SigmaRoc plc (GB00BYX5K988.SG) Earnings Call Transcript & Summary

Good afternoon, and welcome to the SigmaRoc plc Interim Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Maximilian Vermorken. Good afternoon to you.

Good afternoon, everyone. Thank you very much for joining our interim results call for the first half of 2025. We have 30-odd slides for you in five sections, which I will run you through highlights, performance, finance, strategic delivery, and outlook at the end. We turn to Slide 4 now, some highlights to start with. First and foremost, phenomenal performance all around in a market backdrop, which was far from obvious. And I know that the teams in the business have done an exceptional job to deliver synergies, integration, the net zero road map and the development of the group more generally. The management of volumes stands out here. We had quite some headwinds in various markets, core volumes down 3%, additional volumes by choice or by exiting some contracts a further 6, which made the first half from a volume perspective, a challenging backdrop, but we did perform very well through that first half through the delivery of synergies and therefore, financial performance on budget, margins up, EPS up, leverage down. CO2 has remained in focus, and I will come back to some of the initiatives that we've taken over the first half in that space further down in the presentation. And most importantly, there's a lot of talk of recovery in Europe, and we are ready to take advantage fully of that recovery, 2.7 billion tonnes of high-quality mineral reserves, mostly limestone right across Europe. And so we are positioned to take advantage of a series of structural tailwinds that I will highlight further on. And so therefore, at this point in time, full year expectations unchanged, and we're ready to deliver another good year in '25. We go through some highlights in more detail when it comes to group performance. Let's have a look at the various components. First, group, GBP 510 million in turnover for GBP 118 million in EBITDA. That's 2% up year-on-year proforma, so including all acquired entities across the first half of '24. Some regions stand out when it comes to their particular performance. And so these regions are, in particular, the U.K. and Ireland, 4% up year-on-year, this in a tough market backdrop. We've seen how the U.K. economy has suffered through the first half, in particular in terms of construction, yet the business has outperformed our expectations and some of its peers. West Europe has also done a very good job. And here, we see the impact of some of the synergy programs in particular coming through. I need to add here that West Europe includes also some of the smaller development units, particularly Spain, which did a very good job there. The Nordics, flat on EBITDA in tough market circumstances. That this in particular when it comes to paper and pulp and some other customers, so a very good performance there, slight drop in the Central European economy. A few non-structural impacts here, delayed start of the agricultural season, which is quite a big component here, some elections in Poland, some breakdowns or customer-specific slowdowns in Germany led to this, but nothing structural here. This business is performing well as we hoped. We look at the performance of the group when it comes to end markets, a number of points that I'd like to make. First and foremost, the industrial sector, which includes steel, paper and pulp, chemicals and mining. The steel sector obviously still suffers from weaker auto demand and the effects of some of the tariffs selling into the United States. This is expected to stabilize as we go into 2026 when the infrastructure funds and defence spending start to come up. Paper and Pulp, tougher first half. These conditions continue to be the same for the second half. Chemicals were largely stable. Mining robust, some of the critical minerals we supply to. Environment, second segment, water treatment, consistent demand. Flue gas treatment, interesting evolution there. We mentioned this a number of times last year when we had very low exposure to the sector because of preponderance of wind and solar energy. I want to note here the coal and gas power generation is always a sector that we are keen to supply, but allocating capacity to these sectors is always something that we need to carefully consider as they switch on and off as the wind and solar energy comes through. And then the Food segment, which is, again, the agricultural segment has done a good job. The third sector, construction, there, a lot of the weakness is present. That weakness is predominantly residential construction, which has been weak across Europe, some improved performance here and there in the U.K. in our businesses because of the setup of the companies that we have. Holland has seen slight increase in demand, but it still remains well subdued, in particular in Germany, Scandinavia, and more recently, a little bit in Poland. The infrastructure spend generally remains stable. No new or large new projects have come on stream yet. This is probably going to happen only when the German infrastructure spending starts. We then look at things from a product perspective, there the picture changes again. High-grade minerals, which is high-grade limestone and lime, 100,000 tonnes in lime loss over the first half. The largest loss of volume is in the middle section, aggregates and stones, the construction materials predominantly GBP 1.1 million lower. I'll come to the explanation of how this happened later in the slide presentation. And then the value-add products, slight uptick there. That's predominantly the [indiscernible] precast and so on where good work has been carried through. So this gives you a little bit of a matter-of-fact perspective of the group's performance so far. I'll hand you over to Jan for the finances.

