Siegfried Holding (SIX Swiss: SFZN) Q2 2026 Earnings Call

0:00 Welcome to the presentation of our Half Year Results 2026. I'm here with Marcel Imbinkherrid, our CEO and Tanja Micky, our CFO. First, Marcel will present the highlights of our numbers. Then Tanja will go into the financials in more detail, and then Marcel will talk about the progress in our strategy Evolve Plus and the outlook. At the end, we are looking forward to take all your questions through audio and video call in the Q and A session. With that, Marcel, over to you. Thanks a lot, Peter, and also from my side. Good morning and a warm welcome to all of you. I'm excited to present to you our half year results 2026 together with Tanja.

0:50 Tanja joined us two months ago and it was a busy start for her with the integration of the recent acquisition. With her strong experience as a CFO of a public listed company, she's already running on full speed, so I'm very pleased to have her on board. Now, let's turn to our half year results. The Siegfried team is delivering. Let me give you a summary on the upcoming slide. The performance of the first half of the year is exactly according to plan. Growth is in line with our expectation, net sales grew by 4.8% in local currencies.

1:35 Also core EBITDA margin increased from 21.6% up to 22.4%. Integration of newly acquired sites is on track, I will give you more details later on. Evolve plus strategy, exciting progress, so I really will share give you more insights later on as well. With these results, we laid a solid foundation for the full year delivery. We are confident to confirm our guidance, high single digit growth in local currencies and an EBITDA margin above 23%. Now, I'm handing over to Tanja for the financial update. Thank you, Marcel, and good morning to everyone from my side as well.

2:25 I'm delighted to be joining you today for my first earnings call as CFO of Siegfried. While I have only recently joined the company, I have already had the opportunity to meet many of my colleagues across the organization. And I have been impressed by the depth of expertise, commitment and collaborative spirit of our teams. The strong focus on execution and operational excellence is clearly reflected in the results we are presenting today and is one of the reasons I'm excited to be part of Siegfried. I'm very happy to have joined the company at this important stage of its development and I look forward to supporting Siegfried in the next phase of its growth journey. I also look forward to meeting and engaging with many of you over the coming months.

3:12 With that, let me take you through our financial performance for the first half of twenty twenty six. As Marcel has just outlined, Siegfried once again delivered profitable growth in the first half of twenty twenty six. And I'm pleased to confirm that we have established a solid foundation to deliver our expected full year results. In line with the guidance, which we issued at closing of the acquisition in May, net sales increased to CHF $633,000,000 representing growth of 2.2% on a reported basis and 4.8% in local currency. Drug substances sales reached CHF 431,100,000 in the first half of the year, while drug product sales amounted to CHF 201,900,000.

4:04 As expected, seasonality is more pronounced this year than in previous years. This is mainly driven by the recent acquisition of three drug substances sites in The US and Australia. As the transaction closed on May 1, the acquisition contributed for only two months in the current period. Treproducts is more second half weighted due to planned ramp up of new products. In addition, seasonality is driven by the nature of our production plan. Let me explain this in a bit more detail. The Siegfried Group recognizes most of its revenues at the completion of a production campaign. As the duration of this campaign can vary from a few weeks to several months or even more than a year, the timing of revenue recognition differs from year to year and depends on the production plan.

4:55 Similar to last year, a larger share of revenue recognition events are scheduled for the second half of this year, resulting in a stronger second half weighting. Now let's have a look at the charts on the right hand side where we already see the first effects of the acquisition. Our U. S. Dollar exposure has increased to 14% compared with 10 in the prior year period and driven by increased weight of U. S. Generated revenues. For the full year, we expect U. S. Dollar exposure to increase further to around 20% with the corresponding reductions in the share of the Swiss franc and the euro. The acquisition is also reflected in our sales mix. The drug substances share of sales increased to 68.1% from 66.8% in the first half of last year.

