TT Electronics (LSE:TTG) — Half year results for the six months ended 30 June 2026

0:01 Good morning, ladies and gentlemen, and welcome to the TT ELECTRONICS PLC half year results investor presentation. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish your responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to submit the following poll. I would now like to hand you over to CEO, Eric Lakin.

0:32 Eric, good morning, sir. Good morning, everyone, and welcome to our interim results presentation for 2026. I am Eric Lakin, CEO, and I'm joining this morning by Ian Ashton, who joined us as Chief Financial Officer at the end of June. This is Ian's first set of results with TT, and it is great to have him alongside me today. I would also like to thank Richard Webb. Ian's appointment is one of a number of changes to the Board this year. Phil Swash joined as Chairman in May. Also, Mary Waldner joined last week as Senior Independent Director and Chair of the Audit Committee. Together, these appointments significantly strengthen our experience as we progress in this next phase of TT's journey, and I'm delighted to serve with them on the Board.

1:20 Today, we'll update you on the progress we've made, the actions we've taken and our priorities for the second half and beyond. When we spoke in March, I described 2025 as a year of transition. It was a year in which we faced real operational challenges, took decisive action to address them and rebuilt the foundations of the business to deliver sustainable, profitable growth. I also said that our focus for 2026 would shift from stabilizing the business to executing against a clearly established value creation plan. Six months on, this is what has happened. The first half has been about disciplined execution and delivery, and I'm pleased to report this is now translating into tangible results.

2:07 The headlines for the half is a material improvement in profitability,

2:13 margin expansion and stronger commercial momentum, reflecting the actions we took during 2025, improved execution and the delivery of our strategic priorities in the first half. Adjusted operating profit was up 37% to £18,500,000 with operating margin up two thirty basis points to 8.1% compared to the first half last year. There are three drivers behind the profit improvement. First, the benefits of the operational actions we took in EMS. The Cleveland turnaround has been implemented and the site delivered consistent profitability throughout the period. Second, the return of our components business to profitability, driven by underlying business improvement and by the closure of the site at Plano, which has significantly loss making in the first half of last year.

3:06 And third, our strategic priorities are delivering. The divisional realignment has been implemented. The cost reduction program is substantially complete, and we have seen strong momentum in order intake right across the group. That order momentum was broad based across multiple sectors, and it gives us good visibility of revenue coverage into the second half. To illustrate that, our order book at the end of June was approximately £550,000,000 which is 20% higher than the same point last year. Reflecting that momentum and the benefits of our cost program building through the second half, the Board now expects adjusted operating profit for the year to be ahead of current market expectations. In short, we have moved from operational turnaround to disciplined execution and delivery.

3:56 Let me take you through the framework driving that progress. At the full year, we set out four clear priorities that would define our next phase: divisional realignment, our cost reduction program, sales transformation and portfolio optimization. First, divisional realignment. The transition to a product led organization structure was completed in April. The group is aligned around three clear divisions: Power, which includes power control, conversion and distribution technologies EMS or Electronic Manufacturing Services, with a focus on engineering led, high mix, low volume PCB and high level assemblies and components, which, as the name implies, supplies individual components, including a wide range of resistors, potentiometers and optoelectronics.

4:49 This structure aligns sites with common technologies and production characteristics and also better reflects how we engage with our customers. To give an example, there are several situations in which we have a new or existing EMS customer that can be supported across multiple EMS sites, and we can adapt to their evolving regional supply chain needs such as a recent transfer from China to Malaysia, manufacturing or support requirements for localization. In Power, we have focused investments in our technology road map, including next generation silicon carbide power modules and additive layer manufactured products, both of which were showcased at the recent Farnborough Air Show. The creation of these technology platforms as well as our R and D center of excellence has strengthened global collaboration and our sales pipeline.

5:40 We are already seeing the benefits. Teams are working more effectively and collaboratively across our global footprint, and we have secured new customer wins spanning multiple sites, and the result is a more agile, customer focused organization.

