Earnings Call: H1 2018

Sep 5, 2018

Good morning, everybody. Welcome to those on the webcast this morning, and welcome to our interim results for the first half of twenty eighteen. Presentation this morning by Peter Tom, Group Chairman Pat Ward, Group Chief Executive and Rob Wood, our Group Finance Director. So we'll hand over to Peter Tong for some introduction. Peter? Thank you, Steve. Good morning, everyone. Thank you very much for coming. It's been well documented by lots of other people that it was a fairly tough first half of the year in our industry with the weather and rising input costs, but we're very, very pleased under those circumstances with what we think is a very resilient set of results. As you know from these meetings, we are very much concentrating on cash. And again, as you look through the numbers, there was a strong cash flow generation in the first half. We've only had the Lagan business for 4 months or so, and obviously, only 10 weeks are in these numbers, but we've been extremely pleased with the way in which we've been received. We now we've got a whole group of new people and colleagues who've joined the business who've been have welcomed us and have put in a very strong performance since we acquired the business. And our colleagues in the English and Scottish business have done very well in very difficult circumstances. So we're pleased with the way the integration has gone, and I'll pass over to Rob, who will run through the numbers. Great. Thank you, Rob. Thank you, Peter, and good morning, everybody. Before I run you through the numbers, I just wanted to explain how we've reported our results for the first half of 2018. In addition to our existing three businesses, Breeden Northern, Breeden Southern and Breeden Cement, We have, following the acquisition in April 2018, added a Lagan Group reporting segment to the group, which contains all of the businesses we acquired as part of that transaction. We anticipate that we will continue to report LAGEN as one segment for the rest of 2018, but that we will then integrate elements of it within our breeding businesses in 2019. As you can see from the financial highlights, it's been another half of progress for the group. We have delivered revenue growth of 16%, underlying EBIT growth of 17% and achieved an underlying EBIT margin of 11.1%. Excluding the impact of acquisitions, revenue and underlying EBIT were marginally down on the first half of twenty seventeen and reflected the challenging market conditions in Great Britain, the severe weather in the Q1 and rising import costs. In terms of acquisitions, LAGEN's performance in the 1st 10 weeks of our ownership was encouraging and benefited from more favorable trading conditions particularly in the Republic of Ireland. Underlying profit before tax is up 15% and more modest underlying basic EPS growth of 7% reflects this, but also reflects the €170,000,000 equity placement we undertook at the time of the acquisition. Lastly, net debt has increased significantly due to the Lagan acquisition being partly debt funded. However, at the same time, after allowing for the seasonality of the business, the group has continued to be strongly cash generative. Turning to the income statement and revenue, which at €378,400,000 was up 16% on 2017. Excluding the impact of acquisitions, it was marginally down. At the earnings level, underlying EBIT, which we cut after the associate joint venture line, of £42,000,000 was up 17% on 2017. Again, excluding the impact of acquisitions, it was marginally down. The increase in interest costs to £4,600,000 in 2018 reflects the high level of debt post the acquisition of Lagan. Non underlying items of £7,000,000 in 20 18, primarily comprised of Laggan acquisition related costs, which included acquisition costs and the amortization of acquired intangibles. Additional acquisition costs of €3,700,000 in respect of the associated equity placement have been taken to equity and debt arrangement fees of approximately £4,000,000 have been taken to debt. In total, the lag and acquisition costs are within the £15,000,000 guidance we gave in April. Profit before tax at £30,400,000 is marginally down on 2017 after taking into account the non underlying items. The tax charge of £7,100,000 reflects a tax charge of 24% and this is the result of the fact that the majority of the non underlying items are disallowable for tax, the underlying tax charge being 19%. This all translated into an underlying basic EPS of 1.96p, up 7% on 2017. Now turning to the divisional performance. Breda Northern's results reflected the subdued markets in which it has been operating. Nevertheless, we supplied several new and existing projects including the final phase of AWPR. Breed and Southern also traded in weaker markets with volumes under pressure particularly in ready mix concrete. The picture, as always, is varied across our regions with busier markets in the Midlands contrasting with muted demand in London and the Southeast. Although revenue reflected the softness of the ready mix concrete market, Breeding Cement delivered a sound performance. In Northern, revenue was up 6% on 2017. Underlying EBIT was down €800,000 or 7% on 2017 and the underlying EBIT margin was 9.5%. In Southern, revenue was down 2%. Underlying EBIT was down £3,300,000 or 15% and