Thank you, Max. Also a number of facts here on the slide. I'm very pleased to show very good results for the year, especially considering the market circumstances that Max talked about. This is an overview where the important financial and other metrics are listed versus the actuals of last year in '24, the light blue blocks there as well as a comparison with our proforma numbers being apples-to-apples for the composition of the group, which is for the actuals, not really because there are some extra acquisition financials coming through this year versus last and not all the acquisitions came in at the right time. We passed the GBP 0.5 billion mark this period. Revenue came in over GBP 500 million, 13% up year-on-year versus '24, but 1% down on the comparison to last year on a proforma basis. This is mainly due to our revenue following lower volumes, so revenue pressure there. We'll get back to that on later slides where we provide some details, but that was only 1% as that volume drop was in specific areas of our business. Despite the pressure on revenue, our EBITDA is up for the year, both versus '24 as well versus our proforma numbers, 21% and 2%, respectively. This is primarily due to the delivery of our synergy results that were projected a year ago, and they are actually coming through in our numbers. [indiscernible] some details to the discussion later on, but that's very helpful for us hitting our results. That higher EBITDA level also translates into higher EBITDA margin. We're up 150 basis points versus the last year and 60 basis points versus our proforma results. So very good development there, upgrading our portfolio, which is done on an active basis, looking at our contract structures in the geographies and actively work on those. If you look at that on the rest of the P&L, we'll get to that in a minute where we show more details. Overall, most of the line items are positively contributing to the bottom line. And the bottom line here is reflected in our EPS number. It's 4.7p for the half, which is a record for the company. It's up more than 50% year-on-year from 3.1 to 4.7. And from a proforma comparison, they were also up with 9%. So every metric is going up further as soon as you walk down the P&L. So very nice performance there despite the difficult markets that we have seen ourselves confronted with. ROIC also up following EPS, we're at 5.9%, now 100 basis points up year-on-year, a very good position to be there where we are. And then if you talk about cash, we have a business that generates healthy levels of free cash flow. We have GBP 53 million for the year. We'll see that on the later slide that translates in a 53% free cash flow conversion as well, 740 (sic) [ 640 ] basis points up year-on-year. So a good position there on the conversion side. And that translates into a good net debt position under the GBP 0.5 billion mark, down 6% year-on-year. And leverage, we came down from 2.6x last year to 2.0x now. We say that we can turn 0.5 point per annum. Well, this is a nice proof that we are able to do that with the teams we have on the ground. And proforma basis, we were also up nice -- down nicely, sorry, from 2.3 now. So all in all, very good results in difficult conditions. So this is a testament to all the teams we have on the ground in different geographies that are able to deliver under difficult circumstances. If we move to Slide 11, which is a slide where two bridges are shown, revenue and EBITDA. This is versus the actual results. Next one is a little different versus proforma. Here you see clearly the contributions of our acquisitions from last year that are still having an effect because they came in during the year in '24. So for Buxton, we have an extra quarter. They came in late March in '24. So we have an extra quarter in the first half of this year. And then Poland, we were totally missing their results in the first half of last year, they came in, in September. So we have there an incremental EBITDA number from those business units that are now part of the group for the full period. West came in very nicely as well, good progress there because of some cost actions taken in the later half of 2024, which is now contributing to the bottom line on EBITDA. So from GBP 97 million to GBP 118 million, so good position to be. If we move to the next one, Slide 12, where we show EBITDA versus the proforma, GBP 116 million to GBP 118 million. And this is the core slide that basically tells the story in one picture. Tough markets out there. There's pressure on volumes in -- especially in steel and residential industries across regions, GBP 9 million hit on the financials. But with all the teams working very hard to offset that in the different regions with our synergy program, we have been able to mitigate that for a pretty decent number, as you can see in the light blue bar going up with GBP 7 million. This is a series of projects that the teams are working on, and they are successful in delivering good results of that, almost fully mitigating the volume pressure. On top of the volume pressure, typically goes hand in hand with some pricing pressure here and there. We had a hit of GBP 4 million in Poland because of some pressure on price coming from imports from Belarus and Ukraine. In order to stay in the business, we have to move prices a little bit here and there to not lose the business, which was successful, but you do see some price effect there. But on the other hand, we turned it into negative overall because the same teams work on taking costs out where they can in order to maintain our margin or improve even in this case, we're improving on a net basis on the margin side. So that's a good performance and that positions us also very well for the coming years. We have a few other bits and pieces in our results that were positive. We organized a new Carbon Expert center in the Nordics has started to deliver positive results, as you can see here. And we had a slight negative foreign exchange effect. It's a minor side, but