Foresight Group Holdings (LSE:FSG) — Foresight Group: H1 FY24 Results

0:01 Good morning, ladies and gentlemen, and welcome to the FORESIGHT GROUP HOLDINGS LIMITED half year results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, I would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to CFO, Gary Fraser. Gary, good morning, sir. Morning. Thank you for that, and thanks to everyone for attending this morning. My name is Gary Fraser as as it's just been announced, and, I'm the CFO of FORESIGHT GROUP.

0:52 I'll be taking you through the results presentation today for the half year ended 09/30/2023. I'd encourage any questions either written or or verbal once we get to that point in

1:03 in proceedings. But, that being said, we'll we'll kick off. So the the highlights for the the last six months. So performance in current markets has demonstrated FORESIGHT's success in its diversified model. So we had strong core EBITDA growth generating 27,600,000, plus 28% year on year. AUM was resilient and marginally up at 12,200,000,000, just 1% up. We've benefited from high quality revenue, so 80 per 7% of our revenues were recurring annual revenues, so within our target of 85 to 90%. And in terms of AUM, over 90% is long duration capital, and we're experiencing no management fee pressures.

1:53 The investment opportunity with our in our key markets continues to grow, and we've got a pipeline of total future deployment rights in international infrastructure over £5,000,000,000 now, so significantly increased year on year. And most recently, we had a first close of 50,000,000 in a Welsh investment fund and 10,000,000 for a Northern Ireland investment fund. So and both of those were on the private equity side, so we continue to make good progress there.

2:24 In terms of profitable growth, so you can see the track record, from just around about the time of IPO in 2021 at ten point six million all the way up to 27,600,000 at the end of September twenty twenty three, our first half of the year. So very strong core EBITDA growth. Average over the last three years is 38%, a compound annual growth rate, so very healthy indeed. In terms of the margin, we've marched we've fallen slightly from 42.4% down to 40.7%. That's really as as a result of two things. I'm one is that we had a performance fee just post period end, which would have driven the margin up further.

3:09 But, also, institutional fundraising for infrastructure is expected to fall in the first half of next year as opposed to the current financial year. And that is really the driver of a growth in margin going forward. That being said, I expect the margin to increase in the second half of the year closer to our medium term target of 43%. And if you take into account recent cost savings, if if we annualize those, I'm sure by the year end, when you take into account the increase in margin with the annualized cost savings, we'd actually be there or thereabouts in terms of our medium term target at 43%.

3:49 In terms of AUM, it's been a a resilient period. I'm you know, from full year '23 up to h one twenty four at 12,200,000,000. I think it's probably worth saying, just pausing and thinking about that for a second, we had you know, although we were flat during the period, we had, net outflows in our OIC business of several 100,000,000. That was more than offset by the performance in private equity and retail fundraising. So the business overall, it's three divisions. It's private equity. It's FORESIGHT Capital Management, our OIC business, and infrastructure. And overall, I'm pleased between the three of them that we've managed to to produce a slight positive in terms of, you know, AUM growth. A lot of businesses out there on the investment management side have seen net outflows for a significant period of time. When I compare our business model to a lot of those, I'm very pleased at what we've been able to achieve during the period.

4:51 In terms of the business model at FORESIGHT, it's probably worth explaining a little bit why we've seen such such success through several economic cycles. So in terms of distribution, I'm roughly speaking, two thirds is institutional and one third is retail. And I really like that split because during periods when institutional funds are not being raised because you tend to raise funds every two or three years once the money's been invested, we're still raising retail money on a regular basis. On a literally, on a daily basis, we can raise money for, you know, our VCTs, our EISs, inheritance tax fund. So very solid in terms of that balance between the two different, distribution models.

5:37 In terms of the investment divisions and the split profitability between them, almost 60% is same from the infrastructure division, 36% is from the private equity division, and just 5% from our OICS division. The last the latter, they are having suffered from outflows during the last few months, but the other two infrastructure and private equity divisions showing real resilient performance during the last six months. In terms of the underlying investment vehicles that FORESIGHT has, approximately 91% are long duration vehicles made up of 65% vehicles that are evergreen and 26% that are LPGP structures, so limited partnerships that typically are ten years but can extend as far as twelve years.