5:45 For the full year, we expect the drug substances contribution to increase further to around 70%. Turning to foreign exchange rates. The US dollar and euro both weakened against the Swiss franc compared to H1 twenty twenty five. As a result, we experienced the currency headwind of 3.4% in direct products and 2.2% in drug substances. Based on current exchange rates, we continue to expect a currency headwind of around 2% for the full year. Importantly, our natural hedge once again worked well during the first six months, resulting in no material impact on our EBIT margin. The next slide provides reconciliation from our reported Swiss GAAP results to our core results, which form the basis for how we manage and steer the business.

6:36 I would like to highlight two items included in the reconciliation. The first item relates to adjustments for our foreign pension plans while we make in every reporting period. We have reclassified CHF 900,000 of net interest on foreign pension plan form from operating expenses to financial expenses. In the reconciliation to core net profit, we have also adjusted for the corresponding core net interest expense. The second item is the exclusion of CHF 400,000 of acquisition and integration related costs from our core results. Having explained the reconciliation to our core results, let me now take you through the core income statement. In the first half of twenty twenty six, we further improved our profitability, increasing our core EBITDA margin by 80 basis points compared with the same period last year.

7:34 We achieved this despite continued increase in input costs, particularly personnel expenses. The main drivers of this improvement were productivity gains, a favorable product mix, and a strong focus on cost discipline across our entire network, including our headquarters. What has particularly impressed me is the relentless focus on operational excellence throughout the organization, which remains a core pillar of our EVOLVE plus strategy. This progress is also reflected at the gross profit level. Core gross profit increased to 170,700,000, representing year on year growth of 4.7%. Core SG and A expenses increased slightly reflecting our continued investments in systems and organizational capabilities.

8:26 This includes strengthening our commercial organization in line with our increased focus on commercial excellence under EVOLVE plus as well as expanding our early phase development capabilities across both drug substances and drug products. Between EBIT and core net profit, I would like to highlight two points. First, core financial expenses were slightly higher than in the first half of twenty twenty five, reflecting the expansion of our bond financing. Second, exchange rate movements had a slightly positive impact on the result. As always, this effect is driven by currency fluctuation and can vary significantly from period to period. Let me now turn to our cash flow performance in the first half of the year. Operating cash flow amounted to CHF 93,700,000 in the first half compared with CHF 149,600,000 in the prior year period.

9:21 The decrease was primarily driven by the timing of tax payments, currency translation effects and an increase in net working capital, largely reflecting the addition of the newly acquired sites. One of my key priorities will be to drive strong conversion as this remains fundamental to our capital allocation strategy and long term value creation. Capital expenditure was below the previous year's levels, reflecting the completion of our high quality drug substance manufacturing facility in Linden. Investing cash flow also included acquisition related outflows of CHF157.4 million. Despite these investments, free cash flow remained positive at CHF15.1 million.

10:11 Financing activities generated CHF 143,300,000, primarily to fund the acquisition resulting in net debt to core EBITDA increasing to 2.3 at the end of the period. Overall, the underlying cash generating capacity of the business remains strong. Our focus will continue to be on cash generation and networking capital management. Let me now turn to our capital allocation framework. Our capital allocation framework remains unchanged. We continue to invest in attractive growth opportunities both organically and through M and A. These investments are designed to support sustainable top line goals, strengthen our customer offering and over time contribute to margin expansion and increased cash generation.

11:01 The acquisition completed in the first half is a clear example of this framework in action. It strengthens our platform, expands our capabilities and demonstrates our ability to deploy capital selectively when we see a compelling strategic and financial opportunity. The recent acquisitions has neither changed this framework nor our M and A strategy. M and A remains always on. At the same time, our immediate priority is the successful integration of the acquired business and the realization of the expected benefits and value creation. We will continue to assess opportunities against the same discipline criteria, strategic fit, value creation, and an attractive return on invested capital.