5:56 Second, our cost reduction program. This was substantially completed during the first half and it is progressing as planned. The costs associated with the program of approximately 3,000,000 were recognized within our operating profit in the first half and were effectively self funded during the period. So the costs are behind us while the financial benefits will be delivered in the second half. We're therefore on track to deliver the previously announced £3,000,000 of net savings during 2026. And from 2027 onwards, the annualized benefit is expected to be more than £6,000,000 This gives us a leaner organization and enables a more devolved operating model with clearer accountability at the operating company level. It also provides a strong, more resilient platform for continued margin expansion.

6:45 It's important to note that the cost reductions have been focused at the administrative levels. It's vital that we continue to preserve and invest in the crucial capabilities that customers value and provide sustainable competitive advantage, including specialist engineering skills, operational and supply chain excellence and commercial talent with relevant domain knowledge to understand customer needs.

7:09 The third component of the framework is sales transformation, which is the priority I'm perhaps most encouraged by because it is the one that shifts TT from recovery back to growth. During the period, we continued to invest in our commercial organization, expanding business development resource, especially in North America and China, improving capabilities and strategic selling, driving consistency in pricing in the bid review process, improved deployment of our CRM and strengthened pipeline management. These initiatives are beginning to deliver greater commercial discipline that involves a focus on market segments and applications in which we can add most value and the right to win, is driving stronger order intake with a book to bill ratio of 112% for the group and a stronger order book across all three divisions.

8:00 We have seen improved conversion of the opportunities in our pipeline and encouraging new customer logos and NBO wins, which I'll come on to later. I'll come back to those wins in more detail shortly because they tell important story about the breadth of demand for our technologies. There remains further work to do here, but we are building a more disciplined and more effective commercial organization and the benefits are coming through.

8:29 Finally, portfolio optimization. Following the completion of the strategic review of the components business announced with our full year results, we have tested market interest in acquiring the business, and we have received an encouraging number of indications of interest. The Board is now evaluating a potential divestment, and I'll reemphasize what we said at the full year. Any decision to execute a transaction will remain subject to value, and there can be no certainty as to the outcome at this stage. We've been very encouraged by the return to profitability of components during the period. The business is performing better in a growing market, and that strengthens our position, whichever route we ultimately take. Alongside this, disciplined capital allocation remains a priority, balancing selective investment opportunities to strengthen our core business with further deleveraging and future capital returns.

9:24 Taken together, these four priorities are doing what they said would do, driving margin expansion, sharpening our focus and building a platform for sustainable growth and delivering improving financial performance. With that, I'll hand over to Iain, who will take you through the financial results in more detail. Thank you, Eric, and good morning, everybody. I'm very pleased and privileged to be here as CFO of TT. This is a business with great opportunities in very good markets, and it's already getting very firmly back on track. That was my belief before I joined, and my first two months in the business have more than confirmed it. So I'm excited at what's ahead. It's been great to meet many people across the group already to start to benefit from their knowledge and to see their passion for the business and their own excitement at what's possible in the future.

10:16 Also, a word of thanks from me to Richard, who has done a lot of sterling work in his time as Interim CFO and has been extremely helpful in enabling a smooth and very effective handover. So the key financial metrics for the half. I won't talk through all of these during the presentation, and some I'll look at in more detail in later slides. But for now, revenue in H1 showed a modest decline of 2.7% versus the prior year, but that was affected by two significant one off factors that have been flagged previously.

10:52 And absent these, sales grew around 4%. We expect to see positive organic growth with or without any adjustments for one offs in H2. Operating profit grew by £5,000,000 or 37%. The key drivers were the strong turnaround in the Cleveland site going from loss making to profit and the benefits of closing the underperforming Plano site. As a consequence, the other profitability metrics are also very positive versus the prior year with substantial percentage increases in PBT and EPS. And I've referenced on here that these reported numbers are despite an unusually high effective tax rate that's due to the fact we cannot yet recognize a deferred tax asset in respect of U. S. Tax losses. Finally, I'd also highlight ROIC at 18%, which is a healthy number and leverage at 1.1 times, flat on the 2025 full year after some modest inventory build in H1, but well down on where we were a year ago.

