Morning, ladies and gentlemen. Welcome to Orica's 2018 half-year results. Presenting today is Alberto Calderon, our CEO, followed by Vincent Nicoletti, our CFO. At the end of the presentation, we certainly will have time for questions from the floor and from the line. I'll hand it over to Alberto now.
Thanks, Delphine. Good morning, all. Thank you for joining us in the room, on the phone, on the webcast. I will ask you to quickly read the disclaimer. I will start, as always, with safety. Our primary focus remains on fatality prevention. During the half, we continued to build on the work we started last year. This has been focused on three fronts. Firstly, we have completed the mandatory business standards and group procedures which apply to all of our sites. We have commenced structural reviews to ensure we drive compliance. Where we find gaps, we implement action plans which are monitored for quality and for urgency in closing out. Secondly, we have progressed the work on major hazards. That is, just to repeat, major hazards are the one that could lead to either fatalities or workers being seriously hurt.
Where we have identified the potential for fatal injuries, we have defined controls to keep our people safe. We have also detailed and regular verification activities to confirm those controls are in place and they are working. If we find gaps, we close those out with purpose and with urgency. Lastly, we review actual events that could have been more serious in different circumstances. For these events, we conduct rigorous investigations to understand the root causes. We follow up to ensure controls and compliance can prevent occurrence. Recurrence, sorry. These improvements actions are tracked for quality and urgency. We continue to monitor the rates and how our people are injured in their day-to-day working activities. We're driving hard to ensure we're consistent in how we report injuries across the organization. During the half, there was a small increase in the total recordable injury rate.
I think we are already at a very good level. Sustaining ourselves around that level, I think, would be a good outcome. More importantly, we are seeing that in some areas, injury severity has reduced. The rates compare favorably against our industry peers and benchmarks. Obviously, that is not a cause for complacency. Our strategy for improvement is basic. It is sound. As the head of the business, I'm committed to building the capability of our leaders, providing transparency, and to holding people to account for performance. Turning to the performance of the business in the first half. On the 1st of March this year, we flagged with the market that while volume growth continued in the first half, there would be number of one-offs and other factors that would negatively impact the first half result.
The underlying EBIT for the half of AUD 252 million was almost exactly in line with this trading update that was released in March, which will cover this more in detail. If you look at the waterfall chart, you would see that we had AUD 21 million of asset sales and AUD 16 million of expected headwinds. That's about AUD 35 million that would have happened under any scenario, even if we hadn't had the manufacturing issues. Just to point out, again, this was in line with the expectations that we set in March, and there's no new news here. On the other hand, we continue to see clear signs of continued recovery in the markets we serve, and as a resulting lift in demand for our products. This has started to see some of this come through in March and April.
I am confident that this run rate will continue for the rest of fiscal year 2018 and into fiscal year 2019. I will talk about this later in the outlook. We recorded a statutory loss after tax of AUD 229 million. This included individually significant items of AUD 353 million. Vince will provide further details on these later in this presentation. Notwithstanding these one-off issues, underlying demand for our products is strong. The normalization of mine plants that commenced in the prior half has continued, and this combined with new contract wins, saw our AN sales volumes for the half improve by 3% on the prior year. AN pricing has also continued to firm, with revenues up 4%. The APA and North American regions continue to be the main drivers of financial performance, with particularly strong demand growth in Australia and Indonesia.
When we set aside the issues experienced in the first half and look at the momentum we are seeing in demand, we expect significantly stronger EBIT performance in the second half. We continue to make good progress on the business improvements initiatives and have delivered a further AUD 35 million benefits in this half. I will talk more about this later in the presentation. The acquisition of GroundProbe was effectively as of mid-January. The business is generating profits and performing in line with our expectations. This business is very complementary to our existing operations, and the integration is progressing very well. We had a 100-day plan, and we're about 95% of the integration in that 100-day plan. We're very focused on maintaining the health of our balance sheet.
Gearing increased to 40.7% at 31st of March, largely due to the acquisition of GroundProbe and the increase in our Burrup shareholding. Cash generation was impacted by lower earnings in the half and increase in CapEx and higher trading working capital as we built inventory to meet expected second half demand. Some of these impacts are transitory in nature and not reflective of our disciplined approach to CapEx and trade working capital management. The interim dividend of AUD 0.20 per share reflects a payout ratio of 71% of underlying earnings. As you may remember, we flagged that we would move to a payout ratio in between 40%-70%. This one is on the top end of our expected payout ratio and reflects our confidence in the future. Turning to the performance of each region now.
