25 k of that was repayable on demand and has been repaid during September. The remaining 0.795 is what is proposed for conversion to equity at the general meeting, and this would clear all the long term loan balances and save around 73,000 a year in interest.

9:12 So finally, for me, flow. The equity raise has turned an overdraft position into a positive cash balance. Net cash from operating activities, however, was an outflow of £109,000 compared with an inflow of 528,000 during twenty twenty five H1. This reflects the lower revenue base and working capital movements. Investing activities is almost entirely the capitalization of development to secure the future products. And that was at £395,000 slightly down on the previous year total. Financing brought in a 1,150,000 net, driven obviously by the net equity raise of 1,375,000 less the CIBIL repayment finance cost and lease payments, less a net change in cash for the half year for... At 646,000, leaving the cash of 436,000 at half year.

10:13 Now let me hand you over to Paul who'll take you through the accrued specific slides. Thank you, Ian. Thank you for that. So welcome, everyone. Some of you have probably seen this slide before, but I'm aware we've probably got some new people into this forum here. So what I thought I'd do is just quickly start off by giving a run through of who we are and what it is actually Akiri People do. So Akiri People's business was formed back in 2019 by amalgamating four existing opcos together to form Kiri. And we have clients on six continents and across 50 countries. And broadly, what we tend to do is split the business into two sectors, that of executive search and that of contingent recruitment. So for us, contingency is is basically everything other than executive search. So perm, contract, interim, and temp recruitment.

11:06 Over on the exec search side, as we've already spoken, file finder is a product that's been around for a very long time. It's it's it's contributed a a great deal towards the the revenue lines over the years. It was churning, and it carries quite a high cost base. And as you've probably been aware, you've been following our story over the years, we're putting a lot of effort into our next generation platform product that we call Telentis. This year, Telentis got to the point where we were confident that it was a suitable home for a lot of our Filefinder clients. And so this is the year that we've chosen to to make the move and end of life the file finder product, which is due to to end at the end of this year. Also, in the executive search side of the business, we have a product called gated talent.

11:51 This is a platform service really for executives looking to source services such as resume rewriting and LinkedIn profile optimization, those sorts of things. On the contingent side of the business, the the kind of flagship release, our Infinity product. It's a core CRM. It's aimed at those agencies that do a little bit of everything, so a little bit of perm contract and especially shift based temps. And holding all that together is a product that we call mid office, which does exactly what it says on the tin. It not only connects to front office recruitment CRM systems, not only Infinity, but also competitive products as well, collects the the placement information from those, generates time sheets, catches time information, works out the payroll, the accounts, the billings, things like commissions, all that sort of thing, and then exports that information out to the client's own incumbent payroll and accounts ledger system. So very much the kind of glue that holds everything together.

12:52 Finally, the contingent side, we have a product called ISV, and that's designed for our online skills testing and also training. And it's a product that's used by some of the leading UK recruitment agencies. So... But one of the main kind of core objectives for our business this year is this file finder to Lentus migration. We announced the end of life file finder back in March 26. And in late May, we began pushing those migrations through in earnest. And in the intervening time, what we were doing was kind of tooling the business up to be able to run these migrations through in bulk. And I'm pleased to say that's that's kind of where we are now. We're able to process migrations quickly and efficiently through the business.

13:38 And what that means is we've been able to actually see some of those cost savings coming through from rationalizing the platform on file finder coming into half two this year. And certainly by January 2027, the migration will be substantially complete, and then the product will be withdrawn. When we get to that point, we'll be able to recognize significant savings, which as we've quoted is 6.6 figure number. But what's encouraging for me is that of those clients that are migrating across at the moment, the vast majority of them over 75% are actually choosing to sign multiyear contracts with us. So this gives us confidence not only in our revenue lines in the future, but obviously speaks to the testament of the strength of the products as it is now that clients are willing to to take the risk and sign multiyear contracts up front.

