The Alumasc Group plc (ALU) Earnings Call Transcript & Summary

Good afternoon. Welcome to the Alumasc Group plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Paul Hooper, CEO. Good afternoon, sir.

Thank you very much, Lilly, and thank you all for attending the Alumasc interim results presentation for the half year to December 2025. Introductions. My name is Paul Hooper, I'm the Chief Executive of the group, and I'm joined today by Simon Dray, the Group Finance Director. This is my 50th and last results presentation for the Alumasc Group. So if we may, I suggest that we go on to Page 4, and this is really an overview of our divisions. Sustainability drives our future growth. We have 3 divisions, and I'll give you a quick description of each of those, and we start with the Water Management division, which is involved in water and storm water management. Many of our systems are specified. We manufacture circa 70% of our products and 70% are sold to merchants with 30% direct to contractors. Our second division shown in the middle here is the Building Envelope division, which consists of our roofing systems company, which gives technical advice for instance, by taking core samples from current roofs and then advising what the solution is. We supply premium roofing systems from Derbigum, Hydrotech, both global leaders, and we also have our own brand, EuroRoof plus other brands. We're also involved in other niche areas such as blue roofs, green roofs and biosolar roofs. This division does not manufacture and it imports its products from Canada and Europe from suppliers who it has had a 35- to 40-year relationship with. It supplies its systems directly to contractors, so no merchants involved here directly to contractors only. And then our third division is the Housebuilding Products. It operates under the Timloc brand, which has really developed by giving an outstanding next-day service and 100% record for on-time and full delivery. If an order is received by midday, it will be delivered often in small quantities the next day. Above GBP 100 delivery is free of charge and GBP 150 to site. We bought it for just over GBP 3 million around 20 years ago, and it makes more than that in profit now with a circa 26% operating margin. It manufactures 95% of its products. And again, around 95% of sales are through builders merchants. So if I may, I'll ask Simon to continue on our clear and well-established growth strategy, please.

Thank you, Paul. We have a clear and well-established growth strategy, which we organized under 4 separate pillars. Just briefly because we will touch on many of these during the presentation, but we are a champion for sustainable building products. We use environmentally efficient materials to create durable, high-quality, low-maintenance products that help address the environmental challenges facing the built environment. We look to accelerate our organic sales growth. We sell into markets that will grow faster than the general construction market. And we have international opportunities for parts of our product range, and we, therefore, look to outperform general construction growth. We look to drive our margin improvement through efficiency, automation and volume growth. And we look to use our strong balance sheet and cash generation to make value-enhancing investments in the business, capital and revenue investments that enhance future growth, but also selective bolt-on acquisitions to accelerate our ambitions. And pass back to Paul now for the overview of our half year performance.

