Shearwater Group (LSE:SWG) — Final Results

0:02 Good afternoon, and welcome to the SHEARWATER GROUP PLC final results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company will 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. I'd now like to hand you over to Phil Higgins, CEO. Good afternoon to you, sir.

0:34 Good afternoon. For those that are new to SHEARWATER, I would just like to take you through a brief introduction. At SHEARWATER, we provide cybersecurity, managed security, and professional advisory solutions to help create a safer online environment. We have two divisions that make up the company. Within our service division, we have three companies. Brookholt Solutions provide next generation cybertech and services. Exena Consulting provide professional advisory and audit. Pentest provide red teaming penetration testing along with their newly released training program. Within our software division, we have secure endpoint, which provides next generation converged access management platform, and GeoAg, which provides sensitive data discovery.

1:24 I'll comment a little bit more about some of the changes we're making to the company in the in the latest slides. So just general stats here for you. Our service division produces 89% of our revenues and our software 11%. We have circa 100 staff, and our products and services were sold to 49 countries during the period. And we all do we manage that all from five offices in The UK.

1:55 To take you through some of the results of last year, Paul will cover these in more detail in his financial review. But to give you some highlights, in fiscal twenty three, the company did face some challenges due to the cautious customer behavior in the uncertain economic climate. This resulted in a decrease in our group revenues of 26,700,000 from 35,500,000 in fiscal twenty two and a negative adjusted EBITDA of 200,000 compared to a positive 4,400,000 in fiscal twenty two. This is mainly due to contract delays in the fourth quarter. Despite these financial setbacks, though, the company did maintain high engagement levels and required 130 new clients during the year.

2:42 Also, during the period, the company took decisive action to streamline operations even further and improve the efficiency, making the business more lean and productive. Additionally, the company's strong customer base of blue chip organizations across various sectors provide a solid foundation to move forward. To overview our offering, the group boasts an impressive array of cybersecurity capabilities. With its companies enjoying a stellar reputation in the field, they are all award winning. This aligns perfectly with the current market trends, where cybersecurity is the utmost importance to organizations. SHEARWATER has transformed into a more agile, specialized, and focused business.

3:31 Thanks to recent operational adjustments made, it has maintained long term customer relationships with prestigious leadership organizations across various sectors. Increased investment in research and development has notably enhanced our software solutions. Furthermore, the company's robust balance sheet, improved visibility, and growing pipeline of opportunities strengthens its position as a cash generative business. This is also supported by a seasonal board leadership team, industry thought leaders. Overall, the company is confident in its ability to achieve solid, sustainable revenue and profit growth during the coming year.

4:20 So some of the changes that, we've implemented, we've we've agreed to work on the merging of Xena IS, Xena Consulting into Brookfield Solutions. The reason for doing this is to streamline operations, reduce some of the complexity, and simplify the group's message. The services accounted for 89% of the revenues, primarily from blue blue chip clients in banking, telecom, and technology sectors. Despite the challenges in the services vision Despite the challenges in the service division, we did expand the team to meet the growing demand and introduce new products across Exena, Pentest, and Procter solutions to strengthen their overall service offering.

5:16 Today, we look at the software division. We've merged the geo link into Secure Envoy to create a more cohesive software company, increasing cost effectiveness, and enhancing operational performance. This unified software company will be referred to as Secure Envoy and will benefit from significantly strengthened position and its offerings as a result of continuous increase in r and d spend.

5:44 If you look at the progress in fiscal twenty three with Secure Envoy, it released its management software platform version three, which helps organizations manage and control access to their system software. With SecureEdWare solution via a single sign on, organizations can enhance their security measures, ensure regulatory compliance, reduce supply chain risk, simplify management of users accessing the corporate systems via a single sign with geographical with geolocation control on that access. In fiscal twenty three, GROUP PLC introduced a fully functional enterprise ready software as developed for sensitive data discovery, and it's now being used by a leading bank and attracting interest from other existing clients and new prospects.

