Zigup (LSE:ZIG) — H1 Results

0:01 Good morning, ladies and gentlemen, and welcome to the ZIGUP PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. 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 we'll 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. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to Ross Hawley, head of investor relations. Ross, good morning, sir. Good morning, Jake. Thank you very much for that, and good morning everybody online. This we do as a fireside chat format.

0:50 So I'm very pleased to be here with Martin Ward, our CEO, and Rachel, our new CFO for being being around for a Newish. Newish CFO. This is for our half year results, which we published on Wednesday morning. I think I would expect a number of people have actually seen those results. But I think just to kick off, really, if I just say, Martin, you've described earlier this week as a great start to the year. Can I just talk to some of the highlights that you see from the results? Okay. Thank you, Austin, and good morning, everyone. Yeah. Look. I think the four takeaways for me in the performance that we're talking about for the half year, really, first one is the standout performance that we've seen in Spain. I mean, that's been a phenomenal sort of result increasing VOH, average VOH of 6,000 vehicles in the period.

1:38 So, you know, the economy is doing well in Spain. The market is still growing in terms of rental. And I think the team have done a fantastic job in able to grow our position, and there's still a lot of opportunity to go there. So performance from Spain, first point. Second one, I would say, is the PBT upgrade. So, clearly, I said in the announcement, this exceeded our expectations. You know, the business is performing really well, And we were able to to launch to land these results with saying that our full year is expected to be at the least at the top end of the then formed consensus. So in plain speak, that was at 155,000,000. And this has since obviously changed the numbers, but I think that was that was a great sort of way of showing that momentum.

2:27 The third thing is the change to the UKNI operating model. So we've been on a journey. This is an evolution. We've been on a journey since our merger in 2020 about providing mobility services in the platform. And last year, in March 24, we brought the management team together, and we talked about that, having a single management team across the The UK and I business. So that evolution in terms of how we're now gonna operate going forward and collapse our brands into two very distinct divisions in The UK and I and the Northgate Mobility and FMG and provide our services from those banners. That's another standard that will deliver some benefits. Rachel will talk to those benefits in more detail. Yeah. But, clearly, that's given us some further momentum.

3:12 And the thing the last point I would make there's many more, but the last point I would make is is the inflection in the steady state cash flow. So investors and and shareholders have been saying to us, you know, great. Like the momentum that we're seeing. You know, we want to see the cash flow in, but we generate a lot of cash in the business. So in the period, you know, we've grown that steady state cash. We're adding another 20,000,000 on top of what we had, so it's 43,000,000. You know? And bearing in mind, you know, after steady state cash, we still invested 73,000,000 into growth CapEx. But we're on a trajectory of building steady state cash simply because the net replacement CapEx, the fleet is in a place that we're comfortable with. There's a little bit further to go. And, clearly, there'll be less net replacement CapEx going forward. So that's they say cash generation, I think, has proven itself out very nicely.

4:02 Fantastic. Thank you. Just for people who haven't been with us before on this, we very definitely welcome questions online. Reason my my laptop is here is I get to see the questions here. And I try and ask as many of those which are posted as possible, but try and group those into themes just to make it a more coherent conversation on that. So please do ask questions into the chat. I think while people start to think about that, maybe if I turn to Rachel and sort of go, this is your first set of results here. It's your first investor meet, but it's your first set of results here. I think, you know, you gave some thoughts on Wednesday about your first few months and what you found. Do do you wanna just elaborate on on those a bit? Yeah. I to. Thanks, Ross. And I'm really pleased to to be here. And I I shared that since I I've joined since August, I've had the opportunity to go and visit lots of different parts of the business and meet the different stakeholders.

4:54 I've been really impressed by what I've seen both in terms of the level of expertise and the commitment and the commerciality of the team that we've got, but also the assets that ZIGUP holds and how we leverage those assets. And I can see the opportunity for growth. Not to say, we are growing. Yep. I see much more opportunity for us to grow and grow efficiently. And I think we are doing that with the right level of of pace and and energy and the the operating model change and the pace at which we're moving forward with that. I think that's evidence of of that. Yeah. Absolutely. And I'm sure we'll come on to each of those in in due course. Is it worth just going through some of the financial headlines just as a as a starter? Yeah. Sure. So strong set of results.