11:51 We will not pursue transactions simply for the sake of growth. At the same time, our approach to organic investment remains equally disciplined. And now that we have completed several major capacity expansion projects, we will focus on decreasing the capital expenditure level. This is also part of my ambition to maximize cash generation. Importantly, the ramp up of our capacity expansion projects in Minden, Hamel and Barcelona are progressing according to plan with the additional capacity being filled in line with our original expectations. And Marcel will provide more detail on this in a moment. Going forward, we will continue to invest selectively in capacity, technology and capabilities that support future customer demand while maintaining capital expenditure in the low teens as a percentage of sales.

12:42 As expected, leverage has increased following the acquisition and it is now our ambition to return back to pre acquisition levels. We will put a strong focus on cash generation and deleveraging on maintaining the financial flexibility to invest in the business and act on attractive value accretive M and A opportunities when they arise. To sum up my remarks, we delivered a solid performance in the first half of the year. We executed exactly according to plan. And we established the foundation to deliver our guidance for the full year 2026. With that, I would like to hand back to Marcel who will give us more insights into the execution of our Evolve Plus strategy.

13:28 Thanks a lot, Tanja, for sharing the financial insights. And now let me provide some more insights into the good progress we have made in executing of our strategy. I will also share our outlook for the remainder of the year. Two years after the launch of Evolve Plus strategy, we are seeing positive results across all dimensions of our strategy. The industry trends remain very much intact. Our strategy at Evolve Plus is built on these trends. Let me give you a few examples of where we are seeing exciting progress.

14:18 High demand and limited drug substance capacity in The U. S. We have significantly increased our capacity in The U. S. More details shortly. Customers are looking for supply reliability due to geopolitical uncertainty. Our global network with 16 drug substance and DP sites across The U. S, Europe and Asia is the perfect answer to this need. Small mid sized pharma doesn't have development manufacturing capacities. We can now offer them the complete service from preclinical to commercial, from drug substance to drug product. Essence and Grafton together have a really attractive offering in The U. S. Good news, the inflow of new projects for Grafton and Essence is very positive.

15:10 This means our hypothesis two years ago with the announcement of new strategy of Wolfbus during the Capital Market Day, which we have adapted is now really proven. These R and D teams are almost fully booked. And one important update related to commercial excellence. As you know, we have sharpened our go to market approach and strengthened our sales organization with more hunters. Good news also here, we were able to gain 31 more RFPs in drug products and 69% more RFPs in drug substances year to date compared to 2025. In drug substance, we won twice as many new innovation customers year to date compared to last year.

16:02 After two years, the direction is clear, EvolvePlus is really working. We are building a stronger platform for future organic growth. One of the most visible examples is how the recent acquisition further strengthens our global network. With our newly acquired sites, we now operate the largest global small molecule drug substance CDMO network globally. 10 sites across The U. S, Europe and Asia give us a truly global footprint with a very strong presence in The U. S. Our offering spans the full journey from pre clinical development through the commercial manufacturing. This combination of scale, technology offering and geographical reach is unique and puts us in a very strong competitive position.

16:57 Nowadays, if we are offering a new molecule, we are able to send out offers from three different locations from Asia, Europe and US and our customers can make the choice. For our customers, this is about more than just capacity, it's about supply reliability and at the end also the flexibility. We can combine more than one hundred and fifty years of experience with a Swiss quality mindset and deep technical expertise across our sites. This is an attractive proposition to customers and we are already seeing strong momentum from our expanded U. S. Presence. Let me provide more details on that on the next two slides.

17:44 From the day we announced acquisition, the phone lines have been constantly ringing. Customers are curious about this additional capacity for U. S. We opened Wilmington for customer visits in July, since then five customers visit. Another six visits are scheduled in the upcoming four weeks. Even more important, we see very concrete interest from top notch large and mid sized pharmaceutical companies. They are looking for capacity for in market products as well as future product launches. The feedback has been consistently positive and we have already submitted three concrete offers. This strong level of customer engagement gives us further confidence in the business plan and in our ability to deliver the targeted growth.