6:36 GROUP will benefit from operating underneath the wreck the recognized brand of Secure Envoy and gaining access to its global reseller base. This is all underpinned by continued investment into our software and bringing new service offering to market. With that, I'd like to now hand over to Paul. Thank you, Phil, and good afternoon, everyone. Starting with this first slide, this first slide provides a breakdown of the summarized p and l of the group, starting with revenue of 26,700,000. We have seen, as Phil mentioned, a reduction in your year on year revenues, which is primarily, as a result of, q four delays, which, primarily in the services side of our of our business, whereby at the end of the the financial year, we saw the delivery of some deals taking a bit longer as a result of client client request.

7:40 And in addition, as Phil mentioned, some some the conclusion of signing up some deals being slightly delayed. It's pleasing to say, though, that since we start the the new year, we have seen a number of these delayed opportunities completed. We're seeing delivery of some of these opportunities now now coming through and flowing through in in q one and and and and beyond. And with the remaining opportunities, we we are looking we are seeing progress there as well. In terms of, gross gross profits of 6,400,000, it's worth noting that, the profitability of a gross profit, basis is slightly, down on the prior year. It's 24% versus 30%.

8:29 There's a couple of, one off items that that have impacted this. So within this number, a one off unrealized FX expense has has suppressed the the gross profit margin and also some additional investment into adding sales generating capacity, into advisory teams has, initially suppressed the margin. So, if you're adjusting some of those items, that profit margin is is not too dissimilar to to to that of the prior year. In terms of administrative expenses, we have seen an increase on a year on year basis, things such as inflationary pay pay increases to to to members of our team.

9:15 In addition to other increases in infrastructure costs across the group, have been offset slightly by efficiencies and reductions in corporate costs. So we have seen a circa 4% increase within this this, expenses line. At the end of the year, obviously, an adjusted EBITDA loss of of 200 k, does reflect, to a large proportion, those the benefits of those delayed revenues in in the period. I'm not going to go through every single line on on this. As you can see, a number of, the items below adjusted EBITDA remain constant with the prior year. However, it is flagging it's worth flagging two things.

10:06 The amortization of intangible assets, computer software. There's a slight reduction here, and the reason for this is that there are some historical projects that were fully amortized in the previous year, which has given rise to that that slight reduction on a year on year basis. And, additionally, obviously, a more material expense, which is a noncash impairment charge, which has been made in the year. And and this reflects a write down of goodwill values held for for the group's secure, Envoy, and Exena assets.

10:40 Incorporating this this impairment charge for the year, it does leave a loss before tax of 9,600,000 versus a a 900 k profits in the previous year.

11:02 The next slide provides a a divisional view of of our services, division and our software division. So starting off with our our services division, revenues of 23,800,000 are down year on year by circa 27%. And, again, as mentioned in the previous slide, this is primarily reflective of some delays we've seen in q four, which have materially impacted the revenue during the period. It's worth noting that these delayed revenues relate primarily to the security solutions and managed services and warranties lines with within this division. It's just it's a promising to see that our advisory revenues grew by 18% on a year on year basis with with a SIP. We have noted a significant demand for our consulting services within our Brookhort and Pentest businesses,

12:03 which is is great in the sense that it also does drive some additional visibility moving forward for that revenue line, which historically, you don't always have a a a large degree of visibility on. Gross profit margins of 20% are slightly suppressed in the year compared to the prior year. And as mentioned on the previous slide, this it does take into account the one off unrealized exchange expense in the period as well as some of that initial investments into adding adding headcounts to to support future revenue generation. Overheads within the services division have increased during the year, and this actually reflects some one off costs relating to, infrastructure upgrades, across the division, and also some one off items such as recruitments of adding those additional revenue generating stuff, during the period as well.

13:06 Adjusted EBITDA for for for the division of the 100 k does incorporate and and and is impacted primarily from those revenue shortfalls as mentioned above. Moving on to our software, business, it's it's pleasing to note, actually, our repeatable and reoccurring revenues have remained strong. Our our renewal rates, have surpassed 8% demonstrates some support from our long standing client base within our secure Envoy business. We have seen lower than expected new business within our software division during the period, with some opportunities taking a a little bit longer to conclude.

