SigmaRoc (LSE:SRC) — Review of 2023 Results and Prospects

0:00 I didn't think so. What do you wanna bring out? Good afternoon, ladies and gentlemen, and welcome to the SIGMAROC presentation on the 2023 results, the transformational acquisition of the Lyme and Limestone assets from CRH and prospects. Before we begin, we would like to submit the following poll, which you will see on your screens. Throughout this presentation, investors will be in listen only mode. However, questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand

0:30 corner of your screen or if anyone has dialed in via SIGMAROC at walbrookpr.com. The company may not be in a position to answer every question it receives today. However, the company will review all questions submitted and publish responses where appropriate. These will be available via your Investor Meet company dashboard. Finally, we would like to remind you that this presentation is being recorded. I would now like to hand you over to Chairman David Barrett, Chief Executive Maxima Morgan and Chief Financial Officer, Garth Palmer. Thank you very much. Welcome, everyone, to this Investor Week Company presentation of our 2023 results. The agenda for today is on the screen. I will give you a brief overview of some of the very exciting progress we've made across 2023, inclusive and operational review. At that point, I'll hand you over to Garth, my right, who will take you through the financials for the business.

1:24 I will return with some views on strategy, capital allocation and the outlook for the group before we turn to Q and A. It should all take about thirty minutes in terms of slides, then we'll have plenty of time for questions. In terms of overview, 2023 was probably the busiest year we've had in our history since founding the business in 2016. It's an enormous evolution on three fronts: financial, strategic, but also ESG and sustainability of the group. When we look at financial evolution, a number of points to make on the slide here. Revenue, EBITDA and EPS all moved ahead quite considerably and ahead of consensus. We did this in a market backdrop, which was in some markets challenging with 4% like for like volume drops, which is actually quite good given some of the industries we are exposed to.

2:16 Our EBITDA has grown in terms of margin to 20%, which is quite pleasing. It's our long term target. It's also what we aspire to be ahead of in the future. Cash flow was robust with free underlying free cash flow nicely in line with our expectations, helping us to de gear to 1.65 to seven times, so below 1.6. That was helped by some noncore asset divestments to the tune of about GBP 8,000,000. We turn to strategic side of things. We have done the largest deal we've ever done with the CRH transaction. And that in many ways allows us to say that we've now written chapter one of the story of this company and are starting to write chapter two, which is the chapter where we are a leading lime and limestone operator across a very compact footprint around the North Sea and the Baltic Sea with fantastic assets in most of these countries as the second largest operator in lime and limestone in Europe. We also did a number of bolt on transactions at the start of year.

3:21 At the start of the year, the general climate was fairly gloomy, but we decided to get on the front foot strategically and add a number of businesses into our setup, which turned out to be very good acquisitions as you can see later on in the slide deck. We continue to innovate. We have our first CO2 capture system with Aqualung set up in Sweden. It captures CO2 10,000 ton a year, so the largest of such facilities operating, I believe, across Europe. We've obviously substituted some biofuels. We've invested our green concrete solution with GreenBlock and MEVO. When we turn to a few of those sorts of points from a financial and ESG perspective in more financially numbers, we can see the following, $580,000,000 in turnover, 170,000,000 in EBITDA, 8.12p in EPS.

4:13 Very satisfying design numbers to see. 20% EBITDA margin, leverage at GBP 1.57, return on invested capital near enough GBP 11. That's good. It's on our trajectory towards GBP 15. Looking at the next set of numbers, these are ESG focused. And here, we've managed to make a number a lot of progress again. Emissions intensity, 29% down. Energy intensity, 12% down year on year. Alternative sources of electric power, 71% across the group. Alternative fuel use, our first one of our kilns ran 100% on biofuels across a full week. That kiln was not designed for biofuels and yet it still did it with our modifications. This is very good because it shows that we can progress along this line. When it comes to safety, 31% reduction year on year in serious harm injury frequency rates, and that was achieved by a 172 site audits. These are full day audits where safety team goes in, reviews documentation, reviews reviews operation operational reality.