the underlying EBIT margin was 10.4%. In Cement, revenue was down 4%, underlying EBIT was up €700,000 and the underlying EBIT margin was 14.4%. As already mentioned, Lagan's first contribution has been encouraging. Lastly, central administration costs for the first half are on track to end the year in line with the 2018 full year guidance given out at time of the 2017 results of flat versus 2017. Turning to our products. As you're aware under the terms of the Cement Market Data Order 2016, we are not permitted to disclose information in respect of cement. In terms of our other products, reported aggregate volumes grew by 17% on 2017. Excluding acquisitions, the increase was 7%. Reported asphalt volumes grew 28% on 2017. Excluding acquisitions, this increase was 2%. And reported concrete volumes declined 7% on 2017. And again, excluding the acquisitions, the decline was 10%. And in terms of pricing, increases by product category were in the 0% to 2% range. Pat will confirm sorry, Pat will comment further on the market shortly. Now turning to net debt. The net debt, which now stands at 383,600,000 has increased by 273,800,000 in the first half and reflects the underlying EBITDA of $66,000,000 the cash element of non underlying costs of 5,900,000 a £31,300,000 seasonal working capital outflow interest and tax paid of a combined £11,700,000 dollars a 10,900,000 CapEx outflow and a net acquisition spend of 281,000,000 pounds this being after the equity issued of 171,200,000,000 primarily in respect of the acquisition of Lagun. And based on the closing net debt of £383,600,000 and taking into account Laggan pro form a earnings, leverage is now 2.3 times EBITDA. In summary, it's been a half of further progress for the group. Turning to the second half and the full year, we believe that the market in Great Britain will remain challenging. Expect market conditions in Ireland to be healthier, but also see continuing pressure from rising import costs. Having said that, we remain comfortable with the current market expectations, which we understand to be €102,000,000 at the underlying EBIT level. I'll now pass you on to Pat, who will take you through his group and operational review. In case you didn't pick it up from Rob and Peter, it was quite a challenging 1st 6 months in the year. But what I would say is I'm particularly delighted with the performance of the company and our colleagues and the business in Scotland, England, Wales and Ireland of Ireland. In general, if you look at the statistics, the market was fairly flat, maybe down a little bit in areas. And from our perspective, breeding performed very well in the aggregate and asphalt markets from an activity basis, up 7% in aggregates and up 2% on asphalt on the legacy business. Concrete was substantially different for us. Concrete, we were down about 10% year on year, which the market is projecting about 6%. And that's for a variety of reasons. There's a regional impact, which is specific impact in certain areas for us where we're strong in ready mix. There's delays to the tarmac deal, the Chorindio, and that's primarily because as parts of your business know that they're exiting, maybe the focus drifts a little bit and you're not as competitive in the market, maybe some of the staff moved across. So that had an impact. But the third one is, for us, it's not a race to the bottom. So quite prudent pricing in certain market areas may have resulted in some market share erosion for us, but that was was a conscious decision because of pricing pressures in certain parts of the market. Ireland itself, particularly positive for us, particularly in the South. So that sort of outweighed some of the challenges we've had in GB over the period. From a performance perspective that's kind of you guys considering I moved them for you. Performance, strong contribution from the acquisitions, particularly offsetting the weaker GB out ton is demonstrating the numbers that Rob put forward. Peter talked about the strong cash generation. That continues and that will continue going forward in the business. And we continue to invest organically in the business as well as some bolt on acquisitions. So those continue. Very pleased about the underlying EBIT margin being maintained and a strong contribution from the lagging business from an EBIT margin perspective in the 10 weeks that we include the results here. And more specifically, the lagging group was acquired during the period and integration commenced and is progressing well. And I would say that the results that you're seeing in the lagging group are really the way lagging performed. There's very little impact from our interactions with the group. So what you're seeing is a solid set of results from the lagging business as the lagging business and the commitment that our new colleagues have to the group overall. As well as lagging and as well as Turin completion, we also had 2 bolt on acquisitions, a minimix business and an aggregate quarry in the Scottish Borders and a ready mix plant there as well. I know as we talk about safety, we continue to make improvements in the safety performance of the business. We continue to become even more highly engaged with our colleagues on safety, but we continue to be disappointed at the level of results we got and that will continue to be a focus for