Yes. This is on Page 7. These are the highlights of this half year, where we've had a resilient performance, and we're on track for delivering on our full year expectations. It has been challenging, though, the market, and we are against a strong prior half year comparator. The revenue in the period under review was GBP 50.4 million. And that really if we take the Chek Lap Kok business out of there, which was into the Hong Kong Airport, which accounted for around GBP 5.5 million of revenue. We were actually, as Simon will show shortly, 3% down on the prior year. Now there were headwinds that we encountered and particularly with the Building Safety Act delaying larger projects. And let me just tell you that in construction news, it was commented on in the House of Lords Industry and Regulations Committee on the 2nd of September '25 that the local authority Building Control CEO commented that there had been anticipated to be 20,000 starts of projects in London in the last year, but only 900 started. Now that is a 95% reduction in anticipated starts. In the Sunday Times, just 2 days ago, it commented on a 75-year low of concrete sales in London, 27% reduction versus the prior year, 39% versus 2023. There have been 310,000 houses built in 18 months since the government came into power. And Matthew Pennycook, the Housing Minister, indicated, and this is according to the Sunday Times, that live discussions were in government right now, and there was a reference in that article to the government looking at Help to Buy scheme. This has all been stunningly unhelpful to our industry. So we've been battling against all of this. And at the same time, affordability concerns, planning delays have affected housebuilding. And we then had the autumn budget, which had a 1-month delay into November, and that didn't really help either. But we had a bit of a pickup in the -- right at the end of the year, which I'll come on to. I touched on the CLK revenue in the prior year, and we had minimum in our H1, but we have got GBP 2 million of orders. Those are with us. We've got payments all up to date, and we expect to be able to ship those in our H2. The underlying PBT was GBP 4 million, and actions have been taken to drive efficiency and margins. We took GBP 1.1 million of annualized costs out, which will benefit H2, and those are all in the Water Management division. We have a strong balance sheet with a net debt of GBP 7.7 million. We have conservative leverage ratio of 0.5x, and we maintained the interim dividend at 3.5p. Moving on to the next page. It was a resilient performance, and we're on track to deliver the full year expectations. And this is evidenced, amongst other things, by a healthy and growing order book and a robust pipeline of opportunities. We haven't referred to those opportunities in the pipeline much in the past, but we're going to today. And if we start with the order book, which has a growing momentum at the end of December, that was GBP 14.5 million. And if we take out Chek Lap Kok, that is 27% ahead of December '24, 50% ahead of December '23. So some good growth there. We've had several overseas projects won, and I'll touch on some of those that have already been supplied into H1 later. And we've had GBP 2 million order from Changi Airport in Singapore. Now this is a really important win because there is further business there, which we believe could be worth GBP 10 million to GBP 15 million. And that will have to be won that having worth -- won the first part of this, GBP 2 million, puts, I think, us into a strong position for a further win. In terms of our pipeline here, the opportunity is robust. We have GBP 190 million of near- and medium-term U.K. and export opportunities, and these are largely or Alumasc brand specifications. So around 75% are specified. And that reflects our investment in sales resource, technical sales resource and customer relationships management, in other words, the CRM tools that we're now using more fully. We've announced my succession, and I will be succeeded as Chief Executive, starting really at the end of March, early April, and Pamela Bingham joins us as CEO designate at the start of March, and she has a plc background. She was a Non-Exec Director at Tyman Plc and also Weir, CRH and Rotork, and I'm sure she'll do a fantastic job. She'll bring a new level of energy, and I'm sure she's going to be a great success. We've also taken the opportunity of strengthening our Water Management division with 2 MD appointments; one, Peter Blanchard, formerly of East Jordan, a competitor going back a few years ago, to Gatic, he will take -- he's taken over and is running Gatic and Wade. And then we have Steve Dan, who came with our ARP acquisition a couple of years ago and now takes responsibility for AWS, our water management solutions part of the water management side. Our full year expectations are unchanged, and we're well positioned for medium-term market recovery. And actually, at the end -- coming end of this period coming into December, there was an interesting review by RICS on the residential market survey that indicated improving near-term 12-month indicators for improvements really here in confidence. So that was encouraging. We've identified opportunities to outperform in our target markets, and we are confident of achieving our FY '26 expectations. And over time, we're well positioned to deliver substantial shareholder value as these markets recover. So now I'll ask Simon to continue, please, with the financial review.