5:21 Very, very good results all around. When we put a bit more context to this from an operational perspective, very nice picture there of our German site. The group as it currently looks is three regions that will expand to five as the full spectrum of the CRH deal comes through. Garth will give you a few details on that later on. On the left, you'll see our product mix by revenue and our end markets as a bit of context. When we look at the operating regions we currently have or we had in the group in '23, three in total, The Northwest first, that is the British Isles three platforms, the Precast Group, England and Wales quarries, and integrate integrated businesses there, and then the then the Channel Islands.

6:08 This is a one of the three regions which has a considerable construction exposure and also residential. So the concerns were voiced by shareholders early in '22. How are you how will you fare when residential construction comes under pressure? Well, this is a slide that gives you the answer to that. We will fare rather well, actually. We have an increase of EBITDA of 5% year on year to 31,000,000, nearly 32,000,000. The reason this this just these platforms did so well is a laser focus on how these businesses are run, exposing them more to infrastructure, preparing the products for more infrastructure use, making sure that our teams are competent to sell into that, sales teams in the right place. That's particularly the case for print for the Precast products PPG business, which is a fantastic collection of precast and precast concrete assets right across The UK. When it comes to the quarry businesses in England and in South Wales, again, very pleasing results. Positive year because of larger infrastructure contracts we were able to supply into.

7:19 Obviously, some difficulty when it comes to residential construction because they were that was a market which was slightly less buoyant or a lot less buoyant, but we recovered that with a better exposure to infrastructure and also industrial builds. We've started the construction in of a new asphalt plant in South Wales. There's some nice images in the annual report where you can see the progress of that of that plant, which will come on stream in a in a few weeks' time. All in all, very good performance in spite of some headwinds here. Second platform is the West, which is basically the Benelux. Two setups there, the dimensional stone business and then the Benelux business and aggregates and concrete operation. The dimensional stone business did very well. We improved its its operating logic. We sold this the the product further afield into Italy, more into Germany, more into other markets and into The United States. For example, we are using more of the material we we extract. We have a new product there called blue, which was effectively a waste product because it had fault lines in it, and we've been able to recycle that into a very high value return.

8:31 The Benelux platform, concrete and aggregates delivered well. Again, headwinds here when it comes to real estate, construction, but we exposed it more to infrastructure, specifically in Northeast Belgium where we have the concrete businesses along the canals, along the River Meuse, River, Shells, where large infrastructure projects have been built. Good progress from EBITDA perspective, good progress on margins as you can see on the right hand side. When we go to the Northeast, this is the North Calc setup, a much more diverse end market. If you look at the pie chart on the right hand side, and that's helped that business through some of the challenging times when it comes to residential construction.

9:19 Paper and pulp had a destocking effect across the first half of the year. Metals and mining did well. Food, chemistry, environment did well also. As a result of that increase of EBITDA year on year 16% to over 80,000,000, margin recovery to over well over 2020% EBITDA, further savings that were generated by a more regionalized management structure with very high level, high quality managers in situ now. Very pleased with the results here. So that completes a very brief review of the operations, and I'll hand you to Garth for finances. Thank you, Max. Good afternoon, everyone. Very pleased to report another strong year financially for the group, while we also managed to continue to invest in growth and also transition into a leading European lime and limestone producer.

10:09 We're reporting revenue of 580,000,000 for the year. That's an improvement of 2% like for like, and that's in spite of a 4% like for like volume decline. EBITDA of 117,000,000, so improvement of 10% like for like and 15% year on year. That's a function of acquisitions through the year and operational improvement initiatives and some margin improvement. And then earnings per share of 8.12p, an improvement of 1% year on year, and that's in spite of finance costs increasing by nearly 60% and also the dilution impact of the fundraise in February where we didn't fully deploy the capital from that until Q4 with the acquisition of Betons. We also then managed to reduce leverage from down to 1.57 from 1.93 at the start of the year, 90% reduction.