5:42 As I said, we are growing four and a half percent revenue growth, and the the EBIT, excluding our disposal profits, grew by 11 and a half percent in in h one. And Spain, as you said, standout performance, over 16% revenue growth, maintaining really impressive margins of 19% margins. And then in The UK and I rental business, I think that's a great example of how we're leveraging the assets that that we have. So driving over 6% revenue growth using pricing mix and a growth in our value added services. For our claims and services business, volumes were down, and and so revenue was was flat. So still a good performance based on sort of volumes, but we see a great path for for h two in terms of the opportunity in that business across h two and also in raising our EBIT margin in that part of the business.

6:42 Oh, fantastic. I think, yes, clearly, a strong start to the year. And that's, as you said, about great progress across the business. So maybe and thank you. I can start to see some questions coming through. And we will touch on each of these inflection and cash, the operating model, etcetera. But I think it would be remiss not to actually talk about the first half. And and, Martin, in terms of some of the operational side, people still think about it in those three different geographic and and disciplines. Where would you like to start? Shall we do the UKNI first, or shall we just talk about Spain? Because that has been the standout before. I think we'll talk about it more, Ross. So you just you're done here. Look. I'll I'll start with Spain because I think that's a that's a fairly straight story, really, in the sense of, you know, we've talked about the rental market size in Spain. So Spain, you know, has got a commanded position in terms of what it does. It's a differentiated prop differentiated proposition in terms of rental over sort of leasing is where we see that's the competitiveness.

7:36 And the rental market is growing. And that's the key thing here is that it's only five percent penetrated, you know, in terms of rental over all of mobility in in in the Spanish market. And in The UK, that's more like 13%. So there's a long way to go. And that sort of structural change still, we've talked about it before about companies no longer want an ownership. They want a usership. We're seeing evidence of that in terms of where that growth is coming from. It's got over 6,000 vehicles on, you know, and that's why we've directed our capital because it's coming back with good discipline, strong margins to see that level of growth. It's it's really pleasing. And the economy is doing well. You know, we know economies can change in the worst of it, but let's take the wins when the wins are there. And I've said before to to investors as well, you gotta think about this business in in in a slightly different way as well.

8:27 When we're growing, we consume capital because we're we're sweating capital. We're putting it to work. We're buying assets. We're going out on rent. We're growing our asset side of things, and we're growing our services side of the business. But even in the potential downturn, you know, what we what we if we're not buying a fleet, if we're not investing capital, we just throw off a lot of cash. That's the converse of when you're growing and investing capital. Yeah. You learn if you're not doing that, you throw off cash. It's got some good qualities about this business in a growth cycle, whether you're growing the EBITDA. But in any sort of future downturn, you know, the characteristics of throwing up a lot of cash in the business as well. So Spain's a great story. We expect that to continue from what we can see from the short to medium term. We expect that to continue.

9:12 Plenty of opportunity to go for. Yeah. Let's let's just stay on Spain a little bit longer because, obviously, managing growth is is a challenge if you've this based on growth and demand. So they've doing some great things in terms of operationally and thinking about that to cope with that scale of growth to actually to allow that to continue. That's right, isn't it? Indeed. Yes. I mean, you know, there's a few things that we've been opening up some service points in Spain. You know, customers polarize around our branch network, so it's important when when we take on a new account, and we have taken on some good site accounts. Then And we just picked up the the large Spanish rail operator. We'll be commencing rollout of vehicles for them in February 2026. So Yep. Not even in the numbers yet. But it is important that we have that locality to be able to service customers. That's the way the model works. So we've been opening up service points. We had the new delivery hub in Madrid in Gaddafi, which enables us to take in delivery of vehicles very quickly, which we can get them out to customers very quickly. We've seen that sort of operational performance improvements come through in terms of how quickly we get vehicles on rent and then, you know, earning the profits.

10:19 We're going to repeat that in Barcelona as well. We've got a big sort of network in Barcelona, so we're gonna consolidate into a delivery hub there as well. So and Spain needs that capacity to be you know, it needs that additional capacity to be able to support what it has. At some point, we will get some leverage, operational leverage out of that capacity in terms of what we invest in. And then besides physical footprint, you know, we've been using technology as well to to sort of support progress in Spain. You know, we have showcased them. Myself, Rachel, over, and we saw firsthand the e auction platform for selling our vehicles in Spain. You know, that's a new rollout of technology. And, actually, what it can do with analytics, profiling, and how we actually market our product just means we're maximizing the value of the sales that we can get from our disposals.