Thank you, Paul. As Paul mentioned, first half group revenue was down by 12% or 3% if you exclude the contribution from Chek Lap Kok Airport in each period. U.K. revenues were down 5% on the strong headwinds that Paul mentioned that intensified in Q2 in the run-up to the autumn budget. Export revenues in the period -- in the prior period benefited from GBP 5.5 million of sales to CLK Airport. There was only a small contribution of around about GBP 100,000 this half year. Excluding this, export sales grew by 30% on growing demand, especially outside of our traditionally strong territories in Asia and the Middle East. Our contribution margin, which is revenues less variable cost of sales was level with the prior period. So product pricing and product material costs were good. But due to a small element of fixed cost of sale, our gross margin was 140 basis points lower than the prior year at 36.2% due to the revenue decrease in the period. Similarly, our operating margin at 8.9% was impacted by the lower revenues. We took action in the period, reducing operating costs at our Water Management division by an annualized GBP 1.1 million, which will benefit the second half of the year. And our medium-term margin target remains in the 15% to 20% range. And reflecting its confidence in the group's full year outlook, the Board has maintained the interim dividend of 3.5p per share. The revenue and profit bridges illustrate the impact of the challenging U.K. market on our Water Management and Building Envelope divisions, where the effect of the delays from the Building Safety Act implementation and the uncertainty caused by the autumn budget were felt particularly in their core markets of larger mid- to high-rise projects. Housebuilding Products was more resilient, and it grew both revenue and profit. They were less affected by the Building Safety Act delays, but still face strong headwinds from the low housebuilding volumes, yet managed to gain further share in their markets. Margins were affected by the lower volumes, but the cost reductions together with our operational gearing, so the incremental impact that increased revenues, less variable cost of sale has on covering the fixed cost in the business will drive improvement in the second half. As well as the lower volumes, cash flows in the period were also reduced by a GBP 2 million cash outflow into working capital. Our average working capital as a percentage of revenue over the period was 18% compared to 15% in the prior half year. We carried a significant level of debtors into the beginning of this half year from the Chek Lap Kok projects, which have now cleared. But in the second quarter, there was a temporary stock build to service the growing order intake for the second half. This, we expect to unwind as the second half progresses. Payments into our pension scheme reduced from GBP 1.2 million per year to GBP 700,000 per year midway through the half from September 2025, following the funding plan agreed with the trustees at the April 2025 triennial review. Capital expenditure totaled GBP 1.2 million versus GBP 2 million in the prior year. And the prior year included spend to complete the access covers automation project at our Halstead plant. Current period spend included an upgraded injection molding machine at Timloc to improve the flexibility of their manufacturing process and a new CNC lathe at Halstead to in-house some component manufacturer to reduce cost and inventory holdings. Net debt at the end of the period closed at GBP 7.7 million, which represents a conservative leverage ratio of 0.5x, giving us substantial headroom against our debt coverage leverage of less than 2.5x. And those bank facilities totaled GBP 25 million plus a GBP 20 million accordion facility, which gives us good headroom. These expire in August 2027. So we will begin the process of negotiating a replacement facility in the second half of this financial year. We have a good relationship with our partner banks and expect good appetite for the new facility. And our IAS 19 pension surplus improved again and is now at GBP 7.1 million on outperformance from the scheme's growth asset investments. The scheme is now largely hedged against bond yield movements, and we're on target to reach a self-sufficient position where the scheme will have a low expectation of requiring further payments from the sponsor employer from Alumasc on or before 2030. I will pass back to Paul now for the divisional review.