10:59 And we also had very strong free cash cash flow of $47,000,000 underlying cash conversion ratio of 40%. That is less than what we generated last year, which is a function of the higher interest costs and some working capital absorption as part of the growth in the group. Moving on to revenue evolution year on year. So we increased 8% from $538,000,000 to 580. 1% of that was from organic growth, primarily other than Northeast, and then 5% from M and A, which is a combination of retaining that was acquired in the Northwest, Gordian's and Betzons in the West, Bjorka, Juan Dolomiti, and SD Investica in the Northeast. And then looking at EBITDA on the same basis, we went from a 102,000,000 to a 100 and 17, 15% year on year increase.

11:53 8% of that is organic growth, primarily as we sort of touched on before, pricing power, margin expansion, and primarily operational improvements, particularly in the Northeast with our management restructure translating to $3,000,000 of recurring savings there. And then also 6% from M and A through the acquisition pipeline and also full year contributions of businesses we acquired in '22. So overall, really strong improvement year on year across the group with a focus on operational control and integrating the acquisitions. The full income statement we sort of touched on, this includes D and A and cost of sales, underlying profit from operations of 84,000,000 versus 70 in the year prior.

12:41 Net finance costs increased by 5,000,000 up to 14. That's a function of full year of the base rate hikes from '22 and translating to a cost of debt of a bit over 6%. Other gains is share of earnings from associates and some hedging benefits. And then tax expense of 12,000,000 is up $33,000,000 year on year, represents about a 70 of profit before tax ratio, which is up from 14% the year prior, and it was expected as we've used up the, carry forward losses from some of the acquired businesses in The UK.

13:16 3,000,000 of profit was attributed to non controlling interest, giving us a profit attributable to owners of 56,000,000. That's up five from the year prior, translating into an earnings per share of 8.12p. And then on the right here, we just have a breakdown of cost of sales as a percentage of revenue. So you see the evolution year on year. It's fairly consistent, slight shift from energy into materials and production. And that that cost base is very much dynamic. It scales with production. So if we don't produce, we don't incur approximately 70% of our cost base, giving us all the resilience through difficult trading environments. Moving on, so shifting from from EBITDA through to free cash flow evolution, 170,000,000 underlying EBITDA translating to underlying free cash flow of 47,000,000 at 40% conversion ratio.

14:07 We had a 23,000,000 underlying drawdown in working capital. That's after we had just added back 20,000,000 of payables outstanding at year end in relation to m and a, primarily the SRCH Lime acquisitions. And there was also 3,000,000 of working capital impact, which was a function of purchase price adjustments that worked their way through payables, so taxes from pre acquisition periods, etcetera. Income tax paid was consistent year on year at 11,000,000 and net CapEx of 22,000,000 translates into about a 72% of DNA ratio, includes 6,000,000 of non core divestments, and then adds back about 9,000,000 of growth investments, six of which is biofuel conversions, carbon capture, the asphalt plant, wash plant, and five of and then five of life of mine extensions, which we'll detail on the next slide.

15:02 And then finance costs of 30,000,000 paid, cost of debt of, as I said, of over 6%, translating to that free cash flow of 47,000,000. And from there, we then take from net our net debt evolution for the year starting at a 194,000,000, 47,000,000 of underlying free cash flows we just detailed. We raised 30,000,000 in February, twenty nine point two net of costs. We then deployed that across the year spending a net amount on M and A of 32,000,000. That includes 2,000,000 in of divestments from one of the acquired businesses and also includes 3,000,000 for the bet on asset acquisitions, which actually goes through our cash flow as plant and equipment acquisitions and intangibles.

15:49 And then organic investments of $11,000,000 as previously detailed and non underlying cash costs of 12,500,000 $12,600,000 Primarily, that's M and A related, obviously, the six acquisitions through the year plus the CRH deal, which we completed on the January 4. So a lot of those costs were accrued and some were cash paid. And then there's a portion of that is also restructuring. And then lastly, 9,000,000 of other includes dividends to noncontrolling interests, some minority investments, the investment in Mevo, for example, some derivative adjustments, and predominantly forex on the borrowings translation of debt, which is mostly euro. That gives us a 182,000,000 of net debt and a leverage ratio of 1.57. On the next slide, we have an overview over the last five years of how we performed on some of the key metrics, revenue and earnings, which we've managed to increase every year while maintaining prudent leverage. And we've done that through some fairly challenging operating conditions with COVID and the inflationary period in '22.