that will reverse in the second half. So all in all, good performance for the company in the first half on a relative comparison with the proforma numbers from last year. So still delivering results, although the market has not really given us free gifts. If we move on to the next one, Slide 13. This is details on the P&L. A couple of points there. This is a comparison actual. So on proforma basis, you'll see then the revenue goes up again with the bigger amount. In the middle there, you see an underlying profit from operations increasing with GBP 13 million, about 19%. So a little more than EBITDA because depreciation is mentioned in there, and that's a bit light in the first half. So it does help from operation line item, but we do expect a little bit of an uptick on that in the second half. Net finance costs came down, which is very helpful for two reasons. One is we were able to refinance the bridge loan early in the year at lower interest rates. So the cost for us is coming down there. And then secondly, as it is a Euribor denominated loan, needs to be [indiscernible] to the Euribor throughout the first half of the year. So the interest rate came down there as well. So that is a good position for the second half of the year with the rate now around 2% and then we have a margin also based on the banking facility we have, but down from last year, helping the bottom line as well. We have, of course, the tax line that we need to deal with. Tax expenses are going up because of higher profit before tax. So we pay a little more on an absolute term. If you look at it from a relative perspective, that represents about 21% or so, which is slightly under the consensus that we have out there in the market is around 22%. So good position there with underlying profit going up to GBP 53 million, that then translates to an EPS of 4.7p based on the outstanding shares we have. So good P&L, good performance across all the areas of the P&L with a record EPS, which we're proud of, and the market is still not helping us really with a tailwind at the moment, but still good performance. If we move to the next Slide 14, where you see one of the reasons why we're able to deliver good results. If you look at the different items of the income statement, we have basically five buckets. And three of the bigger ones, materials and production, energy, fuel and carbon there at the top right and then the distribution part are cost buckets that have a variable nature. So if we have to scale down production, these costs go down with it. So it makes our income statement flexible and is especially resilient when it comes to difficult circumstances. So that helps us maintaining a healthy margin overall, and we executed in a very disciplined manner to make sure that we cut all the outflows where we can. The next one is around cash flow that is the result partially of the cost mindset. And we're able to translate our EBITDA of GBP 118 million to a free cash flow position of GBP 53 million. There was a little bit of a hit on the working capital, which was related to the restructuring program that we approved for in the later part of '24. That's now in execution where we have the people moving out of the company with some payment as a consequence. We, of course, paid the taxes, like I said. And in the middle there, you see maintenance CapEx, which usually runs at 75% of D&A. This first half, it was a little lower, 15%, but we do expect that will pick up in the second half as well. And then we have a deadline, which is now 6% of debt, which is GBP 60 million of interest. So overall, very good cash generation in total. And that also brings down our net debt, which is on the next one, where we moved from GBP 509 million on a net debt basis at the beginning of the year, running at 2.1x leverage to GBP 498 million running at 2.0x leverage. So the delta there is not as big. It could have been bigger because in that middle section there, you see a large bar of foreign exchange result. That is the euro strengthening versus the pound, which basically means that our debt in euros is higher in pound than at the end of the last year. However, it is a natural hedge. That's why we chose that it was Euribor-based -- euro-based. And it basically means we have a debt in euros, and we earn our money in euros for the most part. So that 24 is not a financial risk per se. It's just the translation of an existing euro-based loan into pounds. And then we can easily deal with that risk profile there. If you look at the building blocks, free cash flows coming in. We sold the second tranche of the business of France concrete business in the first half. So there was an inflow there. And we have two cash outflows, a few non-underlying costs related to some earn-outs on the M&A side. And we invested GBP 10 million through our EBT to buy some shares during the CRH clearance that happened in February this year. So all in all, a very good position on the leverage side, 2.0 at the end of the period. That brings us in an overview with the most important conclusions for the first half. We delivered results and our operational improvement was achieved during our synergy program. We actively worked the business mix, looking at large contracts that contributed. So that was a good performance there. It also helped together with other items in the P&L that we managed to record EPS position. So that's good, ROIC improved, and we continue to demonstrate that we can generate strong cash flows and bring our leverage down. And that brings us to the question, okay, what do we do with the money? We have four buckets there. M&A is clearly back in focus. We talked about that during our CMD in May. Same applies for capital investment. There's now a large CapEx project going on in Belgium to invest in a new crusher, a bit anticyclical, which is usually helpful when it comes to returns. So we're positioning ourselves to benefit from a recovery that is upcoming in the different geographies. I think that's the most important part of the story.