6:28 And only 8% being an OICS, which tends to be shorter dated money. So very pleased with how that split is formed at FORESIGHT with the principle being that we're looking for longer duration, investment vehicles because they generate higher quality revenue. Finally, on that geography. So at the point of IPO, approximately 80% of FORESIGHT's assets were invested in The UK. Now that's down to 57%, and that's deliberate for two reasons. One is we made some m and a activity during the last couple of years. So we invested in a company in Australia, ICG Australia, which added significant assets to FORESIGHT. But also a lot of the investment opportunities that we're seeing now are non UK opportunities, whether that's in Australia or in Europe more generally. So we're diversifying away from being, you know, a UK centric business, and I expect to see the the the exposure to The UK, reduce further over the next few years as we expand internationally as business.

7:34 In terms of the detail behind the financials, so you can see in terms of AUM at the period end, slightly up at 12.245 from 12.167. So only a very small nominal increase of 1%. AUM was slightly down from nine to 8.8, down 2%. And, again, the principle behind that was outflows in the OIT business. However, revenue was up by a very healthy 34%, up at 67,800,000 from 50,700,000. So very attractive increase. And that is really a result of the full year impact of last year's organic fundraising as well as the m and a activity that I talked about a little bit earlier on.

8:21 Recurring annual revenues I mentioned right at the very start was healthy at 87.3%, well within our target of 85 to 90%, and I would expect that to continue going forward. Core EBITDA, up from 21,500,000 to 27,600,000 plus 28% period on period. And core EBITDA margin at 40.7%, down slightly from 42.4, but I'd expect that to increase, as I said, in the second half of the year as a result of both revenues being generated, but also some cost savings that we've implemented more recently. Finally, in terms of shareholder returns, the interim dividend will be 6.7 p, and that will be paid on the 01/26/2024.

9:08 That's a 46% increase period on period. Again, very healthy. I and so I think overall that brings the yield on FORESIGHT's stock based on the current share price to about 5.1%. So in terms of, you know, how attractive it is as a stock and an income generation stock, it's very attractive indeed. So just in a little bit more detail, the assets under management bridge. So we started the period at 12 point two. Inflows and outflows roughly the same at 400,000,000, but it's worth saying that there's a difference between the inflows and the outflows. Principally, the outflows were, OIC outflows, which tend to be lower margin outflows, and the inflows tended to be on higher margin products. So that overall mix, albeit flat, is better in terms of both profitability and revenue generation.

10:07 Some market movements in terms of valuations at 200,000,000 down, but also debt under management increased, and that would be principally around infrastructure assets made. And we had a small amount of FX foreign exchange movements principally coming through as a as a result of European and Australian assets.

10:30 So in terms of the 34% year on year increase in revenues from 50.7 up to 67,800,000. So that 17,100,000 increase, almost evenly split between organic growth and acquisition growth. But just going down into the details, 7,700,000 of the growth was organic and 9,400,000 related to the acquisitions, principally the Australian acquisition that I talked about a little bit earlier on. In terms of h two f y twenty four, revenue will benefit from a full six months of management fees relating to high margin retail and private equity fundraising delivered in the first half of this year. With further retail and institutional fundraising, two private equity funds, as I mentioned earlier, were launched in November.

11:19 And we've already seen some incremental performance fees generated in the second half, approximately 1,850,000 delivered in November this year. So all the signs are very good in terms of revenue generation and profitability for the second half of the year.

11:38 In terms of costs, it's always worth keeping a tight rein on costs, especially in a high inflationary environment. But why did costs increase during the period? Well, they're up 8% year on year on the rebased h one f y twenty three costs, principally because there was an average 7% salary increase for staff reflecting said higher inflationary environment. 600,000 increase following f y twenty three review of senior staff remuneration by Korn Ferry. And there was a split of performance fees between the house and staff as well, which roughly generated 350,000 of additional costs. The full year increase in cost is expected to be around about 10% over and above the f y twenty three rebase cost of 76,700,000.

