Vp plc (VP) Earnings Call Transcript & Summary

Good afternoon, and thank you who -- to those of you who are joining us today to hear from Vp plc, who announced their interim results yesterday. We're going to hear this morning from Neil and Allison, who are going to run us through the presentation, and at the end, there'll be an opportunity for Q&A. So without further ado, I'll hand over to you, Neil.

Thank you, Hannah, and good afternoon, everybody, good afternoon. Yes, we're going to take you -- I will take you through the highlights section and also the market trading review, and then I'll hand over to Allison, who will talk to the financials for the 6 months. So moving on, in terms of highlights, we do expand on all of these points throughout the presentation, but in terms of the highlights, the results, we see these as market leading profit margins that we've delivered in the 6 months to 30th September 2021, and therefore, very pleased with the quality of them, the results. There's been a strong recovery in trading, and that's catalyzed profitable reinvestments into our high fleet. We've seen an excellent performance, which has largely been driven by, for the most part, in the Infrastructure segment, but as I'll explain later, not all of Infrastructure and also a buoyant housebuilding market. Elsewhere, overall demand in commercial construction and civil engineering has been solid, but not particularly strong. The International division had a stable 6 months. We've made substantial progress in ESG initiatives across VP with a new road map to net zero. And we've focused a lot of capital investment in new fleet, which has been heavily focused towards eco-friendly solutions. Current trading in the business is positive and in line with our expectations. Final highlight is the restatement of a progressive dividend policy reflecting confidence in future trading and the declaration of an interim dividend of 10.5p. The headline numbers, we reported revenues of GBP 176 million, which is 24% ahead of the prior year, and the recovery has been maintained. Profits of GBP 20.2 million were very good and a material improvement as well, and also importantly, much improved margins. Return on average capital employed, for those of you that know us is the key measures for VP, that's back up towards our target level of 13.5%, and it's pleasing to see earnings quality return as quickly as it has done. Net debt increased by just over GBP 10 million, but that's after spending GBP 32 million on new fleet in the 6 months. Just 2 -- the next 2 graphs are a reminder of the long-term growth trend that we have within the Group, which has clearly been impacted in the recent times by the COVID pandemic. But I think it's important for observers to see how strong our long-term growth trend is. The interruption of that started in full year 2020, which is year-end in March 2020, where the March trading was very impacted by the start of the pandemic. We then -- the full year 2021 includes the worst that [ we note ] of the pandemic scenario. And what we've shown in the final column is the consensus between our 2 joint broker, Cazenove's and Berenberg of revenue recovering to circa GBP 355 million in the full financial year. The second graph and perhaps even more importantly, is the profit graph, which again shows similar trend, good profit growth interrupted by a very disruptive year last year and with an expectation that we're recovering a significant proportion of that shortfall in the full year. On to market and trading, the core markets slide is important one in understanding, where VP are. We have seen not too much change in this over the last few years. Infrastructure market represents about 40% of our Group revenues, and Construction, a very similar figure and another [ 40% ] effectively. All markets grew, which you would have expected, as the -- as things improved, but within those markets, there were some different dynamics happening. So within Infrastructure, which we -- is generally defined as regulated markets, we've seen a mixed recovery. We've been very busy on HS2. We've also had good revenues from the transmission sector. But by contrast, 2 other very large regulated markets, which we are major suppliers, the AMP water market, the AMP7 program and the CP6 rail program have both been slower to pick up than we might have expected. So we see that with the HS2, we see that's continuing and we've had good activity in that area and that's something that will continue. We hope that the AMP program will pick up, if not in this financial year certainly materially in the next financial year. The rail market, we've already shown -- seeing some signs of improvement. In Construction, again, a mixed message there. We've got construction, RMI, so the repair and maintenance has been very strong, and we've benefited from that. But I think they will lack confidence in private investments in speculative construction has held back the new build area of construction market. And that's another area of potential improvement for us going forward, but not been more [ GDP rather ] business sort of economic confidence led rather than regulated, that may take longer to come through. Housebuild has been excellent. Sustained demand in the Housebuild sector. We see that continuing in the foreseeable future. And in Energy, we have seen positive activity on onshore rather than offshore in terms of maintenance activity. So overall, our core markets are recovering, but there's still a lot of potential to come. The Group figures, good revenue growth on COVID-19 [ year ] of 24% and also a significant