Thank you very much. Okay. We go through Section #4, the delivery and the delivery levers that we use to perform in the first half. There are seven -- six key points here -- seven key points here at Slide 20. First and foremost, volumes were weak. This led to a reduction in EBITDA per bridge that Jan showed you just now. We utilized commercial synergies, operational synergies to recover from a P&L perspective, the loss that was made through the volume picture. We also positioned the business for the future, continue to develop our CO2 strategy, Net Zero roadmap, fuel switching and CCUS. I'll come back to those later on. We continue to invest in strategic projects, and we focused quite a bit on innovation as well. If we look at those drivers individually, first and foremost, the volume piece. Volumes went down by 1.1 million tonnes in the stone and aggregate section. We lost EUR 9 million of EBITDA in that reduction in volume. That reduction was concentrated in two buckets, core volumes, 400,000 tonnes roughly, which is basically softer steel market, softer construction markets. And then a second part, which is a realignment of our portfolio, exiting some temporary contracts, reducing supply and lower margin. That's a further 700,000 tonnes, 9% reduction in total, of which 700,000 tonnes were intentional. We recovered, on the next page, the loss of EUR 9 million in EBITDA of this volume backdrop by being very active on the synergies. First and foremost, top line synergies, optimization of pricing, pricing mix, customer, customer mix, selling channels right across the group, about GBP 5 million contribution there. And then selling additional -- into additional markets, for example, the Baltics, for example, waste-to-energy here in the U.K., very proud to be good suppliers to that industry and then further product development leads to another GBP 2 million EBITDA on top. Additional to this GBP 7 million synergies on the top line perspective, we worked very hard and the synergy teams in particular, worked very hard on the bottom line synergies. And this concluded three big programs. First and foremost, the realignment of the headcount right across the group, 6% of the headcount reduced, shutting down certain operations, shutting down or reducing in West Europe. This is to realign the business in those areas to what the demand outlook looks like from a volume perspective in these regions. That program is now closed. These programs are now closed and will not be continued. Secondly is optimization of kilns -- kiln network, improved production and yield valorisation and tighter cost control, which led to an additional GBP 1 million in savings. And lastly, we have a much more dynamic network of kilns at this point in time where we clearly look at which kilns are best suited to supply what customer and what location. That goes up to GBP 6 million increase, GBP 13 million now in total. So we then look to the next Slide 24 to see how this then maps on to our development synergies. You can see we have delivered so far GBP 13 million in synergies with a total program of 30 -- this is pounds, GBP 13 million in synergies with total program of GBP 34 million, EUR 40 million, and we are targeting the total program to deliver about GBP 60 million by the end of 2027. Full year guidance, therefore, is expected to exceed GBP 21 million for '25, which is nicely up from our last update. We now look at the future further up. First and foremost, Net Zero and our Net Zero ambitions by 2040. We're progressing along the three axes that we've identified, fuel switching, recarbonation, and CCUS. Fuel switching, we have one kiln and in the future two kilns running fully on biofuels. We have replaced 75% of our diesel use in Germany to HVO. We're using kiln optimization software. These are programs, mostly driven by artificial intelligence to reduce fuel use. And lastly, we signed up to the Peak Cluster, which is one of the U.K.'s foremost due to pipeline initiatives to decarbonize the cluster of companies there, several cement plants in our lime stakeup. This is all successful and keeps going. In the meantime, we've increased our scores for CPD -- CDP, sorry, and the other scores MSCI to increase our rating. We've also worked on strategic initiatives from an investment perspective. Two in particular are currently ongoing. New aggregates plant in Belgium is on track, slightly behind, but slightly below budget and on time delivery in 2026 first half. Civil works are starting, all plant supply is identified and signed up. So this is a nice project and well on track. Second project is our JV with ArcelorMittal in city of Dunkirk, where we are constructing or will be constructing new kiln capacity to 600,000 tonnes of lime, half of which roughly will benefit ArcelorMittal Dunkirk steelworks. The other half will be absorbed into our, in particular, Nordic lime network where we are shutting inefficient capacity down as we improve on our Net Zero road map. These new kilns will be highly efficient, fueled by biofuels. It will be, therefore, green lime as the CO2 hub is fully set up. And lastly, we're very proud of having done two further investments within our SkreenHouse venture capital unit, a small unit that was set up to invest in technology that is beneficial to our business. We've led two investment rounds for two very appealing start-ups, Adaptavate on the one hand and Koncrete