12:27 And in terms of h two f y twenty four cost saving initiatives, they're estimated to save 1,900,000 on an annualized basis. Our effective tax rate is unchanged at 20%. In terms of profitability, 28% year on year increase, up from 21.5 to £27,600,000. That's 28% year on year, as I said. So very successful per year and year to date fundraising into higher margin and longer ten year vehicles has driven that growth. The annualization of the FY twenty three m and a activity has added 3,800,000 into profitability. And as we said earlier, we're maintaining firm cost discipline and looking for cost savings wherever we can.

13:16 We achieved the 40.7% core EBITDA pre SBP margin in h one f y twenty four. And as I said, that's expected to increase in h two. And we remain confident in growing this margin as the business scales. So the key to unlocking further growth in the margin will be increases in institutional fundraising. And it's probably worth just saying that although there hasn't been material amounts of that on the infrastructure side during, you know, calendar year '23, We expect that to really accelerate in the first half of calendar twenty four, and that will be a critical success factor in the future. And it's one that I'm very confident on delivering. The next time we speak, I expect to be in a position to tell people about the success we've had in institutional fundraising.

14:06 In terms of the outlook, so there's two principal levers to deliver further profitable growth, focused approach to fundraising and m and a activity. So just taking each of those in turn. So an institutional infrastructure, you know, there's an initial power transition, renewable energy generation. So we're looking at ARRIF, which is an Australian fund, an existing 1,000,000,000 yield pay core plus energy infrastructure fund. It's got a diversified portfolio of wind, solar, and hydro investments in Australia. So we're really looking to raise new funds for that and expect to be in a position to announce a successful first close during the first half of next year. In terms of FEED two, it's concentrating on systemic power transition.

14:51 And so it's in areas like renewables, flexible generation, and grid assets. So a good example would be battery storage or interconnectors between a different countries. And in terms of the wider net zero transition, we've got an international hydrogen fund seeking to develop and build a portfolio of low carbon hydrogen and power to projects across OEC country OECD countries. Excuse me. On the institutional private equity side, there'll be a further rollout of our regional strategy currently with 14 active funds. So in that rollout, I would expect new funds covering new regions that we're not already in, but also new funds within existing regions where the existing fund may be in its runoff phase.

15:40 On the retail side, we've got a successful ongoing fundraising near 50 in house sales team generating inflows not only for our OICS, but also for IHT, VCT, and EIS funds. And that if you excluding the OICs, I expect us to have a record year in retail fundraising this year. It's got off to a great start on the IHT and on the VCTs, both accelerating as we head towards tax year end. And so I think if we can continue that momentum into q one next year, it will be a record retail fundraising year for FORESIGHT GROUP. In terms of m and a activity, we continue to apply a disciplined approach to assessing the market, and deals will only be considered if they're accretive.

16:26 This enables us to leverage our proven track record in the space. It's worth saying that I think at the moment, there's a bit of a, disconnect between private market valuations and public market valuations, which means that vendor expert pricing expectations are still higher than I would like. That said, it makes us difficult for us to buy them with paper, you know, our stock, if you like, because of our current rating. Therefore, any acquisitions we do, we'd, a, have to be at the right price and are more likely to be in cash as opposed to to stock.

17:05 In terms of summarizing everything that I've just said in terms of, you know, touring through the slides there. So in terms of growth, our three year rolling average target remains 20 to 25% growth in AUM, and we're currently at 22%. Our focus is on high quality earnings, so 85 to 90% target for recurring annual revenue, and we're currently at 87%. We've got high degree of visibility in f y twenty four earnings, and f y twenty four revenue will benefit from a full year of fees and significant f y twenty three AUM growth, combination of both organic and inorganic, as I mentioned earlier.

17:45 In terms of operate operating leverage, our target for margin remains at 43%. Even though we're currently at 40.7%, I expect the full year margin to be above that. And in terms of operator operational leverage going forward, this will be delivered through institutional infrastructure fundraising, which is the real key to unlocking, driving that margin forward. Finally, in terms of shareholder alignment, I mentioned the 6.7p interim dividend a little bit earlier. I'm that is reflective of a 60% dividend payout ratio, which we expect to maintain. I think any excess cash over and above that, we would look at opportunistic buyback opportunities as well as m and a activity that I mentioned a little bit earlier on.