16:55 Taking that a step further, we have sort of evolution of the group. What we've acquired in the dark blue bars, EBITDA acquired at the respective acquisitions at various stages in the group's evolution versus their incremental and then the blue bar is their incremental performance based on FY '23. So in the first group, we have just Roanoke, which we acquired at the start of 2017 at a nine times multiple, and with 60% of EBITDA uplift, that's now at an effective multiple of 5.6. We then take Roanoke all the way through to Bmix, which is the last business we acquired before we acquired NORCAL in 2021, which are the middle two chart bars. So those businesses collectively are 6.9 times acquisition multiple, 57% uplift in EBITDA performance in '23 giving a 4.4 effective, and then the entire group including everything we acquired in '23, immediately preceding the series lime acquisitions 6.7 acquired multiple and trading at 5.3 based on a 29% EBITDA uplift.

17:59 Taking that a step further, this slide is anonymized data across all the 18 acquisitions where we've invested a total of $680,000,000, of which 400,000,000 was new equity. Again, includes acquisitions in '23, those are shaded in the light blue, an average return, EBIT return on investment of 14%, which is very encouraging, targeting over 15%. And we think that's very much achievable. And we'll continue to, you know, once we've de geared, continue our investment strategy, you know, identifying businesses with product, reserve, geography, market, and customer fit. And then lastly, just rounding out on the back of these results, sort of investment case, we've improved on every key metric that we focused on.

18:49 Operational improvements have led to EBITDA increase up to 170,000,000, 10% like for like, and EBITDA margins over 20%. We've also increased EPS despite high finance costs and also the dilution from the fundraise in February. We've improved ROIC from 10 to 11% even while deploying capital through the year, and we also then managed to reduce leverage despite those investments down to 1.57 times. So then to conclude, just a slight forward look structurally, obviously, off the back of the acquisition of the CRS Lime, the deal won in the first week of January. The group will be structured around five regions, three core end markets, and three products. From an end markets perspective, we'll be just under 50% construction exposed across the enlarged footprint, 37% industry and the balance 15% environment.

19:45 In terms of products, we'll be over 55% lime, 30% stone, and then the balance 15% value added products. And then that will cut across five regions. We'll maintain the Northwest and the West. Northeast will be separated into two, and then we'll add in the new central region, which is Germany and Czech. We feel that this structure will enable us to manage the enlarged footprint effectively, but will also retain our agile structure, keep us nimble. So that concludes the financial review. I'll hand you back to Max for strategy and outlook. Thank you, Ab. Thank you very much. So a few slides on strategy, capital allocation outlook. First and foremost, the year was busy. We did a large number of different things, inclusive a transformational transaction with CRH, six bolt on acquisitions,

20:35 about $32,000,000 on those, adding another 10,000,000 in EBITDA. Organic initiatives, some of which Garth has already mentioned, to extend mine life, quarry life, and some of the key operations. And we divested a few assets already in '23, and there's more to come on that in 2425. The main event, obviously, within that list of initiatives is the CRH transaction, which creates with our group the number two operator from a size perspective in lime and industrial limestone and construction limestone right across Northern Europe. It's a fantastic transaction. It strengthens our position, and it really makes transforms our business in a focused number one and number two operator in some very attractive markets.

21:21 On top of that, there's potential synergies we talked about, 30,000,000 or so at the very least, and potentially more up to €60,000,000 in EBITDA synergies to deliver to be delivered by twenty seven months they've been fully integrated. The markets we're operating in are quite attractive markets. They will help us get to a ROIC return on invested capital of 15%. We're already at 11%. But even without that passing of time, we already did double digit announcing with this transaction once fully integrated in a full year of ownership. And that is quite satisfying and always a condition for us when we invest. And post all of this, it's a great platform for compounding growth as the business continues as a Lyme and Limestone operator.

22:11 What's important to know and why we're so excited about Lyme and Limestone is effectively this slide. Our group is a from a story perspective, from an equity story perspective, a very simple business. We have one core mineral, calcium carbonate, which is the base of limestone. It creates two core products, quick lime and limestone in various forms. And that will be sold into three core segments, industrial, construction, and environment. And in these three segments, you'll find countless applications. And to give you an illustration of that, these are some of the materials that you where we sell lime or limestone into and that need limestone to be produced. They're essential for modern life.