11:06 Another good sort of evidence point of just how we keep refining and improving our our model there. Yeah. Very good. There's more to go in Spain. I think it is one of messages. There there's been a question here just, you know, are there other markets to expand such as Portugal, etcetera, clearly something which makes logical sense? How do you see about kind of the how much opportunity there is in the Spanish market? Yeah. And, look, we talk we talk about it all the time. You know, the Spanish team will tell you that there's so much opportunity on their doorstep. So we can we can sort of drill the land that we're standing on to find more goals. So there's plenty of opportunity. There isn't a shortage of prospect pipeline is strong. There isn't a shortage of, you know, opportunities for us to sort of explore. And And it makes sense for as long we're when we're looking at capital allocation and the discipline around that, we have a look at sort of competing projects and what the returns are. And whilst we can sort of continue to grow very strongly organically, I think that's where the capital goes.

12:03 We're always open minded to what opportunities can bring, you know, on a longer term strategic basis. But I think the focus for Spain is to be able to maximize their organic opportunities. And and just for people, we on our website, we did a capital markets event in Spain in September last year, and there's some very good information and slides there. I think one of which they really drew out is the concept of the service proposition is actually quite unique for the Spanish market or is one where absolutely people are coming to us for that. Just before we move off to May, I think you'd you'd reiterate that. As I say, it is a differentiator. You know, we own our own workshops and body shops, so we we can do all the service and provide all the services, you know, from inside the business as an integrated model.

12:49 That isn't that isn't replicated in the sort of the more wider competitive market, so it is a it is a differentiator. And it is it is important. You know, if you're running a fleet and you require your vehicles to be out on the road every day, you know, to be able to turn those vehicles around very quickly on service maintenance, repair, tires, all of that stuff, it is it is important, and and Spain does that really, really well. Right. And I've kind of carried on on Spain because when I look at the questions coming through, obviously, there's a lot of news flow in terms of The UK and what we're planning to do. But I think a lot of people said Spain is the unsung hero at the moment, though it's no longer unsung because just the strength in terms of their margins, the strength in terms of the growth, etcetera. So, yeah, I I you you were at the meeting yesterday with investor, and I was sort of slightly stopped in my tracks when one of them pointed out was I never realized Spain was now as big as The UK rental.

13:38 And it has sort of crept up over the five years. And if you look at the sort of trajectory in Spain in terms of EBIT now, you know, it's it's sort of on the course for a €100,000,000 EBIT. Yeah. That's not the forecast. That's just the sort of the run rate from the trends. If you look at the size of the fleet, it's a record size in terms of what we're operating with. Utilization is very strong. So I think, you know, credit to the team in Spain as well. I mean, they've done a fantastic job. That's focused and that ability to support them and do what they they need to do. It's a great position. And, you know, I don't know if you had questions on I'm gonna preempt and say this now, Ross, but, you know, people say, well, why don't you sell Spain then and and just get the sort of the the Not yet. Not yet. But I'm gonna answer it anyway, so it's a preemptive. That's unscripted. Yeah. My list is No. No. That's fine. People do ask that question, by the way. So, look, let's lean into that one. You know, five years ago when when these businesses merged, we were you know, we had a an activist shareholder on the Northgate register, let's say activist, a nice activist, Crystal Amber, Richard. And, you know, Richard pointed us to sales pay. I wasn't on the board then, by the way. But if we had done that, and if Richard is listening, it would have been half the value it would have been, yeah, two years ago, three years ago. Absolutely. The business has got a lot further to go, a lot of value still to build for us. And we do run the business. It is separate. It's not integrated with The UK, but it's got a lot further to go in terms of what we can do. So I'm preempting that question now, Ross. Okay. Fantastic.

15:08 And and I think we will come back to Elizabeth in terms of capital allocation and where one places growth CapEx, etcetera. Etcetera. But let let's move to The UK, and let's stay on rental for a bit. I think, you know, clearly, a lot of large fleet orders coming through. Really good demand. It is good demand. I mean, Rachel covered it. You know, what we've seen in The UK and ICE, we've both the size of fleet down modestly. But what we've done is we've increased the revenues by over 6%. We've increased the EBIT profit by over 14%. So we've done more with less, and that's the discipline around saying, how do we put our fleet to work? How do we get the right sustainable returns? And moving away from some of the older model where, you know, we would put, you know, almost end of life vehicles out on this last bit of rent at a lower margin rather than disposing them, taking the capital and reinvesting in the. So there's a discipline in The UK and I around getting good sustainable returns.