improvement in profitability, which has more than doubled. Margins at 12.8%, I think, very good and heading back towards, where we were pre-COVID. I made the point that incremental revenue conversion, the drop through from that incremental revenue is effectively, it's a margin of 35%. So it's very much about understanding the operational gearing effect of a business like ours, which has a lot of fixed costs and latent earning potential in its fleet, if we can put more revenue, as markets grow, then the conversion to profitability can be disproportionate in our favor. And finally, the strong performance for the year with potential as other markets achieve fuller recovery, we hopefully will be able to deliver further progress going forward. The U.K.'s division is effectively the engine room of VP. It's by far the larger element of our operations, and we've had a very good first half in the U.K. I think that the revenue growth of 25% maybe might have been expected, but we've been able to deliver that convert [Technical Difficulty] into growth and profitability and margins at 13.6% are certainly very close to where we were pre-COVID. So we've already installed the quality of our revenue streams, even if we haven't fully restored our revenues to full pre-COVID levels. I've talked about the markets in the core sector slide, in terms of the influence on the U.K. business, the HS2 activity has been beneficial to our TPA, Groundforce and our ESS businesses, in particular, with good demand both on -- both the enabling and the construction phases of the HS2 program, which is of long-term in nature. By contrast, AMP7, which is the 5-year water investment -- capital investment program, that started in April 2020. We've seen very little growth in that so far and we're hoping that, that will start to pick up in the new financial year -- sorry, in the new calendar year and heading into the new financial year. It won't be a step change in activity. It will be a gradual buildup, but that's an opportunity for us. On CP6, which is the rail industry's long-term investment program, that was also -- was a bit slow in the summer than we might have hoped for. The activity in contrast, [ Torrent ], we have seen rail activity pickup in the second half of the year already, and Torrent, in particular, have been very busy working on both the East and West aspects of the Transpennine upgrade and we've got a confidence of further growth in those markets in the new calendar year. Moving on to construction, the RMI, the repair and maintenance activity has been very good, in particular, for our Brandon and MEP businesses and that's something, which we see is continuing. Again, in terms of weaker, but equally potential opportunity going forward. The new build market has been quieter and major projects has been less, and that's produced a subdued civil engineering market, which, in particular, impacts the rate of growth in our Groundforce division. In Housebuilding, it's been a busy sector, very good for U.K. Forks. There is -- it's a rare time, but we've seen demand is outstripping supply in that sector in terms of the U.K. Forks products at the moment and lead times. The reason for that is lead times for new equipment stretching out as far as 12 months, although we have preordered our requirements, minimum requirements for the next 12 months anyway, but that's creating a very busy rental sector supporting an absolutely [ non U.K. ]. And then finally, we -- as we've reported last year, we made a lot of cost savings in 2021 during the COVID pandemic and those cost savings, I'm pleased to say have been materially maintained into 2022, and are undoubt -- that is undoubtedly a factor in the recovery in operating margins so quickly in the first half of this year. Moving on to International. International is much smaller. It's been disproportionately impacted by lockdown action in all the jurisdictions within which our International businesses operate. So we have seen lockdowns in Australia, New Zealand, Malaysia, Singapore, they've affected both our TR and our Airpac business. So this pace of recovery, particularly in profitability terms there has been less. However, despite the weekends news about the Omicron strain, we're hopeful that clearer waters next year, we'll see both those businesses, lead a recovery back to some normal -- more normal levels of profitability. In terms of rental fleet investment, it was a strong investment period. We spent GBP 31.7 million, which is well up on prior year and probably 3 areas to focus in terms of that. One was the, as I mentioned in the highlights, the investments into improving trade opportunities. The second is, in terms of lead times, so we have to be proactive in making sure that we can guarantee a supply to our customer base over the coming months and throughout the rest of the year. And thirdly, we've also put some anticipated growth investments. So we've invested into some of those markets, such as supporting AMP, supporting the rail sector in advance of that full recovery coming in, and on the basis, we expect those markets to recover more strongly in 2022. I've got a separate slide on environment, but there was a strong emphasis on eco-friendly product substitution and we are engaging with both the manufacturers in terms of new and better and more environmentally friendly and greener products. And we're also engaging with our customers in helping them with the same journey that we are on in terms of trying to achieve [ some ] impact on the environment. My final comment on rental fleet investment is that not only do we spent nearly GBP 32 million