Thanks, Simon. And I will start with Water Management, which is our biggest division. The revenue declined here by GBP 6.9 million, of which the CLK project represented GBP 5.5 million. So if we take that out, the decline was in the order of about 5%. We haven't been helped by the Building Safety Act that I've gone on a bit about today. And then the budget didn't really help us, especially when it was delayed by a month. The U.K. market as a result, was subdued. On the more positive side, our exports, excluding CLK, were encouraging. We had a 24% increase in those. And to give you some examples, we supplied into a Slovakian NATO air field with slot drain at Sliac Airfield, Huelva port in Spain for slot drain, Bangalore Airport in India, Suape Port in Brazil. Those who follow us may know that we won that Brazilian project around a year ago, and it was worth around GBP 0.5 million. So these are further products going in. Those are actually separators. And then we also had Western Sydney Airport in Australia for slot drain. So encompassing quite a few parts of the world there, and there's more potential, which I will come on to. The underlying profit was GBP 1.5 million, and we took the opportunity of taking GBP 1.1 million of annualized cost savings out or we made cost savings and took those costs out, and those will be implemented from H2 with the actions already been taken in the final quarter. There has been a strong momentum in our order book and the opportunity pipeline, which will again come on to. And there's an example here of the rather beautifully manufactured precision-engineered F900 Access Cover that we've moved manufacturing from our Dover plant into Halstead, which came with the acquisition of Wade a few years ago. And it's quite interesting because certainly, Heathrow have very much liked the quality of this product. There is no lead that's being used as an infiller here. And actually, now we're manufacturing. We're putting components on shelves and then pulling them off. And it's giving us an advantage in being able to supply these products very quickly and assemble them from the components that we've already manufactured. So that's been a really good move. We've also launched a new facade rain screen. I've got a separate section on new products. I'll cover that one there. And then I touched on the 2 appointments in the senior management side, 2 MDs that we brought into this division. The order book at the end of December was actually 53% ahead of the prior year. So that's quite significant and 63% ahead of 2023. So I'll move now into the second division, which is Building Envelope and Roofing. And actually, the performance with the revenue down 6%, profit -- underlying profit down 25%, belies the actual performance here where they did very well in developing some blue-chip customers, including Waitrose and work with BT. These have got very large property portfolios in the U.K. that require refurbishment from time to time. We supplied Hinkley Power Station, Manchester University with the start of a project and there's further to come there, various health care areas, as I say, Hinkley Power Station. So some quite big projects in here across both the private and public sector, a high level of activity. But once again, the Building Safety Act interfered, I'm afraid. Don't get me wrong, we're very much for the Building Safety Act, but it's just the way it's been implemented that has given problems to really contractors and ourselves. But coming into late quarter 2, we found revenue and order intake improved. We've been continuing to grow our market share because of the outstanding technical support that we give. We've been also benefiting from increasing regulations and sustainability requirements. And in addition to the blue-chip private landlords and the public sector demand, we've also brought in a new product. This will be featured, and I'll show you this in the new product area, but it's Aluply under our brand actually, and they were very good at getting a top product and a top manufacturer to supply this product as an own label for ourselves. And our order book at the end of December was 12% ahead of the prior year, 38% ahead of 2023. So moving in the right direction. Now I'll move into the third division, which is Housebuilding Products with the brand Timloc in there. This was the [indiscernible]. This was, in my view, an astonishing performance where it grew its sales, it grew its profit to GBP 2.2 million. And this is against a very difficult housebuilding background where volumes have not really recovered very much, but it has a fantastic outstanding customer service and competitor supply issues also benefited it. Its OTIF was 100% again. It delivers next day. And it's launched new products. As a matter of fact, the one launched a couple of years ago in InVentive, we now reckon has got about a 12% market share. This is a tile vent going through specialized roofing products, merchants but ending up on a house. And this has helped to plug the shortfalls from the reduction in the marketplace, and they've also taken market share and they've had further trading agreements signed. We've had to invest in a further 1,000-tonne injection molding machine to improve our capability, and we've had to extend the building there slightly. We have a new product, which is the new Loftite loft door, and we have around 30% to 35% of the U.K. loft door market anyway. But I'll come on to more detail of that and how we think it's going to be a winner. We're well positioned to support any demand recovery. We have a focus on sustainability, which supports the drive for lower carbon homes. And we will continue to launch new products into the new financial well into 2026 as well. Significant capacity for growth. We estimate 40% to 50%. And actually, with the injection molding tools, you can add cavity. So in other words, if you've got a 10 cavity wire, you might make that into 15 or 20. It's not infinite. You can't go to 100 easily. But there are things like this that can also help our capacity so that out of a bang on the equipment, we can get more products coming out. So significant capacity there for growth. And just to remind ourselves, Timloc doesn't have an order book because it's straight in straight out really the next day, and that's where it wins its business. Okay. So let's have a little look here on Page 19 at our order book and the opportunity pipeline. We haven't really talked about opportunity pipelines much in the past, but we think this is a good moment to come into this. And actually, if we look at the order book in the top right-hand area, the numbers in white or visible, you might say, background there, our CLK, and you can see those coming down from GBP 7 million to GBP 1.7 million in 2025. Meanwhile, our other general orders, and bear in mind, this is Water Management and Roofing only moved from GBP 8.9 million to GBP 12.8 million there. So good movement, good strengthening there. And then our opportunity pipeline, which we estimate to be GBP 188 million at the end of December 2025, with 75% of it specification backed. You can see with GBP 59.8 million coming into '26, GBP 73.3 million into '27 and GBP 54.4 million for FY '28 and beyond. And then on the left-hand side, higher up, we're showing the comparators, excluding the CLK of the order book versus the prior years. So looking quite strong coming into H2. We've got the CLK final phase of GBP 2 million orders already in. We're ready to go. And then we've got the start of the Changi Airport project that was in total, at this stage, GBP 2 million. So let's have a look at the U.K. opportunity pipeline at GBP 145 million here. And you can see it's quite well spread across private and public sector areas. We've got defense driving some of that public, the 3% GDP that's going to be spent, health, education, prisons, energy generation and data centers, transport infrastructure. So it's a quite reasonable spread here of opportunity. And yes, we're going to win a good proportion of these. And then moving to the next slide, this takes us into the export area. And our traditional areas of exports have been in Asia, Chek Lap Kok, Singapore, et cetera, in the Middle East. And there are 2 big airports that are coming through in the Middle East over the next few years, King Salman Airport in Saudi and the UAE have got an equivalent and these could have 6 to 8 runways, very big airports. And then if we move fully to the left-hand side, we're describing it as Americas, but it's really Latin America. And we've moved in there in the last couple of years with this win, particularly in Brazil from a chap operating -- one of our salespeople operating out of Bogota in Colombia. It's also covering Colombia, Mexico, Costa Rica, Peru, Chile and unearthing of some good opportunities there and further ones in Brazil, Sao Paulo area, et cetera. So we're quite excited about the opportunity there, moving across into the next area, which is Africa. In West Africa, particularly Nigeria, there are good opportunities there. It's a Petrodollar state -- country that's quite wealthy and Senegal in French West Africa, their ports are available. Nigeria would have airports and ports that give opportunities. So the evidence is that you put the people in, you put the salespeople in and with our good products, our good technical support on -- particularly on Gatic covers the slot drain and particularly into airports and ports, then we are starting to win some additional business. And that's pretty exciting. It really is very exciting actually. So we have and we will be investing further into our sales teams for exports in the second half year. Now let's go on to NPD, new product development. And we've got in facades on the left-hand side, Water Management. These have only just been launched. The BBA-approved CWCT, that stands for Center for Window Cladding Technology, weather tested, ready to go here, marketed under a strong brand that we have called Skyline that's already covering copings and fascias. We won't be installing, but we will be supplying, and we will be in combination with market-leading bracketry partner there. So we're quite excited about that one, and we are ready to go. And then in the middle, Building Envelope, which is roofing. We don't manufacture, but we are bringing this in from a very reputable supplier under our own brand, which is great under Aluply. We have cost and performance advantages, the highest level of European fire safety classification and warranted up to 25 years, and this is suitable for new build and refurbishment projects. And then finally, on the right-hand side, we have this Housebuilding Products, new loft door that exceeds the requirements for L1 and L2, et cetera, has 2 seals for maximum air tightness. Now what is quite interesting here is that it has a patent pending situation on the fitting slots that allow rapid single-person installation. And that is important for housebuilders if they can have these products installed by just one person. So we're quite excited about that. There is some good interest as we look to, again, get this product going. We've only just launched it. And if I may, I'll ask Simon to cover the next slide on championing sustainable building products, please.

