Midwich Group (LSE:MIDW) — Full Year Results

0:00 Good morning, and welcome to the MIDWICH GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via 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's appropriate to do so. Before we begin, I'd like to submit the following poll. And then I'd like to hand you over to the management team. Steven, good morning, sir. Thank you. Good morning, everybody. My name is Steven Fenby. I'm the group chief executive of MIDWICH. My colleague, Adam Council, is chief financial officer. Adam joined two weeks ago, so I'm not gonna make him do too much of the presentation.

0:49 Do you want to just quickly introduce yourself, Adam, then I'll I'll talk about the business. Yeah. Thanks, Steven. Yeah. So I'm as as Steven said, I'm admin council. I've got about fifteen years experience as CFO of quoted businesses initially with I did seven years at Restore PLC. And then I was at Fuller's, which is fully listed. And then more laterally, spent four years at MIDWICH PLC. And I'm fresh into MIDWICH, so I've done a couple of weeks. In terms of what I've found so far, I've met a lot of really good people. It's really good management team in the business. Business has really good market position. And, yeah, I'm really keen and looking forward to business to its next stage. But as Tim says, I'm pretty fresh in, so he knows far more than me. So happy to hand back to him, but we'll pick up any questions as they come up.

1:37 Thank you. So for for people who don't know the business, I've just thought I'd spend a couple of minutes just explaining what we do. The few slides in the pack, which is our the pack of our year end results, which will ex give a bit more background into what I think makes us special as a business. But MIDWICH is a trade trade only distributor of audio visual equipment. So basically, we buy products from hundreds of different manufacturers ranging from the very big manufacturer like Samsung and LG right down to very long tail of small specialist products manufacturers. And we pulled those together to give solutions to our customers, and most of our customers are specialist AV installers, so integrators.

2:24 And the job we do for our manufacturers is we're here to get their products out and grow their market share, get them out into the market, reaching tens of thousands of customers, specialist customers. And for our customers, we're here to help them to win projects and then deliver them successfully. The business is actually forty seven years old, started as a distributor of computing equipment, moved into audiovisual in the mid nineties, and I joined in 2004 as finance director. And we decided at that time that we were going to focus on this rather interesting market called audiovisual, and that's now our entire business. And we are one of, if not the largest, specialist distributors of AV in the world. We were in one office in 2004. We're now in dozens of offices around the world, operating in 23 different countries, and a very long successful history.

3:16 Slightly more difficult market situation in the last two two years, which I'll explain, but that's kind of a little bit of background into the business. So if I go through our pack and say there'll be some more detail comes up about the business along the way, and please do submit questions on the q and a board as we go through. We had a few through already, which is great. So we came into 2025 believing that the market will be challenging. It was challenging to 2024. We thought it'd be challenging '25, which it was. But our work really was to focus on what we're really good at, get the business into the best shape we can for the future, and and to hit the numbers that were out in the market for for last year. So we did a lot of work on the business. We finished with a revenue of just under 1,300,000,000, which is down 1.5%.

4:06 I think it's the first year our revenues actually dropped in twenty odd years. There was a combination of actually good organic growth and growth opportunities in The UK and Ireland, actually, against the tough market and also some growth in the parts of our business that look after the address the live events and entertainment markets, particularly in Southern Europe and The Middle East. Offset against that was a very soft German market, and we have a good business in Germany, but very much focused on the education a bit on the corporate market and and they found life very challenging, which again, I I'll talk about a little bit later on. Our gross margin percentage was flat year on year. So it says for our industry, it's a strong gross margin. Operating profit was down by 10%, but we did spend a lot of efforts in turn in in adjusting our overhead base during the course of the year, and I'll talk a bit a bit about that later on as well.