us going forward. And we, as a surfacing business in Breeding Southern, won our first framework contract with the highways agency where we're a joint venture partner with Bow in the Midlands. That's probably worse, all things being equal, probably £40,000,000 over the course of a 4 or 5 year period depending on phasing. So that's pleasing for us as well, and it continues, I think, to show the maturity that the company is beginning to develop. Rob talked about the variance in numbers, particularly in the Southern and Northern business. And maybe more specifically, I can talk about some of the items that occurred there. But for me, it's a credible performance in subdued markets. The teams in the ground, be it commercially, be it operationally or be it our transactional people, have done a wonderful job in difficult conditions, and we continue to be pleased with the support we're getting from these colleagues in the business. We have had some notable projects that we've been supplying or completed supplies to, notably the AWPR, come into the final phase. That's been a positive project for us, and we've learned a lot on it, and we've contributed, I think, to the overall value of the project. Wood Smith, the potash mine at Wood Smith mine, Peathead Harbour and East Midlands Gateway have been other projects that we participated in. And again, for us, we don't mind doing larger projects, but it's not about chasing price through the projects and chasing volume. It's about can we bring value to the project, can we enhance the project and the client relationship. I talked about the organic investment and maybe a couple of examples is a replacement asphalt plant commissioned at Furnace in Scotland. And installation of an asphalt plant is almost complete now at our Dow low quarry in the Peak District. And we talked in March and we talked in April about a new quarry. We opened 11 miles from Glasgow. It will be physically it will be the closest hard stone quarry to Glasgow. And in order to complement that, we're investing substantial monies in our Port Dundas, our 6 Centre Glasgow ready mix plant, which will, of course, will be a recipient of the materials that will come out of the Northrop Holly quarry inertia, just outside Newton Mearns. Linkborey Quarry and Staffs Concrete are the business I talked about we acquired. Breed and Cement. Breed and Cement is a really good performance as far as I'm concerned. You see the volumes are down, and the volumes were impacted a little bit by the demand internally. Is ready mix down 10%, so that has an impact on the pull through. But what drives the performance and the improved profitability is the operational performance in the business has improved dramatically, the sort of availability of the plant performance of the plant overall. We're benefiting from improved production and stock management, and that continues to be a focus each year. I know that the team up at Hope Cement Plant put a lot of effort into how they manage stock, particularly at that point because they were an individual plant and didn't have support within the business. What we can see now is that we have support from the Kinnegaard plant outside Dublin, and we have opportunities there to bring cement into our terminals in the Northeast of England, which again allows us to be a bit more flexible and sort of robust in our planning going forward. And we continue to develop our bagged cement strategy. Lagging group, can't really say enough about a lagging group. They performed ahead of expectations. The new management structure is in place. But again, I always make the point that I love working with my breeding colleagues, but Aggregate Industries have good employees and Tarmac have good employees. And what we're seeing here is a bunch of people who have joined us from the lagging group and who are contributing in our the delivery of performance is high octane. They haven't missed a beat. It's a big change for the organization, but they haven't missed a beat. I'm delighted with the support we're getting in management and the relationships we've been developing in the business. Again, it's coming through in the numbers and it's coming through in the cash generation. The next point on the management structure. Maybe the point worth noting is when I sat here in April, 2 of these positions were interim. We had an interim Managing Director in Southern and we had an interim Managing Director in Cement, and both of those positions have been filled full time. So what we have now is a solid in place management team to take the business forward. Outlook. It will remain challenging. We see GB continue to remain challenging for 'eighteen. I think it's compounded by Brexit, by the uncertainty there, and that continues to be a daily issue. There may be some confidence in areas of the market. But if the market is flat, as we always say, Breeden is Breeden, we are happy with that because there's a lot of self help we can bring to the table and a lot of focus we can put internally. I think it's inevitable, whether it's early 'nineteen or late 'nineteen or beyond, there will be infrastructure spend. There will be continued investment in house building in the medium term, and we'll be ready for that. And maybe more than activity level because I was never terribly worried about it as the