SigmaRoc plc (SRC) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the SigmaRoc interim results presentation. Before we begin, we would like to submit the following poll, which you will see on your screens. [Operator Instructions] The company may not be in a position to answer every question it receives today. However, the company will review all questions submitted and published responses where appropriate. These will be available via your Investor Meet Company dashboard. Finally, I would like to remind you that this presentation is being recorded. I would now like to hand you over to Chairman, David Barrett; Chief Executive, Max Vermorken; Chief Financial Officer, Garth Palmer; and Deputy Chief Financial Officer, Jan Van Beek. Max?

Thank you very much. Good afternoon, everyone. Thank you for joining our results -- half year results call this afternoon. We've got about 30 slides for you, take us 30 minutes or so to run through it. After that, there will be plenty of time for questions. Start with Section 1 highlights. The first half of this calendar year was in an extremely busy first half. What we've effectively done is built through 3 transactions, Europe's leading lime and minerals business with a footprint right across North Europe. That footprint consists of 2.7 billion tonnes of high purity limestone reserves. They are located in fantastic locations, right nearby big industrial hubs, big infrastructure hubs, ports, the North Sea, the Baltic Sea. The construction of this business came through 3 parts of the CRH lime deal, which we announced at the end of last year. We completed on the German, Czech, Irish acquisitions on the fourth of January. The U.K. came through at the end of March, ahead of schedule. And the Polish business completed only a week ago, again, totally ahead of schedule with antitrust clearance has happened already in July. We launched into an aggressive synergies program, which is on track with the delivery -- the minimum delivery now increased up by EUR 5 million to EUR 35 million by 2027. More detail on that further into the presentation. We're also rolling out a lime-centric ERP solution right across the group, and that will be rolled out over the next 18 to 24 months as we integrate the various entities. There will be a net 0 road map, which will be revised and published over the course of the next 6 months or so with updates that now reflect the wider group and the wider perimeter of our business. And lastly, we announced our CFO succession. Garth Palmer, who has been with us since day 1, has been an invaluable member of our team, has decided to step down at the end of this calendar year and focus on other things. And we're very pleased to welcome to our group Jan Van Beek, who sits to my left. I will take you through the finance section of this presentation so that you get to know our future CFO better as well. I'd like to take you now through 4 numbers, in particular, on Slide 5, which highlights the first half of this calendar year, GBP 469 million in turnover for GBP 100 million EBITDA. That represents a 21.3% EBITDA margin, up 240 basis points. We're very pleased with those numbers. They're ahead of our internal budgets. They're totally in line with consensus and represents the evolution of our group. You'll see that turnover has moved backwards by about 8% and EBITDA by 3%. These numbers are again expected. There's less pass-throughs of energy and CO2 costs versus the first half of '23, which was obviously right at the peak of the energy crisis, and that reflects most of that move, as expected. There's 2 further numbers I'd like to draw your attention to on the right of the slide. EPS, 6% up at 4.3p. This is a key number for us. This is taking into account all parts of the CRH deal. So on a pro forma basis, therefore, the group as it will look in the future. The 6% move forward is key, and it shows the accretion of the CRH deal that we've done and how that impacts our group as a whole. The second number on the right is our leverage at 2.3x at the half. Again, this follows very nice the path of degearing that we announced at the CRH transaction at the end of last year. All in all, a very strong performance, which underpins the confidence both in our half year and full year expectations as outlined. If I go through some of the end markets, first by segment and then by geography, a few points to make on the supply in the first half trading. Industrial segment first consists of 4 different subsegments: steel, paper, pulp, board, chemical and mining represents GBP 217 million worth of turnover, 42% of the group. Steel had a good start in the first month with some restocking and some slowdown at the end of the first half, with some automotive demand coming off a little bit as a result of a first half in line. Paper, pulp, board and packaging, good first half, some strike action in Finland now over, so very specific disruptions here and there. And as a result of that, very steady volumes, very good volumes as expected. Chemical and mining, similar trends there, pockets of really good activity where our products were used as primarily as purifiers of their products or process or as fillers. And there again, demand remains very good. The second segment is in the Environmental segment. We sell into the food industry and to their agriculture, so food would be chicken feed, the production of feed for other animals, the production of sugar. Agriculture would be lining of agricultural land as a replacement for fertilizer. Again, both segments, very strong performance that's set to continue. We saw some weakness in power generation. So when you burn coal to create energy, power, you use lime and limestone to desulfurize the flue gas. If there's more wind energy in the system because of bad weather, there's less demand for flue gas treatment, obviously, and that we saw in the first half. Overall, a decent performance for the first 6 months with GBP 63 