Victoria (LSE:VCP) — Audited results for the year ended 29 March 2025

0:01 Good afternoon, and welcome to the VICTORIA PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question or receives during the meeting itself. However, the company can review your questions submitted today and publish responses, which is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to executive chairman,

0:32 Jeff Wilding. Good afternoon to you. Good afternoon, and thank you very much for joining joining the call. Yesterday, we published our FY twenty five results and confirmed the refinancing of our 2026 bonds. In summary, the last year's demand remains subdued throughout the year, and the focus, therefore, was on delivering the cost savings we set out at the time of our interim results in November. The result was that h two EBITDA was up more than 25% on h one on more or less flat revenues, and q four was the strongest period of the year. This year, we are continuing to execute on cost savings, which are expected to yield an additional 70,000,000 per annum of savings over the next eighteen months.

1:21 We will set this out in some detail, of these various projects during the course of this presentation. The bond transaction that we announced, exchanging the existing 2026 notes for new 2029 notes, has removed the near term refinancing risk without equity dilution. It's increased the company's liquidity and provided more than sufficient runway for the company to deliver the 70,000,000 of cost saving projects that we will set out today.

1:51 Alec Pratt, our CFO, will now take you through the FY twenty five financial results. Great. Thank you, Jeff. So slide one, just the headline summary there. So as Jeff mentioned, revenue was down last year in a very soft market. We've reported revenue of just over £1,100,000,000. This is in line with the guidance that we provided in May. EBITDA is a £114,000,000 for the year, and net debt rose 57,900,000 to just under 900,000,000. As a result of that slight increase in debt and reduction in EBITDA, leverage for the year finished at 7.9 times.

2:37 And, obviously, that has now been addressed as part of the refinancing. Overall, for the year as a whole, there was a pretax loss of just over £11,000,000, and the focus for the year is on cost savings going forward. So as executive summary, their demand remains lower than the 2019 level by about 15 to 25% across our different geographies, and we'll come on to guidance going forwards. Cost savings targeted at the half year results were delivered of £32,000,000, and we'll see the benefits of those flowing through into FY '26. This will benefit by £20,000,000 in year ahead.

3:26 Incrementally, we have another £50,000,000 of savings that are being targeted to come in by the end of f y twenty seven. And later in the presentation, we'll talk through where those savings are coming from and also the timing and phasing of those. Once those cost savings are complete, the business will return to being a mid teens EBITDA margin, and that will be before any cyclical or volume recovery, which will be on top of that. Market conditions remain at trough levels, but we are tentatively seeing signs of stabilization. That is in particular in The UK and our Southern European markets. More recent trading, we can see that volumes overall remain behind f y twenty five, but with an improving trend, and average selling prices are higher than the year before.

4:18 The board remains confident of the medium term outlook and in both volume and pricing recovery. And, obviously, yesterday, we announced that we had successfully secured over 90% support to attract new senior capital to refinance all of our 2026 maturities, and I'll talk through that in more detail later in the presentation.

4:42 It's important to keep the context of the 2025 results in with where we are in the cycle. Clearly, the pressure on the market is not a VICTORIA specific thing that has been seen across the industry and across all of our peers. We've been very successful in growing the business over a ten year period, and so this side slide sets out where we are compared to our track record. In the top half of that table, you can see the pre IFRS 16 EBITDA progression since twenty twenty sixteen or 2016. As you can see, the average margin over that period is 13.6. That compares to 7.3% in f y twenty five. So I think the key point we we are highlighting on this page is that whilst the 70,000,000 of incremental EBITDA savings are a large number in absolute terms, we are very confident that we can deliver those. And in the context of where we have been historically, that will just return us to where we have performed in the past.