13:55 And I think looking moving forward, it's it's pleasing to see that, the newly released version 3.1 Secure Envoy product will provide opportunities to to to further push new business in in this division moving forward. Gross profit profitability within the software division of 63% is slightly, reduced on a year on year basis, and and this is impacted slightly by some one off additional hosting charges that, the division has incurred, which which is a bit being incurred in order to drive the delivery of new product sets. So, moving forward, the these are one off costs, which will will adjust back down. So we would like to think that profitability will return to prior year levels as a gross margin level.

14:51 Overhead increases are slightly up year on year from 700 k to 800 k, and maybe these reflect inflationary, expenses, inflationary increases to to to our cost base. However, we have offset some of these inflationary challenges with increased efficiencies across the division as as well as sensitive reductions in in other other areas. Adjusted EBITDA of of 1,000,000 for the year then delivers a 34% adjusted EBITDA margin. Moving on to the next slide. This next slide just provides a brief summary of the group's cash, movements during the period.

15:45 I won't go through every single line here. I'll try to pull out the some of the key movers in the year. So firstly, starting with our the group's operating cash flows as at 03/31/2023. These were obviously positive in in the year. However, they do also include some one off costs, that additional investment into headcount and some in in infrastructure costs are incorporated within that's that's operational cash generation figure. And in addition to this, there is some one off exceptional items, and these relate to the first parts of a group reorganization, which started towards the end of q four.

16:29 Other items to note are capital expenditure of 1,300,000, up from 1,100,000 in the previous year. And and and the the majority of this spend is in relation to investments in internally developed r and d to develop our our our new software offerings.

16:52 The other items to to note in the previous year, we we've paid back the final loan balances held by the group. So at 03/31/2023, the group has no no loans outstanding with the exception of lease leases for buildings. And, yeah, the business continues to cash collect cash efficiently. And to date, it has not utilized the RCF facility in place. With that, so I'd like to hand back to Phil. Thank you, Paul. Right. Now I'd like to take you through a couple of slides. The first would be in the strategic direction. We remain steadfast. It's our vision to become the preferred provider of choice. We want to deliver the next generation cyber technology, professional advisory, and advanced cybersecurity services solutions.

17:48 Our initial focus will be on the short term is on building organic revenue and delivering solid, sustainable revenues and profit growth in the years ahead. Our organic growth will be achieved through helping our company solve core scaling issues, providing capital and infrastructure where required, cross selling across the group, securing new customers, and supporting product innovation. Our long term strategic goal is to grow via first acquisition, acquiring companies, which complement the group, building shareholder value, and that's on both the side the services side and on the software side.

18:33 And to conclude, our current trading, just to give you a little bit of an idea of of how q one started up, we saw a strong q one. Trading was driven by high customer engagement and the fulfillment of some of those delayed orders that Paul spoke about. This one scores our robust robust prospects and complemented a healthy balance sheet and ongoing relevance of our solutions is addressing modern day security demands. Anticipated fiscal twenty four cash generation further reinforces its our promising outlook.

19:13 When you look at the opportunities inside the group, the company aims to enhance its services division by expanding its leadership client base, increasing the shares of reoccurring revenue on from its existing clients. As we see our customers buying longer term or or buying annualized contracts, but having those in place for multiple years, sweating their assets, we do expect to see an extended range of new recurring revenues and last well into the future. We'll also be looking to expand our offerings, both in our service and our software division. With our continuous investment in r and d, we do expect, additional softwares to and features and functionality to come out of our software division.

20:07 And with our services division, I'm glad to report that our service offerings that were recently launched last year are all now generating, cashing opportunities. We aim to facilitate, more cost introductions between our existing blue chip services customers and our software products. We own the IP. It's a highly profitable business, and what we're have done, we've incentivized our teams to actually take these products to market and sell those to our existing customers and to also generate new prospects as well. And I'm glad to report that our, the take up and the interest in our new softwares is, is growing. The number of, POCs and presentations and client meetings have been taking place since the beginning of this fiscal year, and we expect that number to grow and obviously show some return, as the year progresses.