11:50 Revenue. This business has great opportunities and importantly capacity to grow the top line, and that will, of course, be the biggest sustainable driver of value in the future. The headline for H1 was a 2.7% decline at constant currency, as I mentioned, but the underlying picture was positive. This slide shows the simple year over year bridge with the movements by division. Power was flat over the prior year. Aerospace and Defense, which will be very positive long term drivers, represent around two thirds of that business. But as noted on here, there were some customer driven delays which held the headline revenue number back a bit in the half. Conversely, we expect H2 to be positive. Power sales into Industrials and Healthcare were positive in the half.

12:36 EMS' headline number, a decline of 8%, was affected by the well flagged product transfers from Suzhou to Kuantan in the period. Absent that one off impact, the business grew quite healthily at around 7%. Finally, Components delivered growth of 6% despite the approximately 5% impact of the Plano closure.

12:58 This slide summarizes that 37% constant currency profit growth over and above a very small currency benefit of £05,000,000 you can see there. I'll talk through the divisional results in a moment, but you can see good year over year improvement in EMS and Components, driving the group improvement in H1, the former due to the strong progress in Cleveland, as I mentioned. Power is our highest margin business and generated £14,000,000 profit in the half, albeit it was slightly down on the prior year due to the sales phasing. As I said, we're confident that will come back in H2. So I'll now look briefly at the three divisions' performance in the period. Firstly, Power. I've mentioned the key drivers of the sales result. As I said, we expect H2 to be stronger.

13:43 Agreements recently signed provide good momentum and confidence about the near and longer term, with the near term outlook corroborated by the robust book to bill ratio and the longer term by the strong macro outlook in A and D in particular. The Power operating margin of 14% was slightly down on prior year due to the flat sales in the period, but it remains healthy and we think there is certainly still scope to improve it over time. Eric will give some detail on some of the commercial successes in the period that give us confidence for H2 and beyond.

14:18 In EMS, the top line was distorted by the customer transfer, as we've said, but showed encouraging robust growth absent that one off factor. And the operating margin is up to 8%, not where it needs to be yet, but showing very solid progress. The key driver of that improvement has been the turnaround in Cleveland. I've been to that site myself, and the management team under new leadership have clearly done an excellent job over the last six to twelve months. There is, as always, more that can and needs to be done, and I'm confident it will be done there, but the site was profitable throughout the half and is very much back on track. As with almost all of our sites, they have existing capacity to cope with substantially increased demand.

15:02 Components was also a positive story in the half, growing well and back to profit. The sales growth is being driven by better markets and better execution on our part, and we expect the positive momentum to continue. That top line growth, along with the benefits of closing the Plano site have driven the division back to profitability. We're confident the top line momentum will continue to help drive the margin upwards. And Eric's already commented on the status of the strategic review of the business.

15:32 I thought it would be helpful to also include the group sales split by end market and by geography. A and D is the largest segment weighted heavily to Power, followed by auto and electrification, I. E. Industrials and then health care. The sales through distribution are largely in the components division, about 80% of that 16% on the chart. So, we're well exposed to some strong macro tailwinds. Geographically, we have good diversification and we're notably well exposed to the currently stronger growing regions of The U. S. And Asia. So some very good opportunities for growth, and Eric will talk further on what we're doing to ensure we get after those as effectively and quickly as possible.

16:16 This slide shows the key elements of the cash flow during the period. The higher profit was, of course, a positive factor in the half, leading to EBITDA of GBP 24,000,000. Of the items between that and the free cash flow, the key one is working capital, as highlighted on the slide, which this period saw an outflow of around GBP 13,000,000. This was driven by increases in inventory in Power ahead of some of the delayed revenue already mentioned and in EMS at the Kuantan site as they build inventory to support the new business that has been transferred there from Suzhou. Of the other items, the only one I'll highlight is the £3,800,000 cash spent on restructuring and exceptional items, the majority of that related to the Plano closure and also the closure of the small EMS plant in Mexicali. Due to the lower cash conversion in H1, free cash flow was nil in the period.