5:52 So as you go into the FY twenty five results, the first page lays out an overview of the performance. So a lot of numbers on the page, but a couple of key messages to bring out there. So firstly, the business has been very focused on efficiency over over the course of FY '25. We've reduced the level of s g and a both in absolute basis, but also on a percentage of revenue basis through self help initiatives. These were enacted throughout the year, and what you can see in terms of profitability is that EBITDA was second half weighted. So you can see that was 63.5 in in the second half versus 50.2 in the first half.

6:38 And the margin in h two was therefore 11.6% versus 8.8 in the first half. What that shows is those those cost saving initiatives are already having an impact. And as we disclosed in May, q four was our strongest periods of profitability for quite some time. The next slide provides a breakout of revenue across our divisions. I think two key points to mention there. So in soft flooring, the main reduction in revenue was due to a change in average selling price. The main driver of that was a change in mix across the business.

7:26 So part of our nonwoven rugs business actually performed very well. The selling price of that product is, yeah, very much at the lower end, and so that replaced some of the higher value products which saw some decline. And therefore, that ASP declines across that division. In ceramics, there was a blend of volume and ASP reduction. So clearly, in a softer demand environment, you know, some customers are choosing to switch down to lower cost products, and so pricing is under a little bit of pressure there. And, also, we reduced volume as the business began to focus more on profitable sales.

8:14 Across both our Australian and North American businesses, you know, fairly stable performance there, so no material trends across those businesses in revenue.

8:25 As we look towards profitability, this slide looks to break out the impacts of reduction in revenue and then margin. So as you can see, you know, in both soft flooring and in our ceramics business, yeah, the main impact there is on margin. As we've talked about previously, we are operationally geared. So actually reducing revenue does drop through to the bottom line. I would also bring out on the ceramic side. Last year saw the roll off of an advantageous hedging position through the course of the year, and so that actually reduced profitability as we went through the second half. As with the revenue performance in Australia and North America, was relatively stable, and clearly costs were kept under tight control at the central level.

9:20 So the next slide really highlights, you know, the non underlying charges. Couple of key points to bring out there. Firstly, that the cash exceptional items remain relatively low at just under £17,000,000. Those are highlighted in orange at the top. Then secondly, exceptional impairment charges, so a £186,000,000. They have been have been run through the accounts. Those are focused around our Belgian rugs business, our Spanish ceramics, and then our US distribution businesses. It's important to note that those are noncash, so just an accounting measure.

10:06 As we look through the lower half of the table, you know, exceptionals there, again, the main driver is amortization of acquired intangibles, which remains just over £30,000,000. And, you know, the net movement in finance costs is broadly neutral. On cash generation, here, we've broken out the various steps here. The first piece is that actually, in terms of operating cash flow, the key thing I would highlight there is that through the course of the year, there was an outflow of working capital. The key driver of that was due to our credit rating, you know, we had a reduction in credit insurance.

10:53 What that means is that our suppliers began to tighten in their supplier days, and therefore, we're paying them earlier and has an outflow of working capital. Clearly, with the successful announcement of the refinancing yesterday, that situation should improve, and we will have conversations with those credit insurers over the coming weeks. With that credit insurance being put back in place, we would expect an inflow of working capital through the course of FY twenty six. In the middle of the charts, we show how we are choosing to deploy capital. There are three black bars there in terms of CapEx. So maintenance CapEx remains relatively low at £46,900,000.

11:43 We have continued to invest in the business both into improving the cost base, and so there was a £26,100,000 charge for exceptional reorganization CapEx. We then have, you know, 30,000,000 of expansionary CapEx, which was deployed. The main element of that is investment in our, you know, new high-tech ceramics plant in Spain, which we'll talk about later in the presentation. The teal bar of 58,900,000 shows that the board has delivered on the guidance on disposals. There are two main elements to that. Firstly, the disposal of our Granister business, which is a Turkish ceramics business that was sold, you know, in early h two. The second element of that is sales of properties.