21:07 So with all of those things in in mind, I'd like to think that the there is a very positive outlook for the group moving forward. And with that, I believe that concludes the presentation today. And therefore, I'd like to open up the floor for questions.

21:27 Perfect, Phil. Paul, thank you very much for your presentation. What I'll do is I'll just bring your cameras up now. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. We've received a number of questions, and I want to start off the q and a session with this one here, which reads as follows. How exactly were you will the work you've been doing to merge group companies drive an increasing number of opportunities moving forwards?

21:55 I think that one's best for me to answer. There's there's a couple things. First of all, I'll address the side of of Secure Envoy and and Geolang. Obviously, Geolang was a pre rev technology company when when required. What we did is obviously invest in it over the years. We've got the the product installed with the customer. It's been constantly developed during that period as well in partnership with the the client. And we have now got an enterprise grade technology. And as opposed to just restricting it to the the customers that we have already inside the group, we we wanted to use the platform of Secure Envoy. They have a very well established brand name.

22:41 They have a very well established distribution network of resellers internationally. And this would allow us to make their product available, to all those resellers, multiplying up the amount of salespeople that would

22:54 be able to talk and introduce this technology set to their client base. So that's that's one side of it. It also meant that we could, bring together the the programming teams. We could get greater efficiencies out out of those teams than the staff. It also meant that the quality controls and and all those things would fall underneath the, the rigor process of of Secure very well established programs. And so all in all, from from that perspective, it made perfect sense to do so. And we're already we're seeing that, obviously, there's been new software announced from from Secure Envoy independently. The GeoLAN software is is now out there. It will be marketed as sensitive data discovery.

23:41 It will be the company will be Secure Envoy.

23:46 And we will obviously, we've incentivized the sales team to actually go out and and and sell this to to make sure that this all all works and happens for us. On the services side, we're merging Exena IS, Exena Consulting into into Brookhall. That's the plan. It's currently on the process. And what we're looking there for is one, once again, efficiency savings. We're we're looking for, you know, reduced administration costs, simpler message, easier to actually go to market, and and that's what we we gained we will gain from this. We also when you look at it from the business side of things where where where the rubber hits the road, the then the team at Exena will be able to represent themselves now as part of a larger company.

24:35 They'll also be able to

24:38 use the ISO badges that, Brookhall have, and we have five of those, which will complement what they have. It also mean that we can take the Exena accreditations that they have for audit and bring those into Brookhall. It will increase the profile of Brookhall with its own customers. We have many blue chip customers there. And what I'm expecting is to see a more greater awareness from our existing Brookhawk client base to understand more about the services Brookhawk can offer, and one of those services being Exena Consulting and their array of audit and advisory services. It will elevate our, our opportunities, and we believe that, you know, along with the the general savings, of administration, the practical ones is it creates a lot more opportunity for, both the services side and the software side.

25:36 Perfect. Thanks very much, Phil. May another question for you maybe. Could you give us a flavor of the type of customers you are engaging with in the current year? Certainly. Yeah. We, we typically deal with

25:48 branded, fortune companies. You would know all their all their logos. We do have, all sorts of telcos for international high street banks. We have chemists. We have, leading, sportswear manufacturers, international clients. We have petrochemical companies. These are a lot of our customers have been very long standing, and I'm I'm glad to say that there's some repeatable and recurring revenues in all of those. And despite and one one of the things you you you must consider is the reason that some of these contracts get delayed is because of the sheer size of the contract and the magnitude of work that the customer has to do.

26:34 They're international by nature. They're long term. It's a huge investment. And, but that is the nature of their client base. We we're dealing with those big customers, and sometimes there are some delays simply because of the customer's infrastructure and their their availability to actually complete their work. But, these would all be I wish I could give you the logos and the names. Unfortunately, it wouldn't be the sort of, practice to actually give out customer logos of of where we look after security for them. Perfect. Thank you very much, Trevor. Do you expect to enter new territories globally in the current period? Yes. We do. So there's a couple of things. Services division predominantly, we're client led. So a customer will will and we get involved in lots of international engagements across Europe and international global deals.