in the first half, we also ordered an additional GBP 20 million by the end of September for equipment, they will be delivered largely in the second half, but actually some that may still drift into our next financial year, again, reflects the supply chain issues that we are faced with. So on environmental, we have made a lot of progress in this area in the last 6 months. We've committed to the Science Based Targets initiative as a business, and we have developed a road map in terms of how we're going to approach our response to that initiative. There is a long-term road map, but we -- more importantly, we figure that we should be focusing on the short-term, which is the next 4 years. And actually as an appendix to this presentation, there is a -- we share what our road map looks like as a business. I mentioned that we've been investing into new products in the rental fleet. There is a vast range of those products that have been purchased and are now being used by our customer base. The selection would include solar panel lighting fleet. Our Torrent Trackside invested in the largest solar panel lighting fleet in the U.K. to service their rail customers during the half. We've invested in a huge range of substitutional cordless tools, which will replace tools, which have been diesel or petrol driven for many, many, many years, and that's been a relatively seamless transition, which has been very encouraging. We've also bought electric compressors, electric telehandlers and also electric mini excavators, all of which are growing popularity with our customer base. And finally, we started to operate hybrid service vehicles within the -- within the fleet. So there is a significant emphasis in that area. Other initiatives, we're committed to achieving ISO 50001, which is the international energy management standard. This creates the framework around which we will build our environmental response. We have some good examples of water recycling at certain depots. We're introducing solar panels into some of our [ largest ] sites. We are 95% users of renewable electricity and the -- is now -- there is now a hybrid car offer within the company car fleet. Another element is biodiversity. We've invested into 3 nature conservation projects in the last 6 months. We are delighted the Yorkshire Wildlife Trust, Nottinghamshire Wildlife Trust and the [ Floor and Floor International ], and these are aimed at people, restoration, [ rewinding ], reinstitution of meadows and also marine conservation. So some important -- is a important -- small important contribution from us. And pleasingly, there are colleague engagement opportunities within the -- our employees. It's probably important to point out that a lot of our existing equipment, whether they be aluminium, portable roadways or steel shoring or aluminum tower in our tool hire business, MEP, they are zero emission at point of use. So yes, there is -- there is output environmentally on the making of the metal. But once we have that product, there's -- there are no engines, there -- there is no fuel usage in that. And my final point is even more fundamental that we believe that rental as a concept has very strong eco-friendly credentials in that. We optimize shared -- the usage of shared resources. So our existence allows all our customers not to all have to earn one each. They can share the usage of that buyers maximizing the utilization [Technical Difficulty]. So -- so that's our environmental initiatives for the year. My final slide before I hand over to Allison, is on outlook. We continue to deliver market leading quality of earnings. You've seen the slides that I've shown on revenue and margin. Allison's got a slide on return on capital, you know, these are very good performance metrics for us. We anticipate an acceleration of AMP7 and CP6 activity, which will provide large opportunity to us. The only slight doubt is whether that's going to be in the next 3 months to 4 months or whether it's in the next 6 months. And then there's further upside if and when the economic and business confidence grow sufficiently to allow an acceleration of commercial new build investment, which is also -- also going to be a useful benefit to us. I mentioned the HS2 already. It is a long-term opportunity. Our engagement with housebuilders is the -- it's -- the next 2022 is going to be just as busy as 2021. The sustainability initiative on environment I talked about is understood across the business. It's become part of our day-to-day language, which [ in fact ] it wasn't a couple of years ago, and it is providing vital customer support. Investments in technology has remained strong. And we have been always continuing to introduce digital solutions, both for our customer base, but also in operations alike, so to better and form our own teams within the business. We have also revitalized our learning and development initiatives as a business, investing in our people. We've -- had a new intake of engineering apprenticeships, but we've also opened up in terms of sales apprenticeships and LGV driver apprenticeships this year, adding to which we had another intake of graduates in September. Prospects in the U.K. and International divisions both remain positive. I think the combination of our financial strength and the exceptional team of people around the Group, and with all those experience and knowledge, we will deliver results going forward, and we remain confident of reporting another year of tangible progress in the [ eventful ] year. So that's all from me for now until Q&A. But I'll hand over to Allison, who will talk to the financials.