18:40 The real value of this acquisition lies in unlocking the capacity for new and high value business. People are the key. Our integration teams are fully focused and engaged to execute this plan. I had the opportunity to meet the team on several occasions, also together with the Board as part of our strategy off-site in The U. S. One thing I can really tell you, this team is really hungry. Our target remains unchanged to free up 80 cubic meters of high quality capacity for innovative products available from 2028 onwards. We are on track. Transfer activities are already underway. Wilmington, the first transfer of the first product will be completed this year.

19:29 Bensville transfers have been initiated leveraging the synergies and capabilities of both sites. At the same time, we are moving forward with new business. As capacity is freed up, we will gradually start development and transfer in activities for new product exclusive products. We expect first revenues from this new business in 2027, followed by a step by step ramp up from 2028 onwards. And there is more, Wilmington continues to see strong demand for the existing portfolio. To sum up, we are moving fast, we are delivering according to our plan and we remain fully on track to unlock the full value of this acquisition.

20:18 A key priority of our strategy at WolfPlus is to further broaden our technology offering. This is absolutely key to attract new business, especially from small and mid sized pharma. Good news, all our strategic technology upgrades are coming online as planned. Elmasno additional lines progressing well, the site recently shipped the first sterile products to The U. S. This is an important milestone after a successful FDA audit and an approval. Minden product transfers are progressing as planned. The first large food campaign was produced and packed earlier this year. The new production facility is now on stream, really on stream.

21:03 Early phase development has already explained strong project inflow into our U. S. Acceleration hub continues. Barbela first development projects for spray drying are being executed, while we are building up the commercial capacity till end of this year. Harlem, the first pivotal syringe line is coming online as planned and this progress confirms that it was the right decision to broaden our technology portfolio in these strategic areas. To sum up, We have delivered a solid performance in the first half of the year, we have executed according to our plan and we have laid the foundation that makes us confident to confirm our guidance for the full year 2026 and beyond.

21:54 We have a laser focus on the execution of our strategy at WolfPlus to ramp up our future organic growth, to unlock the full value of our acquisition and most important, we focus to be reliable the reliable partner for our customers, on time delivery, top quality and to make sure that our products are helping millions of patients worldwide. This makes us confident on our positive midterm outlook. Siegfried will continue profitable growth with CapEx in the lower teens or even closer to 10 in the near future and of course M and A is always on at the right price and for the right business.

22:41 We will continue our journey, step by step, year by year. Thanks for your attention now and now I'm handing over to Peter for the Q and A session. We will now start with the Q and A session. We're looking forward to take your questions through audio or video call, or you can also type in your question into the web chat.

23:46 The first question is from Laura Pfeiffer. Laura, can you hear us? I can. Can you hear me? Perfect. We do. Hi, Laura. Hi, Laura. Good morning. Good. So good morning, everyone, and thanks for taking my questions. I have three. Maybe if I can go one by one, would be appreciated. So maybe first on drug substances. Your guidance now includes some small volumes from the previously uncertain large contract here. And here, can you please specify what order is exactly back on? Is it like the usual order size and most of this will be delivered next year? Or is it just a small amount that be effective for the second half? So that's just a clarification.

24:38 Thanks a lot for this question, Laura, but because I am expecting that plenty of you would ask the same question. So this is now really defined and also cleared out with the customer. So the additional business what we are gaining compared to the last guidance which we had is marginal. So but now everything is in, now with the full confirmation also for the guidance, which we gave in February and also after closing. So this everything is in, and of course, next year business as usual. Okay. Thank you for that one. And then maybe on drug products, it grew only a little bit in H1, but you point to the planned ramp up of new products in H2.

25:29 I'm just wondering if you could tell us a little bit more which sites, technology and products will drive this acceleration? And specifically also here, what is the time line of the first protein degrader project? Is that on track? And when will it have an impact on growth in DP? Okay, very good. I think first of all, I think we have quite some new products, which we are transferring in. And of course, that's also the reason that we see then bigger now in the second half of the year. So of course, the second half of the year will be stronger for DP compared to the first half of the year. Last year, it was fifty-fifty, now second half will be stronger. And to come back to the second question, which locations, it's in two different locations where we are transferring as we speak new business, which will really then go further, not only for the second half of the year, but also for the upcoming years then as well.