14:26 So in terms of our outlook, what are we looking at for this year and kind of the remainder of half two? Well, we've mentioned the the file finder migration. That's that's obviously key that's taking a lot of our resources to deliver. In conjunction with that, we've also seen a stronger than anticipated order book for our Infinity products. And what that's meant is as we enter in half two, actually, our delivery pipeline is is the strongest it's been for a considerable time. We've got a lot of orders that are are due to be delivered, and that means we should see a a stronger second half contributing not only to ARR, but also nonrecurring revenues there as well, which will will certainly play a part. Now core for us, the the kind of primary overarching objective, not only to get the the kind of file final migration done, but it's to get back to this EBITDA margin of 25 plus.

15:22 Now the way we're gonna come about this is, as Ian kind of alluded to earlier, our market is hard. The recruitment sector is is in a difficult place. It's had over forty months of kind of consecutive downturn. So our plan to get back to the 25% EBITDA margin isn't reliant on the market recovery. It's entirely reliant on levers that are under our control. That gives us the confidence to to know that we're gonna get to this this kind of position, this target. So the way we're going about this is we are kind of maintaining our our customer focus and our... Yeah. We are very, very proud of our service levels. We've got spectacular Trustpilot reviews. But because we've been kind of...

16:08 As Ian alluded to earlier, this file finder migration is something we've known about for a long time. We've obviously been aware of the the downturn in the markets. So we've been able to to start doing business up and gearing the business up for a kind of process of continuing improvement and basically streamlining the business, making it more efficient in everything that we do. And included in that is the use of things like AI and tools. So it won't be a conversation about recruitment without sort of talking about AI. And kind of where we are in the moment with AI in in our sector, this is a very interesting challenge right now. It's gonna give you a a kind of idea of of where things sit. Maybe if you turn the clock back five years ago, a recruiter might put a job advert out there. They might get 30 to 50 applicants coming in for that advert. Now they're getting at least 10 times that number.

17:00 And the reason for that is that it's a lot easier for applicants to apply now. They're all using AI to do it. They're all tailoring their their CVs and their resumes and applications for the job specs at hand. And that makes it very much harder for the the recruitment agencies to handle this volume of load, not only from the point of view of the the sheer volume, but also the fact that they're very, very similar in applications because they've all been done by AI. So our clients now face the problem that they're being squeezed hard on their margins. They're needing to cut costs, make improvements themselves internally. They've got this increased volume. So what they need is to turn to AI as well to help them manage that process through. And that's one of the things we've been spending a lot of time this year kind of looking at and providing solutions that utilize AI to help our customers with this conundrum.

17:48 And it's something we're we're kind of doing across the product range as well. Internally, our use of AI has increased dramatically over the course of this year. We've become a lot more efficient in some of the tasks and activities we do, and that's that's clearly measurable and will play a part in how we get to that 25% EBITDA. So with that, I will hand over to Gareth to talk a bit more about the future strategy. Thank you, Gareth. Thanks, Paul. Great progress. Folks, before I turn to that strategy, I just want to close off the Okuru piece around how it fits as the first step of our strategy and just confirm that it's in no way an encumbrance to our new strategy. It has valuable recurring revenue, long standing client relationships, and so our ambition for it is really clear with the adjusted EBITDA margin target of 25%.

18:44 Paul spoke there of the levers that are within our control, and I have full confidence that his team will get there through invoking a set of internal disciplines, commercial focus, cost control, and some productivity mess... Measures, net revenue per head, those sort of disciplines. A business that run that... Runs that way will generate cash. That cash is the starting point for everything I'm about to describe. And we mustn't forget the fact that Ikira People has an over forty year legacy of sourcing and empowering great talent, so we've no current intention to divest of that. So a brief word about me, why the board has asked me to lead this new strategy, and why I'm genuinely excited to do so. Well, a few... Until a few years ago, I was running and leading a specialist industrial manufacturing and services business called Worldability.