Thank you, Neil, and good afternoon, everybody. So my first slide is the financial highlights, which serves to recreate some of the points that Neil's made and the fact that we've had a strong and continuing recovery in the first half of this financial year. Revenues were strongly ahead of the prior year. They were up 24% to GBP 176 million. And profit before tax and amortization was up 135% to GBP 20.2 million. This reflects the fact that some of our businesses are actually trading ahead of 2020, which we take to be the pre-COVID year, and others, [ that ] aren't in that position because of the cyclical nature of Infrastructure and some of the supply chain constraints that Neil has outlined. Flipping on to a slide on dividends and what this slide sets out to do is to show the long-term view of our dividend and that we have for the past 10 years or always really, implemented a progressive dividend policy. We've declared an interim dividend of [ 10.5 pence ] per share. And you'll see that last year, FY '21, we didn't pay an interim dividend, that was due to the uncertainty around COVID, but in the previous year, we paid -- paid [ 8.5p ] per share interim dividend. So the [ 10.5p ] is a significant uplift in that. And what we're trying to address in that is twofold. The first is that we want to go back to more 1/3, 2/3 split between the interim and the final dividend. And also, we've noted, certainly on the time period of this chart have been well ahead of the 3x dividend cover, which well ahead of our 2 to 2.5 stated policy on dividends. So the increase is signaling our intention to move back to the 2 to 2.5x dividend cover. Key points about our business is that Neil's already outlined the quality of our earnings in terms of revenue and profits and margins, but we also look at the return on average capital employed. And again, hopefully, this chart will illustrate the fact that we've delivered strong return on average capital employed throughout the duration. We target 15% return on average capital employed throughout the cycle. And you can see that COVID did impact this, bring this down to 9.2%. We've now recovered at the half year to 13.5% and I would intend to get back to where we were previously. And this number is still well ahead of our weighted average cost of capital, which is 8%. We have a strong balance sheet, and you'll see that hire fleet is GBP 213.7 million. This has grown year-on-year. We have a young and well managed fleet, that's one of our key attributes, where the average age of the fleet is about 3.5 years. We've grown the fleet in the period, and that resulted in an increase in net debt to GBP 131.7 million. These kinds of uncertainty always makes sense to keep an eye on debtors, and we -- I'm pleased to report that actually our debtor days are in a healthy position than they were in half one 2021. And our bad debt write-off, as a percentage of revenue has remained at similar [ level ], just slightly lower than it has been for the last 18 months, although we will keep this under review, as perhaps there is more of a risk, as we get into to a stronger recovery period and maybe some businesses that we deal with would start to help [indiscernible]. Cash flow generation, we are a strong generator of cash. As I previously mentioned, we did have a cash outflow of GBP 9.8 million in the period. This was driven mainly by the strong capital expenditure that we put into the business, partly, that was to meet demand, and partly, as Neil has already mentioned, skewed towards environmentally friendly assets and also to manage in [ advance ] to deal with the supply chain issues and longer lead times for our [ projects ]. Net debt and facilities, you can see from this slide that we have generous headroom against our facilities, so we had GBP 59 million at the half year. We put in place a refinance in the first 6 months of this calendar year and that's resulted us -- in us having long-term debt. You can see that we have GBP 93 million, which is [ 6 and 7 year ] money on a private placement, and then, we have GBP 90 million in -- on RCF, which is -- expires in June 2024. So it's fairly long dated, like long dated. And the RCF also includes GBP 20 million accordion. So in addition to the GBP 59 million of headroom we have to allow us to grow and recover. We also have the accordion. And my final slide is that in our facilities, we have 2 equivalents, EBITA interest cover has to be greater than 3x, and you can see that -- which consistently been well ahead of this. And then net debt-to-EBITDA has to be less than 2.5x, and again, we're well within that range. And that is the final slide for me. So I think I'll [ cease ] sharing, and then, we can do the Q&A.