17:06 We certainly expect it to be positive in H2 and therefore the year as a whole. I'd also emphasize that on an LTM basis, I. E. June to June, the cash conversion was at 108% and free cash inflow was £23,000,000 Free cash flow generation is, of course, the key long term value driver of the business, and I believe that's well understood by all of the management teams. It will remain front and center in all of our decision making. As an aside, in the appendix to the slide deck, there are some more detailed guidance points covering some of the full year 2026 numbers, including obviously a few pertaining to cash flow.

17:45 A quick recap of the key balance sheet metrics and also our current financing. Net debt excluding leases was £52,000,000 at the period end, broadly flat on 2025 year end and well down on a year ago. Leverage at 1.1x is at a very manageable level, but nevertheless, we do expect to reduce this further in the second half. We also have good levels of financing in place. The RCF of £105,000,000 was almost all undrawn at the half year. As Eric and Richard reported in March, during Q1, this facility was extended to June 2028. The private placement notes have maturity dates of 2028 and 2031, both at similar rates that amount to 3.65% on average. We, of course, very much value our lenders' ongoing support, and we'll, of course, be starting to plan for the 02/2028 maturity dates well ahead of time.

18:34 But in short, the group is in robust shape as regards to financing. Finally from me, this slide shows the board's current and in certain respects initial thinking on capital allocation, which we thought it would be useful to share. To be clear, at this stage, our focus is on the left hand side of this slide, I. E, ensuring the business is generating sustainable and increasing levels of free cash flow.

18:58 That will, in turn, allow any organic investment that's needed to drive the business further forwards. So pretty basic, we want and intend to get into a virtuous upward spiral of ever improving organic profit and cash performance. How we would think about the other ways of deploying cash generated, whether from organic performance or, for example, from a components disposal if that were to happen, is shown on the rest of the slide. Firstly, absent anything more transformational that might be considered in the medium or longer term, we aim to keep leverage below 1.5 times. Obviously, we're below that level today, and it may also go a bit lower in H2. We'll always keep that under close review and ensure we're doing the right thing for the long term health of the business. Secondly, dividend. We do not currently expect to reinstate the dividend for the 2026 financial year, but we'll, of course, keep that under very close review.

19:49 We know it is rightly important for some shareholders. It's fair to say that if and when we do reinstate the dividend, we'd expect to start at a prudent level and build from there. Thirdly, portfolio. We've discussed components. Proceeds of a sale will give us options and flexibility beyond what we have today, but the priorities for deploying any proceeds would be as just described and as shown starting from the left. The other aspect of portfolio, I. E, bolt on M and A opportunities, is something we intend and need to look at as part of longer term value creation, but to be clear, not an immediate priority. The Board will provide greater clarity in the future on its approach to M and A and selected bolt on acquisitions, including the disciplined criteria that would underpin any future activity. In summary, our capital allocation framework will help ensure a very disciplined focus on unlocking and maximizing the substantial value we believe exists in the business and with a clear goal of delivering superior returns to shareholders over time.

20:49 That concludes my section, and so I'll now hand it back to Erik. Thank you, Iain. I think what Iain is just taking you through is a materially stronger financial position, significantly improved profitability, better margins and a balance sheet that is increasingly giving us more flexibility. What I'd like to do now is spend a few minutes on the commercial side of the business and point to some clear examples of our strategy working in action.

21:18 Our investment in the commercial organization is translating into a stronger pipeline, an increasing rate of customer wins and a growing order backlog. During the period, we secured material contract awards with blue chip customers across several end markets. And post period end, we signed a significant multiyear agreement with Rolls Royce, which I'll come back to in a moment. In EMS, we won two new logos in scientific and analytical instruments. And in Power, we secured a new contract to supply power electronics for subsea oil and gas applications. The commercial pipeline continues to strengthen. We have signed a letter of intent with MBDA, a leading European defense company, based on our credentials in ruggedized power electronics. That could drive significant long term value.

22:04 Our Power business is engaged on the Future Combat Air System, which has to potentially be one of Europe's largest next generation defense programs. We are also engaged on major armored vehicles, including Boxer and Challenger through Rheinmetall BAE Systems, and we continue to support the Typhoon and F-thirty five air defense platforms. Against the backdrop of increasing defense investment across Europe and The U. S. And an accelerating focus on delivering critical capability, TT is well positioned to support our customers through the next phase of production growth. What I want to highlight here is the breadth, New customer wins for EMS and Healthcare and a return to growth in the wafer fab capital markets segment demonstrate commercial traction extending beyond aerospace and defense, and these wins span each of our three divisions and provide broad based momentum.