competitive situation in the market should improve. Each of the businesses are facing significant cost increases as input materials, particularly bitumen and energy rises. There's always a lag between when you're hit with these increases to your recovery in the marketplace. So I continue I expect to see continued progress over the next few months into 'nineteen and beyond where we start to recover some of the lag in these cost increases. But we continue to watch those, and we anticipate maybe further pressure on those. In Ireland, we believe we'll see continued growth in Ireland. The projections for the Republic of Ireland are 28% growth through 2020. Northern Ireland is growing modestly in spite of Nouriel government there. We're now starting to see some projects moving and some major projects are starting to place orders. So we expect to see activity levels in the north rise a bit and at past rates. And there's parts of the maintenance program in the Republic where we're seeing inquiry levels almost double what they were this period 12 months ago. So we don't see that changing in the short term over there. And I think that will continue to offset any risk of any weakness that we may have in GB. But as I said, in relation to the weakness in GB, we have self help. We can give ourselves operationally. And I think from a if we are surgical in our pricing, we will see margin improvement as we recover the cost increases through pricing. In the 3 months May to July, this is an indication because one of the benefits of being this late in our results as you get to see some of the flavor of some of the conversations that have been had. And from our perspective, there was an improvement in volumes in quarter 2. So we did recover some of the shortfall in Q1, which reinforces the fact that it was primarily weather driven for us in at the start of the year. We will continue to be mindful of pressure from rising input costs. We're focused on self help. Breeden have been focusing on self help for 7, 8 years and nothing's changed. We have a bigger platform that we can focus on self help with. And traditionally, it's always been from an operational perspective, but we invested a little bit of money recently on a commercial tool because as the business grows, we always say, whilst we have a national presence, now for us, the money is in the local markets. So we have to be diligent in how we are pricing locally in the markets. And in order to do that, we've invested a lot of money in a commercial tool to help us evaluate and move pricing forward in each of those markets. One of the areas of exciting development for a quarry person like myself is the Republic of Ireland, where they have a sort of embryonic aggregate business. They had some sites. There were some dormant sites, and they also acquired some distressed assets over the course of the last few years. And those individuals over there are ready to push forward aggressively on developing this business. I think we've all agreed that speed is not the key for us here. For us, we'd like the business to be developed slowly because in an aggregate business or a quarry development, if you make sort of quick decisions and you move too quickly, you can end up spending years trying to recover that position. So from our perspective, whilst our colleagues are keenly press on, we would rather we just take smaller steps as we develop that business in the Republic of Ireland. And that would be a good contributor to the business in future years. And to reinforce Rob's point, we are comfortable with 2018 market expectations. If you look at the headwinds we faced with Brexit, with the weather, construction issues in general, Karelian. Even our activities on AWPR were impacted the perception of our activities there were impacted by Karelian. But from our perspective, in the face of all those, our colleagues delivered at the start of the year. I believe our colleagues will deliver for 2018. And I have every confidence that with the enlarged management team we have and the enlarged group of colleagues that we'll continue to deliver in the years going forward. Okay? So with that, I'm happy to Peter, Rob and myself are happy to take whatever questions. I would prefer someone gets one of them before John Messenger, but just to get us warmed up. Could I just ask, for the benefit of people on the call, when you ask a question in the room, could you please give us your name and your house, please? Thank you. Good morning, everyone. It's Robert Eason from Goodbody. Just on the input cost headwinds in the first half, can you just help us to understand the scale of that headwind and how you see us kind of unwinding in the second half? And what I mean by unwinding, it's more the price cost spread rather than the absolute unwind of it? That's kind of question 1. And just in relation to kind of lagging, you've already alluded to the opportunity on the aggregate side and you're going to take it slowly to make sure you're starting at the right, so you don't have headwinds further down the road. Can you just talk through the scope around the cement optimization of the whole network now between terminals and your actual plans? And how should we see that? But also the opportunity around the asphalt import terminals that you got there and again just optimizing the