Thank you very much to you both for that helpful run through the presentation, and we've got a number of questions. Are you still comfortable with the 14% margin target by March 2022? And what do you hope the margin will be for the full year '23?

I think that -- I think we would be comfortable with the margin for the full year at this stage. What we do know is that H2 is always -- tends to be slightly quieter than H1 in total activity terms because of December and January being shorter months. But the overall quality of the revenue should hold up -- should hold up in those -- in those lines. In terms of improving the margin further, hopefully, that will happen. And as I said on one of the my slides that the operational gearing of the business should assist in that regard. But to be quite honest, the main driver for us is about return on capital. So the most important thing for us is that we may said, well, we maintain, continue to close that gap, but that's quite small now, but Allison referred to in terms of getting back to the sort of return on average capital employed that we target through the cycle. And again, that I think is going to be our more likely aspiration, if you like, into 2023, is that we can continue to invest in the business, continue to grow it, but more importantly, make sure that we don't dilute the quality of the earnings that we're already getting. And I think that's a realistic ambition. Some of our businesses are operating at full tilt at the moment. They're ahead of pre-COVID and that we're investing in those businesses and growing them. Some of our businesses have got spare capacity. They've got equipment that can be used, which we're already invested in. And that, if you like, is a potential free go once some of those markets I referred to that are not opened, reopened yet, reopened. So I think that would be my take on that. I don't know that Allison has got anything to that.

No. Okay. I mean, you addressed it well.

No. Okay.

Thank you. Well, perhaps then in terms of how you flex in terms of capacity demand, do you rent -- do the rental prices vary on demand?

The -- well, they do -- they do in the long-term, but not necessarily in the short-term. So it's not a dynamic pricing model on a daily hourly basis. But what we have seen, unusually, I think, in the last 6 months, 12 months is the whole range of pricing in the market, so we've got businesses where we have [ invert ] quite material price increases and improvements because we need to or we can. And then, we've got other parts of our market, which are less busy, where price competition remains very acute and you -- and we've got everything in between. So typically, with larger customers, we will have long-term pricing agreement, so we will review pricing with them on an annual basis, and we will flex those prices dependent on circumstances. For smaller to mid -- medium sized customers, there isn't that discipline, if you like, of annual review. So that's -- that's a more dynamic pricing environment.

Thank you. Okay. Brandon Hire, obviously a big acquisition for VP. How do you feel it's going in terms of the benefits starting to show through?

Yes. We're very -- well, we're extremely pleased with the Brandon Hire acquisition. I think as we've said in previous presentations, the execution of the bringing together of 2, successful tool hire businesses into a consolidated Brandon Hire station, I think the execution that was by the management team there was excellent. And we've got a very well organized, well put together, single business, which is now the largest tool hire business, pure tool hire business in the U.K. with 160 branches across the country. In terms of the revenue synergies, if that's the right phrase in terms of growing revenues, as I said in the core market slide, some elements of construction are a lot higher than others. So whilst we've been very busy in Brandon on certain aspects, the construction market, there are other areas, where we are waiting for that, if you like [ for a ] better phrase, we'll wait for that to come through. And that provides the further growth for Brandon going forward. But Brandon has had a good first half, they're ahead of their -- they're ahead of their targets for the first half of the year, and I'm sure they'll continue to deliver in that way. So we're very pleased with that. I think one [ side ]comment on Brandon, we pay, I think we paid GBP 68 million to Brandon. We leveraged our borrowing, which Allison was talking about to over -- we spent -- we -- I think at peak, we [ were at ] GBP 200 million of debt.