million turnover for that segment. Third segment, construction. Construction segment splits down into 2 parts: infrastructure on the 1 hand and residential construction on the other. The infrastructure component is the largest 1 by far, so robust demand right across Europe with demand for primarily projects that were launched during either COVID times or the energy crisis later on, and we think that will continue as is. The residential side of things were slow, has been slow for the last year, maybe even more than a year. We see a recovery coming as soon as interest rates come down. Housing permits remain low, but housing shortage remains the same pretty much everywhere. So as soon as that starts to turn, we see this segment recover. Taking a look at the same trading and the same 6 months of trading across the geographies. There are 4 main regions across our group: the Northwest, which comprise the U.K. and Ireland, Channel Islands. Very good performance across this segment. Market share, pricing, cost control were very much maintained. Margins were very good. Even though there's quite a bit of residential exposure in this business, the business performed very well. So we're very pleased with the Northwest. The Western section, which is the Benelux, North Spain and in France. Again, good performance in spite of some weakness despite weak, the same trading in residential construction. We see that turn as the interest rates come off. We also have quite severe weather disruptions there in the month of January with snow covering some of our sites with no activity possible at all in the first few weeks, but that turned out -- turned around again afterwards. Fels and Vitošov consist of our central region. CRH businesses we bought there, very good performance in line with budget. The residential construction here again, also weakness. We make aerated blocks for residential construction, primarily in power generation. These were the 2 weaker sections there in the first half. But all in all, when it comes to the other segments, food, agriculture, steel and so on, good trading in the first 6 months. And then lastly, the Northeast, which is North count footprint, very positive EBITDA performance over the course of the first 6 months. Pricing, cost control were outstanding. Infrastructure demand was good, in particular, in Poland and the Baltic states. Scandinavia had some weakness in residential demand, but pulp, paper, board, mining, chemicals were very good. So very pleased with the North count business in the first half of this year. We obviously need to look at our group when it comes to the future, how it looks post the CRH lime acquisition. And there, the group is essentially formed the 4 regions I mentioned, which are displayed here on Slide 11. The U.K., the Channel Islands, the West region, 193 million tonnes of reserves, the West region, smallest of 3 currently with big reserve position in Belgium, in particular, 447 million tonnes. The Central region, again, a fantastic reserve picture there with very big limestone reserves in the half of Germany, 27% of our group and the largest region currently, nearly 1 billion tonnes of reserve, again, the Northeast, which is the North count business, including both the lime assets in Poland, 39% of the group and thereby the largest part of the group. On the left of this slide, we have the pro forma numbers for the business. That means all of the parts of the CRH Group now integrated for the first half. To give you an idea of what the group looks like when all these parts come in, GBP 532 million in turnover and GBP 118 million in EBITDA, strong market positions in each of the countries we operate in and 6 core sectors. We also launched into a synergy program with the teams at group headquarters running this program under the leadership of and several others. And then helped by the regional heads and their teams as well. And this has been a very collaborative effort right across the group, and it's been very successful so far. As a result, we were able to increase the base deliverable for this program from EUR 30 million to EUR 35 million by the end of 2027. We also give you on Slide 12 a breakdown of how that EUR 35 million will come through in the years '25, '26 and '27, as you can see on the right-hand side of this slide. The potential to go all the way up to EUR 60 million very much available. EUR 35 million was achieved not yet taking into account Polish setup, which have only been part of our group since the second of September. When it comes to where these synergies come from, on Slide 13, we give you a few ideas here both in pictures and in the text on the left. The picture in the middle of the slide is actually quite a nice one. You will see in there our founder carrier, the MV Ronez, the ship with a green hull on the left being filled with lime out of Ireland, the truck on the right, to be shipped across our network. This is just to give you an idea of what kind of synergies we're looking at. We're very much bringing our business together as a leading European lime and minerals group with an integrated kiln network. You also see some other pictures on the right. We're very much looking at the optimization of our kiln network. We're investing heavily in AI-driven kiln optimization. We're also looking at technology firms, some small startup firms that bring very interesting applications and ways of looking at production methods, logistics and other things through our ventures are all of this to optimize the network to more R&D and product development. And there's also standard or more standard synergy work that's being done, bulk buying because of scale, it is SG&A optimization, in-sourcing of certain materials, costs reviews across the group. All of this to make this business a leading European limestone group. So that completes the first 2 sections of this presentation. I'll hand you over to Jan Van Beek to present you the financials.