12:35 As we previously talked about, there is a significant property portfolio across the group, and so that could be a source of further liquidity, you know, if the right values can be delivered. Last year from an m and a perspective, you know, a small outflow there, that was a mixture of earn out payments and then small f and a focused in The UK business, which Philip can pick up on later. The net impact of all that is that, yeah, there's a £57,900,000 outflow of cash through the year, and we'll kinda turn and see how that impacts the debt. So on this slide, we show the different elements of our debt.

13:21 Yeah. That is a very diversified lender base split across local facilities, a super senior revolving credit facility, and then a variety of listed bonds. In total, the debt increased to just under £900,000,000 on a post IFRS 16 basis, and our EBITDA set was a £114,000,000, which leaves a a leverage ratio of 7.9 times. Above that, there is also below that on the table is also our preferred equity. As a reminder, that is provided by Coke Industries, which is a large US conglomerate. That is a equity instrument, which does not have kind of maturities or covenants or anything like that.

14:13 So if you choose to include that as a liability, that increases overall liabilities to just over 1,000,000,000 at 9.3 times. So key announcements, obviously, is the refinancing yesterday. So a few things to highlight there. So firstly, this is a full solution for all of our near term maturities. This provides, yeah, stability for the group going forwards, and clearly will be a very strong message for all of our customers and suppliers. This is through two key components. So the first is a new super senior facility of a £130,000,000. We announced, you know, last couple of weeks back. The key message there is that it increases liquidity for the group and does not have any covenants or any draw stops on that, so that is fully available.

15:11 The second element, we confirmed yesterday, is an exchange offer for our twenty twenty six bonds. Those will be converted into new first priority notes, which extend maturity out to 2029.

15:26 Pleasingly, we received over 90% support from the bondholders before we launched, which gives us excellent certainty around completion of that transaction. And in total, the transactions allows us to have a significant runway to execute our self help initiatives, which we have laid out later in the presentation. So to summarize, the transaction provides enhanced liquidity. The new capital structure has no financial maintenance covenants. There are now no short term maturities with a materially extended maturity profile, and that has all been delivered with no dilution to equity holders.

16:10 Quickly, the impact on the pro form a capital structure. So a lot of numbers on this page, but on the left hand side, we have the existing capital structure, then the changes, and then you can see what happens post transaction. So the largest change there is clearly the introduction of those new 2029 first priority notes. So those are £534,000,000, that is. We've assumed here that the full 2026 bond is removed. You will also see that there is a reduction in the 2028 bond of about £72,000,000. That is due to some of the 2026 holders also holding 2028 notes.

16:55 And so as part of their consent, they asked that their '28 notes were converted into first priority notes as well. And so what that means is that the remaining stub of those twenty twenty eight eight notes is only a £143,000,000, which, you know, as a proportion of the group's capital structure is relatively small. So as and when that is addressed, that is a reasonable bite size that we can refinance at that time. On the right hand side of the slide, you can see the costs associated with each part of that debt. So the local lines clearly are an attractive kind of mid teens sorry, mid single digit interest rates. The new super senior facility can be drawn either in pounds or in euros, and the margin on that is 6%.

17:48 So depending which currency you draw, yeah, that's kind of, call it, 8% capital. The new first priority notes have been issued with a 9.875% coupon.

18:03 The important thing there to note is that we have the option to pay a twelve month period where we only pay 1% cash interest and the rest of the interest in payment in kind. We will take that option in the first year of the notes, and so therefore, the cash cost of that interest sorry. Cash cost of that instrument in the first year will only be about £5,000,000. So overall, with the refinancing, we'll remain at about eight times net debt EBITDA. And, actually, the serviceability of that interest, particularly in the near term, is actually very strong and attractive. So with that, I'll hand over to Philip to talk through the operational review. Okay. Thank you, Alec.