19:33 And we exited to Indutrade, the Swedish serial acquirer whose culture, structure, and ethos was quite a privilege to work within. I stayed on, ran that business inside IndoTrade, and led some further acquisitions there. And so I've seen this model from all sides of the table. We did a lot of m and a within the company prior to exiting, and so I've been the operator. I've been also the owner deciding who to sell to. And and then I have been an acquirer within the in in decentralized entrepreneurial group, one that cultivates talent. And so I found that experience really helpful. I think it'll be helpful in this strategy, but so will how the DSG board has been reshaped around this strategy in this year. Matthias and Akash from PNR joining in February, now Ned's on the board, have brought a disciplined perspective on capital allocation, which is fundamental to our new compounding strategy.

20:30 A quick word on Jason. Jason Starr, who obviously has led the company through a challenging period and has a very long tenure with the business. I'm very pleased to say that he remains on the board as nonexecutive director, delighted that we can retain his thirty plus years of knowledge within the Akira people. Julie Pomeroy and our long serving chair, Giles Fearnley, complete our current board. And on finance, as mentioned earlier, Ian sadly departs, but we are currently in the process with interviews underway for an interim CFO, and we expect to be able to make an announcement in the coming weeks. So the new strategy is what you're all here for. Let's distill it down into one sentence. DILLISTONE intends to become a serial acquirer and long term owner of cash generative profitable b to b businesses beyond software.

21:22 What that means in practice is that we will acquire all of or majority stakes in profitable enduring reputable companies. We will own them decentrally. The people who built them, the management teams will continue to keep them running, and we will insert a group discipline on reporting, financial control, governance, continuous improvement, and capital allocation. And we will invest the cash that these businesses generate into further acquisitions so that the group compounds over time. Now none of this is particularly novel. It is here at Ikeru because it's a change of strategy, but that's rather the point, the proven model that is already evident in The Nordics with companies like Inditrade, AdTech, Lifco, where they've compounded shareholder value over decades doing exactly this.

22:16 And closer to home, we have in The UK, judges scientific, diploma, probably the best known examples, but also having trans SDI,, DiscoverIE. They're all showing different flavors and versions of the same discipline, and we study them closely. Our job is to apply their lessons at our scale. And at our scale, we believe the pool of good businesses is deep and valuations are rational. So why is DILLISTONE best placed to do this? Well, three reasons. Our AIM quotation gives us access to capital through debt and equity, which makes us a viable credible buyer with a longer sighted mindset. Now to a founder or a retiring seller, a listed permanent owner is a very different proposition from a PE fund who are working under the pressures of a five year exit horizon.

23:09 And secondly, the leadership and the board are now built for the job. And thirdly, by looking beyond one sector, we are diversifying, reducing our risk, and materially widening the number of suitable targets. It's important to clarify at this point that we have no intention of becoming becoming an investing company under AIM rules. We will be an operating group of aligned companies. We all own controlling stakes, and we will actively govern them and consolidate their results. So this slide is our flywheel, if you like, the economic engine of the compounding that we intend. And we describe this simply as acquire, improve, compound. In practice, we acquire cash generative companies at sensible valuations, improve them, not by imposing a central operating model, but by supporting management with a value creation playbook and a focus on financial discipline, operational improvement, and good governance whilst preserving what is their entrepreneurial autonomy, their that their customers understand and and keep coming back to them for.

24:12 We call this freedom within a framework, and that framework is tight on capital and reporting and accountability, but it is that freedom which governs how that business best serves its customers. Good businesses run well and convert profit into cash. And growing diversified cash flows will create debt capacity that we can use sensible, serviceable leverage alongside equity and reserves to fund these transactions. And so we'll reinvest that cash that comes from those operating businesses into further acquisitions with the result being a larger, more diversified group with rising EBITDA and greater earnings resilience. So thinking as capital allocators, our North Star should be the return on the tangible capital that we deploy and our ability to keep reinvesting at those returns year after year.