Thank you, Max. This is an overview that was shown earlier on, but with a little bit different numbers for revenue and EBITDA, this is now year-over-year comparison for the important metrics financially. We're very pleased to report strong results for the group that was delivered in a very busy half that is behind us, integrating the CRH asset to become the European lime and minerals producer. So very pleased to show there a 60% year-over-year increase of revenue up to GBP 469 million. EBITDA grew even more, 82% year-on-year to GBP 100 million, partially due to acquisitions as more group -- units in the group now, but also through effective pricing across the group and in cost control, so that will help. And that also drove up the EBITDA margin with 200 basis -- 240 basis points to 21.3%. EPS down a little bit year-over-year, 20%, which is primarily to do with the timing and the structure of the CRH acquisition, where debt came in earlier than the units would come in, especially covenant leverage in September. If you look at the EPS on a pro forma basis, which is next to it, which is then up 6%, showing the earnings accretion that the CRH assets bring. If you move down to return on invested capital, up 100 basis points to 6.2%. Free cash flow generation of GBP 43 million, up GBP 44 million of last year, which translates into a 43% conversion rate, which is helping us to degear, which will get to that later on. Covenant leverage is 2.6x, in line with expectations and guidance. And on a pro forma basis, it's down to 2.3x. So all in all, very good results for the first half and providing confidence in full year expectation and the ability to deliver for the consensus. If we move to the next slide, there are a lot of numbers in here. I'll focus on a few. This is all on a pro forma basis with all businesses included in the numbers for 2024, Buxton as well as the Poland unit. Grew revenues up 83% to GBP 532 million. EBITDA, even up triple digits, 115% to GBP 180 million, which also brings EBITDA margins up substantially with 330 basis points to 22.2%. Talked about underlying EPS, already nicely up 6%. Cash is firm at GBP 153 million for June 30, and the adjusted leverage ratio is up 33% better than at 2.3x. If you move to Slide 17, we have the revenue bridge. As this is a year-over-year comparison, the majority is coming from M&A. In terms of growth, 62% is the growth year-on-year from GBP 290 million to GBP 469 million in '24. M&A comprised of 65% primarily through the lime acquisitions, of course, but also through the full year contributions of smaller acquisitions that were done in 2023. Organic growth declined 1%, primarily driven by the residential industry in the Northwest, in the West that had softer volumes. Northeast was a little better. Overall, it's down 1%. So ending the year at GBP 469 million. If you go to Slide 18, similar bridge, but then for EBITDA. We see that earnings is up 82% from 55% in the first half of '23 to GBP 100 million in '24. M&A, again, contributes substantially for that as we also saw with M&A, both also on the smaller acquisition side contributing. And you can see here where the central units are contributing the most, 58% of that M&A component. Organically, the growth of 2% was driven by the Northeast region that benefited both from operational improvements that were set in motion in the years before that is now paying out through improvement programs. But also, pricing was strong and cost management was also helping out there. And on top, infrastructure demand, especially in Poland and Baltics was strong as well in the first half, so both contributing to a good EBITDA growth year-over-year. So ending the year at GBP 100 million. If we move to Slide 19, there's a lot of numbers on the slide again. This is the income statement year-over-year. I love the numbers again, I'm not going to mention all of them. One thing to highlight here is that rather in the middle, underlying profit from operations. It's up GBP 31 million. It's about 80% plus, which is in line with the EBITDA increase that we showed earlier on. Net finance income is up GBP 17 million coming from the funding of the CRH deals earlier this year. So that will comprise a little less than 7% of the cost of debt. So that's on that. And then in the middle there, you'll see an increase in the tax expense of 6, which is in line with higher earnings that we were able to accomplish over the year, and it's also in line with what we guided, then it represents roughly 22% of earnings before tax. The section to the right shows the composition of cost of sales relatively where the increase in the inclusion of the CRH assets does provide a little different cost base than what the group had before with labor and energy coming in at higher percentages because of the cost base structure that the lime business has versus the limestone business. The good thing there is that those units are also running at about 70% variable costs, which allows us for good cost control also to secure good operating margins for the entire group. If we move on to Slide 20. We have an overview on the cash generation for the group. It starts with the underlying EBITDA of GBP 100 million. It was up GBP 45 million roughly versus last year, and it only came with an absorption for June of GBP 3 million overall, which was lower than was expected and especially due to change in the policy for ETS returns, which was originally scheduled for March, which will now happen in September. We paid about GBP 10 million of income tax during the first half, which was in line with expectations. And then we have 2 components of CapEx that we paid for, GBP 24 million -- GBP 24.5 million for maintenance to keep the assets running, which represent about 84% of D&A, which is in line with what's being said structurally to be 85% to 90%. And then growth was 3%, and it is primarily related to the commissioning of a natural plant to South Wales early this year and a minor amount for the start of the synergy program. Net finance cost, GBP 60 million. Cash out, like I said, it's about a little less than 7% of cost of debt that we paid for and then ending the year at GBP 43 million of free cash generation. That helps us to deleverage the finance structure of the group, which is shown on the next slide. Here, you see the position of the net debt. The focus is on deleveraging as the Head of Sales post the CRH Lime acquisitions. We started the year at GBP 182 million, then the CRH deals were done 1 and 2, where we raised about GBP 200 million minus some cost, GBP 196 million through equity. We got the funding for the units complete. At that moment, we had to pay also some borrowing costs as well as a nonunderlying cash cost to make the deals happen. So since earlier this year, we're at -- that was the max level of that rule incurred. And since then, we are generating cash to lower down leverage through underlying free cash flow. And there were a couple of other components to pay out coming from the deals, minority interest and all that. So we're now at GBP 533 million by the end of June, 2.57x EBITDA. And the intent is to delever that ASAP to the end of the year, which we think we can get to 2.3x, which would be in line with the consensus and expectations. That concludes the finance section, Max. So back to you for the strategic delivery.