27:27 And it will be we will go where the time requires us to go, and we look at the most efficient routes to actually deliver that business. And we these things have to be done under, you know, bid and tendering rules. Generally, they have to be, economical and superior to to competition. They've got efficient. And we've got a reputation in delivering that. So we do expect to see, an increase in that activity as, so say some some of their clients will catch up with their, their international rollouts. On the services on the software side of things, we're proactively looking for additional territories for our software distribution. Obviously, the more, territories we can cover, the more, use and more business we can pick up in that region.

28:13 So that will be an ongoing program. Perfect. Thanks very much. Next question reads as follows. Can you provide more detail on the r and d spend and where you're seeing the most benefit?

28:27 Paul, is that one for you, or do you want me to leave with that?

28:32 I I think in terms of the r and d spend recent recently, obviously, it was circa 1,300,000 was our our intangible spend during the period, which probably about 1,200,000 was was specifically spent on development of secure, Envoy, and GLM product sets. We have spent time during the year looking to make our our r and d teams more efficient, which I'm very pleased and same with has got us to a point where new products that have recently been released in in in q one. I I think moving forward, the level of spend feels appropriate, and and I think following the recent launches of the secure invoice products, we we we would like to be hopeful that we would start to drive some incremental revenues from this point.

29:32 Perfect. Thank you very much. Next question here is from Patrick L. Service revenue was sharply reduced from your two largest customers in FY twenty three compared to the prior year. Is this reduction in lost contracts or just delayed renewals? I think that's probably suited to me. We had long term customers who have been very stackable for very long period of time. They're still customers, and they have huge projects. And some of these projects do get delayed, then this is simply a a delay of project. And they're not lost. The requirement for the customer is still there. And, obviously, until we we have successfully delivered some of those delayed orders already, the remaining delayed orders, we will give you further announcements as and when we can post period end h '1.

30:29 But, yeah, they're not lost. Perfect. Thank you very much, Phil. Next question here. An 80% renewal rate within software might be consistent but appears low. Do you have a view on this? And what rate do you target?

30:44 Obviously, we'd like to target higher. One thing you gotta realize is when when Secure Envoy was acquired, the product set there was a lot smaller than it is today. Its features and functionality is a lot smaller. So you you you when you see, obviously, some of those declines, they would be expected. And what we've done over the last few years is actually invest and the team have been working really hard to actually bring together the, so to say, product set for for to claim tomorrow. We're now on prem in the cloud. We now cover multiple devices. We now got geolocation. We now host the art technology. We've got all these features which are needed today to actually meet compliance and regulation and security requirements. So, you know, the 80% would not like to grow? Absolutely.

31:32 What we are also seeing is some clients are sweating their assets a little bit longer, so maybe that will, you know, contribute to an increase in that. But 80%, I don't know how that measures up against industry averages. Obviously, you know, people like Microsoft, I imagine everyone has to renew that one. But there's other technologies out there. I don't know if if 80% is a good mark or not, to to be honest, for for for the software. Paul, I don't know if you've got any more color you can add to that. I think the point to make on the 80% re renewal base and whilst very early days, I think adding the, obviously, the the new product sets in q one, we would we would like to expect that that will have a positive impact on customer retention moving forward because, obviously, additional functionality gives a hook to some of our existing clients. So so it's obviously, it gives them enough reason to stay with us.

32:33 Perfect. Thank you very much. Just turning to the next question here from Paul B. If the EBITDA losses were driven by timing on customers, will be will twenty twenty three, twenty twenty four EBITDA performance result be an upgrade to forecast in the market?

32:51 Unfortunately, we're allowed to forecast. But you can obviously gain access to SinkoSnow through Research Tree, and that'll give you some, some guidance there. Paul, is there anything we you can add any color on that? I I suppose just, just to add to that slightly. Obviously, we've we've noted that current trading is ahead of the prior year, and and q one was in line with our with management's expectations. So, obviously, we're we're trading ahead of the prior year. But, again, obviously, it's not something we've we've forecast moving forward, upgrades or anything like that. Not at this stage. Perfect. Thank you very much. And, Phil, perhaps one for you. Who are your main competitors in the service division and the software division?