16:09 But you're right. We've got some good orders, and, you know, I profile some of them at the analyst presentation. You know, we've had some good wins that will be coming through as well, and we can support that with the with the captain as well. You know? And that's coming from large, you know, mainly large customers in the infrastructure side. So we've seen, you know, a rail rail support company taking a large order, a water company taking in excess of a 100 vans. We have a short term excess contract with the Royal Mail on 300 vans, circuitry in advance. So there's there's lots of things coming through, but we're doing this on the right margins. And with the package of services as well, it's not just about renting a van. It's all the other things that we do for our customers as well. Yeah. And I I think that's absolutely, you know, what has come through. And I remember when we talked I had this conversation six months ago with the comments about infrastructure side. Actually, of those large orders are really from places which we see.

17:02 We think about the right place to place fans and what the opportunity is for sustainable rental. In indeed. I mean, we we profile, as you know, in the appendices of the presentation. We do with the pie charts and the sort of split of the industries, and it's fairly consistent. You know? It hasn't changed very much over the last couple of years. And we focus we do focus on quality, and that's that's the piece. So so, look, I think I mentioned last time, you know, from the government spending reviews, a lot of money has been allocated to to highway bills, infrastructure products projects, and we support a lot of customers that are sort of in in that space. So, yes, it is about quality. It is about sustainability. I've talked previously about some of the areas that we do less in, and that's that's where we're focused, let's say, in just making sure that we're putting the fleet to the to to work in the right places. Yeah. So very broad, very diverse, but an ability to make decisions, which I know you both do on the CapEx calls, etcetera, to make sure they're going in right place.

18:01 Let let's just finish off in in terms of the claims and services side before we move, and, Rich, I will start asking you some questions about CapEx, etcetera, and inflection of cash. That's clearly what a number of people are asking about. But claims and services, some renewals, some wins, Howden, insurance is in there, which is a big global broker. Lots of positives there. Lot of positives. Rachel said, know, this is the revenues were flat, and, you know, the margin did improve 4% to 4.2%. But I think that, you know, for me, it's a fairly quiet summer in terms of what's coming in. I mean, I'll I'll never ask the team to do something. If if the work isn't even coming through in the accidents, you know, obviously, you can't skin as much claims that you need to work with.

18:46 But what I would say is is that the business has seen some good renewals on some, you know, big contracts. We talked about the renewal in multi multiple years. Yes. How and you've mentioned. Howden, you know, the insurance broker, international player, good presence in The UK. We only onboarded them in October, by the way, so they're sort of their their numbers haven't come out. But we've given an indication that we expect margins to track towards sort of more towards 5%. But, yes, it's a it's a it's a strong business, and, you know, we're still only penetrating the market around 22, 23%. Mhmm. So there's further to go. And when you win contracts in that space, new contracts, they're typically three to five years. So, again, it just plays to that quality of earnings, and we're working with big names. You know?

19:31 When you look at The UK motor market, you think of the big insurance names. Yes. These are the names we're working with. So we sit behind them providing services to policyholders, and, you know, we provide a lot of capacity on our repair front. So we've got our own network of body shops. So there's lots of things that we provide into the insurance market, and we are agnostic. How you call the mobility, whether it's credit hire, direct hire replacement, courtesy cars, whatever. We provide mobility. And under the new model going forward, that will be under our Northgate mobility banner. Indeed. And just before we jump onto onto that side, we're also investing in The UK in terms of body shops and greater capabilities, etcetera, and we're more productivity. So there's still lots of growth there, and, actually, we're doing better within ourselves.

20:21 Indeed. Yes. I mean, look. You know, when people think of body shops, they think of up under the arches. The world has moved on demonstrably from them. You know, this is this is about sort of providing, you know, good quality modern body shop space. You know, we've been, you know, transforming out of sort of some of our older premises that we that we bought the the old nationwide business into, you know, good high quality sort of 20 to 25,000 square foot sort of premises. And with that brings investment in technology in terms of the latest things that we can do. You know, the car park and the modern fleet is moving forward. There are different techniques for repairing now. And we provide that capacity, as I say, out to the sort of the the insurance market and beyond. So skilled technicians, you know, we won apprenticeship of the year for our for our body shop apprenticeship scheme.

21:10 You know, over 90% or slightly, it's closer to 95% of our apprenticeship stay with us after they've been through through the training. You know, I talked previously about bringing the average age of our technicians down, you know, by fourteen years with people coming into the industry. So we've got a good position in that space. You know, the market needs to secure capacity to do these repairs. We have that capacity, not only our own body shops, but we run a network as well. So we're able to sort of flex that capacity with what we're doing. And also, Ross, as you know, we've been building our mobile technician repair capability as well. And that offers great flexibility for customers where there's a sort of a quick fix that's needed. It supports the body shops in terms of being able to increase capacity at times of need.