5:02 Cash generation was strong. So our cash conversion, a 123%, was a was a very strong performance. And and our leverage, which was two and a half times at the at the eight at the half year stage, we reduced down to 2.17 times at the year end, which is a little bit better than than actually expectations. We did a lot of work in in following our strategy. So our long term strategy is to become more specialist, more technical more involved in more technical sales and gaining market share. So as I said, we're very busy in laying the foundations for the business, a focus on improving our commercial excellence by broadening our vendor and customer share, expanding our product ranges, offering new developing new services, and cost efficiency, of course. In terms of ex expanding our vendor portfolio, we commenced 36 new vendor relationships across the group.

5:55 We made significant progress in our digital capabilities, including AI automation tools, digital solutions, including a new software billing platform. I can see we've got a question about about practical AI solutions on on board. So so we've looked at a lot of systems enhancements and digital projects, including AI. And so so we we would I know we've also done a lot of work in terms of our train commercial training academies. We've built we we hope in 2026 to build on the organic growth that we started to see through in the second half of last year and to build the business through this year, accepting whatever the world throws throws at us along the way. The team's energized, very much focused on the delivering for the future of the business.

6:46 In terms of the current landscape, as I said, 2025 is a challenging year for our market, but and I see no great signs of improvements in that. We've certainly got it as a working some of the market will deprive, but our focus is on improving our our lot, our business in that market. We started to see some price rises across a range of vendors and technologies, and we, you know, we would expect these to to see some some increase in our selling prices, the increase in selling in cost prices driven by trip chip shortages and increasing cost of chips. So we expect to see some price rises coming through for some time. Generally, they are good for our business. We tend to pass on price rises through to our customers and against see having seen quite a lot of price erosion in a few of our products last year, this is this is quite welcome.

7:42 Government spend is falls a a reasonably significant part of our business, continues to be suppressed, particularly in Germany where we've not seen the yet seen the benefits of the major capital investment program that they've that the German government's been talking about. We've seen increased adoption of AI in our industry, particularly in terms of vendor solutions. Our vendors are our suppliers, and they're they are adopting AI solutions in a lot of their hardware products, which which means that they increase it's increasing the specialization of their products and their specification and driving the demand for the business, which is good. In terms of our own business, we're seeing stable order books. Our market shares have been growing, and we expect to see those continuing to grow. We've done some work in terms of our cost base last year, and we'll see expect to see the benefits of that flowing through into this year.

8:40 I mentioned our AI solutions. We have a strong business in The Middle East, and obviously, the Middle East crisis could be a factor. Hopefully, it won't last too long, and we'd see a bounce back after that. The moment it's having some impact on our revenues out there, but we're still open for business. And and, course, you know, we're looking after the security of our of our business. We we operate in a very dynamic market. It's very energized long term. There's been long term growth generally ahead of of GDP growth, and the latest the latest sort of VIX market research report suggested 3.9% a year growth in the bit in the market for the next for the next five years. In terms of our business and differentiators, I've talked about our role, which is at the bottom of this page, and picked out really on here four things that make us different and give us a special advantage in this marketplace.

9:39 And the first one is is the strength of our vendor relationships. As a distributor, what you crave, what you really want is access to to the best products to sell. And with many years of successful trading in the industry, we have a fantastic collection of vendors, and we do very well in rolling these vendor relationships out across our group. And particularly when other businesses join the group, when we we we do our m and a and bring new territories into the group, we can then introduce new vendor relationships into them. So that is a great asset and a real differentiator, not easy to get hold of these distribution agreements. We have a lot of experience in managing portfolios. So, of course, we have a broad portfolio of products, geographies, technologies, and lots of experience in bringing new brands in, growing them, seeing seeing technology and brands out of the portfolio as they reach sort of maturity and and the profitability goes out. So very normal for us, very, very good at managing these portfolios, A huge amount of specialist knowledge in the market. We only sell AV equipment, you know, this is we have to make this work.