25:00 So what are we looking for? The headline is right here on the slide. The financial characteristics of the businesses in the lens will, determine their suitability for acquisition, not specifically the sectoral segment that they find themselves in. We want businesses that operate with a high degree of trust and autonomy, a clear competitive advantage, a solid reputation, and durable cash flows with preferably low capital intensity and strong cash conversion, and ideally, with significant recurring or reoccurring revenue available at a reasonable valuation, and those owners who own them now are seeking succession or a long term home for the business to continue to grow within. So quite specific, but deliberately broad in its net that we are casting.

25:49 What this does mean, though, is we want no turnarounds, no loss making businesses, and, of course, we won't be straying into mining, petrochem, property, crypto, those kind of spaces. So our focus at this moment is principally in The UK, where we perfect this model internally, and we may explore selective opportunities in Europe in the medium term. As we say here, our ideal focus areas are broadly support services that are nondiscretionary if possible and contractual or periodic, light manufacturing with repeat custom and a particular specialty within those businesses, and then suppliers of specialist niche components into what are high margin sectors. So gives us something to work with, but we remain alert to opportunities.

26:40 This slide just brings those target characteristics together. I'll draw out just one here. You can read the rest. High autonomy. We seek to buy businesses with management teams that are able to run independently. If a business needs us to come in and run it, it probably isn't the right business for us. We want them to be able to benefit from being part of the group, but come with an existing modus operandi and the skills to continue to execute on that. Just to bring these broad sectors to life a bit, here are the kinds of example segments that we might be looking at. We believe that there are businesses in these spaces that exist in material number and of the type and size and demographic and vintage, if you like, that we'd be looking for.

27:32 And so just to pull out a few, testing inspection calibration. We've got training and certification. We have precision manufacturing, industrial automation and control. And there on the specialist components, obviously, we've got some medical optical. We've got aero and space marine and defense adjacent type businesses, if you can imagine why. So what do they already have in common, though? Well, they're all often owner founded, typically of a vintage with owners approaching a retirement age, sometimes with no obvious internal successor. Their customers, though, tend to value the reliability of these businesses over the price of their product or service, and their products and services are sometimes specified, regulated, embedded in... To their customers. So they...

28:26 The cost of switching can be high. And many of these businesses are probably of the sort of materiality and scale that they probably sit just below the radar of the largest serial acquirers and mid market private equity firms because they require, you know, operational expertise. And that keeps the valuation sensible. We're gonna be disciplined about that. They're not the sort of businesses that you go into if you haven't got an understanding of the space and of the way these businesses are typically run, but this is a market that I know. It's where I built my own career and spent twenty years cutting my teeth. So I'm excited to to get into some of these and see what we what we can bring into the group. So capital allocation is obviously where serial acquirers succeed or fail.

29:13 We're to be very disciplined, as I mentioned, in our search for suitable target companies. We're going to align incentives where appropriate through deferred and contingent consideration or retained equity. And fundamentally, we're going to aim to pay sensible multiples even in what is an increasingly competitive market, but we plan to win on our certainty, the clarity we give to the sellers, the permanence in our mindset, and the culture that we wish to cultivate. In the first hundred and eighty days after each deal completes, we're gonna come alongside these businesses, these management teams. Our focus is gonna be on partnering with each of them to reinforce their financial discipline, their reporting, their controls, but also to help install a growth driving continuous improvement mindset.

29:59 Looking at ways just as we are now with the Kira people, of how, we can help these businesses to, improve their, their fundamentals. As was mentioned in the circular, it's important to note that the strategy is not without its risks. Our process is designed to mitigate as many of these as possible, but they are real risks. Please read them here on the slide. We do take them very seriously. Fundamentally, though, with such an abundance of companies within scope, and within the demographic and macroeconomic motivators for the, owners to exit that exist today and with the incredible tools, as Paul mentioned earlier, some of them are at our disposal to drive value creation through digital transformation, I'm highly optimistic about the opportunities that lie ahead of us.