18:52 So first division, if we have a look at the first division, which is also the largest UK and Europe soft flooring. For the record, this incorporates the boardroom carpet and LVT, underlay artificial turf, and rugs. So we see reinforcing UK strength and a further optimizing of the cost structure. Important to notice is that if we exclude the rug division, we have a mid teen performance of that division. So all the rest of the subdivisions in the soft flooring are up. Just talking about rugs. So the volume, rug segment of Alta has had a difficult environment as, as you know. So we've done already, two restructuring operations, and we have had to add another restructuring operation recently.

19:48 So we've been announcing to the trade unions the intention of a further restriction whereby we would want to to to put most of of the production on in our existing Turkish plants. So instead of a fifty fifty split between Belgium and Turkey, we would go for a 90% in Turkey, and only 10 would be left in in Belgium. This is just to enhance our cost base. Yeah. So just brief overview on the rest of the division because there's a few other good growing parts of that division. For Broadloom. So extremely important is the expansion of the product groups there, which we see.

20:35 So what we've done, the The UK is the main market as we all know in terms of customers, product, and distribution for soft flooring, but we needed to expand the product groups. In the Broad Room, we have a a market share of about 18%, and we need to expand on other flooring types. There's about 60,000,000 square meters of other products being sold in The UK, and we want to have our port in that. So we've also looked into reduction of overheads in in that division. We've integrated or or better even merged two brands with other two brands. So in order to take some cost out, this has allowed us to take out 50 FTEs. We've also at this moment, we can say that we have completed the integration of production of Baltar ranges in UK because Baltar had a lack of broken production in Belgium. All of that has been moved to UK. This operation has come to an end. And then very important, of course, in that division is also the service component, the next day delivery.

21:38 So we're only a manufacturer, we're also a distributor in in The UK. So presently, in The UK, we have four brands and about sales 70 sales staff in the market to run for different service propositions. All of that is done through Alliance. Alliance is our distribution vehicle in The UK where we continue to deliver best in class service. Last year, we've delivered a 120,000 order lines with an 83.5% next day delivery, even 95% within forty eight hours. Alliance has also further evolved in an independent service provider and is providing services for 14 non VICTORIA brands.

22:30 Another subdivision of the soft flooring division is the underlay. We have a very strong market share in the underlay, and we've done quite a bit of operational work there. So we've done an integration of a of a production unit we had in Scotland. We've integrated in the main site in Effingham. So we've also integrated in in warehouse internally. We've done a small acquisition to do some

22:55 to to concentrate some production, especially on the rubber drum manufacturing. And then for that as well, we've further developed our European hub, which is called Estillon. This is a small acquisition we've done in the past where we want to expand because we think on the continent, we can provide a lot of growth for the underlay division. Last but not least, subdivision of soft flooring is artificial turf. Can be very short there, so we've had a a good year in artificial turf. Last year, we are mainly residential. 80% of that division is residential. Only 20% is contract sports fields. So we've grown in both in residential and in contract, and the growth was a bit higher in the sports side.

23:43 Second division is ceramics.

23:48 We've had or we've seen a more difficult environment in the in the ceramics division. Reason for that is that we had no favorable gas contracts. So we've also been we've also seen that we've had a bit more pressure from new market entrants who are traditionally in the volume segment and who have entered in this segment with a different margin ambition. We've also probably kept too long our margin ambition before changing it to some extent in order to to take a bit more volume. But the average price, I have to say, the average price dropped only 2.3%. And to compensate that, the management was able to take to reduce the average production cost by about 7% in terms of labor savings and all kind of other reductions.

24:41 So there's been a lot of work in in the ceramics division in terms of taking cost out. So we've reduced headcount. We've reduced SG and A. So there's plenty that has happened. We've also speed up the time to market, which which was important. We had had some slack there in the last couple of years, so we caught up on that. We've also further reduced the number of SKUs in the in the ceramics division. And then on the sales side, we've opened three extra showrooms in the retail channel, and we've reopened our large showroom, which is in Castellon, the Agora showroom, where we've done a big event for customers as to be as okay. This was rebuilt after the fire we had a couple of years ago.