10:49 We have a lot of knowledge, pre, post sales knowledge. We can do we have experience centers, we run training courses. So if you want to operate as a trade buyer in the AV market, you really need to come and talk to us, and we have all the knowledge that you would need. If you come across a project that you're not not particularly aware of, we can give you advice in terms of how to win and deliver those those projects. And finally, and most importantly, is consistently high customer service, and I can see that when our service drops, which occasionally it does or somebody else's drops, you start losing customers. We need our customers to see us as a an extremely reliable supplier, and I think we do we do particularly well on on that, and that's been a big part of our successful sustained growth over the years.

11:38 So I'm often asked about the size of our market, how much of the market's addressable, what our share of it is. It's always a difficult question to answer because of a lack really of reliable data. You know, the market has many different segments to it. Some of them are suitable for distribution, some of them some of them aren't some of them are attractive to us and others aren't. But as I said earlier, Evixter in last year came up with an estimate of the size of the global private market, which is about $332,000,000,000 dollars, that is in 2025, and growing 3.9% a year. So we operate in a market that is growing, has experienced long term growth, which is a great start.

12:24 In terms of our growth model, that table at the bottom, know, where we have where we're in competition with other distributors, then our focus is on firstly, is on winning share of of our vendors business. So maybe on this example, we have half of them half of our Samsung, for example, business. So one one of our jobs for us to do is to is to get as much of the share of their business as we can. And at the same time, we're also trying to represent our manufacturer to for them to win as much of the share of the market as we possibly can in competition against other manufacturers. And then, of course, with total with growth in the market, then that should help also our growth. So lots of different ways of us achieving growth.

13:09 The table on the right hand side, which is quite small to read on my on my screen, but it shows our relative position in terms of key product areas across the top, and our key and our key geographies down the left hand side. The the darker shaded boxes represent areas where we have a comprehensive portfolio of of leading perks. The lighter shaded boxes where we have some presence, but not as not as strong and room to to enhance that. And then, of course, the white space is areas where we don't have any presence, and that represents a strong opportunity for us. What we've not put on here is some other developing categories such as drones, software dry hire services, and security. So I suppose, you know, we we think we probably have about three to 4% of the target addressable market.

13:59 Very difficult to estimate, but the the summary, I think, for for from all of this is, you know, there is plenty of opportunity for us to to grow our business and I don't see limitations in in terms of the size of the market. So the next couple of slides just give just give two examples of how we're able to help how we're able to source and drive new business. Firstly, our relationship with the major drone manufacturer, d DJI. I think we're all aware of drones now and that but they also have lots of commercial applications such as emergency response or search and rescue, infrastructure inspection, land management. We started to sell these drones, DJI drones, in late in The UK in late twenty twenty four and then Benelux in 2025.

14:49 We hadn't had any previous experience in this sector, although we're involved in peripheral sectors like broadcast and and software sorry, services and security. But it has become a major success story for us in 2025 with revenues in the tens of millions of pounds. What that shows to me is that the approach we have to taking a product and a brand and driving the growth in it applies not only to the AV market to other but to other sort of peripheral sectors. And you can see from the quotes on the right hand side that this vendor's very much appreciates our approach, our success, and is looking forward to a few a strong future partnership. The next slide, looks at, unified communications. So this is video conferencing, meeting room solutions.

15:38 It's a part of the AV market that we didn't have much involvement in prior to acquiring our first US business, called Starin in early twenty twenty. We completed it the week before COVID hit off, so that was quite that was quite good timing. Through applying our sort of focused distribution approach, investing strategically, and acquiring and rolling out vendor relationships, we've become a global market leader in this category. It now represents around 15% of our group turnover. An estimate is we we estimated that we've grown this this business organically by well over a £100,000,000 in the last six years. And, again, you can see a quote on the right hand side of this slide from one of our relatively new vendors showing how we've substantially increased their global reach.

16:29 And just out of interest, these slides are on on our website, MIDWICH GROUP PLC, if you want to refer to them later. So for now, just quickly talk about our, financial performance. I'll just pick out a few key points that I've not already covered, earlier on. So firstly, our our decline in revenue of one and a half percent was just more than 10% on a constant currency basis. That, in turn, was a combination of a first half decline of 2.4%, but a growth in the second half of 0.8%. Our overheads were largely flat despite the full year effect of acquisitions that we undertook in 2024 and some strategic investments in parts of the market that that we want to really develop. Our adjusted operating profit, as I mentioned, is down 10% on a constant currency basis, but in h two of last year was broadly flat year on year.