23:01 I want to bring two of these relationships to life, starting with Rolls Royce. Shortly after the period end, we signed a significant multiyear agreement with Rolls Royce to supply high reliability solutions for all of their wide body civil aircraft engines throughout their operational lifetime. The content is mission critical power electronics and precision magnetics that support the performance and reliability of those engines. This is not a new relationship. It builds on more than four decades of collaboration between our two businesses. What the agreement does is formalize and extend that partnership and reinforce TT's position as a trusted design and manufacturing partner one of the most demanding customers in aerospace. For us, the significance is twofold. It provides attractive long term revenue visibility, and it demonstrates our ability to convert deep engineering relationships into strategic, long dated commercial agreements.

23:56 The second example is a program rather than a customer. We have supported the Eurofighter Typhoon program for almost thirty years through production, upgrade and in service support, the kind of longevity that provides real long term revenue visibility. During the first half, we secured further material contract awards on the program, reinforcing our position on one of Europe's leading air defense platforms. What makes Typhoon a useful case study is what comes next. As I mentioned just now, we are engaged on the Future Combat Air System, known as FCAS, supporting the transition from today's Typhoon platform to Europe's next generation combat aircraft. The capability we have built over three decades is precisely what positions us for the programs that follow.

24:43 That capability sits across our sites in Manchester, Barnstable, Bedlington and Fairford, highly skilled engineering teams that create a strong foundation for future defense programs. As you can see, targeted investment in technology and business development capabilities is leading to rising commercial prospects and gives us the confidence to support new aerospace and defense contracts in the future. Finally, turning to the outlook. We entered the second half with improving momentum and with increasing pace and effectiveness in execution across the group. Starting with revenue and our markets. We expect revenue to return to organic growth in the second half, supported by a strong order book, which at the end of June is 20% above the same point last year.

25:29 And demand in Aerospace and Defense continues to provide a strong foundation for the group, supported by increasing defense investment and a healthy pipeline of program opportunities. Within EMS, we're encouraged by increasing commercial activity, improving conditions in Health Care and Life Sciences, the successful transition of customer production in Asia and order growth in the semiconductor supply chain. Regarding operational performance, a drive for productivity improvements combined with a lean cost structure is supporting profitable growth and margin expansion. Strategically, our focus remains on commercial execution and operational excellence, and we continue to optimize the portfolio. The Board is evaluating a potential divestment of the Components division with any transaction remaining subject to value.

26:20 With respect to the balance sheet, cash generation is expected to strengthen significantly in the second half with further deleveraging expected for the full year. Reflecting this momentum, together with the benefits of our cost reduction program building through the second half, the Board now expects adjusted operating profit for this year to be ahead of current market expectations. The progress we have made over the past twelve months has transformed TT into a stronger, more resilient business with a clearer strategic focus. Last year, we were fixing operational problems. Today, we are executing against a clearly defined strategy with improving margins, stronger balance sheet and genuine commercial momentum. I just want to use this opportunity to acknowledge that this is a team sport, and the execution of the turnaround would not be possible without the support, commitment and expertise of the many great people we have throughout the business, for which I'm very thankful.

27:16 There remains a lot more to do, and continuous improvement remains a mantra. But as I said earlier, we have moved from stabilizing the business to executing against a clearly established value creation plan. We are increasingly seeing evidence that our strategy is delivering, and that gives us confidence in our ability to deliver growth and long term value for our shareholders. Thank you very much for your time this morning. Ian and I are very happy to take your questions. Perfect. Eric, Ian, if I may just jump back in at this point. And thank you very much indeed for your presentation this morning. I'll just bring your cameras back up there for the Q and A. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, just like to remind you

28:04 that a recording of this presentation along with a copy of the slides and the published q and a, can be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions. So Matt, at this stage, sir, if I may hand over to you to chair the q and a with the team. And if I pick up from you at the end, that'd be great. Thank you. Thank you, Jake. Good morning, everyone. So our first question this morning comes from Justin who asks, what is the typical conversion period from the opportunities currently in your pipeline to turn it into production revenue? Yeah. Great question. And, oh, thanks all for joining today and for your questions. Keep them coming. I'm joined here with it looks like we're on two separate rooms. We're in the same room. I can assure you just two different screens.