on the other. This is plaster board replacement, reduces lime, where we led a funding round of GBP 2.7 million and Koncrete is the platform for the delivery of construction materials where we led a EUR 1 million investment round. In both cases, these businesses were looking for scale up, industrial validation and therefore, also fundraising to get to the next level, which we help them achieve. When we look at the outlook now and the next steps for our business, along the three main sectors we supply, the industrial sector, the metals, steel will remain subdued because of low demand in the short term, but we see that the German infrastructure programs and defense programs will boost that demand in 2026 and on from there. Same will go for the mining sector, the chemical sector, where the currently decent demand will hopefully increase with the additional demand coming from those programs. Paper and Pulp. Pulp generally robust outlook, but paper sees rationalization of capacity in certain areas, and we're looking what that will imply from a demand perspective for our Finnish business. When we look at the second segment, environmental and agriculture, the season for agriculture was delayed slightly, but it has now started, and the outlook is improved. So stabilization is still going very well. And then when it comes to desulfurization of flue gas, flue gas treatments, coal and gas fire, as I mentioned earlier, requires very intermittent capacity. So we're always managing the amount of capacity to that sector. Waste energy is much more stable in its running and therefore, is easier from our perspective. When it comes to construction, last segment, residential has stabilized at very low levels, extremely low levels, and we're waiting for that to improve. The improvement will come, we believe, as the mortgage applications, which we see coming through translate into actual transactions subsequently building or renovation. Yes, there's a slide in the back of the slide deck, which gives you improved mortgage picture versus some of the low levels we had earlier in the year, and therefore, we're optimistic for next year. Infrastructure, politically driven with new infrastructure programs coming through as Germany starts to spend, as Poland continues to focus on the development of its infrastructure, we will see those increase. And that drives essentially two headwinds -- two tailwinds, which will mitigate the headwinds that we have within the group currently. The first tailwind is EUR 500 billion infrastructure stimulus that Germany has announced. And of that, they will increase. They already spend EUR 100 billion per year on infrastructure, which will increase to EUR 120 billion, a 20% increase, quite substantial in that year-on-year for the next years. Secondly, the additional money spent in this bucket will go to the digitization of the economy, green economy initiatives and money to the specific states in Germany, all of which will benefit further construction spending. So from that perspective, we're extremely optimistic that the German stimulus will benefit our business quite nicely. We are exposed to that particular part of the world and its neighboring economies to a degree of 44% of our EBITDA. So we stand -- clearly stand to benefit. When you look at the Ukrainian reconstruction, we have provided you at the back of the slide deck with an estimate. This is all public data that we put together to give you an idea of the scale of the effort required when hopefully peace returns to Ukraine. A $170 billion worth of infrastructure of various types was destroyed to date. This is an estimate, obviously, but that equates to 21 years of total prewar construction output for the Ukrainian economy. It's an absolutely colossal effort that will be needed, which we will, if we can help to provide some materials. And then there's obviously a few headwinds that we still have. There's the global uncertainty when it comes to the economy, trade tensions with the U.S., et cetera. We're actively managing the effects that this generates and delivering synergies. And there's obviously two sectors that are clearly still seeing some weakness. In the shorter term, construction until that recovery starts. In the shorter term, the paper sector as they rationalize capacity and then steel from the auto sector, but that will very likely recover. So we then conclude the slide presentation, with the last page here, seven key bullet points that we would like to give you as a sort of a wrap-up. First and foremost, the performance in the first half of this year was really excellent in very tough conditions and the whole business has performed extremely well. We thank everyone for the monumental effort they put in. The proactive management of volumes was very effective and the delivery of synergies to deliver the financial results that we've just shown you is a testament to that. Even as we're busy managing our business, we're still focusing on the future. CO2 is never far away. CapEx investments are being progressed at speed, and we're, therefore, well equipped for a recovery with a fantastic resource base, 2.7 billion tonnes of material available. If there's growth in Europe, we will certainly benefit from it. For now, full year expectations unchanged, plenty of optimism for '26, and we'll keep you informed as the business keeps delivering. Thank you very much, we take questions.