17:23 We have some significant exceptional items this year, which are listed in the appendix, and I think they're all understandable. We we did some it's about restructuring. We've We've written off an investment in an ERP system because we have a new and much better solution for achieving what we want to achieve through that. Turning to the balance sheet. Strong working capital in in the year led to a ratio of working capital to sales being much lower than the prior year. Positive net cash flow generated a a reduction in net debt. So we reduced our net debt by £4,000,000 £4,600,000 across the year. As I mentioned earlier, our leverage 2.17 times is better than previous guidance, and we have an expectation of that being below two times at the end of this year.

18:15 We have we've been very acquisitive over the years. I probably should have said this earlier. We've over the years, we've acquired 45 businesses to get us into new markets or, you know, geographical markets or new product markets. We didn't acquire anything last year. We're focused more on our internal growth and our organic growth, but we were very busy in the previous few years. So we had a number of outstanding liabilities which we cleared during the course of 2025. We have outstanding liabilities of about GBP 6,700,000 over this year and the next year. So much lower level of outstanding liabilities for previous M and A. And our debt facilities, you can see on page, no change in those facilities. We have a portfolio of six banks in our primary revolving credit facility, and we have very good relationships with those.

19:07 So we are we are organized into four regions, EMEA, UK, and Ireland, North America, and APAC. If I look at the performance of each of our four regions, so EMEA, the first one is is our largest region by revenue with 41% of of revenue. So what we're trying to do with with each of these slides is look at the key drivers of our performance in 2025, then our assumptions about the market and our business in 2026, and finally, a view about our market our position in the market as as we are currently. So to EMEA, our largest region, overall revenues declined by five and a half percent on a constant currency basis. Now these excluded two discontinued businesses, one in well, this one in Switzerland and EMEA and one in in North America.

19:56 We saw growth in the Southern European businesses in Spain, Italy and Middle East, but this was overshadowed, as I mentioned earlier, by a drop in the German revenues. We we undertook some quite significant restructuring activities in the German business later in the year, which will flow through into 2026 results. And finally, at the end of twenty twenty four, we had a fire in our Dubai warehouse, which was actually caused by the warehouse next door. So that that impacted the results to that part of the region the first few months, but they bounced back very strongly once we'd replenished the stock. So that gives me a confidence about a bounce back from the current Middle Eastern crisis. In terms of this year, I think we're still forecasting pretty flat markets generally and further expansion out of our German business into Central And Eastern Europe. We recruited some people and built a portfolio of of vendors that we can sell products into Poland and Eastern Europe.

20:56 And, of course, as I mentioned, the Middle East Middle Eastern crisis. The Middle East is quite a big contributor to profits in 2025. Although it's early days, that crisis, it's it's obviously slowed our business a little bit in that area. But we're hoping with a if we can get a reasonably quick resolution to that, then the business will get back on track where where it was. In terms of our position in the market, you know, we have strength in the live events and entertainment markets at different parts of that of the region. Strong positions in German, French, and Benelux markets, I would say probably leaders in in each of those. And then, of course, there's specialist distribution businesses in Southern European markets.

21:42 So looking at The UK and Ireland, 40% of group group revenue last year. Market challenging in The UK, which as you would have expected, but we did a lot of work ourselves to improve the business. And, you know, we turned down turned up at 6.6% improvement in revenues. I think it was 4.9% organic growth. GP up naught point 6% to 18.6 and a 30% increase in the adjusted EBIT. So a fabulous performance from our UK colleagues. Really, the the performance was driven by, you know, partly by reducing cost base, but really about taking taking business from competitors. So so aggressively going out of business without dropping prices, launching new brands, which we did very well at, growing the drone brand as an example, but also just making the most of the commercial opportunities that we have, taking on new brands, old traditional stuff, but working very hard to to build a business in a very tough market.