28:49 So, hopefully, you can hear us loud and clear. Yeah. To answer the question, it depends on really by division and the nature of the contract. So, for example, in components, a typical lead time for our products would be, say, ten weeks, and that's what we commit to customers. So order intake to delivery revenue would be within three months, so relatively short term visibility. It could be for an existing product we make for an existing customer. For example, some of the products for Rolls Royce, it's more like six months. So from order order to revenue. For more for new customers, new products, it could be nine, twelve months because there could be some elements of engineering content and design before product is manufactured, tested, shipped.

29:47 Thanks, Eric. So our next question comes from Chris who asks, what characteristics would an acquisition need to have for you to consider attractive given the current focus on deleveraging?

29:58 Yeah. No. Good question, Chris. I'd say from the the get go, our priorities are organic growth. Right? Profitable growth, proving the top line, improving the bottom line in margins, and converting that to cash. It's also true there are is potential for further value accretion through acquisitions, but we'll do this in a very disciplined way. And I've done quite a lot of m and a in my career and understand the potential upsides and some of the challenges. So we are we are starting a journey of building a funnel of opportunities

30:35 through which we would filter and consider very carefully. But to give a bit of an idea of the type of thing we're looking at, it would need to be relatively modest in size. So bolt on acquisitions, nothing significant to pose greater risk. It would need to be strategically relevant, So something that would complement our business with our core that we currently do. The most likely focus is on power electronics where we've got real strength, but there are some adjacencies, some areas we don't play in that could support our business. Capability we don't have, geo geographies we're not currently in, for example. And then financially, we need to be, obviously, a business where it's appropriate valuation.

31:21 We think it's meaningfully accretive to our business and for shareholders.

31:28 Thanks, Eric. So our next question comes from Matt who asks, could you speak to custom concentration, please? For example, how much of your revenue is from your largest client and how much is from the top five? Yeah. Sure. Yeah. Yeah. Yeah. So good question. I mean, we I don't think we'll get into specifics on sort of names or getting too granular about exactly how big or small certain customers are. But I think it's fair to say we have I mean, like most companies, near the top, there are some larger larger customers, but it's pretty well diversified just to put some kind of range around it.

32:06 You know, the top 10 customers, you know, 35 to 40 of our revenue, give or take. And then and then it sort of gets less concentrated. So the top 40 is probably more like two thirds of the revenue. So that maybe helps give you a little bit of color around it. Thanks, Ian. So our next question is from Chris who asks, how do you see the optimal portfolio mix between power, EMS, and components over the next three years? Yeah. So it's an interesting question. I mean, we've determined that starting with components, that is not critical for the rest of the business. I it's it's noncore in the sense that there's limited synergies with power and EMS, which is why we've conducted the strategic review and why we've announced this morning we are running a process that will be determined by by value whether we complete that process or not.

33:04 It is a business that's currently in a a market that's recovering and growing, is a good dynamic for whether or not we choose to sell the business. But it's not an area we're looking to to double down on, if you like, through acquisition or elsewhere because the characteristics are different from what I consider our core business, which is power and EMS. They are sort of similar in size in some ways. I mean, our EMS is only three sites, but typically bigger sites by far, the largest site being in Suzhou, China. And power is it's got a diverse portfolio mix across both The UK and The US. And so similar in size, there's no and there's strong synergies between the two, I should emphasize. We actually have quite significant sales, particularly of EMS PCB assemblies, box builds that go into our power modules that go to our customers. So I I expect there'll be we're looking to grow both of the all three divisions, in fact, but power EMS.