25:34 So important to to highlight here in the ceramics division, there's four strategical lines guidelines that we've set for ourselves. So we first of all, we want to intensify the approach to integrate the ceramics across Spain and Italy. We've also decided that we wanted to expand on small sizes and a special DIY approach. This is why we brought the management of a couple of companies together to give it a special DIY approach, which is strong and mainly the Italian brands go for that. And then as a third leg, we've set up a sourcing agreement also with the recently sold Turkish ceramics brand, Kaneser, where we can buy some specialty products or when there is an extra demand so we don't have to fire up a new kiln so we can do some third party manufacturing when needed.

26:29 And finally, very important is the investment we've done or we're in the process of doing in Spain what we call the V four project. This is a project with the build of a a new continuous press and a kiln with a a very long one. So we have efficiency gains in order to try and reduce the box. We're already developing product to that. We are trying to take orders on that on that as well. We've developed a product, and we we will see some upside of that project in the last quarter of this financial year. And it's more aimed for the next couple of years to come. So the production output of that line will be about 5,000,000 square meters, And we hope that this is all this is sales on top of the existing and is not replacement sales.

27:20 Third division, can be very brief on the third division, which is Australia. Very resilient performance, and we keep on having a a positive outlook there. So quick reminder, we have two carpet plants in Australia and one underlay plant. All the segments in corporate, in synthetic as well as in wool and underlay have performed to budget. So we also have an import activity in LVT from Southeast Asia. There has been a bit more pressure on on that because there's a lot of importers currently in Australia, but we we have made some choices to move in the more higher end with with our branding policy, which we are rolling out in Australia.

28:07 Last but not least is is America. There we see a resilient positioning in a in a challenging market. So just for the record, we are not producing anything in The US. It's only an import activity. We have a market of about $300,000,000 in The US with the largest company. We have the Cali in San Diego, which is an omnichannel distributor.

28:41 Unfortunately, what we have what we have seen in f y twenty five is that the North American trading conditions have remained extremely challenging and high mortgage rate of about 6.7% for a thirty year fixed mortgage, whereas we know that it should be around 5% to unlock or To unlock demand. So, also, the hosting transactions have been at its lowest with 4,000,000 units. So, like, we we are waiting. But in the meantime, what we've done, so we've taken self help initiatives to try and take cost out of the business, especially in Cali where we have paused the the residential residential part of of the revenue, which has allowed us to take off to take out a lot of advertising costs in terms of pay per click contributions, which we had to make for the in the advertising budget.

29:41 So we've also introduced new product in Kali a bit away from where the most of the market goes in in LVT. So more real wood laminate and other affiliate products. So I think this is it for most of the content on the on the divisions. If I can hand over to to Alec again, please. Great. So we've number a short session on driving performance. Going forward, clearly, a big focus is our self help initiatives, so provide a bit more detail on that. I've now been in business for about three months, so I thought it'd be helpful to kind of provide a bit of color in terms of what I've seen getting getting to know the business. So in terms of initial observations, let's say, obviously, we are a large business, you know, with a pretty diverse structure, which is run, you know, on a fairly federated basis. So all the local teams, you know, have quite a lot of operational autonomy.

30:44 Yeah. Pleasingly, what it seems, you know, very strong local teams, all very competitive with a strong desire to win in the local markets. A number of those businesses actually have very strong positions within their markets and are in a number of cases the leader and in some cases by quite some way. Clearly, in kind of a a lower volume environment, that's really helpful, and hopefully, something we can, you know, take advantage of going forward. Now we are differentiated in a number of our businesses, so people see us sometimes as a as a industrial company, but, you know, we do have very strong brands, broad customer base. We have very impressive physical distribution capabilities in high value end markets. So that sets sets us apart from a number of our competitors.