Thank you, Paul. Important part of our growth story are the target markets that we look to sell into. Over 80% of our product portfolio addresses markets with long-term regulatory and environmental growth drivers. And these cover building decarbonization, improvements to a building's energy efficiency, primarily through improved insulation, managed ventilation, but also through facilitating solar power generation and even CO2-absorbing membranes. We also improve building climate resilience with products that manage urban rain and storm water. And we help provide urban green spaces, which reduce habitat loss and improve biodiversity in the build environment. And we continue to see strengthening demand tailwinds in these growth drivers despite the recent market disruption. Back to you for the outlook, Paul.

Thank you, Simon. And we're on our last slide now, which is the outlook. We had a resilient performance in H1, and we're on track to deliver on the full year expectations. We have a strong order book and pipeline with growing momentum. We've restructured the cost base in Water Management. We've strengthened the management team there. We expect GBP 2 million to come in for the rest of the CLK project, which will be shipped in H2. And we have the first call-offs coming in from Changi Airport. There are some early signs of improving business and consumer confidence, evidenced by that RICS report in December. And any interest rate reductions, which have already happened to some extent and further ones will assist and also getting the BSR/NPPF reforms in place will help unlock latent demand later in the year. Now in terms of medium-term potential, we believe that's significant because of our significant end markets -- diversity of our end markets rather and also the export potential. We have a strategic alignment with the shift to sustainable construction. We like to innovate with products, and I showed examples of 3 that are coming in over just a couple of months period. We have an experienced management team. We have best-in-class service. We have operational excellence, and the Board remains confident in the group achieving its full year forecast. We're also well positioned to deliver substantial shareholder value as markets recover. So that's us. Thank you. I think we have a couple of questions, do we?