Thank you very much. There's a few slides in the deck that I wanted to take you through to give you a few pointers on where this business is going. We've obviously transformed slightly. We were a focused construction materials group, but we have, since the acquisition of Nordkalk in '21, systematically moved closer and closer to a minerals and lime business. The reason for it is that the lime and minerals business is aligned with the minerals section -- segments are much less cyclical, much less P&L-driven and much more driven by strategic reserve position, long-term supply deals, long-term customer relationships and a fantastic industry to be in. As a result, we really want to put forward the location and quality of our industrial reserves, the diversified nature of our portfolio of clients and sectors we supply to, but also the operational excellence that we have pushed through this business for years now, and the effective management of CO2 with a revised net 0 strategy that we will bring out over the course of the next 6 to 12 months. And where we really take into account the new setup and how we see CO2 as an opportunity for us as a group. If you take all those points in a few slides, Slide 24, the group as it stands today, is the map in blue on the right side of the slide, #1, #2 position in each of the markets we supply in and a vast network of setups and plant locations, reserve locations right across our business. The 2 pie charts on the left show you the split of our group as it stands by region and by segment, very nicely diversified with many different regions and different end markets. I mentioned already on Slide 25, the importance of our reserve base. The reserve is spread right across our footprint with millions of tonnes in each location, close to end users, close to end markets. In the heart, very often of main consumption hubs, be it residential, be it infrastructure, industrial use. The reserves are of high quality. The purity, pure limestone that has multiple uses today and well into the future. That operational footprint, that location of reserves, 2.7 billion tonnes in total is a critical point in the delivery of our strategy. The second point I'd mention to you is the benefit of being a diverse and diversified group. And we want to show you how this looks over many years. We've taken 75% of the pro forma EBITDA this group generates since 2008, the data we have available from the various companies that we purchased. And you can see the steadiness, the stability of the earnings and the margins of these earnings right across that period of time. Across that sort of nearly 15 years, many crises have happened across Europe, many periods of growth and stability have happened. And each time, our businesses have performed very well. This is a real testament to the nature of the industry we're part of. A different way of showing this is how our diversification has panned out since the first half of '23. At the top pie chart on Slide 27 will show you what our group's turnover was exposed to by region and by sector in '23 and how that has now diversified even more in '24. The sector pie chart on the bottom left side corner shows you a very nice split between the various end markets as well as the right-hand side between the various geographic locations. The diversification is ideal. It helps you navigate the various economic cycles across the group. A further way of showing how this diversification happens and helps is if you take out revenue stability through long-term contracts, the pie chart shows you how the contractual relationships with the various end customers that is in terms of length across our group. You can see that only 25% of our business is exposed to contracts, which are lower or shorter than 3 years. And that's actually easy to understand. These are mostly construction-related contracts, as these construction related contracts are more project-based or more delivery on the day. Korea put contracts for specific housing projects or infrastructure projects. All the rest are longer-term relationships. So we're particularly proud of this. It means that we have been able to help our customers solve their challenges, their issues, help them with their production processes through delivery of products, through R&D to helping them solve their production challenges. Now we obviously have grown our business not just by acquisition, as we have over the years. We've also done quite a lot of work to make sure that we grow organically. We have decided to include a graph here in this slide on Page 29 with 2 bar charts that give you a bit of a breakdown. On the left-hand side, the organic revenue growth on the right-hand side, the M&A-based revenue growth. We're particularly pleased here with the left-hand side graph. 