22:57 They need lime. They need limestone. And this list will get longer as we transit from a

23:05 fuel heavy economy to a more sustainable economy. What it looks like from a operating perspective, the map in blue on the right, which assumes obviously the Polish and UK assets having come in completely within the group. They the assets, the dots are the main operating plants across that region. We're number one and number two supplier in each of these markets. Industry segments are highlighted with three product types, lime, stone, and then and then value added products for more than $1,000,000,000 in turnover overall. These markets have quite a good outlook, the three main segments and then the submarkets in there. Steel, generally robust and has been a good market for us over the past years to year. Paper and pulp had a recovery in 2023, the second part of twenty twenty three after some overstocking in the first half, started well in the first few months of 2024.

24:07 Chemicals, slightly softer start in some areas, but generally speaking, an okay outlook in mining remains stable. That's 31% of our revenue in '23 and a larger proportion of '24. Construction and engineering splits down into inch infrastructure and then residential work. Infrastructure has seen a good pipeline in relation to projects that were launched during COVID, projects that were launched subsequently in the inflationary period to deal with the energy infrastructure.

24:38 But also residential needs to have been looked at because that has had a tough time. As long as the interest rates, we believe, don't come down, we will see tougher trading in the residential market. That said, we feel we're now close to the bottom of this and any turnaround will lead to additional volumes for us, which is fantastic because that will be coming in and help our trading. The last segment is food and environment. Here, this is cleaning of water, cleaning of flue gas, the supply to the food industry to make sugar, feed for animals, feed for chickens and so on. This is a segment which has a little bit of its own dynamic for various reasons. For example, if there's a lot of wind power, a lot of wind in the system, lot of wind power, you burn less gas and coal and therefore you treat less flue gas as a result.

25:38 Good markets, generally speaking, there's a lot more needed of this product, and therefore, the outlook remains good as well. Medium term, robust outlook with a lot of diverse end markets. To give you a further illustration, however, on that challenging backdrop in construction, residential construction, a graph here. These are our markets, the markets we operate in and sell into residential construction, nonresidential construction, and then civil engineering, which is primarily infrastructure jobs. The middle bar there with the dotted line around it is the evolution in '23

26:12 for the three sectors. And you see that the negative movement in residential building is quite dramatic. We'll see an uptick in that we hope in 'twenty four, but still quite a negative outlook there. And in 'twenty five and 'twenty six, that turns around. And so midterm, good out better or good outlook for residential construction and quite an explanation here in terms of how trading has been this year. When we turn to the last page before an outlook, a subject that a lot of people are quite interested in is synergies, the delivery of synergies. And so to give you a bit of guidance on that, this slide. On the left, you see a bar chart which tells you 30,000,000 to 60,000,000 total synergies. That was the outside in look when we bought the CRH assets, which is a a look that we, based on our due diligence and our analysis, thought we could generate. We've now held had three of the five businesses for a bit less than two and a half

27:16 months. And out of that in that during that period, we have progressed very well with the identification of the potential synergies that we can build in. We're confident just on the footprint we currently own that we are able to identify and subsequently build into our P and L EUR33 million worth of synergies. So that's ahead of our total estimate for the entire perimeter. We don't own two of the five countries as of yet. We started to build in these synergies already, and we are, at this point in time, tracking with EUR 2,000,000 already being built in for the year 2024. That number should grow as we progress across the year. Deal two and deal three, The UK and Poland, will then bring in further EBITDA and therefore further potential to look at synergies. And we hope that as those come through, we will get to that 60 number rather than just the 30 as we identify synergies and build those in across time. So generally speaking, a very positive outlook and a very good place to be so short into new journey.

28:24 And we summarize all this in two slides, one driving shareholder value and another one outlook and summary for the year. While driving shareholder value boils down to these eight points, we're number one or number two European lime supplier limestone supplier, which is a market which is excellent to be exposed to with both growth out of recovery for building and hopefully also structural growth for new applications in those markets. The asset backing of the group is very strong, 2,700,000,000 tons of mineral right across our spectrum. And we have gathered that set of assets through a whole series of very attractive M and A work and organic work. 18 deals with a low multiple, low average multiple and that has allowed us to increase our EPS eightfold over the time that we have been running since the founding in 2016.