Just over 2x.

So basically, we paid for Brandon now. [ This ] our debt is now GBP 130 sort of million. So in our eyes, the Brandon acquisition has been absorbed with all the reinvestment in all our the divisions, et cetera. Despite that, we've been able to pay down all the debt that we took out by et cetera. So Brandon has now paid for us as far as we're concerned.

Nice position to be in. Excellent. Are there any plans to start a share buyback to close the rating gap on other peers, especially as VP is tightly held and volumes are light.

I think the short answer is no. There aren't any plans to do a share buyback. We did do one about 10 years ago and that was more because we felt there was an opportunity to do a buyback, which is going to be beneficial to both shareholders, who wanted to stay and also gave an out -- [ way out ] for the people, who wanted to sell those shares. From memory that and I -- I, it's dangerous I quote a number from memory, I think the price is about 240 pence. So that was -- it was a while ago. But if you look at where the share price is today, that look like a beneficial move both for the shareholders that stay. It gave the shareholders that wanted to cash in a way out and it also the beneficial impact on the share price. We do have debt capacity, which is waiting for us to use, where we are I think, much more attuned to being imaginative about how we mobilize our investments in the business to grow. The return on capital employed graph in a way is the important one, that we -- if we can make returns of 14%, 15% and effectively, on a weighted average basis borrowed [ 8 ], then the very best way for us to reward shareholders, arguably, is for us to just keep investing more capital and returning 14%, 15% return on capital employed, so that…

Okay. No, well, a clear analysis you can give us. Thank you. Is VP size and early embracing of environmental practices and products, given you a clear differentiator versus competitors?

I don't think it's a particular advantage in terms of our immediate peers in terms of size. I think we're all engaged, which is a good thing. We're all engaged in the same sort of themes. We're all trying to introduce better greener products. I think that it's arguable that we -- that the larger businesses may find it easier to comply in terms of the cost of that switch, but [ it's ] smaller businesses may find the switch from -- if they're finding that they need to shorten the lot their typical working line for the fleet, which is diesel or petrol generated, for example, to transfer it to a battery-operated equivalent. There may be some limiters to that. I think the -- perhaps the more interesting angle on that is that 20-odd years ago, the construction industry was smitten with some very strong health and safety legislation. And I think without a doubt, that was a -- whilst I think everyone was scratching around saying, well, that's already irritating, there's all sorts of traditional ways of working got to get out of the window, that as a rental company that gave us a great opportunity. And I think undoubtedly health and safety, which is a good thing, was also been a big plus for us as a Group. So arguably, there's a similar potential scenario on environmental. I don't think it's as big an opportunity as health and safety, but the need for customers to change to greener ways of working, I think if handled properly, will create further impetus for the rental sector going forward. But I don't -- we've got to be smart, we've got to make sure our customers trust us to understand what they are looking for and that we can help them with solutions. And we do -- we said it -- I said it many times, we see ourselves as solutions -- solution providers rather than rental providers. We want customers to ring up asking how that we can help them with a problem. And I see the conversion to -- from an environmental point of view to better and greener solutions to all the customers been yet another area, where we can advise, and hopefully, as a result, give our own business another lift in terms of activity.

Thank you. Your capacity overall, is it less than pre-COVID since your turnover is now 7%, 8% less?

The thing…

You said in fleet.