18:35 That's a sort of whistle stop tour of the interim results for the period. Hopefully, that gives people a flavor of, you know, the success that we've had, but also a little bit of a hint of the outlook for the rest of the year and beyond. I think the key to driving performance going forward will be fundraising.

18:56 And on that, I think, you know, private equity continues to fire in all cylinders both on a retail and institutional basis, raising funds on both sides. I'm starting to see on the oil parts of the business an increase both in terms of inflows, but in terms of performance as well. So I expect November's AUM to be higher than October's AUM on the basis of, both oil flows, but also the performance of the underlying oil investments as well. So, you know, I'm not

19:27 gonna call a change in the market there because the macro is still a little bit uncertain in terms of interest rates. Albeit, I hope that short term interest rates have reached a peak based on recent inflation numbers in The UK, The US, and Europe. So that will really benefit the oil part of the business. I think as well it's worth saying that in that oil part of the business, we've signed up distribution agreements not only in The US and Europe now, but we've also focused in The UK by hiring

19:57 a specific team that is OIC only focused. So when that market turns around, which I expect to be, you know, during the first half of next year, I really think that we're well positioned in terms of driving inflows into the oil part of the business. To give you a flavor due to the the sort of high interest rate environment, that part of the business has gone from 1,600,000,000 down to about 900,000,000.

20:24 I firmly believe that that part of the business can be a multibillion pound part of the business and really help drive AUM and profit growth going forward. So I think the key to unlocking that is not only distribution, but it's all obviously, also the right macroeconomic environment. We have the distribution in place, and I think the macro environment is coming towards those strategies.

20:47 Finally, on the infrastructure side, I'm the key for next year is to raise institutional fundraising. There are a number of funds that I mentioned earlier that we're focusing on. So FEET two, as I mentioned, pan European infrastructure into the energy transition, hot international hydrogen fund, but also AREF in Australia, is core plus, you know, infrastructure that we expect to raise both from existing, LPs in Australia, but also new international LPs both in Asia and beyond.

21:22 So I think that gives you a summary. I'm very happy to take questions should there be any at the moment. Perfect. Gary, thank you very much indeed for your presentation this morning. If I may just jump back in there before we look to take those 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. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A

21:52 can be accessed via your investor dashboard. Gary, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. Liz, if I may now hand over to you just to chair the questions, and if I could just ask you to read those out and give your responses where it's appropriate to do so, and I'll pick up from you at the end. Thank you. Of course. Thanks, Jake. So we've had a number of questions, as Jake's pointed out. And I'm just gonna try and group those that we've taken through in a sensible order. So, Gary, just kicking off,

22:24 I had a question about what are the main trends that you consider or look at when identifying investment opportunities? So, I mean, I think in terms of, you know, if I look at infrastructure, which is the largest part of of FORESIGHT GROUP, you know, the the energy transition and decarbonization agenda is the biggest opportunity or trend that we've seen in in a generation in terms of not only the ability to raise money, but to deploy money. Our current deployment pipeline in that space is over £5,000,000,000. And I think if anything, it's going to get larger, not smaller.

23:02 So I think the opportunity for us is to raise that money and invest it because, you know, we're we're effectively one of few experts in that space that has a soup to nuts approach. So we manage the assets as well as making the investments. You know, we've we've got a, you know, a full three sixty service. And I think that more and more, we're going to see opportunities in that space, more roll out opportunities. And then there's adjacencies. So hydrogen is effectively adjacent to to our core infrastructure offering. So we're looking for opportunities that deliver returns to investors,

23:40 on the one hand. I'm but within that, I think there's there's sectors within it. So, you know, there's renewable energy generation. There's storage capability. There's flexible flexibility that, you know, I mentioned earlier that interconnectors offer. There's hydrogen. There's compressed natural gas for HGV vehicles. You know, that so there's subsectors within sectors.

24:05 So I think what we're looking for are sectors that provide the right risk reward return for investors on the infrastructure side. And I've named a few areas there that strike a chord with investors and that we're actively raising money for. On the private equity side, you know, certainly on the NBO side, the real key there is looking at businesses that can scale but also have, you know, exceptional management teams.