whole network across the 2 jurisdictions. Cut? Yes. So I'll deal with the first one. In terms of as a backdrop, the easiest indicator would something like as a proxy for something like bitumen would be like Brent crude and for freight costs. And if you look at sort of the Brent crude H1 'seventeen to H1 'eighteen, it's gone up by a third. So it's gone up from mid-50s to sort of low-70s. And actually post half year, Robert, it's gone up even further. So it gives you an understanding of the challenges that face as a business. As we've talked before, we do have a strategic purchasing plan in place for some of our key cost bases, and we do look to hedge a proportion of whether it's bitumen, whether it's energy costs. But ultimately, you can only beat the market for so long. And so whilst we have some comfort and we have some hedging in place, ultimately, as you look more distant in the future, the impact of that hedging becomes less. In terms of amounts, we're talking 1,000,000. We're not talking tens or 100 of 1,000. We're talking the impact of bitumen on this business is significant. The impact of electricity usage is material. I mean, a subject dear to John's heart will be carbon. And look at where carbon's gone over the last 12 months. It's just unbelievable the trajectory of the carbon costs. So the headwinds are there. We do, as a team, attempt to and mitigate it through hedging, but those headwinds remain. Maybe on the other question, Robert. We usually take pride in not answering questions we don't want to, but I didn't expect it to be from you. The cement in bitumen are really works in progress for us. Clearly, lagging brought cement into GB, and they have over the years, they also put it into Europe at some point. We see that continuing. We see it being able to support the breeding network of plants and support hope, but what that means is we have to evaluate our terminal strategy. Clearly, it's very limited what we can do with it with a terminal in Blythe and a terminal in Dundee. So a live topic for us today is whether we develop those terminals and where is it going to complement our business here. So spot on, but it's live today. It's a work in progress and so is bitumen. We talked about it can help our negotiation. We also talked about we can replicate potentially the terminals in GB or we can tranship it from Dublin or Belfast over to GB and projects, which they did. They've got a history of the Belfast terminal supplied into Ayrshire to supply all the asphalt on the M8 project and the Dublin terminal supplied into RAF Valley. So they have experience of it. What I would say, maybe without being too specific, is that the Irish businesses have had much more success in pushing through the bitumen cost increases because of their ability to run the terminals and be supplying to the market. And that clearly reinforces that, that's a potential option for us, and that again is part of our strategic discussions and our life topic right now. I don't have we haven't come here landing on it, but I think we have to be nimble on both to make sure we get most of our opportunities even in this interim period until we decide what it looks like at the end. Howard Seymour from Numis. Two questions if I may. One is actually following up on the input costs And just the thought process in the context of what you're saying there on recovery relative to the industry. Do you perceive there's any dynamic change in the competitive environment of the industry whereby wouldn't expect others to try and pass this on as well? And then the second one, not surprisingly on cement, if that's okay. And just on that, just to sort of get the dynamics on the cement business that happened in the first half because you alluded to the fact that concrete sales down, therefore internal sales, they're down as well. But the productivity gains that you saw elsewhere, I know you can't talk about specific volumes, but does that suggest that the overall tonnages would have been broadly flat in the business in the first half? From a competitive landscape, I those of us who have been in the business a long time know it can take 6 to 9 months sometimes to recover dramatic increases. There's a school of thought that says they'd much rather see bitumen going up £100 a tonne and £10 a tonne increments because it forces people to go to the market and recover it. I don't quite subscribe to that because it's still £100 however it comes. So no, I have absolutely no doubt in my mind that, I mean, businesses, they have to make a return if they want to continue to invest in the business. So on that basis, I have no doubt that the market will continue to move forward and people will recover and improve the margins relative to input costs. Did you The other was about the Cement performance and the volumes. We're not going to talk volumes. But I think the key thing behind the Cement performance is, and I think we've talked about it before, about when we acquired the Hope business, the 2 planned shutdowns were very tightly managed together and it tends to be done sort of in advance of the busy season in the Q2. So it put massive strains on the supply chain and cement availability. And what we've done is we've broadened that gap and and cement availability. And what we've done is we've broadened that gap and spaced