That's great. [Operator Instructions] We have received a number of questions throughout today's presentation. And then Elisa, if I may just hand back to you to chair the Q&A, and I'll pick up from you at the end.

So there's a first question from Vivian, where is the focus on M&A [indiscernible] division.

The focus is currently developing our business. We're clearly a growth company that is still in the phase of expansion. It's -- if we are entering a decade of stimulus -- fiscal stimulus across the European continent, it's wise and it's good to be positioned to take advantage of this. So the focus currently is clearly expanding our footprint.

And then the second question is effect of German infrastructure fund and Ukraine on the business and what will it come through?

We sort of touched on that in the slide deck that these are the clear two tailwinds that the business will have. There's a video that I also released this morning, which gives you a further detailed explanation of how the impact of those two programs will come through that's available on our website and on LinkedIn. And I suggest that you have a look at that because it's quite instructive.

Final question from Vivian. Is H1, what we expect in terms of the usual H1, H2 split?

Yes, that's completely in line with a normal year of evolution.

Next question is from David. Why is free cash flow conversion still low at 50%?

So our target of free cash flow to EBITDA is 50%. It might be that cash conversion ratio is the ratio you've picked up in other presentation. It's a different calculation. Therefore, those ratios would be in the 90s. When you take free cash flow, it would be 50.

Next question is from Delsie. When do you expect the first contract for the German infrastructure program to be signed?

So the German infrastructure contracts will be signed with those who develop and lay infrastructure work and asphalt and road. So we will be signing those. This comes through us supplying into those contracts. So it's a question of months. The German government is developing all these plans at speed. They've given us guidance on the amounts and the next step will be guidance on location of spend. We see this starting to benefit our business in the early part of '26.

Next question is from David. In the financial review, you noted that the margin over Euribor on the private placement bridge loan is 4.93%. In note 15 to the accounts, you say that the interest margin on debt facilities is 2.25%. I'd like to understand the reason for the substantial differential?

Yes, those are different. The private placement was the refinancing of the previous bridge loan. The bridge loan had a margin over Euribor, but that changed. So it's now a fixed margin. Euribor is not relevant anymore. It's a fixed margin for the duration of the facility, which is 5 years. and it's 4.9% -- sorry, 4.93% throughout the period, not over Euribor but just 4.93%. The normal debt is a debt structured with a margin over Euribor, the term loan that is the 2.75% now as we are higher than 2.0x levered, which will come down as soon as [indiscernible]. Details are in the different publications, in our annual reports online.