33:45 Well, there's the good thing is is when you look at our our companies, they're all all winning. They've all one of these one of them got there for customer service, innovation, productivity. So we do have competition there. We are a specialist company. So there's very few companies that are as pure as what we do. And there's lots of general there's companies that will have, for example, a department to do some pen testing. But we have a company that does pen testing. There's also a company that has won numerous awards on the international stage. They service high end client base of technology companies. And there's no greater accolade, I don't think, than when companies from your own industry sector use your skill sets to to test their their technologies.

34:34 So from a pentesting perspective, there are people that will do it cheaper, but I don't see them doing it any better. From a solutions perspective, there's there's a lot of resellers out there that will sell the product set and don't have the service. Now we've managed to keep hold of our key clients for north of ten years, and that that list is growing. So our service is king there, and that's the thing that keeps us in there. So we we're lucky that we don't see many companies like Brookhorn out there. There's been a few that have have, have emerged. Some of, no longer with us. Some of them have been bought out. Some of them are back into PE.

35:20 And, you know, so there's very few companies that are like a Brook or Exena. That's, you know, great proposition there. They deliver the same services as the as the, you know, big four. Apart from the the, you know, cheaper endpoint. And the skill set you actually get, you actually get a person with twenty years experience. So once again, it comes down to a service offering. Our services, we believe, are master are faster period than that competition. On our software side, it's all about innovation. It's all about addressing technology gaps, and it's looking for you know, even in the crowded market space. You know, everyone says, why buy I buy buy Microsoft? And what we're seeing is is a lot of our customers are saying, well, Microsoft's great, but we need Microsoft plus one because it's not quite so focused on where we need it. So now looking for those focused companies, which is where we have, you know, things like, you know, data discovery and secure invoice and access management platform.

36:20 There are many big secure invoice out there, lot lot bigger than than those guys. And but their prices are more expensive. Their quality of service isn't as good, and that's simply because of the volume of people. And the way we attract people is, obviously, once again, on that service and quality offering. And and the price point, it's it's particularly in today's environment, that price point becomes more important. With GeoLAN, it's we're plugging a a technology gap where there's, certain technologies out there which need for compliance and security reasons need to be monitored, filtered, need to be controlled, and we we are we're we're able to do that with the toolset that we've got.

37:07 And this toolset is is is not widely available, you know, through through through competition. There's there's a couple of companies out there that do a little bit of what we do. There's some some other bigger companies that do some of what we do, but not so well. So we're you know, the types of organizations we're talking to are once again leading blue chip companies. And we're obviously with the new versions that are now being released, we're hoping that those conversations will materialize. And I would like to think that there will be an opportunity for us to expand our software revenues as a result of that. And so competition wise, it's very difficult. Big generalist companies are, are available, but we're seeing our client base looking more at at some of those focused companies who can specialize and be more pure with the offering. Hopefully, that's a bit long winded, but hopefully that answers your question.

38:01 Perfect. Thank you very much, Phil. Just turning to the next question from Richard. Clearly, new contracts is the key to the financial health of the business. Are you offering special deals to entice new customers to sign up for one year deals, for example? What we we we do a lot of international business. We do an awful lot of multiple year contracts. We are seeing a lot of those contracts. Some of those contracts being one year ones with the options to renew. We try and stick turn away from the, you know, buy one get one free simply because of soon as you've got customer in the in the mindset of I can get it cheaper, you never get them out of that. So, obviously, we want to sell to maximum value. So what we do, we work very closely to the size of some of these deals, and you've probably seen in some of the RNSs, they're multimillion dollar deals.

38:53 We work very closely with the manufacturers from the services side. And there that sometimes there is especially big pricing that's offered, but the customer has to make a large commitment. So it's a it's a it's a coordinated event in actually achieving that. On the software side, there are there have been instances where there's been special offers, promotions on, especially when launching new technologies and things. And to get the the buzz, we will incentivize it, and we we wanna get it moving. So we will look on those on a case by case basis. But generally speaking, we want to try and steer away from buy one get one free type of approach. Perfect. We've got another question here from Duncan. Lots of hope has been expressed, but no scale offered on either division. So what practical comfort can shareholders draw given the decline in revenue last year and collapse share price? And comfort is required if the valuation is to improve.