21:58 And it's a it's a it's a brilliant offering to our partners. We're delighted with that sort of flexibility that we can roll in. Yes. I was actually talking to one of you managing that and saying the ability to go to a fleet customer and say, we can actually set up in a tent in a very clean zone within there and plan and manage a lot of smaller repairs, etcetera. It's great for that. Customer because the bands are just quickly in and out. It's great for us because we can carry on servicing and and providing that sort of support. So real good opportunity there as well. I just wanted to touch on the residual values, and I we have written markets normalizing quite a few times over the past year or so. And I think and you called that absolutely right. Just before, I want to turn to Rachel just in terms of kind of the view on the outlook.

22:46 Normalizing markets, normalized markets, disposal profits coming into range. I think you called it right. Thank you. Yes. Indeed. As I knew, the royal the royal you, the the the team. But but you're right. I mean, look. Residual values in The UK have have stabilized, and they and they have been stable for some time. So we said it was on that sort trajectory where it would sort of would normalize, and and it has. I would say in Spain, they've been elevated still, slightly in Spain. Now we are forecasting that they they will fall in time, but they have been elevated. The one thing I would leave our listeners with here is is is just to think about it in this way. You know, in '22 and '23, there was a shortage of supply of vehicles into The UK and high market.

23:38 So people remember you couldn't get supply post COVID and so forth. So those vehicles that you would have had in those years would be the vehicles that would now be coming to market on a used basis. So there will be a global shortage, let's say global and national shortage Yeah. In terms of those vehicles coming to market in the next next year and the year after. That could give that could give rise to a view that price would actually could increase in usage on on used vehicles. We're not calling that now. We're just saying that's a that's a you know, that's that would be a surprise to the upside. We're saying it's stable, but I know there will be that shortage coming into that space. And therefore, there'll be demand for used vehicles. Now we won't have as many vehicles to dispose off in those periods because, obviously, our as we've said, we've pretty much got to the point of inflection in our fleet. So by the end of this financial year, we'd expect our fleet is in exactly where it is. The age of the fleet has come down quite quite We'd expect the fleet to be now just very normalized in terms of replacement.

24:43 So there's some things to watch out for there, which, as I say, are positive, but I'm just saying that now so it's on record. Yeah. We might might see a benefit from that. Okay. Great. And, look, just turning to Rachel on this. I think we and I want to round all this sort of section off just in terms of the the building blocks before we talk about the reorganization. David, you've been very patiently waiting for this as a quest to answer your question. But in terms of laying out what we see for the second half and the confidence for the outlook, Martin touched on that one five five, and just give us that little bit of context before we move on. Yeah. Sure. So, obviously, based on what we see for the first half performance, as we said, we're really pleased with strong set results and what we can see in front of us. That's why we've guided to at least the top end of what consensus was around the anti profit before tax. And and we've been clear about the margin ranges within that and also specifically where we would expect claims and service margin to to be in terms of the second half. So a high level of confidence there.

25:50 Great. So, Martin, shall we just jump into the the simplification? And I'll say that the camera's focused on you at at the moment because you've been talking lot. We will move that around a little bit. What are you saying? I'm seeing you. Oh. Was saying talking a lot. I'm sorry. You you've you've been Hi, Jess. Let's let let let's jump into the the announced on Wednesday. And I think you called this a natural evolution and continuation of strategy almost involved on that merger, and there's some good building blocks. Do you just want to give kind of that that background, and then Rachel will talk to you a little bit about the program of it. Well, it's very much around sort of how do we provide our services into our markets. Now, look, when we I'll I'll give you a good example. You know, when we bought the Blakedale business, which is a very well run family business, you know, the view at the time when we purchased it and we wanted to protect that was is that very good relationships in the market. Blakedale's our traffic highway specialist vehicle business.

26:48 Very good relationships in the market, you know, with the name Blakedale, etcetera, and it was important to preserve that. And I and I understood that. And then replicate that again with Bridge Express, our temperature control business that we bought as well. And we did preserve that, and it was important to understand and gain the knowledge and the IP and all the things that you need to do when you you acquire businesses. But guess what? People buy people, you know, not the name above the door. They buy relationships with the people through the door. So we've had that time now to evolve. You know, we've seen Blakedale customers purchasing services from Northgate and Northgate customers purchasing services from Blakedale and the. You get the picture. So we're in a position now where we can simplify this. You know, we we get feedback sometimes. It's very noisy. You do lots of things, lots of brands.