24:34 And so those are the core, you know, the core principles that we're looking for there. And to give you an example, our Northwest Fund, which is, you know, formed in and around the Greater Manchester area, has an exceptional track record. I think, I you know, the IRR there is about 35%. It made 17 investments from a fund of just under 40,000,000. Seven investments have been sold, and I think the average multiple on those seven investments is about six or seven times.

25:06 So we're making good investments within a variety of sectors. But I think the one core factor that, you know, we see in a regular basis as well as the market that they're in is also that you've got exceptionally good management teams. So there's there's certainly different things there between the difference the different divisions. I management teams are important, as I say, on the private equity side. On the infrastructure side, that's less so the case because often you're making direct investments into assets, whether that's

25:37 wind turbines or solar, etcetera. So it's really been able to to drive into sectors that generate the right risk reward profile for investors. Thanks, Carrie. I suppose just building on that a little bit or or or taking nuance on it is during the presentation, we talked about an expanding geographic diversification. And by yeah. That also translates to actually reducing our exposure in The UK given we were a UK centric business a number of years ago. And the question is around, is the current UK market weakness not a good time to be investing more heavily at these market lows? It it investing into The UK? Yes. I think

26:19 I take the point. I think the problem is that we're still seeing better returns in non UK assets and non UK investments. So we when we see investments in The UK, they tend the competition tends to be higher, and that tends to drive prices up and turns down. And so we're just not seeing the right risk reward return on assets in The UK at the moment. I

26:45 think the one area I would say where that is not true, and we are active investors, is in development pipeline. So development pipeline in The UK is an area that we're very active in, and we are seeing return attractive enough returns in that space. So we're not doing nothing in The UK, but we're not doing secondary asset purchases in The UK because the return profile is just not attractive enough for investors. That makes sense. And then just a final one on the geographic theme for now.

27:13 Would like an update on progress in terms of attracting inflows from North America. So in terms of, you know, our we signed a distribution agreement for our business with Cromwell Funds at the end of January this year. I'm we're seeing inflows in that part of the business in The US. They're small inflows, but inflows nonetheless. But the same macro restrictions are true in America as they are in The UK. Namely, there's high

27:40 interest rates. I I expect interest rates to fall, more quickly in North America, so I expect to see inflows into our oil products increase during the first quarter, if not the first half of next year. First year was always gonna be principally about marketing our products in The US. I think we've done that over the last eleven months since we did the deal. So I really do believe that that set us up for flows to come through from North America during, you know, during calendar year 2024.

28:12 Thanks, Gary. And I suppose just building on that one to some extent. So you just outlined the significant opportunity we have with SEM, but equally that it's been potentially not the most, not the best period of performance for it. So has is there any opportunity to, adjust fixed costs in that side of the business in order to realign that with the drop in revenues that we've seen? I think the answer is yes, and we've done that. I think it's also true to say, as I mentioned earlier, I'm you know, we've looked at, say, reducing cost and resourcing appropriately across the whole business, And that's led to 1,900,000 of annualized cost savings, some of which comes through for, you know, for FCM. So it it's a very pertinent question.

28:58 I'm and, absolutely, that's something we have looked at and we have done. Thank you. And then just one, a a couple here that,

29:08 touch on valuations. And I think it might be helpful for this audience if you could just go through a little bit in terms of the valuation process that we go through into that foresight, in terms of how that works and and how external parties get involved, and then specifically how any private equity valuations have changed given our exposure to venture capital and private credit recently. Yeah. I mean, I think in terms of, you know, valuations more generally, firstly, infrastructure. They tend to be valued on a discounted cash flow. So the key there is, your discount rate. And discount rates have been going up over the last, you know, six, twelve plus months because interest rates have been going up. So the the sort of a delta between, you know, your risk free rate and your discount rate has been going up as interest rates have gone up. But at the same time, valuations haven't moved materially, because despite the discount rate going up, revenues have been going up because energy price inflation has been going up, as a result of two things. One is just, generally caused by, you know, geopolitical events like the the war in Ukraine, but also because revenues and a lot of subsidy based assets, have an annual RPI linking. And therefore, you've got your revenues going up, your discount rates going up, but you're not seeing huge amounts of volatility in the underlying valuations. Of course, you're getting movement, but it's not as much volatility as you might have expected in a higher interest rate environment.