30:47 And so in order to go and seize the day, as you know and as has been mentioned throughout this presentation, we are asking our shareholders to approve the conversion of outstanding convertible loan notes to equity. And so subject to shareholder approval, £794,750 of loan principal intends to be converted into new ordinary shares at 14 p, and that's covering three instruments as declined... As as defined here. The notes from 2017 and 2024 and the 2025 loan. Now these carry interest of between 8.1510.85% as you can see laid out, but the 14p is the conversion price already set for the 2024 notes, and this has been now applied fairly and consistently fairly and consistently across all three principal sums.

31:38 The effect being around 5,700,000 new shares, around 13.8% dilution. And in return, we remove roughly £73,000 of annual interest and simplify the balance sheet ahead of the acquisition program. Now because the holders include current and former directors, this is a related party transaction. And so the independent directors have consulted Zoos as our nominated adviser and considered the terms fair and reasonable so far as shareholders are concerned. As independent of that process, I'm... Like to just add here that I'm heartened by the positive signal that those loan note holders have conveyed by choosing to move to equity over debt. Their choice of a long term alignment with us over a fixed coupon really gives me confidence, so thank you.

32:25 Which brings me to the general meeting, which is taking place, at 11AM on Monday, October 26 at Howard Kennedy and 1 London Bridge. There are the six resolutions that we've laid out here, fundamentally adopting the new strategy, approving the loan conversion, moving to electronic communications, etcetera. The board is recommending resolutions one, three, and four, and the directors intend to vote their shares around 21% of the company in favor of those. Resolutions two, five, and six relate to the conversion and are recommended by the independent directors. Please do vote. Proxies must be received by 11AM on thirty the twenty second, and we'll announce the results on the day. And if passed, we expect the conversion share to be admitted to AIM at around 8AM on the October 27.

33:14 So thank you for that. Just want to, close on how I'll be judging my progress and how I'd like us as a group to be judged over time. Our ambition is for DILLISTONE to be a responsible permanent home for excellent businesses, a home for owners who want their life's work to become part of a great British group and to enjoy a bright future long after they step back. Done well, that will be good for those businesses. It will be good for their people. It will be good for the economy, frankly. And through compounding, it will be good for our shareholders. So very excited about the road ahead. Thank you so much for all your support thus far. Ian, Paul, and I are now happy to take your questions. And thankfully, Paul has been returned to light. So worried about you there.

34:01 Okay. So please do pop your questions in the chat. We've a few of them coming in now, so thank you. We've had one question in around future fundraising. Does the proposed new strategy require a further fundraising? And how will that be achieved? Well, far be it from me to speculate on future capital markets activity that will obviously be disclosed in the appropriate way. But, this is going to require capital and we're going to, as we've said in the circular, we're going to assess every opportunity on its merit and use the appropriate funding methodology that is right for that opportunity at that time. We've got a question from Ben.

34:49 Thank you for advancing my slide. What proportion of cash generated by the existing businesses and future acquisitions do you expect to reinvest? And what scale could this strategy realistically achieve over the next three to five years? We do intend to put further information into the market about our strategy once it's improved with our goals and and our objectives, and we will be declaring some of our own metrics and measures around things like distribution. Obviously, the compounding requires reinvestment. And so if you study the other serial acquirers, you will see their approach to the use of the capital that they generate. Hopefully, gives you some reassurance at this stage.

35:36 The firm hasn't delivered dividends for a couple of years to my knowledge. So we will be certainly aiming to reinvest as I've explained in the in the presentation thus far. Another question, how will you maintain oversight and financial discipline across acquired businesses while allowing them to operate autonomously? Well, that's that's the secret sauce. That is the the paradox, but it's the one that ultimately requires us to have a centralized financial reporting framework so that businesses of all walks of the group can be pulled into a consolidated position and now us to analyze them against a rubric. But also to have a good relationship at a board level with the governance with these subsidiary companies, working with their teams to timelines and metrics and KPIs and deliverables that will be agreed with them once we've acquired them.