26:28 The second question about the protein integrator, as I already mentioned that during the full year presentation in February, we won three protein integrators. So it's not only drug product, we won also drug substance as well. And this is well on track, but of course, the first year is more related to tech transfer, method transfer and then of course, the volume will start then in one year and afterwards and onwards then really to growth year by year. Okay. So this will be only have an impact from 2027 onwards? It has already an impact this year, but as you're doing the tech transfer, the impact really on the sales absolute number is marginal, really it's really changing then as soon as you are starting with commercial production, so this is ramping up now next year and afterwards.

27:29 Okay, great. No, I think that's clear. And then maybe the last question is quickly on the margin guidance. I mean, you had already 22.4% in H1. Your guidance is unchanged at above 23%. Just wondering if there are any kind of tailwinds or headwinds that we have to consider to think when we think about the H2 margin. No, Laura. I think it's here, you just have more of a profitable mix effect. That would be maybe what makes the H1 twenty twenty six a little bit more than 2025 proportionally. But also, of course, we have the impact already of the operational excellence and also what Marcel mentioned, focus on delivering with the cost discipline.

28:17 So I would say there, it's still within the guidance that we are reconfirming for the full year, which is above 23%. Okay. Thank you. Thanks, Laura. Thank you, Laura. The next question is from Siegfried Holding Hey, Siegfried. Good morning. Good morning, Siegfried. Good morning, and thank you for taking my question. And nice to see you, Tatio, and I wish you all the best for the future at Siegfried. So I have three questions. I will ask them one by one if this is okay for you. First, about the acquisition of the three sites, how much was the acquisition effect in the first half? Is it fair to assume that it was around USD 25,000,000?

29:15 It's pretty much in line indeed, Siegfried, because we are reconfirming again the US100 million dollars guidance that we gave when we acquired or when we closed the acquisition, and that's in line with what you have mentioned. Thank you. And the second question is about the large contract. So now the large contract or the orders from there are included in the outlook for 2026. Is it fair to assume that because of that shift, there is a positive effect expected in 2027? I hope so. But we will look at that and we are constantly in touch with the customer. As already outlined in the past, it's an in market product, so I don't expect a big change there, but it will proceed in business as as as already outlined.

30:15 And we provide guidance as usual, Siegfried, we will guide for 2027 then in February. Thank you very much. And only a small question about the currency effect on the 2026 results, if the currencies remain as they are, could you give us a hint how much it could be on sales and on margins? So on sales, I'm estimating it to be around 2%. That's, you know, again, as you said, expecting the currencies to not change from the level they are now, especially the U. S. Dollar and the euro. From the margin we mentioned before, it's very marginal because we have a relatively good natural hedge.

31:07 So thank you very much and have a good start, Tanya. Thank you, Siegfried. Thank you, Siegfried. The next question is from Estelle from Berenberg. Hi, Estelle. Good morning. Morning, Estelle. Good morning. Good Good morning, all. Thank you very much for taking my question. I wanted to ask about the capacity that you are freeing up with the newly acquired sites in The U. S. The test for the transfer that are happening right now, all this is already to free up that 80 cubic meter capacity. Why are you currently identifying other further assets to be freed in order to reach those 80 cubic meters? I like this question. Also, I was also sharing and I would like to start from a different angle here. I think also what we see, it's really changing for drug substance molecules.

32:05 I was sharing with you one year ago, compared to the past when for an API, you know, it was common to have five to seven, eight synthesis steps, it went up to 20 synthesis steps last year and we really now also happy to share with you the newest generation of small molecules our customers are asking us for 40 synthesis steps. So these new molecules are becoming even more complex and it's also by the way triggered by artificial intelligence because they are going now for the golden molecules. So they can already at the development do much stronger development activities for these molecules. And good news for us now, one is really to free up the capacity in U.