31:35 And, yeah, as we drive efficiency measures, yeah, that will hold us in a really good place. So in terms of the culture, people are deeply commercial and opportunistic. Clearly, yeah, in this sort of in trade environment, that's that's important. And, actually, you know, we'll seek to, you know, grow revenue from that basis. There's clearly a frustration with recent performance. As I said at the start of the presentation, you know, that is an an industry wide phenomenon. The volume is under pressure. Nonetheless, we all want to be kind of growing the business and and pushing forward performance. And I think what we'll go on to is there are very clear plans on how to improve profitability going forward. Now philosophically, you know, we are see beginning to see more and more benefits from working as a group.

32:27 And, yeah, we are one of the larger competitors, you know, across the flooring industry, particularly in Europe. And, you know, we have seen, you know, lots of procurement savings in particular, which we are able to to put in place because of our scale. So there will be more to go for in that in that regard. And then whilst we've made good progress on consolidating a number of the acquisitions we've made over the last kind of ten, twelve years, you know, there is still more scope to integrate further there. So looking ahead, you know, my key areas of focus, you know, and, obviously, it's been a busy first couple of months with the refinancing, but, yeah, we'll work with the team to provide more clarity on group strategy and financial targets.

33:15 You know, we aim to have improved communication both internally. So as part of working together as a group, you know, we are communicating more with our senior managers and then obviously with our external stakeholders, whether that's equity, debt, etcetera. So hopefully, this presentation does give you a bit more granularity than some of our previous communications, and, yeah, we hope to continue to to improve that. There'll be an ongoing strengthening of governance and controls. You will have seen yesterday within the announcement that we do intend to appoint another independent director. There's also work to do in terms of kind of rolling out or formalizing some some policies and, yeah, helping the local management teams with some bigger decisions. Fourthly, leveraging the advantages of scale. You know, we are a big player. We need to make the most of that, and so, you know, we'll look to see that going forward.

34:08 And then increasing emphasis on capital allocation returns. So I think the message from the sale earlier in the year is that the board will be very disciplined about the returns we want from our divisions And, actually, it will be very pragmatic that if we can release capital to deploy elsewhere in the business either through debt reduction or reinvestment in the business, we will do that. This is not about empire building. This is about being disciplined and actually driving returns. So the next slide, you know, is a larger repeat of the slide from the half year. I think the, you know, simple message here is that everything that was promised on cost savings in f y twenty five has been delivered.

34:54 The only piece that, you know, is not yet flowing through the f y twenty six numbers is the ceramics ceramics plant in Spain. That's expected to come online in calendar q four twenty twenty five, and so we'll get one quarter of benefit of that. They're discussing with the local team a few weeks back. You know, the actual construction of that facility is is going very well and on well on track. The team is also focused from a commercial perspective on beginning to, you know, build up sales for when that comes online. So that is, yeah, well on track for what we were expecting. The impact of that is that, you know, we will get £20,000,000 of EBITDA and EBIT uplift from the measures that have already now been put in place.

35:46 So the next slides provides a bit more granularity on our previously stated, you know, additional cost savings to be executed through the course of f y twenty six and FY twenty seven. So the two charts on the right there firstly provides a bit more color on the types of improvements that we're making. So these are backed up by, you know, I think 20 to 30 individual projects. Yeah. We basically bucketed those into three different areas. The first of those is procurement where we're targeting an additional 10,000,000 of savings. You know, the best example that we've seen already that has now been executed is on shipping.

36:32 By using a single tender for all of our shipping, we're able to save about 30% of the cost there, which is a few million pounds. And that is really just, you know, organizational and having a project lead to have a single tender rather than splitting that up across the group. There are plenty more of those opportunities. I think the exciting thing for shareholders and and other stakeholders is that, you know, those things can be done relatively quickly, and they are done, you know, without requiring any capital. So I think those are that's the first bucket. The second one is £10,000,000 of savings from integration. So within a number of our operating businesses, they've been built up through acquisition. So there is scope there to consolidate the back office of those businesses.