[Operator Instructions] I'd like to remind you that recording of this presentation along with a copy of the slides and published Q&A can be accessed via investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.

Thank you very much. So first question, Paul, is, can you talk a bit more about the international opportunity? And is this just focused on Gatic or other brands, too?

Okay. Good question. Yes, I covered that quite a bit, I think, on the Slide 21 on the export opportunity pipeline and really our plans in that area. But it is to keep hiring people in different parts of the world because I'm so excited from what we did in Colombia and bringing that salesperson in who's been so successful. And we will be doing that in other areas of the world. And it isn't just Gatic that we're promoting out there. There is somewhat of an opportunity as we use our EuroRoof brand on roofing. For instance, as data centers pop up in colder parts of the world like Finland, we're not restricted from exporting our own brands, whereas we would be with some of the other brands that we are using and importing such as Derbigum and Hydrotech, where there's a limit mainly into U.K. and Ireland, so -- Southern Ireland. So therefore, we won't just be Gatic. We will look at opportunities for EuroRoof, which is an interesting brand name because it came with a company we bought around 40 years ago and the contractors certainly in the U.K. are aware of that name. And we've now used it to bring and use our own products, our own branding really. So we have full control of those products and those brands. So it's an exciting area. And as you saw, we've grown by 24% in the Water Management division with our exports in H1. And we've just won Changi, which is very exciting, Changi Airport in Singapore, and that will lead to further business that, in effect, will replace the Chek Lap Kok, we anticipate project. Thank you.

Thank you, Paul. The next one is what is the 5-year value creation story from here? How will you maximize shareholder value? I feel I can cover that, Paul.

Do you want cover that?

Well, we do have ambitious plans. Over that sort of time frame, we'd expect some market recovery. We believe volumes in our key markets are still 15% to 20% below pre-pandemic levels. So over that time frame, we would expect some cyclical recovery. We also expect Alumasc to outperform that market recovery. We have markets with long-term and progressive environmental and regulatory growth drivers. We will leverage our spare capacity and the investments we've made and we'll continue to make in capability. And we've got a lot of export opportunities that Paul has just spoken to with the sort of large project specification-led approach that we have, there's a circa 2- to 5-year lead time. So you reap now what you sowed 2 to 5 years ago. So there's substantial opportunity there following the investments that we have made and will continue to make in technical sales capability. We expect margins to grow into that 15% to 20% range over that time frame. And we will expect to have done some bolt-on M&A. We have a good track record of creating value and accelerating strategy through acquisition. So hence, our statement that we're well positioned to deliver substantial shareholder value over the medium term. What is management and Board stock ownership like? Will you be buying more given the current share price? I can, well, comment on that briefly. About 5% of the company's stock is in management hands. It's something we encourage through stock ownership schemes, share retention guidelines. It's good practice to align the interest of management and shareholders. Second part of the question, would I buy? I'm not in the business of giving people investment advice. But I will always be a net purchaser regardless of price. I think it's -- as a director of a publicly listed company, I think you want to be holding a substantial part of your own personal wealth in the company's stock.

Yes. And I'd like to feel that I've tried to set an example there. My shareholding isn't just from LTIPs, et cetera. I have bought quite a number of those and had to rebuild a bit after a divorce 12 years ago. So I've used bonuses, et cetera, to try to buy shares along the way.

On the opportunity pipeline, what would you class as medium term? So I think opportunity pipeline, I think probably most of that is things that we're aware of and are coming. We've either tendered on them or in the process of tendering for them or we are aware that they are about to come to tender. So I think most of that is short coming into medium-term opportunity. There will be some out there that get into the medium term. But equally, there's ones that will drop into the opportunity pipeline that I think aren't yet out there but will be in the next year or 2.

Agree with that, yes.

What's the manufacturing capacity level of your product production? I think you covered Timloc, Paul.

I did. And we've probably got around 1/3 to 50% that we could call on. We're not running 24-hour shifts. We're not running across weekends. And we do flex quite a bit, for instance, at Gatic and Wade when we get a good order book of slot drain in a month, we'll bring temps in along the way. So I would say we've probably got 1/3, yes, 33% to 50% that we could call on fairly readily.