32:52 S. To have enough capacity available for the near future for these new molecules and by the way, happy to have now on stream fully the I-eight zero four facility in Minden. So I'm really confident that we can fill them very soon. Now the question, of course, we are also looking how we can further free up additional capacity as well. So far, what we have and already what I shared with you is this 80 cubic meters in Wilmington, but of course, I can also confirm that we are looking how we could further expand. Okay. Yep. Thank you very much. Thank you, Esther.

33:39 Next question is from Ed Hall. Good morning, Ed. Hi, Ed. Good morning, Ed. Good morning, guys. Thank you for taking my questions. The first one would just be on the updated the confirmed guidance and apologies if missed this, but the segment guide that you originally had. I wanted to understand if that still holds or if there's any changes as you've reported this morning? That would be the first question. No, I think we did this guidance beginning of the year also due to the fact due to the large contract where we had some uncertainty to show that up. However, in the meantime, this is settled, so we are confident and we have an agreement, full agreement also with the customer and we don't need to do that. In the past, always we gave guidance for at the group level.

34:33 Of course, we are always reporting also at the different cluster that means for drug substance and drug product that we will go back as business as usual also for the near future. As DP already what I was outlining also for the question of the colleague previously, here DP will be stronger in the second half of the year, that's also given, yes. Okay. Perfect. And actually just on that, I think we've had conversations previously about a 40 two-fifty eight split of revenue, and you've mentioned the stronger H2. Is this the right sort of ballpark numbers I should think about? Or is it changed somewhat? It's more or the ballpark. As you know, we cannot provide any more specific answer on the seasonality, but it is in that as I said in the beginning, it is more pronounced also because of the acquisition having the larger weight and the full six months is, of course, the main reason why it's driving this more pronounced seasonality.

35:38 For drug subs and TPS already outlined, we have a stronger second half of the year compared to the first half, yes. Very clear. Thank you very much. And then finally, just we just look at the inventory and the conversion in H2. I think outside of the acquired inventory, how should we think about this conversion and then maybe the days outstanding for controlled substances versus maybe other products? Is that at different level to what you typically see? Thank you. As I mentioned before, you know, I will be focusing on cash generation. The conversion of the inventory is, of course, part of it, and that's what we will work on together with Marcel because it is, you know, operational part as well as the finance part.

36:26 But, yes, of course, we are working on converting it. And, of course, I think also, if you can imagine, just Tanya and myself were two weeks ago in Tasmania. And also to highlight this, it was really an exciting trip. Here, we had 40 degrees Celsius and they have winter time. The interesting part is really also to say, you know, their business model is that they are doing the first half of the year really harvesting and in second half of the year, they are going for full production. So then of course also after that, will sell and dispatch everything. So also you can imagine, this is also then driving the seasonality related to the net working capital, but this will be sorted out till end of the year according to the business.

37:17 Very clear. Thank you very much and congrats again. Thank you. Thank you, Ed. Thank you, The next question is from Vin Sjertzer from Deutsche Bank. Good morning, Vin. Hi, Vin. Good morning. Good morning and thanks for taking my questions. Really only two short ones left for me. So if I can come back to the drug products segment and the new product ramps you expect in the second half. I think in the past, we spoke of a large tableting contract that you had won. Is this among the new products that is now ramping up in the second half? And my second question, just brief. It is Okay. Yes. It is that's And then Sorry, Phil. It's exactly. You you made already the point correctly.

38:08 That's what we have announced in the first half of the year of 2024. This is now coming through exactly. And and we can assume this is the majority of it or is there also a couple couple of other projects? Yeah. It's more than this one. So but it's we cannot talk about products and also customers, but it's more than this one. Okay. Okay. And then just lastly, for Melody, if you could maybe quantify how much receivables factoring you had in the first half? It's equivalent to what we had as of end of December, so the €40,000,000 I will be working on decreasing it, so Okay.