37:22 And so, you know, again, that is largely organizational, should be capitalized to implement. So, yeah, that is another ten minute savings. Then the final piece is on manufacturing. So some of that is within individual plants, just kind of ordinary course, you know, better production. But the two main elements there we've already touched upon are, firstly, this new ceramics plant in Spain, and then secondly, the move of the rugs manufacturing capacity from Belgium to Turkey. So cumulatively, that's £50,000,000 of savings, which are being run through across the group. The bottom chart there shows the expected phasing of that. Hopefully, that's, you know, a very helpful breakout as you think about your financial forecasts.

38:14 So, you know, this year, we're expecting a £20,000,000 benefit, '27, 30,000,000, and 2028 as things get the run rate benefit of the stuff done in '27 will be a further 20. So the sum of that is that, you know, on top of our f y twenty five performance, we're expecting £70,000,000 of cost improvement from our own self help initiatives. That would obviously take, you know, our EBITDA up to, you know, a 180,000,000, you know, on a post IFRS 16 basis. The other key thing to mention on this slide is the net incremental cost of implementing these changes is relatively small.

39:00 So as part of some of the manufacturing initiatives, we will be able to release some value from the property as we move those plants. So that will kind of net off a lot of costs. So the total net incremental cost of this 50,000,000 savings is less than £20,000,000. Within that, that includes the CapEx that we are spending to finish off that ceramics plant. That on its own is kind of twelve to fourteen million euros, and so there isn't a lot of additional costs on top of that to get get all those synergies delivered over the next couple of years. So next on current trading and outlook. So, you know, as I'm sure you're aware from other building materials companies, market conditions are relative at a relative trough, but they are showing signs of stabilization.

39:54 This is particularly true within UK and Southern Europe. The group remains focused on improving margins and also being disciplined on pricing. And so the impact of that is that, actually, we have seen average selling price increase in q one f y twenty six, and therefore, that's ahead of last year. From a volume perspective, obviously, last year was a year of progressive falls in volume. So when we started April this year, that was obviously starting from a lower point versus April the year before. But pleasingly, we are seeing an improving trend on that. And as we look through to the rest of the year, yeah, we would expect progressive improvement as we lap weaker comparables from the year before.

40:41 So the impact of that is this after a few years of a falling market, we are now expecting a a typical h two waiting, you know, to to resume. And so, you know, implicitly, that is suggesting that we're seeing a more stable market at the moment. Now, obviously, we've got very extensive cost savings coming through the business. So overall, in '26, we'll get 20,000,000 of benefits. Clearly, that's an ongoing measure. So h two margins will also benefit from those savings beginning to come through later in the year. And obviously, we talked about, yeah, there's a further 50,000,000 that will be delivered before the end of FY '27, and we'll get the full benefit of that within FY '28.

41:31 So we pause there, chairman. How about you for any concluding remarks or q and a? I think we'll just go straight to q and a because there's been quite a number of questions that's that's been asked. I don't think given the time that we've got left will be enough. There'll be an option to get through all of them, but we'll select a number. So I'll read out some of the questions as as they come in and or as they're there, and I'll hand to Philip or Alec to answer them. First one is what's your confidence level with respect to the 70,000,000 of logistics savings, Alec? So so, like, I mean, as I said, that is a whole bunch of different measures.

42:17 So, you know, it's kind of mid twenties type number of different projects. We're very fortunate that we do have, yeah, a number of different local management teams. So whilst that sounds a lot of different projects, actually, it's only a a couple per division. Yeah. Those have progressed very well. I think we have demonstrated through FY '25 that, actually, execution of those projects to date has been very successful. The ones that, you know, are ongoing at the moment are tracking well. You know, the largest manufacturing one is clearly that move from Belgium to Turkey. Yeah. Yeah. We are going through the regulatory process there with the works council at the moment. But what we would say about that is that that team have actually delivered a number of those change projects over the last couple of years.