30:37 In terms of the private equity side, you know, principally profit based assets, you would look at, you know, public based comparatives, and you would take a discount to that to get a, you know, to get a price earnings multiple and make an appropriate calculation on that basis. I think, you know, the you know, so as the market has been moving up or down, the valuation of our underlying assets will move up and down as well. And that's true of MBOs as it is of venture capital as well. I think the key, you know, the key determining factor of whether you're getting valuations right or wrong is whether or not you're selling the ultimate asset or profit to what you're holding it at. And, you know, I'm pleased to say that on most instances, if not virtually all instances, we're selling assets, you know, for a premium over what they're being held at in the book. So but, you know, we are getting that we are getting the valuations correct on that basis.

31:39 Thank you. And then talking about valuations at a higher level, so the valuation of FORESIGHT GROUP, and there's a comment that, market set does seem to undervalue the business as it is, which might be a current cyclical challenge or or it might be something else. The question references that the chairman has previously said of the share price in an interview with the Times that either the price will go up, and we'll stay in the market or we'll get bought at a sensible price or we'll go private again. And the audience is just interested in your view. So I think on the back of the results that we've just generated, you know, we're we're delivering profitability, you know, 28% increase year on year. You know, that sets us up to have a good second half of the year, which will be a stronger half. You know, I think consensus for the year is is about 59,000,000.

32:27 I'd like to think we can achieve or or even exceed that as a target. So, you know, my focus is on on driving performance. And I think, you know, if we're growing profitability at these levels 25% a year in addition to to AUM at the same level, you know, the share price will have to go up because, you know, we're delivering year after year after year. So I think you will see us at a sensible price in the future. I think it will go up because of how we're delivering. And I think fundraising in f y twenty four will be the catalyst for driving the share price up. So my view is continue doing what we're doing, continue delivering on profitability and AUM targets, raise our funds next year, and the share price will take care of itself.

33:16 Thank you. And then I just got a couple of more technical questions on on cost that I'd like to cover. The first being what exactly is SVP and what is driving the increase in this measure for most recent period? So SVP is share based payments. And what's driven in the in the most recent period is is part of the acquisition in Australia, part of the acquisition was done through shares. I'm and so those shares, it goes through the, you know, the profit and loss account, if you like, as a share based payment, and they have to be treated as such. Normally, you know, in the old days when I was a trainee, that would have gone through as an acquisition cost. But things have developed since then. I was gonna say it got better, but I think we'll just say developed.

34:03 And now that that because most of the people that when we made the acquisition have stayed on and they're the beneficiaries of these share based payments, it actually gets treated as post transaction remuneration, and therefore, that's why it's increased so much in the period. And there will be a bit of volatility because we'll have to to to value that on a on an annual basis. And so we will see some volatility in the number going through the, the p and l for share based payments as we value the the deferred consideration of the acquisition, between now, and I think it's about 2025, 2026. Thank you, Gary. And then just more broadly on administration expenses. So I think it's worth potentially highlighting how well these have been managed in the period, but there are some variations within that and some fairly large swings.

34:53 One of those being that there's been a quite significant increase in the admin expenses within the private equity segment. I wonder if you could just give a bit more color on that and and and the question is whether that's temporary or permanent, increase. Yes. So it the the first thing is that we on the the increase on the PE side. So, principally, this year, we had our VCT fund launches. All of the work went into that. So they're earlier this year than they were last year. So the work that was done to launch the two prospectuses, was done earlier. And so you're seeing all of that in the first half, whereas most of it was seen in the second half last, you know, in the prior year. Now the benefit of that is that we're actually seeing a much quicker fundraising season for the VCT. So we launched them earlier, but also because of performance, one, three, and five year performance, the money is coming in at a quicker rate than prior year as well. So, you know, we're likely to close one of them potentially even this month in December and the other one in in January.