38:57 Thank you. Thank you, Fin. Thanks, Fin. The next question is from Danielle Elofried. Good morning, Danielle. Good morning, Danielle. Good morning. Good morning, all of you. And also, Tanya, good start. Thank you. So several questions, and I ask one by one. Yes, please. I'm sorry. I have a lot of I have a lot of interruptions in my line, so maybe the question was already asked. But just to be sure on the lost sorry, the lost incremental order which you have discussed in the last month, You you know, there are some people now saying that because it's now included, it implies a lower guidance, obviously.

39:50 But you said that the impact this year is marginal. So, this contract is now settled. You will get the business incrementally, but the impact, of course, with the lead time this year is minimal. Is that correct, Just to be very sure. Yeah. Very sure, Daniel. Thanks a lot for clarifying this this topic, and then let's close this chapter then for the near future. So I hope so. I hope so here as well to have clarity for all of us, you know. So this this chapter is closed now, it's already in there, so the effect was marginal. It was a potential upside, however, as you know, we have the tendency always to guide a little bit conservative, so that's also now everything is included with the confirmation of the guidance which we gave, which is in line also with the guidance which we gave after closing.

40:43 So that's in a nutshell and I think business as usual now ongoing. But as we are already in August now or September, we got closed. It means the impact will be little because it's just because you are so late in the year, but next year, of course, the impact will be bigger. Right? Just to understand. No. Next year is business as usual. And about the volume lift is extra order should be higher. Then we will come back to 27 in '20 seven in February. We cannot talk about 27 at this stage. So it was related also for this year that was a potential upside. Now we have that figured out.

41:32 Marginal upside, which is included in the guidance and for next year, it's business as usual. We have outlook of forecast with these key customers for the next three years. And here there is no change for 2027. But we will give the guidance then in February during the full year presentation. Okay. And then the next question, thank you. Is the cash flow. Tanja, you mentioned, I fully understand tax payment timing is an impact on the cash flow, but also the inventory delta. And when I look at the inventory delta just versus the first half 'twenty five, the delta was that inventory was up nearly $200,000,000 And that was entirely because of the M and A consolidation or maybe also ramp up of some other CapEx projects or whatever?

42:33 It's both. Majority is for the acquisition. And also, like Marcel mentioned, we have, for example, quite a large inventory for the Tasmania operation because they harvest in the first half of the year and then they sell in the second. So by definition, you have much more in the beginning and then you have less in the second half. So it's the nature of the business. So but majority is the acquisition. And then there is a portion, of course, of ramp up simply because also, like Marcel mentioned, the more complex steps and the production plan. So those are two elements that are impacting. Okay. And thank you. And another one is on I mean, can you disclose in the end just the organic revenue growth for the group in the first half? I mean, I have my calculation, but we have in the past, we had so many different assumptions regarding the transaction that I mean, I modeled 200 bps, to be honest, impact on on group top line from m and a.

43:41 So, is that ballpark a good assumption? No, I think what we have guided also after signing and after closing, so the contribution of booster is for this year CHF 100,000,000 annualized and that is in line also now after four months. And I know that you are really strong in the mathematics, so you can do the math. So I think also the underlying growth is as planned. But you mean $100,000,000, right? Yes. Dollars 100,000,000. Dollars, yes. Yeah. I mean, not everybody got that, I heard. So Yes. You're absolutely right. There was some confusion confusion. For this year, we have boosted for acquisition, you know, for for eight months and the contribution is 100,000,000 US dollar what we have shared with you.

44:35 Mhmm. This is the confirmation. By the way, for CHF 80,000,000, sorry to be stubborn here, but it means when I do the math and take $1.12 for one month, it would mean it's roughly 15,000,000 or so in the first half impact. That's 12, Daniel. Correct. Not $1.12, Daniel. $12.12. One two tens. If you divide the 100,000,000 by ten months. Right? By eight months. Sorry. I'll get that. That's true. Yeah. Yes. On a yearly basis, it's small. Not 12. Yeah. But those are the seasonality which I was just sharing, Daniel, with the site in Australia. So there is always the same pattern.