27:36 You know? We just wanna simplify that. So that's what we're doing. So, like, from an account management perspective and and a a business development perspective, you can have one conversation with us, and we can just bring the service and products to one touch point, and that's important. And all of our team have built up that experience now as we build in and build in and build in. I said the single management team that we put in place in March 24. Yeah. So we are now ready to do that. And this is, you know, this is a rollout. We've been planning this for months. This is the rollout that we will continue with. You know, we will report on you know, for the full year, we are gonna report on the same basis just to give investors, shareholders chance to to catch up. But then we'll have a new that new structure reporting structure beyond the end of this financial year when we go when we get to that. So this will make it very simple for for our customers, for our partners to work with us. It will make it very simple for our own team to maximize the resources and the scale that we have to deliver the products and services.

28:33 K. And I when I go into my local branch, there is the Northgate rental there, and there's the old service. They're all doing vehicle rental, vehicle replacement. So on the ground, a lot of this is is absolutely there already, isn't it? Indeed. Look. If you if you think about it, I mean, you know, the auxiliary business, for example, that provides replacement vehicles into not at fault customers in the insurance world. More than 70% of those hires are done under a protocol agreement there. So it's process. It's process about getting mobility out there, booking in repairs, and so forth. And you're absolutely right. You know, Northgate Mobility, all of our sort of contact centers that are providing that with this service is about process to deliver that. So we can combine that. We can get the scale and get the efficiencies, and we can get the benefits that derive from having that single entity.

29:21 Fantastic. Rachel, there was part of a slide that you had just in terms of the sort of talk about the program, its cost, its plan. Do wanna just sort of lay that out again? Yeah. And and what are some of your experience in certain sides of that as well would be great. Yeah. Sure. So I'm really excited about what we announced this week on on that, and it, you know, it is an eighteen month program. But as Martin said, you know, we've been planning that for for a few months. And in terms of what we're expecting around savings, what we've said is based on what we see before us on our execution plans, that we should expect £20,000,000 worth of savings in financial year 2028. And then we'll give some clearer guidance at at year end, but what I said is that what what I would work with now is around sort of six to eight for for next financial year in terms of net savings.

30:20 Now the biggest part of of that, and we we shared that is that there is a large part that is linked to our supply chain. Mhmm. And through the work that we're doing on the operating model, that allows us to unlock some of those those conversations. And and this is not around our our main fleet. This is around the supply chain that sits around that and how we deal with our other third party suppliers. That's right. Exactly. And we have at the moment a a very high number of transactional suppliers. And what we want to move to is a much smaller number of strategic suppliers. So that means for our suppliers, they get a bigger share of wallet and closer alignment with us. Obviously, it means for us, we get better terms, better pricing, and that ability to work much more closely with the suppliers as they think about their road maps in terms of products and services that will clearly address our needs.

31:17 And we'll keep that process competitive through competitive RFPs, but we've had some really good, early benefits. I've run something similar in the past. The head of procurements run something similar. It's sort of same scale and size. And so, you know, we're absolutely on the ground running that program now. K. And and I think what you just sort of indicated, this is tried and tested. I mean, we've experienced supplier consolidation. We've been a beneficiary of that in the outsourcing for insurance companies. It's something which actually I think nobody understands, and it's something which we can be quite confident about. Yes. I mean, we've we've got the work to do, but we've been we've mobilized quickly. We've got some early results, and we we've tried and tested and and based on our experience and reaching out to to get some also ex external input to make sure that Yeah. The direction of travel is the right one. We're we're confident about what we've what we've had to have.

32:14 And and then just going back in terms of what you're talking about, the financial implications on that, and we gave some guidance. You've sort of given some some numbers around that. Because quite often, this supply chain, this sort of takes time to come through. So, therefore, it will build, and, therefore, it is annualized 20,000,000 from our FY '28 in that year. I think we'll build through up to that, which is why you sort of said there was about people. I think the analysts are modeling that kind of mid single digit benefit to 7,000,000 for next year. Yeah. And and I think that that's true of of most transformation change programs that you need to get the work in, but, actually, the benefits will Yes. Will will come. And so the activity now is, you know, a very high level of activity and mobilization, but the benefits will come through as the spend comes through. Yeah. Great.

33:05 I I think, you know, clearly, we've sort of seen the share price is one element of that. But in terms of investors and analysts, you know, very pleased and, you know, the implications of that. But, Martin, in terms of obviously, we've had conversations with some of the major customers just talking them through this. They've been positive and can see that the simplicity of this is the implications on the operational side are also very positive. Yeah. Absolutely. I think I think for the customers, you know, they can see that this provides more scale, more resources, more depth, more ability to have those single conversations as well because we've talked before about customers are taking multiproducts or multiservice and products from our platform. Now that we're joining it up, and you can have a single conversation, that makes it much more simpler and all the documentation that goes with that as well to simplify it. So they're they're very pleased with we haven't had we've had just positive conversations, Ross, I guess, in terms of feedback. So, you know, now is the time right the time we've tried to do it now simply because, as I said, you have to have that experience to understand.