29:14 Our EBITDA increase is therefore currently stands at 29% improvement for all those assets we bought, with some assets having done a lot more than that even in our history. We target a zero hour business. We have an incredible focus on that. It's a story which and a focus which will never end because every day we need to focus on safety. We have a good team which we're increasing in terms of capabilities to deal with that. And we invest in innovation. We invest in ESG and hope to even at our smaller scale relatively compared to some of the biggest groups in the world. We think we've punched far above our weight. That translates into the guidance metrics you see on the right of that slide, which give you some targets when it comes to top line growth, EBITDA growth, cash conversion and so on.

30:08 Looking there for now as a summary and an outlook for the business. The year started well. We had quite heavy snowfall in various parts of our operations, which meant that the start out of Christmas was in some cases delayed because there was so much snow we couldn't even get going. That said, we recovered the lost time right across the back end of January and into February. Retract track trending nicely in line with our own expectations. The backdrop in '23 will be fairly similar to the backdrop sorry, '24 will be similar to the backdrop in '23. So do demand in residential construction, decent pipeline of infrastructure work, better demand in industrial and environmental application. And therefore, overall, we hope a good year ahead again.

30:59 The integration of the businesses we bought is going well. EBITDA synergies have been identified to the tune of EUR33 million already, and that number should keep going up. We've exercised The UK call option, so that business will come into the group fairly soon. And then we'll start work on the last piece of the CRH puzzle, which is the Polish assets. A positive start of '23. That's for '24. Integration, well underway. Acquisition, progressing well. So all in all, a great year '23 and plenty to look forward to in '24. Super. Great. Well, thank you, David, Max, Garth. If we could turn to the questions, maybe start start with you, Max. But Robert asks, how successful has Greenblock been to date?

31:48 Greenblock has been a fantastic success. And to give you the illustration for that, the PPG group, which is a collection of precast operators that we bought and built into one really fantastic business in in The UK, that business was the inventor and the pioneer behind Greenblock. Its transition from selling mostly residential work to doing mostly infrastructure and larger scale buildings is in a large part thanks to to our pioneering view on on on greener concrete and therefore green block. If you look at the infrastructure work we supply, a lot of that is out of green block mixes. If you look at the residential work we supply, nearly half of that is currently a variety of green block mix. So that product has been fantastically successful from that perspective.

32:41 When you look at margins, you will have seen on the slides that the margins of the PPG out of the PPG, the Northwest setup are actually very solid. That's also in relation to what the PPG business is allowed to do for us, and that, again, is Greenbloc and its innovative aspects. So very successful. Great. Thank you. I have one for you, Garth. A jump from 1.95p statutory earnings per share to 8.12p underlying earnings per share seems big. Do you have any further comments or clarification for the adjustments made? Yep. These are they're detailed in the financial statements. So there there's a full reconciliation there. But fundamentally, we have about 42,000,000 of non underlying costs in the year. Now big portion of that is due to the serious Lyme acquisitions just given the timing of it.

33:36 We had line of sight that that first deal completed, obviously, post year end. So therefore, we had to accrue those costs at December 31. Our total m and a portion of that is about 26,000,000, and approximately 20,000,000 of that relates to to the serious line business. So that obviously has a big impact. It's a billion euro deal. You know, as a percentage of that, you know, those costs are outrageous. There's a further $3.54000000 of restructuring costs, which, you know, one offs, absolutely non recurring and translate into future earnings growth. And then the balance is noncash, so share option adjustments and the like, amortization of finance costs.

34:23 So that this it'll be there'll be a there'll be a bit larger number in '24 not larger than that, but it'll be a reasonable number in '24, and then that will drop off significantly in '25 once we fully integrate the business and complete the other two deals. Great. Okay. Just on the the topic of the of deal costs, etcetera, Mark asks, will there be material CRH related acquisition expenses in '24, or have they all been accrued in '23? Mostly accrued, but there is not everything, not everything was incurred and therefore accrued. So and there and there are costs associated with deals two and three as I sort of touched on. Yeah. Super. Okay. And Michael asked, do you see further small divestments as you complete CRH acquisitions which would help to deleverage your position?