43:07 It's also important to highlight that, you know, within Turkey, we already have a manufacturing footprint there with, you know, spare capacity. And so a degree of that is just moving the machinery and scaling up with kind of a shift pattern there. So whilst these things, you know, always require quite a lot of efforts, you know, confidence in terms of the ability to do that. So should I interpret your guidance as calling the bottom of the market? And if so, what are you basing this on? Owen? Look. I think it is implied that if we're having a stronger h two than h one, that actually that suggests that, you know, we are around the bottom.

43:55 Clearly, month to month, yeah, there will be will be a little bit of volatility, but, you know, we are beginning to see signs of stabilization, you know, in those key markets as said in The UK and Southern Europe in particular. I think we're fortunate in The UK, there are other peers that are listed, and so you can cross reference to what they're seeing, which, again, looks like a positive story from their side as well. You asked about our current relationship with Coke Industries. I'll I'll I'll deal with that because I I spend time with them. I think most most of the shareholders will know that Coke had a director on the board of VICTORIA. He is contributing significantly to to the recovery in the business as he comes out of the commercial excellence team from Coke and is is a is a very valuable member of our board.

44:53 More generally, I would say Coke remain a highly supportive shareholder. We have a very good relationship with them. I talk to them constantly. They they are doing what they can to to help the business, and I I see them as a very good partner. They're very straightforward and upfront to deal with. I I and I think I've described overall the relationship as very solid. So moving on to the next question. You are saying that your cost savings project your cost saving projects alone will increase EBITDA to a 180,000,000 in FY '28. However, your revenue is about 400,000,000 lower than in FY '22.

45:42 So can you tell us what impact on earnings would a 100,000,000 recovery in demand have? I think it pushed my swear. Yeah. So so, look, mean, it slightly depends which divisions the revenue comes through. So gross margins across most of our businesses are kind of, you know, in the thirties and forties. Clearly, there is a lot of operational gearing. We have provided a bit of guidance on that previously, but kind of a 5% increase in revenue will drive kind of, you know, 20,000,000 plus of EBITDA. So broadly, if we are adding 400,000,000 of of revenue, you know, the drop through there, you'd probably expect around call it a 100,000,000 of incremental EBITDA. Yeah. That volume change will obviously not happen overnight, but just directionally, that's kind of, you know, a reasonable number, but it will depend on which divisions that volume comes through.

46:41 I asked a question about the costs being the cost associated with these cost savings projects and synergy projects. So what is the cash outflow to achieve these projects? Yeah. So so the ink so incremental cost is about 20,000,000. Some of that will come through CapEx. As I said, there's kind of, like, 12 to 14,000,000 of euros of spend on the ceramics plant this year. The balance of that will probably be, you know, through the p and l. On the current manufacturing moves, you know, we're expecting that to be netted out through the property sales. So, clearly, there may be a timing impact of that.

47:27 So, yeah, we are we will obviously, you know, sell those properties as quickly as possible as we're going through those projects, but clearly can't exactly match the sale timings there with the cost incurred. There's been two or three questions about whether either myself or myself in partnership with another shareholder have any intention to take the company private. I can categorically state that there are there are no discussions underway or no plans at the present time to take the company private. I I it it's just not something that's on the cards at all, and you can rule that out completely as anything that's that's been contemplated at the present time.

48:17 Look. I'm keep me aware of the time that's that that that we're just about up in terms of time. So I'll hand back to the investment people just as before we we close. That's great, Jeff. Alec, thank you very much indeed for updating investors today. And Jeff, if you had any final comments? And if not, I'll just redirect investors. No. I think that's the end of the session. Fantastic. Jeff, Philip, Alec, once again, thank you for updating investors today. Could I please ask investors not to close the session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of VICTORIA PLC, we would like to thank you for attending today's presentation, and good afternoon to you all.