Is Alumasc considering doing any bolt-on M&A? And what sort of areas are you looking at?

Do you want to comment on that?

Sure. Yes, it's definitely part of our strategy. We are -- I guess the key points are we would look to be in areas we currently know well or adjacent ones. We don't want to buy something we don't really understand. We want something that we believe that we can grow and/or bring synergies into the group. Bolt-on for us is probably in the GBP 10 million to GBP 15 million consideration range. And I think we're sector agnostic. We're division agnostic. I think we would consider the right acquisition if it came along, it wouldn't matter whether it's Water Management or Building Envelope or Housebuilding Products. If it's the right acquisition, it's the right acquisition.

Agree with all that.

Were Timloc prices increased this year? And how did this contribute to the revenue increase? And what was the volume change year-on-year? I don't believe Timloc prices moved significantly. If they did maybe 1% or 2%. So it wasn't a big part of the year-on-year revenue increase. And you can see that from the volume -- the drop-through into profit and the further accretion in the operating margin. So substantially all of that was volume change, I think.

Yes.

Do you see any opportunities within Water Management for projects in the water sewage industry sector with the extra funding that's going into that sector to 2030?

Yes. We have looked to that area in the past, mainly with Gatic and Wade on the sort of dirty water side. And at the time, it was fairly well catered for. We did try to make an acquisition that didn't come through in the end. But it's an area that we will be considering, but I can't really comment further than that. And I think my successor will have some interest in looking at that, too.

How do you sell to foreign accounts?

Okay. Good question. Mainly through distributors. We're very keen on having the local presence. We understand the culture and how the markets work. And that would be an example, for instance, in Singapore, where we're selling through a distributor there. So generally, it would be through a distributor, not an agent. There are complications with agents. So we tend to avoid those.

Okay. Your margin is so much higher than like-minded building product makers. It can't just be the service. What is the secret sauce?

Well, we're very focused on it, and people are very accountable for their margins. And we've been targeting that 15% to 20% bottom line margin across the group over the last 5 years. We were at about 8% or 9% if we go back 5, 6 years ago. And we've set our store out to get up to that level. And it's not been easy to do that, but we've done it through some operational improvements by moving, consolidating some of our facilities, by ensuring through each Board meeting every month that we analyze what have been the cost increases that have been incurred, what have we been able to pass on in prices and actually being the #1 or #2 player, as we are in many cases, has allowed us to successfully move our prices on when we've needed to. And at the same time, giving a good customer support is very key to differentiate ourselves and to really have our brand strengthened. It's a very key thing to have a brand that people want to buy. And you mustn't be complacent. You've got to continue to really give a great service to customers, and that will include technical support along the line. And so it's been a combination of those events and particularly operational efficiencies. For instance, Timloc. How do you get 26% as the bottom line? Well, you operate very efficiently. And that's a very automated plant and a very good management team running it. And you make sure you don't get caught with costs that you can't pass on. It's very important that you give -- you pass your costs on and that you give an outstanding service. So I think that's probably all I can say on it.

I think down to the last couple now. Can you clarify your dividend policy? I'll have a go at that. We have a progressive policy, which means that we would expect the dividend to rise in line with earnings or rise as earnings increase, I should say. We would look to distribute or maintain dividend cover of between 2.5 to 3x. And that's based on earnings, but obviously, cash flow is important. But over time, we normally expect cash flow and earnings to move alongside each other. And then just a couple, which I will summarize together. Thank you, Paul. Wish you all the very best as a long-term shareholder, I appreciate the leadership and service.

Well, that's so kind of you. Thank you very much. Thank you for your support as a shareholder, too. So we couldn't have done it without our shareholder support, too.

Which probably leads quite nicely on to the wrap-up.

Yes. Thank you, Simon. We've had a tough H1, but we are on track to deliver on the full year expectations. We are also well positioned to deliver substantial shareholder value as market recovers. So thank you very much, everybody, for attending today and for your support and for your very good questions, too. Thanks all.

Paul, Simon, thanks for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Alumasc Group plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.