45:20 First half of the year is really harvesting, second year is production and then dispatching and invoicing. So, that's the reason also why we have even a strong seasonality in the new portfolio with Boost. Thank you. Very last question, I haven't really understood the transfer within the building site. Richard said, the first one will be done this year. So what is transferred within the site? Good question, Daniel. Also, you understand that if you are transferring a product and especially within one site, then from the regulatory point of view, this is the fastest way what you can do, that's really fast track and that's what we are doing.

46:10 So we have different production buildings in Wilmington and one of this particular production building is really fit for purpose for exclusive business and this is exactly the eight cubic meters, which I have already mentioned and to free up, we are internally at the Wilmington site, transferring one product from this facility for exclusive business to an older one, and then we have already capacity available for 2027, that's also the reason why I was mentioning that we are generating the first revenues then 2027 what we are expecting. So this is fastest way. Second wave will be then also that we are doing consolidation together with Bensville, that we are also filling further Benzville as well, which will help a lot to the scale up effect there and to free up then the additional cubic meters in Wilmington to bring in additional businesses outlined.

47:14 Okay, thank you very much and further good success. Thanks. Thank you, Daniel. Thank you, Daniel. We also had questions from Stefan Wolff from ODDO and from Charles Weston from RBC. Thank you so much for submitting these questions. In the meantime, we have, I think, them already. There is one more question from Rolf Arpagals from AWP and he's asking about the trade agreement between Switzerland and China. In the future, Swiss companies no longer need to pay tariffs when exporting products to China. Will that impact Siegfried in any way? Could be an opportunity. And also what and I was together also with some customers in China, as you know, we have a site in Nantong and also the demand is is much higher there as well. Interesting is like the local to local setup, the regionalization is going on in US, see the same pattern now in China, also there is much higher interest for local to local also in China, that means not obviously just Chinese companies, but also European or U. S. Companies are looking also to have capacity available in China. So for us, that's an opportunity.

48:35 Also, we're looking further how we can evolve further the business in China because innovation is coming more and more from China. In the past, it was forty-forty-twenty, so 40% of the new innovation came from U. S, 40% in Europe and 20% of China, that was five years ago, nowadays it's still 40%, 40%, 20%, but this has changed. U. S. Is still 40% of the development activities, now this has changed between China and Europe. China is now also together with US at 40% innovative stuff and Europe at 20%, so that's also what we are looking for to further expand in China as well, but we have capacity available, which we are now offering to the customers. But the agreement, trade agreement will even help us. Thank you, Marcel and thank you all for this question.

49:31 Now we are approaching the end of the Q and A. One more question from Tanya Hansalik. Hi, Tanya. Hi, Tanya. Hi, Tanya. Hi, good morning. Can you hear me? Yes, we do. Okay, great. Yes, just a couple more questions. Most of them have been answered. So on the cash flows, you provided some guidance, but maybe can you give an indication of the net working capital, if you expect a reversal in the second half? And when can we expect free cash flow to be positive? Well, free cash flow was positive already in H1, right, Tanja? But we let me come back to you on this one because I'm still working on the cash projection.

50:21 And as I said before, I have full focus on cash generation. For me, it's one of the most important KPIs. But to I'd rather come back to you with my thoughts on this. But for sure, it's the conversion of inventory. For sure, it's also, Marcel said, less CapEx, more cost discipline around that. So that's what we are looking at. So in a nutshell, long story short, we are looking forward to go to the South with the inventory, this will happening. One example was just the Tasmanian side, but also CapEx wise, we had in the last years quite some investments, mid teens, low teens and so on to build up the capacity. Now we're really happy to have the capacity for the next future growth phase.

51:15 So also we are coming now towards to 10%, which also help us then at the free cash flow. That's what we are looking for. More to come, we will share with you. Thank you very much. That's it for my side. Well, thank you so much, Tanja, and also thank you to all the others who have asked questions and participated. We're looking forward to meet most of you again in February when we will announce our full year results. With that, this webcast is closed. Thank you so much, and have a nice day. Have a great weekend, and all the best. Thank you. Thank you. Bye.