2020-2021 had double-digit revenue growth in them. And that's -- these are periods of time when there was hardly any pass-throughs or inflation to speak of. Also 2018, the 10% up was particularly pleasing. That was our first full year of operations, having set up the business and launched it in January 2017. And as a result of this, our 4i principle, invest, improve and integrate, clearly shows that we're able to not just buy businesses, but make them significantly better as we run them. And then lastly, in this section for 1 outlook slide, a reminder of our capital allocation strategy. We clearly have a mandate in the year, and Jan has referred to this throughout the finance section. Our target is to get to 1.5x EBITDA as we have done over the past each time that we geared up to buy a business. That's being delivered as we speak. We will then consider cash returns to shareholders. Buybacks of shares are clearly on the agenda, if our valuations remain subdued or modest dividends as the share price hopefully moves up. Organic growth is something that we continue to focus on. Maintenance CapEx is always guided at 85% to 90% of D&A, as we are currently running. We'll invest in growth CapEx. We have done over time. We'll also invest in innovation, R&D partnerships with interesting businesses that can help our company move forward. And then selective M&A, all funded through internal cash flow, will help our business compound grow as we go forward. So that sort of completes the section of strategic delivery and leaves us 1 slide to look at for some Q&A, and that's the outlook for '24. The first half of '24 was extremely busy and the teams in the center and at the various obstacles, did a stellar job integrating new companies, welcoming nearly 1,000 of colleagues, making sure that people can pay the pension systems, go let's set up. The IT system worked, that everything went smoothly. We also thank CRH for helping us deliver these acquisitions all time. If we look through to the second half of the year, there's quite a few things that are -- have started well. The first months in the second half are well in terms of trading. And therefore, our outlook for the full year remains unchanged. If you look at the details, industrial demand in steel, we expect a modest slowdown because there's a weakness in auto demand. But on the other hand, paper pulp and board, chemistry and mining will see steady growth, steady demand or some modest growth in '24 and '25. The environmental section sees good and solid demand in agriculture and food volumes, they will remain robust in H2. Power generation, dependent on weather, will be more difficult to forecast. We'll see how the climate evolves over the next 6 months. We see an increased amount for sugar and sugar stone, which is very, very good. Sugar is also used in nonfood-related production. And there, we see further demand coming through. And then lastly, construction, because infrastructure demand remains strong, and that's the large part of our construction exposure. The residential outlook remains fairly weak in most places. We hope that interest rate reductions will materialize, which we think will then reignite the construction in the residential construction markets, where structural demand remains very strong. It's just a question of funding and permits and launches of housing sites right across the footprint. Some green shoots here already in the U.K., a little bit in Belgium, a little bit by -- still quite a bit of weakness in Scandinavia and Germany. So all in all, a positive start to H2. Outlook unchanged from our perspective. A great effort in the first half and plenty more to come as we grow, integrate that there were synergies. This completes the slide deck. Thank you very much for your attention so far. Happy to take any questions.