22:45 So in 2026, we really will continue with this strategy. We've seen some competitors struggling, so we'll pick up more market share I'd expect from them and and, of course, some full year benefits from earlier restructuring. So this this is actually our biggest biggest month of the year in March as we come to the sort of government year end, so it's usually quite busy this month. So it's quite quite an exciting time in The UK. And in terms of our market position, we are clear market leader in The UK and Ireland. Future growth will come through taking on new technologies, new vendors and taking more share from the competition. In terms of North America, this was 16% of our group revenue last year. Didn't didn't perform quite so well. We have seen some growth in this in the last few years, but we saw a decline in revenue of 5.3% on a constant currency basis and gross margin down, and of course, quite a drop in the EBIT percentage.

23:43 This region was really impacted by the loss of a high revenue and high gross profit vendor in Canada at the end of twenty twenty four. And we think we lost a bit of share also in some of our US business, but a lot of activity going on to improve performance. We we reduced our headcount in Canada earlier in the earlier in the year. The CEOs of our Canadian US businesses left later in the year, and we created a single regional management team of four, including recruitment of a senior salesperson from outside the business. Our assumptions for 2026 are the new new regional management team driving improved performance and a particular a particular drive to acquire new suppliers, particularly in that Canadian market.

24:32 So a strong player in Canada in that specialist AV market. And in The US, we're a strong player in the unified communications market, but a very small share of the overall US market. Again, you know, this is this does represent a a strong long term prospect for the business. APAC is our smallest region. We're it's mostly an Australian business. We have operations in Singapore and wider Southeast Asia and a business in in New Zealand as well. APAC is we've has been a bit troubled for a few years, but we've grew our revenue on a constant currency basis last year, improved the gross margin, lowered the overheads, and reduced the losses in that business. We saw the key to last year key to last year was really an improvement in our project pipeline. So we do very well in the Australian market when we get involved in some higher margin infrastructure projects, some changes in managements, a new general manager in Australia and and have replaced our finance director towards the end of the year. And the focus for this year is continued investment in Southeast Asia, which I think represents a strong midterm opportunity for the group and a further focus on project work in Australia and New Zealand.

25:53 So capital allocation. Last year, we recalibrated our dividend policy, so we are dividend paying stock. We changed our policy so that we pay out a dividend based on four times adjusted profit after tax cover. And so there's a slight reduction in the dividend, but still there as part of our mix. In terms of our capital allocation priorities really is to fund organic growth in strategic areas and and then in new areas of development. M and A has been, as I mentioned, has been a big part of our long term development of the group. We've acquired about 45 businesses over the years, and it's been a a, you know, a strong area of of performance.

26:41 And finally, of course, shareholder returns. Our business is I'm the largest shareholder, so, obviously, I'm very well aligned with the interests of of shareholders as a whole. The management team as a whole probably has about 20% of the equity, excuse me, of the business, maybe a little bit more. We have still quite a few UK institutional shareholders, a good and growing proportion of private investors in the business, mostly UK, some some overseas. About 15% of our shares are owned by US investors and about 15% by European investors, including some family office. So our shareholder base has changed quite a bit, but still a very strong element of of holding by the management team, and we we're very much very much bought into the business and the long term prospects for for the business. So I think we have a know, we'll have a strong focus on cash generation on value accretion of the business, a very focused and tight approach to allocating capital, but our real focus is on the long term growth prospects for the business.

27:52 So now looking at drivers, growth drivers, and outlook for the business. I thought it was important just to reemphasize really what our areas of future focus are. I think the first thing is customer service I mentioned earlier is critical, consistently high customer service, looking after our customers, making sure we're a reliable partner for them. We continue to you want to continue to develop the business in our core technical areas and also see some further benefits from our system investments. I think it could be very interesting in terms of the future of efficiency of the business, but also in future revenue and profit generation. We will look to take advantage of any further market disruption, you know, for example, struggling competitors.