39:47 Had any comments on that? See, I've got no control over the share price. I'm a large shareholder, as you know, so that's it's it pains me as much as it does if we have the shareholder. And in terms of, you know, what comfort, there have been delayed orders that we spoke about earlier. And some of those delayed orders have come in. And when you look at, you know, prior to fiscal twenty three, when you go back 2022, 2120, and we were lucky enough, fortunate enough to actually show, you know, progression. And and I would like to think that, you know, whilst we've had these macroeconomic challenges, I would like to think that as some of those clouds clear, there will be an opportunity for for all of us, not just us. And you'll read it in the press. It's it's other companies out there in the IT industry that still, you know, are having a a tough time.

40:42 And and I think all industry is, full stop. And I think with with some of those those challenges clearing, I think there'll be an opportunity for us to, you know, rebuild. We're gonna be focusing on that organic growth. We're focusing on getting our cross selling in improved. We're we're incentivizing the sales team to go out and sell our homegrown technologies as well because they they do yield a greater a greater margin. And with all of those sort of things in play, we would like to think that, they will contribute to a positive story. And then it's up to to the markets, to the shareholders, to to dictate what our share price is gonna be. Perfect. Thank you very much for that, Phil.

41:29 We've got one final question here from Guy. How are you managing consulting staff resources in response to the large year to year variations in revenue? We before COVID, we had made some adjustments to to our consulting base and or to our business full stop. And when we went into COVID, obviously, we didn't know how long that would be, how long it would last, and we kept our teams on. We wasn't expecting it to last as long as it did. We didn't expect the change in working practice to to move the way it did. The face to face meetings are are taking place again. We're seeing increased activity in that.

42:16 Along the way, we did lose some some people. We've made some efficiency savings. And those efficiency savings were were not just in the consultants, but obviously some of the lines of business that we're we're chasing after from an audit perspective or an advisory perspective. The the business at the moment is very focused in what it's delivering. And what that allows us to do now is we have a a good team, and it now we believe that you with the merger of our consulting advisory consulting company, Brookor, it will give a a better platform for them to grow. And so we'll be monitoring that very closely. When you look at our pen testing team, we did struggle in finding some staff, and so we had to push out internationally.

43:06 You can't always get people you want in in The UK, unfortunately. So we do have international staff that contribute to what we do. We have found and taken advantage of some of those price points. Labor rates in some other countries are cheaper. We still keep our core, obviously, in The UK, but we do add to that. And, obviously, where we have peaks and troughs of demand, we do bring in contractors. And that's simply what we're looking to do is make sure that we don't employ only to have to make them redundant. What we're looking for is obviously just to manage the peak of the time. We're looking to drive, obviously, utilization rates up. They're at strengthened levels than to what they were during the COVID period, but we think there's still room for improvement. So we'll be driving it quite hard to make sure that those those rates do improve.

44:00 Perfect. Phil or Paul, thank you very much for that. I think we've addressed those questions you can from investors. And, course, the company will review all the questions submitted today. I will publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which is particularly important to the company, Phil, could I just ask you for a few closing comments? Yes. By all means. So, obviously, there is, these are disappointing numbers. I hope you understand that, some of the challenges that we've had. When you're dealing with large corporates of of the nature that we do, you you can't demand that they they they do things in a certain time frame just to suit you. These big elephants do wander along at their own speed. These these are long standing customers. We've got great confidence in in what they do. They have confidence in us in delivering, and we expect that those will continue to, you know, be great working partnerships.

44:56 So despite twenty twenty three's report, I would like to think that there's great value inside SHEARWATER GROUP PLC market space. I would like to think that you can see that as well. Thank you. Oh, Paul. Thank you once again for updating investors today. Could I please ask investors not to close the session as you 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, but I'm sure it'll be greatly valued by the company. On behalf of the management team of SHEARWATER GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you.