them. And thereby, you've actually been able to manage the stock management and cement availability more productively? Yes. I mean, also, we have to be kind of grateful to Hope as well because they went on a capital investment program just before we bought it, and we got the tail end of it to finish. So our assets today are better than our assets were 12 months ago and 24 months ago. And the assets that we picked up in Ireland have some tremendous assets over there. So for me, as well as having a talented group of colleagues to work with, the fact that we have such robust assets and such a good asset base gives me every confidence going forward. Okay. Could I just ask one more, just on Aberdeen? Obviously, as you see, it's tailing off now and finishing hopefully from what I'm all concerned, except you maybe. But does that create a hole for you in the context of the Northern business? Was the scale of it so significant for you that actually now that product has to find a hole in its way? I mean, it's life when you're in a project like that and it finishes, but we've had success in projects in Dundee. We've had success picking up projects in maybe Lost Your Mouth in Edinburgh. So I whilst it's a big hit as an individual project, over the course of the A9, next phase of the A9 has just been let to Balfour. So I think we'll replace it, and we have replaced it, but maybe in other ways, Howard. It won't be a one off project that we can point to, but it will be made up of a variety of projects, and our participation there will really recover the whole. It's Kevin Kamak at Cenkos. I've actually got 4 if that's all right, but they're all fairly straightforward. Sorry, could you speak up just a bit? Yes, sorry, it's not on. Yes. Just 2 in relation to Largan, I assume obviously at this early stage there is no inclusion of any cost saving, any of the 5,000,000 cost savings that were identified. Yes, they're minimal in the period. Is there any change to the likely crediting of that number over the next 2 to 3 years? I mean it's not at this stage you're not bringing it forward or pushing it out, increasing it, decreasing it? No, we're still holding to the same guidance that will be delivered by the 3rd full year. However, I mean, we're not going to sit on our laurels, and we will we've commenced that journey, and we'll provide further updates during later in the year. There's no surprises and nothing that we've unturned out that would suggest it's not achievable. Secondly, just for comparative purposes going forward, Was the maintenance was there a maintenance shutdown done in the Q1 or is that yet to happen in the talking about the Lagan business? Yes. Sorry, yes. Yes. So the planned shutdown on their cement kiln was done in the Q1, which was pre acquisition for us. And is it a sort of similar sized scale number wise? Yes. No, it is. It is. Thank you. Kevin, maybe and maybe just to sort of reinforce, we're proud of Hope, but we're also very proud of Kinnegyad. You have a relatively young plant that has alternative fuel usage in the range of 70% just over 70%. So it's I mean, it's world class in its performance. So from my prior experience, I know where hope stands as far as world class performances in mine plants, and I think we're very lucky we have 2 of them in the business now. Okay. And third question I had was just about you obviously cited 3 factors behind the variance of the Northern and Southern business. Obviously, one of those was the asset swap. Would you say that was which assume going forward that eradicates itself pretty immediately? In ranking terms, would you have said that was the biggest factor in the deficit of EBIT? I would say that some of the regional variations, but also some of the decision the conscious decisions we made not to participate in certain parts of the market because of the pricing levels. I think all of them contributed to it. I mean, I actually think not maybe not from absolute financial perspective right away, but I'm not sure everybody quite gets how good a deal that transaction is for us to rebalance our ready mix business, which unfortunately was deteriorating as we move towards it. And I would think the flip side is Tarmac lost maybe lost a bit of their focus on the plants that we got in Davia and Minford and Boris and Low Plains, then we're going to have to recover that market position there as well because I would say volumes there are probably impacted a bit in the same way our ready mix ones were. But that's, I mean, that's a really exciting deal from my perspective. And the last one I had, and maybe it's not for now, but in view of what's been happening to the sort of regional demand down in London and Southeast and in view of see the fact the bigger opportunities that Lagan gives you terminal wise etcetera. Could you just comment at all on whether there's any change in the strategy on bagged cement within the U. K? No, there's no change in strategy. For us, it's the balance. If we can make a better margin selling bagged cement over bulk, we'll do it. If it can allow us to replace some of the cement with limestone and change the capacity in the site, we'll do it. It's really we're not hung up in the volume, Kevin. I really am quite relaxed on what volume of bagged cement we do. I'm not relaxed on how much money we make from it. So