28:40 We want to accelerate the growth of our business into new segments such as in software services or other technical product sets and focus on higher growth markets such as North America, Southeast Asia, and The Middle East, and finally, to continue at the right time with our select selectively with our M and A program. So overall, in terms of finances and financial terms, our focus is on growing the PBT, enhancing the EBIT margin, the quality of our earnings and, of course, shareholder returns. On the next slide, we recently undertook a a a sort of detailed three year plan for the business, which sets out our ambitions for the future development of the group. So these are looking at our organic growth opportunities.

29:34 Firstly, the expansion of our existing technical sales reach includes particularly continuing to develop our live and entertainment businesses. Secondly, we have significant plans for businesses that are still in quite early stage of development, such as software sales. Thirdly, continuing market share gains. You know, we we have a strong presence in The UK, but we're significantly underweight in some of the key markets such as The US. But even in markets such as The UK, I think we demonstrated last year that there's still opportunity for market share growth. Fourthly, using technology solutions to drive additional profit growth in the business. Such these would include improved ecommerce offerings and AI solutions. And finally, we identified areas for achieving future economies of scale.

30:22 These are growth areas for the business, all all organic. Of course, this excludes the potentially positive impact from future m and a, which we'd like to get back to hopefully later this year. In terms of our m and a criteria, what we're looking for in businesses when we do buy them, you know, we are buying effectively people, their reputation, their skills, and, you know, that's usually shown by having by them having a strong vendor portfolio and and also cost you know, very very loyal customers based on a, you know, a history of looking after them well. We look at markets where we think we can make money, where the market's growing, where they're receptive to our kind of offering, and of course, a similar sort of culture and ethos to us as a business.

31:13 Paying relatively modest EBIT multiples for the business. So in terms of the outlook, I think this is the getting to the end of the presentation. Very, very sort of short summary, really. We have a basic assumption of a challenging overall market, but we expect to see benefits from the work we did in 2025, and we'll continue to to see benefits in the business and driving the business in the future. Our well focus will be on driving gross profit while we ensure that our operations are as efficient as they can be. And that's the end of our presentation. There are some more slides in appendices at the back of this. I say this this slide, this deck is on our website, and maybe you can obtain it here as well.

32:05 But I'm very happy now to take questions if you want to add them into into the q and a board. I've got I've got a few questions on there, so maybe I will go straight into trying to answer some of those. But say, please add others in as you see fit. I will just I'll start at the top and see how we get on. Right. So first question was across new products, vendors, geographies, where do you see the most exciting growth drivers emerging? Lots I mean, there are lots of areas of of potential opportunity for us. I mean, our focus, as I mentioned earlier, for for many years, has been in more technical products. So these are things like more sophisticated audio and lighting solutions, technical video video solutions, And and also, software could be a long should be a long term should be a long term prospect for us. So that's across products.

33:04 Vendors, the the vendors kinda linking with with our product sets. We have a very big range of vendors. I probably won't highlight any particular vendor, but they're kind of very closely aligned to to what we've done. Geographies, as I mentioned earlier, I think I see our key geographies as being for the future for future developments and growth would be North America, I think The Middle East, obviously, subject to this this current issue, and Southeast Asia in a longer term. But we have plenty of growth opportunities in in, you know, Mainland Europe, and The UK has been a very strong business for for many years, and, you know, it continues to be a very exciting place. And if you go into our main office in The UK, you'll find a place that's buzzing full of full of life and energy. So so lots of opportunities there for us in the future.

34:00 Next question was, with leverage broadly in line with expectations and trunk facilities, how well positioned are you to reaccelerate m and a when conditions improve? I think we're in a good place for that. We, you say, we've been acquisitive over the years, generally bought between two and four businesses a year. Between 2023 and '4, we've acquired 10 or 11 companies. That was quite a lot to take on in a in a market that that then went very soft. So we've had some fixing to do with those, and we're still working very much on those. So lots of work internally on the businesses that we acquired, and of course, you know, that with a market that's that's been challenging, we just need to make sure that we're we're in a really strong financial position.