36:32 But, yes, we we want to make sure that we are consistent in our culture, but that our approach is respectful of each businesses in the idiosyncrasies and and, you know, the sensitivities in their own markets. Certainly not something for us to to do any brute force change into these businesses. If they require that, they're probably not the right businesses to buy. Has very kindly asked, could you please talk us through how you think about valuations and what makes a valuation sensible? Yes. Absolutely. And what kind of leverage would be suitable? Well, I probably can't speak here to the LTV, specifically because as I mentioned earlier, that will be determined with each business on its merits and and what is serviceable debt for each opportunity.

37:23 I can speak to multiples. Obviously, if you if you study your private company multiples and some of the the data that's out there around trends, you can see what's typically being acquired for. You know, these serial acquirers are typically paying, you know, four to six times earnings. Obviously, we will look to pay appropriate fair prices, but not overpay for companies. That is the the challenge ahead of us. We're being asked how exciting... How developed is your acquisition pipeline? Do you have targets that you may be able to execute on in the next twelve to eighteen months? I'm pleased to say we have been preparing for this moment, but, of course, we can't pull any triggers until we have the shareholder approval on our new strategy to really begin on this in earnest.

38:19 My background over the last couple of years has been in sourcing private companies for acquisition, and I have become quite honed at assessing them. And I'm pleased to say that, you know, there are plenty of opportunities out there. We certainly intend from a cadence perspective to be able to move with momentum over the coming twelve months. We have a question about will you be set... Setting up a dedicated m and a team? Well, budget for that is zero today, but, obviously, we will be increasing allocation to that function in step... In lockstep with the growth of the of the group.

39:05 It would be silly of us to go and put the cart before the horse and empire build before we we have portcodes. So we're gonna do this lean to begin with using a lot of sourcing technology and a lot of our AI friends to help us with diligencing in the early stage or at least in filtering in the early stage. No substitute for human input in due diligence, obviously. But, yes, we will... We we we tend to keep lean throughout our operation centrally because, you know, capital allocation should go to the growth opportunities, not to empire building. But we will keep that under advisement as regards the size of the team that's appropriate to execute this strategy. Okay. Have I got any more questions in here that I can take?

39:54 We're being asked, would part of the strategy be possibly to sell acquired companies once consolidated within the group should the right offer be made? Well, shareholder value is obviously paramount, but we should like to think that that could be best achieved through compounding and reinvesting the profits that these businesses deliver. However, never say never. We have to remain open minded, but our plan and our strategy is to permanently hold these businesses. That is what the other serial acquirers in the world do very well. And so I wouldn't expect a considerable number of these to be divested. We're going in with a view to holding them and compounding them.

40:48 We're being asked, what's your likely early bite size? Nice nice phrase. In terms of acquisition price and company revenue. We'll be back to you on that once we've been able to, notify that publicly as part of our approved strategy. Fingers crossed. Great, Gareth. If I may jump back in there, thank you very much. Thanks, Alex. I think that's all of them. Questions from investors today. But, Gareth, before we direct investors to provide you with their feedback, which is particularly important to yourself, could I please just ask you for a few closing comments? Yes. Certainly. Obviously, this is an exciting time for the business. As I mentioned in our opener, this is a fundamental evolution from where they are to where we'd like to be. There's a lot of preparatory work that's going into this to get us in good shape for it.

41:38 We believe it's a really exciting opportunity. We are grateful to our shareholders for their support thus far, and we're really looking forward to our general meeting on the twenty sixth. Thank you very much for tuning in today. Fantastic. Gareth, Ian, Paul, thank you once again for updating investors today. Could I please ask investors not to close this session as you know, we'll automatically redirected to provide a feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.