35:14 Want me to take that? Yes. Yes is the answer. We're looking we have a good portfolio of assets across Europe. There's assets in there that make sense to own and there was assets that are perhaps better owned by someone else. But we shouldn't forget we've built as you can see some of the slides across the that we presented. The group we've built is a group of assets that we really wanted to own when we bought them. So if if we sell anything, we have to sell it we will sell it only if the price is right because none of these assets are either underperforming or nonperforming or assets that we wouldn't own anyway because of the cash flow and the potential that they that they bring for further earnings growth. So yes is the answer to to your question and with the caveat that the price needs to be the right price.

36:07 Super. Thank you. Kevin said Us you said you'd be number two supplier of lime in Europe, which are numbers one and three. But I think you said one and two in in a number of those markets. So this is a competition question, really. Yeah. So the large so we're the number two when it comes to total volume. In some markets, we're the number one. In some other markets, we're number two. The numb the the overall largest supplier in in Europe and also in the in in the world is is a is a business called LHOST, spelled h h l o I s t. It's a Belgian business. It's a privately held business. It's got a fantastic history of a hundred and fifty years. Was founded in Belgium and has grown from there right across the world. The second business, also Belgian independent, that's from a volume perspective, three now in Europe. But again, the number two worldwide is a business called CarMuse.

37:04 Like was a fantastic business, family owned founded in Belgium, has grown over the last century right across the world by expanding its line footprint. We are sitting in between those two in Europe as the number two when it comes to volume. So we're in good company when it comes to to line operators. Fantastic business with enormous skill. Superb. Thank you. Maison asks, what is the operating leverage potential in the business? I wasn't talking debt leverage or we're talking operational I I I suspect it's a question in terms of operational gearing. Yeah.

37:50 Well, our gross profit's about 30% this year, uptick. Haven't looked into it exactly, but it it has to be 35 heading towards 40, I'd have thought, in terms of drop through, if that's the question. Yeah. Super. Alright. Thank you. We we haven't got anything else in the queue. I wonder, Max, whether you just like to summarize very quickly. I know we had a question earlier on in terms of cyclicality of of Lyme and Limestone, which which you had a very interesting answer on. I wonder whether you might just like to summarize before we close. Yep. I can summarize that. So, actually, the slide you see on the screen, the q and a, the various boxes of the various applications we've got is a good slide to illustrate this. In as soon as you deal with anything industrial, you have cycles because that's just what it is. Some min some materials are are highly sought after at some point in the cycle, others are highly sought after later in the cycle. The the fun thing about limestone and about quicklime is that it's exposed and required in so many different applications and that we have so many cycles going on at the same time that out of that, we have a lot of steadiness.

38:57 And you could see that in the history of the the operations that we already own and that we've not currently bought. Sometimes we've shown you graphs all the way back to 2008. It's very steady evolutions. So lots of different cycles. Construction can be up one day. Steel can be down one day, but it usually doesn't happen all at the same time. That gives a real a real steadiness to this to this business, and that is a real attraction. The predictability, the steadiness, the reliability of the earnings of a of a lime and limestone position business. And then secondly, it's a it's a fantastic industry to be involved in. It's quite nice to know that hundreds of difference of applications that make our life our our life both modern in cities, but also rural when it comes to agriculture possible is because we extract limestone, transform that, and the product can be used.

39:53 And so anything that you touch on a daily basis, whether you're sitting in an office or working in the garden or wherever you are, will have limestone in it somewhere. And to be part of such an industry is is is just quite rewarding. Super. That's an excellent summary. Thank you, David, Max, Garth. Could I ask investors not to close this session as you will be automatically directed for the opportunity to provide feedback. If anyone has further questions or would like additional information on SIGMAROC, please do get in contact by SIGMAROC at walbrook p r dot com. Many thanks for attending today's presentation. Thank you very much.