34:49 M and A, the validity of M and A to our business continues, we're very keen to get back to that, but we'll do it at the right time for the business. You know, we probably just need a little bit longer, and we've got we've got a very long list of of targets. We've got some conversations that are still warm, and, you know, hopefully, we'll be able to get back to that. We have a lot to offer to businesses that join the group, and when we do get into M and A, we're generally very well placed to support them and to be able to buy to buy the businesses. The next question, can you share early wins or use cases from AI? So somebody looking for whether AI is actually useful in reality. So we've we we retained an AI consultancy about eighteen months ago to come and look at the business and just to give us some thoughts about potential opportunities.

35:45 And they spent some time with our team, came up with 700 use cases, which is clearly way too many. So we picked five, and and actually we built a team around this, and we now have some of our own in house, you know, good really good AI capabilities. So if I give you one example. So we receive, as you would expect, thousands of orders a day from customers, and they come in in many different forms. And and quite a common one is a a PDF order on the customer's order form. So traditionally, we would take that order, somebody would take it, and type it into our system. Very time consuming exercise. Takes, you know, the we're very quick at doing it, but it take you know, for a complex order, it could take twenty minutes to input into the system.

36:31 With an AI solution, we've now got something where we can take the order from the customer, scan it, automatically put it into the system, and then it's reviewed by by the same person who would have input it. So, you know, it's not perfect and, you know, that we we will the AI the solution will flag areas where it hasn't been able to match the customer's description to ours. So we go through a review process. But, basically, that's cut a twenty minute process into one minute. So that's you multiply that across our whole group, and that releases an awful lot of time for people to go and do some more value add exercises rather than just typing orders in. So that's very interesting. And we have lots of other examples. And hopefully, in due course, you know, if you got if we come and talk to you again, we'll we'll give you some more examples and show you how that's show you how that's working. So that's the next question.

37:24 So the following question, where are you winning most strongly versus competitors, and how sustainable is that advantage? Very good question. I think, you know, fundamentally, there are a number of areas where we win against competition, but the key is consistency. So we we operate we only sell AV, so we're real experts in this. We have to make it work, and we have a good understanding of what customers and our and the suppliers are looking for, and we try to deliver what they need on a consistently strong basis. And that sounds very simple, but it's absolutely clear when when, you know, on the occasions that our businesses go awry, which they do sometimes, or particularly the competition, it's because their service has dropped and their customers can't trust them anymore.

38:11 So I would say, you know, I'm very comfortable that we have a sustainable advantage in in in terms of our service. You know, we only sell AV. Most of our customers are very, very much audio visual focused. Our big competitors generally sell mostly IT and consumer products. So so our biggest competitors are big broad line distributors that sell a whole range of products. So if the AV market's a bit challenging, then they will distract themselves onto selling other products. And but we have to make this work, and that does give us a competitive advantage. It also obviously, as I mentioned earlier, you know, our range of brands and products is is wider than anybody else's, so we really are a very good place to come for a customer who wants a simple buying process where they can get all the products and all the advice they need from one place, and that certainly isn't going anywhere in a hurry. So there's a whole big topic about competitive advantage, but I think I talked about a little bit about that earlier, but I think that we have a very strong competitive advantage.

39:24 Right. Some more questions. How do you see AI impacting the market as you've invested in this and digital? What returns do you expect on margin improvements? That is a difficult I mean, in terms of margin and returns, it that's very difficult to say. We we we look at each particular AI project we're doing to work out what we expect to see the benefits of that, and, you know, we make sure that whatever investment, time investment and money sometimes we're putting into these is justified by improvement. So sorry, I'm afraid that's very difficult to answer specifically, but we do look at each one in turn. I would expect to see that this will be able to reduce or make some reductions to our cost base, but my suspicion is that we'll divert people from sort of lower value add activities into driving more business.