34:03 I always say what we do is simple. How we do it isn't. Yes. And it's important that you have that experience and the depth in your management team, your leadership structure to be able to deliver this. But now that we're in that position to do it, we can see the sort of benefits that Rachel's talked about that are gonna be released from that. And that's creating velocity in the business as well about how we change and how we make progress. Fantastic. So I'm I'm gonna change gears. Brian and others have been asking questions, really, and David, inflection in cash flow, the CapEx, etcetera. So let let's move into that. But, Martin, again, we've talked about this before about the business model. And, actually, this is a very tried and tested business model through a number of cycles. Leverage is an essential it's a natural part of our business model and and of this, isn't it? I'm just Well, it wants to start this off by reiterating that as a It is. It is, Ross. Of course. Look.

34:58 You know, we've said we'll work within a one to two times leverage, and we're working at the top end of that leverage at 1.9 times. But we've got those opportunities. So why wouldn't we put capital to work? Why wouldn't we expect it, as I said earlier, and get those sort of good returns that we're seeing? We're gonna continue to work with inside our our one to two times, so let's be very clear about that. The steady state cash that we're generating through this inflection point and as that sort of builds out, you know, we can put that to work. As I said, it opens up top options in terms of what we do. You know, and our well established sort of capital allocation model says, you know, we'll put that to work to grow the business where we where we can. So but it but it is a feature. And I've said before on on on these calls as well, if you look at our sort of peer group and we've had some work done, you know, the average leverage, EBITDA leverage is 3.5.

35:48 3.5 times leverage. That's a mixture of private companies and the public companies. We're comfortable with where we're at. We're a PLC. We understand the parameters. We're comfortable with that, and we can fund the opportunities. We've got plenty of capital headroom in terms of facilities available to us. We've done all our refinancing for, you know, out to 2030, and we're in a good place. And the cost of our financing, I'm I'm encroaching on rates very high. These other points. I'll say about 3.2%. You know, we've said before, you know, we've got a really good set of position on that. So, look, absolutely put capital to work, very comfortable working on the ranges that we talked to, and, you know, we're gonna generate the cash that's gonna give us options going forward. Fantastic. So, Rachel, I'm I'm going to just turn to you. You come in. CapEx meetings happen weekly.

36:38 You're signing off some some big numbers. There's strong discipline around this, isn't there? Very strong discipline. And and, you know, we're making significant investments in our fleet, and so it that's appropriate. But it's not just in terms of the CapEx meeting. It's about how the all of the teams who are involved in that process and across the business are really thinking about the the return on the investments that that we make. We've put £70,000,000 into growth CapEx in the the first half, and I think that's evidence of that process working because the majority of that has gone into Spain. Mhmm. And we can see the evidence of of the benefits of that coming through. The results will continue, to make those decisions and look at those those different factors as we decide where best to put capital going forward. Okay. Fantastic. Just to address one question. So Jack was just asking about in terms of the the kind of ranges of finance which we have. We've got very strong in terms of our support group, different kinds of financing in there as well and longer longer term, of, what I was gonna say. We got good financing.

37:50 Haven't as part of as part of sort of my onboarding. I've met with all of our banking group, very supportive group, Martin said, had a very successful refinancing exercise. Most of our most of our financing right now is on private placement. I've got no concerns at all about where we are in terms of financing. Yeah. And this is actually what the corporate level there's very minimal asset financing relate related to the nonrelief related to actual vehicles, but just a small pool of vehicles as well. That's right. That's right. And I'm kind of asking that because Jack was just asking in in terms of how we started to do asset financing. We we did some as part of that to just grow and identify different pools, but it's a very small part, which we don't draw down too much of. So actually, all of it still remains within very much of our kind of core lending group.

38:44 Very committed to us. That's right. Fantastic. Right. Inflection in steady state cash, and we're reaching an inflection point. So just tease out the reaching inflection point, how you were thinking about that. It's something which we talked about in the full year, but you're seeing the numbers absolutely evidence. We are, and I'm that we've been able to share that message as part of the results. And we have been clear about breaching, and I want to come back at the the full year and give an update on that. But, obviously, if you look at our doubling of steady state cash in the half year to £48,000,000, I think the trajectory is is clear. And as Martin said, we're seeing stabilization in residual values also in terms of the cost of new vehicles.