Thank you. Thank you, Max. Thank you, Jan. Now if we can turn to the questions, we do have a number that have already been submitted, but please do continue to submit your questions using the button on your screen. We have a question from Ben. The CRH Lime acquisitions have been successfully integrated. How do you view SigmaRoc's long-term growth prospects in the European lime market and what role will ultra-low carbon products play in driving future demand?

Yes. Very good question, Ben. Thank you. It's a great sector to be in. It's a great place to be in it. The business is now set up as a lime producer, a minerals producer. That gives us multiple avenues to grow. First and foremost, we need to look at our own footprint, we need to look at what products are we making, what R&D efforts can we invest in, what new products can we develop to help solve our customers' production challenges. That's the first thing we look at. Secondly, you can look at the wider European geography. There's plenty of markets we're not active in currently, for the South, for the East, for example, where we could very well operate lime and minerals businesses. The further potential is that the group is not just necessarily just a lime business. We've got limestone and there's additional minerals that look very similar to those products and then have the same customer base, and we could grow into these areas also. All of those are avenues that we will explore. And all of those will, as we are driving through synergies and have degeared, allow us to compound growth going forward. Ultra low carbon is something that we pioneered from a concrete perspective here in the U.K. in 2020 when our Northwest division launched a little bit to the surprise of a lot of people, a first ultra-low carbon concrete mix. In that mix, interestingly, was also lime as 1 of the components of constituents. So there again, we will continue to be involved a lot. We are investing in small startups to do these things, for instance, ] cement-free various investments that we've made to full scale to be part of the front, the leading front in terms of decarbonization. Another point that people sometimes forget is that lime is a fascinating product when it comes to ultra low carbon. Most of the products that we sell in terms of lime, yes, they produce CO2 when you make the lime, but they reabsorb that CO2 when you apply it. This is something where we welcome to the market with lots of detail on in the near future. And it's something to keep in mind. And that sets us well apart from, for instance, cement industry or other industries that are carbon intensive. We reabsorb at short notice most of the CO2 in most of our applications. That is something unique that is perhaps unknown. So in short, plenty of growth ideas, plenty of growth potential from the base that we've now built.

Great. And just for Ben's purposes, there was a second question that he submitted. I think you've covered much of your second question that, too. So just for Ben's confirmation, we probably won't cover that. And second question here, which has come from John. With positive momentum in the second half, especially in sectors like food, agriculture and mining, do you anticipate any significant headwinds that could impact your ability to meet full year EBITDA expectations?

We sort of flagged most of the head and tailwinds that we see currently. So there's clearly a few tailwinds, and there's a few headwinds. A few headwinds are what's automotive demand going to do in Europe. We obviously sell into the steel industry, some of that steel gets used for autos and auto construction, and therefore, that's a headwind we flagged up. The second headwind we flagged up is coal-fired power generation. If there's a lot of wind in Europe, the wind turbines run at full steam. And therefore, there's less coal-fired power generation required to meet the energy demands. So these are clearly 2 points to consider and to look at. At the same time, mining, chemistry, infrastructure demand, all those remain robust, sugar, environmental applications remain very robust. So usually, what you see in the lime and the limestone business is that there's headwinds and tailwinds that they balance each other out. And they, therefore, got nice visibility on revenues and EBITDA for the year, but also years out. And that's the nice place to be in at this point in time.

Great. David asks, ROIC has improved year-on-year due to the CRH acquisitions. You've set a medium-term target of 15%. What are your key drivers for achieving this? And how confident are you in hitting this target within the given time line?

Yes, I'll take this. It's actually quite a straightforward one. It's delivery of the minimum synergy target gets us above 15% ROIC, which we're targeting to have by sort of '27. Above and beyond that, obviously, anything at the upper end takes us higher than that. And also, once we've degeared sufficiently, as Max made out and pointed out in the presentation, reinvesting that, compounding growth will help that further as well.

Great. Super. Thank you. Stephen says, as SigmaRoc expands, how are you positioning the company against competitors and what differentiates SigmaRoc from the other players in terms of operational efficiency, pricing power and market share?

Yes. So we're obviously a lime and limestone producer, so we compete with the pure play lime operators and with some of the limestone producers. I think we're quite a dynamic business. We're focused on R&D. We're focused on integrating. We have quite a good product development unit both in Scandinavia and in Germany. So these are actively looking for further ideas to help customers solve their production and other issues. We are also quite somewhat different in that we are a hard quarryman. And that means that when we look at a quarry, we look at every gram of stone that we extract from this quarry, we look for a way to monetize and sell. Some lime operators focus purely on lime and do less in the quarrying space. We find that quarries give us lots of ideas to make some money on and therefore, we'd like to be involved with all the products. That's a slight differentiator, which I think will be very beneficial to us in the long term.