Next question is from Mark. Will part of the future free cash be allocated towards dividends now that leverage is falling below 2x or it's preferable to wait until it's approaching 1.5?

Proposed to wait to 1.5. We're conducting -- obviously, our strategy is to prioritize M&A, and we like to create balance sheet capacity to do that out of own funds. And so dividends will become a topic as we are below 1.5.

Next question is from Bruno. Please explain how total energy costs changed in H1 versus last year…

That's a basket of arguments. The main driver there is the energy pricing, which has come down versus last year. So that brings the cost down. There are individual cases where we hedge the energy in Belgium and in Germany, for instance, where we take position where we can. So that is to secure the level that we have. It's a mixed bag basically of the different initiatives that we -- that allows us to keep control over the energy cost.

The second question from Bruno. The cost of CO2 permits on your P&L. How do you expect this to develop in 2026.

Well, the cost in the P&L on CO2 credit is the deficit that we have. We emit certain quantities of CO2 and the EPS system that provides us with a certain level of reallocations. The deficit that we have versus what we emit and what we get as reallocation is the cost for us in the P&L. That's what we do. We buy the CO2 credits on the market. We have an expert center now running to make sure that we do that effectively and efficiently on pricing and that we do that on a daily basis. So very close monitoring there to keep these costs also under control.

Next question is from Thomas. Could you discuss the M&A environment? Any changes in the tone of discussions and willingness of sellers to engage given the growing awareness of structural problems discussed at your CMD?

Similar tone, similar environment as before. You shouldn't forget that we have, I think in our history now looked at 160 deals overall, if you take all the projects together. And so the tone is always varied across all of them. Some people want excessive amounts of money, some don't. Some are very willing sellers; it's just always a mix. So it's fairly similar to before.

Next question is from Solomon. Could you comment further on the pricing pressure you have experienced as well as on mineral imports?

We have not -- mineral imports are not necessarily something that we see all of. There's a little bit of limestone of different types of grading that used around Europe for certain applications that always has to happen. There's nothing new. There is a little bit of lime that comes over the border from Belarus into Poland and from Ukraine into Poland. These are typically lower quality lime and that impact the lower quality uses of lime, so soil stabilization and so on, about 3%, 4% of total demand, and that puts pressure on that segment, so the lower segment of the demand there. Nothing particularly of scale and has happened before and not something that we think will continue much or grow much compared to this.

The last question is from Ron. The 50% free cash flow conversion is something we should expect this year, or it has been a long-term target.

It is a long-term target. We have two versions of free cash flow conversion and excluding growth capital. Excluding growth capital, we have hit that mark, we are at 53%. The long-term target is including growth CapEx, and we are at 45% now. So there's still some room to improve on.

That's great, Jan, Max, if I may just jump back in there, and thank you for addressing all those questions from investors today. Of course, the company can review all questions submitted today and will publish those responses on the company's platform. Max, before I redirect investors to provide you with their feedback, which is particular important to the company, could I please just ask you for a few closing comments.

Yes. Happy to close comments out here. Just we've done -- we've delivered on a first half, which was a challenging market backdrop right across the group. We were integrating the various companies that we bought across '24. And you can see what the potential of a group of this type now is as you see what we can deliver even in tough circumstances where plenty of initiatives are going at the same time. We thought we've kept thinking about the future, the future of this business when it comes to CO2, when it comes to capital investment, when it comes to development. So all those things together mean that the ingredients for future success, long-term success are clearly present in the business that we have now put together. So a big thank you to all the teams that have contributed to the first half. We look forward to the second half and then in particular also to the years to come when some of these tailwinds will help lift performance further. That was it.

Fantastic. Max, Jan, thank you once again for updating investors today. Could I please ask investors not to close this 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 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 SigmaRoc plc, we would like to thank you for attending today's presentation, and good afternoon to you all.