39:36 And and our EBITDA is growing as we expected, so 7.6% growth in in EBITDA. And we're moving through the replacement cycle as we had expected. And if I I've done some work looking through the detailed models as we think about going forward and as those factors start to play out, and I can see the path to the 200,000,000 that was shared previously in terms of 2028. Yeah. Okay. Fantastic. Martin, does it feel too early to talk about what we might do in terms of cash flow? I mean, in terms of it it opens up more opportunities, I think, is probably the right way to think about it. Yes. I mean, look. We've got a long standing allocation policy. We we we we I said that. And, you know, we want to support growth. Our purpose for being here is to grow the business, to grow our earnings, you know, quality, sustainable earnings, not just sort of growth from the top line.

40:37 And I think we've demonstrated through a track record that we've improved the margins on the business, you know, quite quite significantly over time. So, you know, it does open up options, Ross. You're right. And we have discussed this. But as I said, we do wanna support growth in the business to grow EBITDA, grow the quality, you know, and and that's really what our mantra is. Okay. And I'm ready to tie back. I was gonna ask about the the the market opportunities a bit earlier, but I I think one of the things which you're saying is there's a lot to go for in our own markets. We can see that visibly before us. We will use the CapEx for those purposes as being a core product. For sure. Look. I mean, you know, I think if you if if you've read the presentation, you know, people will see that there's a lot of momentum in the business, you know, and that momentum is growing.

41:29 Are very busy in the business. We just came off before this call. We had nearly 200 of our leadership on. You know, we've given feedback from from these results and picking up all the points and the and the and the feedback that we get from investors and stakeholders. And the team are very, very focused, but we are very, very busy. And, you know, that's good busy. So we this is what's given us confidence about this. I mean, we've I guess we've been saying this for some time about sort of the quality of that business of this business. And I think these are just sort of good landing points to keep demonstrating sort of what the quality is here. And for me, that that's that's important because it's about it is about sustainable growth in terms of what we achieve, and we're just very well positioned in our markets to to benefit from that. Absolutely.

42:16 I'm just looking at the questions. Brendan, I will write back in terms of self driving vehicles, although they're a threat on opportunity. I think short answer is we don't view them as being a threat to our business, and I I don't think we should discuss that. And if any others come through, then, actually, I will try and respond to those. But I think, really, we're just about at the end. So, Martin, often kind of hand over to you to say, have you got any closing remarks which you just like to say before we wrap up? Yeah. Look. I think, you know, for for these results, clearly, I mean, we're pleased at least that it resonated with the market as well. So let's take take that win first of all because I think I've sat here quite a few times on these calls and maybe maybe been a little bit frustrated that maybe the message isn't landing or people aren't aren't seeing the opportunity in the same way as we do. There's only one version of the truth, I say.

43:05 And I think this business is a quality business. You know, if you look at keep pointing to those sort of multiple contract new contracts we have with big companies, some of the big wins with large, you know, companies in the infrastructure side, the support and the rental, the the characteristics of this business, if there's a market downturn because we've lived with this overhang of The UK economy being, you know, you know, people have been pessimistic about The UK economy for the last couple of years. And we've just gone you know, we've just plowed through all of this. You know? So I just say, look at the quality of this business. Look at the multitude of services that we're offering. Look at the markets that we're addressing and and the partners that we're working with. Look at the cash build profile. I mean, Rachel mentioned the route is at 200.

43:51 My eyes even went five years beyond that on on that spreadsheet on the business plan. And I and I use the expression, my eye is watering with it. Which is not an investor relations term, unfortunately. The market doesn't understand that in terms terms of of guidance. Guidance. Eyes watering in terms of sort of where where this business can go. But that's the opportunity, I would say. That's the opportunity. There's a business, solid assets, great prospects, well positioned, and as I said, a good set of results to to top that off. Fantastic. Just before I hand back, I hope that was interesting and helpful to people. I'll respond back to any questions. We are just coming to the end of our first week on two days of roadshow. We're going got quite a busy week next week. We're going to The US for the first time in January. So if anybody on the call is actually listening from there or whatever, we very much hope to see you in January where we'll be going going around there as well. And I think really with that, I'm gonna say thank you, Rachel. Thank you. That's awesome. You, everybody, Thank and I will hand back now.

44:49 Perfect, guys. That's great. And thank you very much indeed for updating investors this morning. 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 that 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 the management team of ZIGUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.