35:55 So we put all the work in early. They're likely to close much earlier. Last year, I think we closed both of them probably in April time, but I think they're likely to close much, much quicker. So the investment was earlier, but the money's coming in earlier, and so we'll generate more revenue. So it was worth spending the money earlier in the year to generate those additional revenues. I think we've also had some abort fees on certain funds that maybe didn't take off. I but those weren't material amounts. But I think, additionally, you know, we're looking ahead at the future at FORESIGHT, you know, and, you know, there's a lot of talk about, you know, making efficiencies within IT, you know, a lot of talk about AI and how that can help business processes. And so that's something we've been investing in that will ultimately save us cost in the future. So there's a number of reasons behind it.

36:47 I'm hopefully, those core reasons give you some color on the reasons behind the increase. But, ultimately, I would expect what we're doing now to yield more revenues going forward, but also to save costs going forward. And I suppose just on the back of that, do you think you were now, as a business, in the right space in terms of costs, or is there further significant investment that that is needed? Or, you what's the trajectory of cost going forward? I I think, you know, our our key cost is is our personnel cost. I'm and I think we're in the right place there. I'm you know, I have no idea what, you know, salary increases will be next year, but it feels like we're beyond the worst of the high inflationary environment. So I would imagine that average annual salary increases next year will be lower than this year. And therefore, you know, I'd like to think that overall, our costs, you know, the increase in costs next year will be much smaller than they have been this year, while at the same time getting a benefit in terms of, increasing revenues. So overall, I think that will be the key. As I said earlier, that will drive margin, and we should see margin increasing next year.

37:57 Perfect. And then, during the slide, you mentioned, you know, that the the company benefits from long duration And there's been a question here just in terms of can you provide some color on the amortization periods of customer contracts as these seem long? And I wonder if there's any link between those things or if you just give bit more color in terms of the length of customer contracts. So I I mean, on average, I'm you know, LPGP structures tend to be ten years, 10 plus one plus one. Over the last couple of years, we've raised a lot of funds. I'm principally in the private equity space. So we raised four last year. We've already raised two this year. So that's six funds that have a, you know, ten year, potentially twelve year life. We also have several investment trusts and closed ended funds that are multiple billions of pounds.

38:48 So they have they're effectively evergreen. And we have one or two LPs GP structures that are evergreen as well. Additionally, our Australian funds have, you know, effectively evergreen funds as well. So there's a number of large private equity and institutional funds that are either closed ended, so, you know, no effect of fixed life, or they have, you know, long dated assets that we've raised recently. So which which helps us really because infrastructure assets tend to be thirty, forty year assets. So being able to take a long term view whom we're investing, I believe, is ultimately an investor's best interest. Wonderful.

39:33 That's it from q and a for this morning. So thank you, Gary, and I will pass back to Jake. Perfect. Gary, Liz, thank you very much indeed for addressing all of those questions that that came in from investors today. 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 to then add any additional responses, of course, where it's appropriate to do so, and we'll get all those responses published on the platform. But Gary, perhaps before really 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 to wrap up with, that'd be great. Sure. So, hopefully, I'm you've heard from me today about the results. The outlook going forward, I think, is very positive both for, you know, the remainder of this year to March 24 and beyond.

40:21 I think 2024 will be a banner year in terms of fundraising for FORESIGHT, and that gives me a lot of confidence in terms of continuing to deliver on what we've already delivered, building on that in the future. We've had three good years since IPO. I'm and I I expect the fourth year to be, you know, to be to build on that in terms of performance and delivery. So my final words would just be thank you to everyone that's, say you know, dialed in today to to listen to me talk about FORESIGHT. If there's anything that you didn't feel that you could ask now and you want to reach out to, you know, to the company going forward, by all means, please do that. I'll be happy to to answer questions directly as well. I thank you to our hosts for hosting it. It's been very successful again. And on that note, I wish everyone a, you know, very good Monday and the rest of the week.

41:10 Thank you very much. Perfect. Gary, that's great. And thank you once again for updating investors, this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of FORESIGHT GROUP HOLDINGS LIMITED, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.