40:18 And and also quite a lot of the AI stuff that we're looking at is also will also generate and on other digital work, will generate more revenue. So it's very diff sorry. I'm afraid it's very difficult to me to give an answer to that. It's something we need to do. I think it's something that's very exciting, and I do expect to see some benefits. Maybe maybe if you come back and ask me that question in a year's time, might give you a slightly more specific answer to it. Next question. Do you look to further acquisitions to grow regions and where are you seeing the large opportunities in the market? I think I probably covered that question. Our focus currently is primarily on organic growth, and I think we have really good opportunities to do that both in revenue and gross profit and also in terms of in terms of the net profits of our of our businesses.

41:08 You know, we we we clearly have some work to do to turn around the German business, and that represents an opportunity for us in terms of a turnaround. But, you know, in the longer term, as I mentioned, North America, Middle East, Southeast Asia are are strong opportunities, we've got big big we've got great teams and big investments going on, you know, in in those parts of the market. Next question. Are you seeing pricing pressure or consolidation in the current environment? How, if any, is this shaping the structure of the market? Over the years, we've tried to ensure that our business is, you know, we have to be competitive in terms of our pricing, so say that, but we're we're not leading on being the cheapest. We're leading on being on being a reliable, high quality, supportive distributor for our customers.

42:05 So so so that's our primary focus. Clearly, price there is you do get pricing pressure from time to time, and we just have to manage that. And we'll manage that, you know, you make margin if you're offering if you're doing something that's a value add and we need to demonstrate to our manufacturers that maybe if we have pricing pressure, they can give us some support because we're doing a great job to achieve what they want to. So some pricing pressures. If I look at product categories over the years, the gross margin's not really changed very much by category. And if we see a product set really declining in profitability because it's reached, you know, late maturity stage, then we will exit from that that part of the market.

42:51 Consolidation in the market, we have seen consolidation in manufacturers and some cons consolidation in customers. That doesn't hasn't particularly impacted us. You know, we still have 22 I think we traded with 22,000 different customers last year. The bigger customers, you know, they're they're really interesting to work with. They'll work on multi multi territory rollouts, which obviously fits very well in in our into our business where we we trade we're operating in about 50 countries with physical presence in about twenty twenty two or three. So they're very good for that. They also work on some very interesting large projects. So we have very good relationships with the large customers. So, you know, they're very happy to source product from us.

43:40 Yeah. So I think, hopefully, that sort of covered that question. Share and the last question I've got on here, how are you thinking about buybacks at the current share price? I do get that question. I understand the principle of it. You know, we've occasionally considered buybacks. You know, we're not you know, we don't we have leverage. We have and when we generate, you know, when we're in a position where we think we'll we'll like to invest, you know, we've got some surplus cash, what do we do with it? We will generally go out and buy businesses because we think we can add so much to a business joining the group. We're not against buybacks. I understand the principle of it. My focus is on having a very strong business that's growing into the future. You know, if if if the market considers our shares are cheap, then then there should should be people out there who are buying the shares. But for us, our priority tends to be more about investing in the business, organic growth, or or into m and a.

44:40 Those were all the questions I can see on here. If anyone has any more, please add them onto the board. Otherwise, I think I might hand back over. That's great. Thank you for answering all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Steven, could I please just ask you for a few closing comments? Thank you. Well, it's very nice to talk to you for the first time. We have a think we have a great business. You know, I'm personally very invested in this. We we operate in a market that is strong. It's growing. We are a very significant player, we've grown to be a very significant player in this market. We have some really strong key differentiators and and ability to defend our our market.

45:28 We have to be very agile as a business, and we've seen some changes in the market that's required us to be very agile in the past. But I'm really positive about the future of the business. And I think we have a, you know, we have a great future ahead of us. So, hopefully, I look forward to seeing some of you on our shareholder register. But thank you for your time. Thank you. That's great. Thank you for updating investors today. If I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good morning to you all.