34:14 I think in terms of margins, power will always be a higher margin business because it's got more design content. So I think the current proportions are work well. As it stands, I'd imagine long term power would probably have a higher growth characteristics and therefore proportionally larger because of its high exposure to aerospace and defense and other other sectors. Thanks, Eric. So our next question, which is coming from a couple of investors, is can we expect a dividend for 2026? That's it, Eric. So, you know, as we set out in the presentation, we've, you know, we talked about the capital allocation. Eric has already talked this morning and asked the question about about m and a.

35:04 Clearly, we understand, as we say, that's it's it's important to some shareholders. We certainly see ourselves at some point in the future reinstating the dividend, and that's what we should be doing once we're generating sustainable, steady free free cash flow. At this stage, we're we're not committing as to when that will be. We'll obviously the board will look at that very carefully come the end of the 2026 financial year. We may or may not reinstate it then. So we'll we'll we'll take a view at the time. As I said in the presentation, if and when we do reinstate it, you know, we will do so at a prudent level and build from there, which we we think is a sensible thing to do. But I think, you know, dividend is important to see that as part of the broader capital allocation. We clearly have lots of opportunities. We think we will, going forward, have lots of opportunities to, you know, to drive value for shareholders and, you know, over the long term and dividend dividend is one of them. The first the first key thing, as Eric alluded to, is to make sure we deliver that sustainable free cash flow generation, which is what we're most focused on right now.

36:11 Thanks, Ian. Our next question, which comes from John, asks, can you speak a bit more about the Rolls Royce and MBDA contracts? Yeah. I'm hap happy to. I think they're both really interesting and strategic contracts, but but different in nature. So Rolls Royce is an existing customer, existing product we sell to them from our Barnes to Golden facility in Bedlington, and we've been working with them for forty years now. So the but this isn't a significant extension of that relationship. So rather than a multiyear rolling contract, this is a life of type. So this could well run to more decades so long as Rolls Royce are producing Trent's engines for wide body aircraft, and we produce a really critical component for that, which is a fadette, which is the brains behind the engine with our micro hybrids technology from Bedlington.

37:12 And and with that comes, know, you know, favorable commercial terms, and it's such a significant partnership. Rolls Royce hardly ever announced partnerships in public, so it's really good to have the official signing ceremony with them at Farmborough. So this is existing product, but it was the extension of that, and it provides potential for additional content as well from other other sites. We don't yet serve them, for example, from our EMS sites, there's other potential products we're considering. MBDA is different it's a an emerging customer. It's a new customer. It's a strategic relationship that could be very long term. And short term, it's not financially that significant with some orders related to that contract, particularly what we call NRE, nonrecurring engineering.

38:07 But the the potential volumes from this particular defense platform that's been considered could be significant, but really starting in probably three years from now. So, again, it's important we've got a mix of contracts to support short term growth and and visibility, but also provide long term growth potential as well. Thanks, Eric. And our final question that we've got at the moment is can you provide a little bit more color on the order book going into the second half? Sure. So as we said on the call, order book is is very strong. It's now over £550,000,000. It's 20% of where it was at the same point end of June last year.

38:53 So that gives us good visibility and confidence for the outlook for the second half of this year and a really good starting position into '27 and beyond. What's pleasing about it is it it's we've seen strength and an increased order book across all three divisions, and it's across multiple sectors as well, aerospace and defense as you might imagine, but also a pickup in growth in health care and life sciences. Components is, as I mentioned earlier, recovery in that market cycle and also industrials as well. We we play in in the semiconductor CapEx market. We've got some couple of significant customers there, and their end user demand is is growing as well. So it's a good rounded balanced order book, and we're looking to build on that as we as we deliver on this year, but also look to capitalize on that for '27 and beyond.

39:55 Thanks, Eric. We currently have no more questions, so I will hand back to you, Eric, for a few closing remarks. Okay. Well, thanks very much. Thanks all for joining today. I think it's important that we make the time and support all of our investors, whether it's institutional retail. Appreciate the questions, and it's great to be here within new CFO. We've had a number of changes to the the leadership team and our boards. I think it's a new chapter for TT, and I really look forward to updating you with future results in the in the months and years to come. Thank you. Thank you. Perfect, guys. If I may just jump back in there. Thank you very much indeed for addressing all of those questions that came in from investors and for updating investors this morning.

40:42 Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team, we'd like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.