we're going to drive towards whichever one will generate the best return for the business, and we're not going to get hung up on a theoretical bag tonnage that was maybe set in the past. So that will be dynamic. That will be an annual adjustment for us in the budget process that it may be a change during the year. What we do have to take into account is lagging sales bagged cement into GB also and they have done. So we need to understand how that fits together. And I think it will be a dynamic model for us. Thanks. John Messenger from Redburn. Just 2 if I could. On the asset swap, can you just give us an idea, I don't know, there's a degree of kind of commercial limit as to what you say, but in terms of the revenue that's shifting out and the revenue that's coming in, how big is the drop in terms of that move, the ready mix out to the aggregates and the new asphalt plant coming in just on an annualized basis for a rough idea. And the second one was just you mentioned Pat about a commercial tool in the UK in terms of what Breton is going to use. Can I just understand what it's not as if there are kind of list prices or internet to scrape out there in terms of data? Is this a bunch of guys in a room ringing around getting quotes to try and work out what prices are doing? Just to give us a flavor as to what you can do because I'm just thinking how does that really work or is that about more your cost to serve and how you're working out where you can make the best margin? Do you want to do the first one? Yes. So on the first one, on an annualized basis, allowing for the sort of the 23,000,000 versus the original 27,000,000 in terms of concrete plants, the delta is about 20,000,000. So in the half year, you'd expect probably 10,000,000 dollars The other one is, I mean, it's nothing too sophisticated, John. All it is, with the amount of volume we do these days, in the past, some of our salespeople probably were more spreadsheet based than they were. And what you find is emotion drives a lot of the pricing decisions. When you lose a job last week, then maybe there's no discipline in where we lost the job. So it's really about it's gathering that data in a form where they can use that in their pricing decisions going forward, where we can look at segmentation of the customers by product or by segment of their business. So it's just it's the same pricing decisions we're making, it's just trying to bring a bit more process and discipline to rather than fag packet. Not that we ever did that. On the pricing point when you think about the price pressure in the market has that been as much independence or is that kind of the big guys who'd be moving because kind of bizarrely some of the players, the international players are awarding their people not on EBIT or EBITDA, but on sales growth this year, which is slightly strange. But is that something that's played through in terms of what you're actually seeing on the ground in that there is price being given around for share basically? I mean, I can't I don't lay a lot of the pricing challenges at independent businesses across. It's pretty much all over the map. Graham Kyle, Shore Capital. Kind of following on from John's question there. Just on concrete in the Southeast, has the market share erosion, it sounds like it was predatory pricing, as John was saying. Is there overcapacity in that specific region? And if there is, how do you expect that to play out? I mean, the impact on us is really not southeast related because we're not terribly active in the Southeast at the moment. We've made in let wind roads into it. So the big variance, our 10% is not massively driven by the southeast market. Okay. Another regions then, is there overcapacity? No. I mean, capacity in ready mix is primarily trucking. Very rarely is the ready mix plant the constraint in volume. So you put truck in the road and the capacity increases. It's I just think it's it could be because of the lack of confidence in the market. When there's a dynamic change in the market like that, it's very hard to for people to understand where they are in the where the market is currently and people can chase volume. When you come out of the bad weather like that, you tend to see some things an overreaction in the market when people are aggressively chasing work. So it's I don't think it's a change in capacity. I don't think it's a structural change in the market, it's a behavioral change in the market. And the second question relates to acquisitions post Lagan. Can you just describe the potential in Republic of Ireland now you have Lagan on board? It's early days for us on that. Obviously, our colleagues over there have a view on how we should grow the business. But for us, it's a new market for us. It's an existing market for lagging. And I think the same approach that we'll take to develop in the quarries, we'll find our way into it. We're spending we spend a fair amount of time over there now. We're evaluating opportunities. We're looking to understand how the markets work in each region. And clearly, it's early for us, but clearly, there'll be opportunities over there for us along the same vein as a lot of the opportunities we've had in GB in the past. Anybody else? Thank you all very much. The trading update on the 21st November and full year on the 6th March. Thanks.