Well, we don't know. But the capacity in the Group is no less than it was in terms of fleet. And as Allison said, in fact, I think the book value has slightly gone up, so -- and we've invested strongly. So no, I think that the Group is more efficiently set up now. So those areas, where we thought there was -- we needed to sort of improve the structure, we took those opportunities last year. So I think we're well set to take more on board. And I think that there is capacity, both financially and within the fleet to cope with that. The one area, where, which is a constant for us is people. So our people capacity, our ability to deliver is always something that's it's not often talked about, but it's just as important as it's being able to afford to buy the equipment or have the equipment is we've got to be able to grow the infrastructure of the business in terms of management and people at the same pace, as we grow the Group. So that's the -- that's an area that we continue to address. And in truth, it won't be a surprise to people listening, recruitment is much more difficult this year than it was last year or the year before. So that's the hurdle there is a lot higher than it was, but we're addressing that as best we can.

Okay. And perhaps one for you, Allison. Will your fleet disposal proceeds in excess of book value?

Yes. We always make up a profit on disposal of the fleet. So at the half year, it was 41% of profit margin and the full year last year, it was 25%, 25%.

Okay.

And I think that reflects one of -- actually it's not that we see ourselves as good, strong asset managers. So we buy the fleet, well, we manage them and maintain them well, and then, we dispose off them well, as well. But we don't tend to dispose in our own markets. We try and find alternative markets to [indiscernible] our rental [ fleet ].

Okay. Thank you. Two questions, actually, on acquisitions. I mean you spoke there how Brandon Hire has now been -- certainly, the debt has been worked through. What is your headroom like to do something on a material scale? And what is the pipeline looking like?

So headroom on the facilities, that was back to one of my slide. So at the half year, we had GBP 60 million, and we also had the accordion to pull down. So that would have given us GBP 80 million of headroom buffer growth that we're seeing organic as well as acquisitions, as being a route to growth for us.

Yes. Yes. It's [indiscernible]. I mean, we certainly, we've got the financial headroom available, perhaps goes back to the last point about structure. We've got to make sure that we've got the capacity. I think we have got the capacity. We did a small acquisition of a very good business down in the Southeast called M&S Hire, just after the half year, and we were very pleased to make that acquisition. My personal view is that M&A activity will be relatively subdued for the next 6 months to 12 months. And then, I think there might be more activity thereafter. It's very difficult to sort of describe a typical vendor, but if someone is looking to sell their business, if they've got the choice, I would have thought they would prefer to sell have improved and that the COVID year wasn't a typical year for their trading and that they'd like to get another year of perhaps more settle trading under their belt before they put it on [ slow ]. So I think -- I think on that very crude analysis, I -- that's why I think that activity on M&A will be stronger in 12 months' time than it might be in the next 12 months. That said, as Allison commented, acquisitions and organic growth were relaxed either way that both have been very important attributes to the growth charts that we showed you earlier, and that will continue.

And -- another one here on M&A. Well, perhaps you would have covered it, regional M&A, gap filling, I suppose, that speaks to smaller projects. Do you think that and the comments you've just made there regarding equity to sell, is that just as applicable on a smaller regional level?

And I think it is. I think it's a similar, if you're a -- if you're also one, who has got a 20-year established business, and you're thinking about retirement, but you're not -- you don't -- you're not, first, whether it's this year, next year or the year after, and you want to be trying to sell on the up rather than on the down. So I think from our point of view, our appetite for acquisition is in -- just to widen the discussion would be on in the U.K., in Europe and also in Asia Pacific, Australasia, we're not differentiating in terms of where we would look, but we're looking more for adjacent growth to similar customer base rather than necessarily trying to find more dots on the map. So we're more likely to buy specialists, local, regional or national rather than just buy -- because of the specialism, not because of their location, if that makes sense. So -- but yes, I think regionally and still apply that -- my theory still applies.

Best sell into a rising tide.

Yes.

Well, thank you. That is it for the questions. So a very helpful session there, and good luck for the next 6 months, and we look forward to catching up then.

Great. Thanks very much, Hannah.

Thank you. Thank you for [ asking the ] questions. Thank you.

And thank you to all who attended.