Okay. Super. Pavan's got 2 questions, and I'll break it apart. Question one, organic growth seems to be lumpy. What is driving organic growth? And what kind of long-term organic revenue growth do you anticipate?

Yes. So I suspect that the lumpy nature of the organic growth has to do with the graph that was on screen, where there's some bar charts are bigger than the others. You should also look at how these bar charts relate to the M&A growth that was next to it on the other side. So each time we make a large acquisition, a bit of time afterwards, the effect of that acquisition then come through in terms of revenue growth. You buy this business, you look at how it works, you integrate it, then you start to drive the performance. And then a year later, that organic growth comes through. So you need to sort of time shift these bar charts not year-on-year exactly, but to put the right sort of delay in between. Then you see that is quite straightforward. Organic growth, generally speaking, is trying to find new markets to the product, make sure to utilize all of the quarry material that you produce, making sure that from a pricing perspective, we do our job. So there's various avenues there.

Okay. A second question, what kind of return profile does the limestone business have? What is the ROE target for the company post synergies?

Maybe the ROE targets...

We've essentially covered that. We look at return on invested capital and the medium target is obviously 15%, which as we touched on, will be delivered just through delivery of the synergy program at the lower end.

Yes. And then when it comes to lime and limestone, you can't just go limestone and lump that into 1 bucket. It's various sub businesses in there. And the return on investment of lime and on limestone are fairly similar. You sort of need both, in our view. The raw material for a lime kiln is secreted with the rock when it comes to the quarry, but you then also have all the other products in that quarry, which is perfect material for all sorts of other applications that are not necessarily burned applications. So fillers, obviously, construction stone, pigments in some cases, for example, paper and other things. So you really want to optimize all the volume out of the quarry, send some material to the lime kilns and then find applications for all the rest. And if you do that well, you get ROIs on both sides, which are really compelling and in sort of the same levels.

Okay. So I've got a question here from Rob, but I think it just needs interpreting, but he says, do you feel the future of limestone -- the future of SigmaRoc as a lime company, with a view to offload the construction elements down the line? I suspect what he means is as a lime business, would you consider offloading the constructive elements down the line?

So it's a good question, and there's a nuance to it. We will always remain exposed to construction because lime is a binder, so you can make lime mortars, for instance, between brickwork. We will also continue to sell limestone as an input for asphalt, for concrete and so on. Where we were very much also focused on end products, sorry, it's concrete, concrete products, asphalt, precast, all the rest of it. As a construction materials operator, that will be less of a focus. Because that is, in our view, now probably better handled by the pure-play construction operators than by us. And so over time, that's becoming less central, less focus, and we'll probably find better ownership elsewhere. All in all, we will be exposed to basically the 3 segments: construction, industry and environment from here on as a lime business.

Yes. Understood. And John asked, you mentioned introducer fees as part of the nonunderlying items relating to the CRH acquisition. Can you explain why this is required, given how well you know CRH?

Well, introducer fees, so essentially advisory. It's maybe the text, the subtexts are not exactly right. These are the various banks and other advisers that you need in large-scale transactions. Therefore, they form part of any type of transactional deal like this. So maybe the text could be a bit clearer on this.

Yes. Understood. Great. Okay. A couple of other questions. When can we expect news on noncore disposals?

We will -- you'll get it as soon as the noncore disposals have happened. As again, I want to make this point very clear. We started to build various concrete, asphalt/concrete products and other businesses across our history over the last 8 years. These companies are stellar businesses. They're high-quality assets. They've got some industry-leading margins. They have -- they punch well above their weight when it comes to their market position. The right owner for these businesses will be found at some point in time as and when we decide to sell them. So at some point, we'll sell them. We'll see when. And to the right owner.

Absolutely. Great. And final question, where could margins get to once the synergies have been achieved?

We always said that mid-20s is the range that we'd like to get to, 24%, 25%. That seems doable, but the total synergy program has been implemented. So that's the target for now.

Great. Super. So nice way to finish. Thank you, Max, Garth, Jan. Could I ask investors not to close this session, as you'll now be automatically redirected for the opportunity your feedback. If anyone has further questions or would like additional information on SigmaRoc, please do gain contact via [email protected] Many thanks for attending today's presentation.