The APA region, our highest margin region, contribute to over 60% towards the group EBIT. Explosives volumes were up 10%, around 66,000 tons, underpinned by stronger demand in both Australia and Indonesia, with growth from both new and existing customers. Demand grew in the Pilbara region as a result of a new contract and increased commodity prices and strip ratios. EBS sales were up 50% from increased demand across multiple regions. EBIT was similar to the PCP, but was substantially lower than the second half of last year. This was largely due to the manufacturing reliability issues we disclosed in March. These issues had a material impact in the half, but are temporary in nature. In regard to the manufacturing reliability issues, we're beginning to see some positive outcomes from the increased operating discipline instilled by the new management team.
For instance, in March this year, we commenced the turnaround of the Kooragang Island nitric acid plant. That's about 60% of the production of AN. This is the first turnaround that has been completed in the past five years in time and under budget. We believe that the reliability of our plants will improve, but this is a gradual process. Having said that, we're currently doing a turnaround in Yarwun that we should be finished in about one week, and there is no turnarounds in the AN manufacturing for the second half of 2018. Hence, that again, probably also is another element of this confidence in the next six months. The negative impact of price renewals originally expected to flow through for this year has been reduced due to some of these contracts being deferred into the new financial year. Let me give some numbers around here.
We had flagged in November of last year that we expected the impact of price increases around AUD 50 million. We now expect them to be around AUD 30 million. Nine in the first half and around 20 in the second half. This deferment is actually a good news in the sense that it is up to Orica when it decides to open a contract, if it believes that it is in best interest to open the contract and then have, let's say, another five-year contract, or if it wishes to keep the high prices because it sees price firming. This is more the case of the latter. Hence, we will not be talking in 2019 of any price deferrals.
We think that if anything, we're having net price benefits, and hence that will drop out of our bridges in 2019, 2020, 2021, as probably with all of the headwinds that we have been dominated our discussions for the past four years. As I just said, we are seeing AN prices firming in the market, which gives us the opportunity to secure more favorable terms as contracts come up for renewal. Let me give you an update on Burrup. As you have been aware, there has been some construction quality issues with the heat exchangers at the Burrup plant with the joint venture operating Yara has been addressing for the past months. This has impacted on two fronts.
We have had to move product from various sites across the region, mainly from Yarwun, to ensure that there was no interruptions to customer supply, as such, incurred additional freight and sourcing costs. It's about AUD 200 freight to move from the east to the west. This in turn put pressure on the Yarwun manufacturing plant, which has recently been recommissioned and is the main source of tons for our Pilbara commitments. This increased load put a lot of pressure on the plant, which resulted in unplanned shutdowns, especially in the first quarter of this financial year. The interim repairs to the heat exchangers are progressing, however, we expect that the plant will be operational by the end of this financial year.
A major scheduled turnaround as part of the plant's overall maintenance program has been scheduled for July this year, and the repaired heat exchangers will be fully replaced in the second half of the 2019 financial year. Yara is currently working with the Spanish construction company on possible redress actions for these issues in line with the AUD 120 million performance bond being held back as final payment. To put it more clearly, we expect that any cost of new equipment will be more than enough covered by this performance bond. Until the permanent fix is in place, we are expecting the plant to have low reliability. This is an important assumption, again, I'll go into a little bit more detail. We are only expecting an average of one month operations in 2018 in the numbers that we have given you.
For 2019, the guidance that we have given assumes very low reliability of Burrup. In November, we'll update you as to how things are. If the reliability is around 60%, I think we would even see a better 2019, but currently the guidance we've given you assumes a very low reliability. This is again just because we don't know. Nobody knows right now how the plant will be able to function and what the average reliability, or let's say availability it will have until we have the permanent fixture. During the half, Orica secured contracts for supply of ammonium nitrate to BHP, which comes into effect in November 2019, and Roy Hill in Western Australia, which came into effect in February. With these contract wins, we expect the Burrup plant to be at full utilization rates at early 2020.
Turning to the second half outlook for the region, based on current demand, we're projecting volumes to be up to 10% on the first half, so second half on H1. Together with a non-repeat of the first half of one cost and impacts, we expect to deliver a much stronger EBIT contribution from the region in this second half period. Demand in North America remains steady despite this half being impacted by extreme weather in the southern region and some tightening in skilled labor markets. That was about a AUD 5 million hit because of weather. We believe that the quarry and construction markets will remain strong, primarily driven by strong forecast growth in residential construction spend. Demand from the gold market remains steady and demand from the copper market continued to strengthen.
Sales into the thermal coal market declined as a result of changes in joint venture partner sourcing arrangements that came into effect in January 2017. Removing the impact of this, which was very low margin tons, direct sales volumes were up 9% on this half. Volumes in both Canada and Mexico continued to improve from new contract wins and increased demand. EBS sales was up 17%. EBIT was impacted by the final flow of the previously flagged up step-up material input cost in two supply agreements in North America, the Agrium and CF. All of those impacts and also in Australia, that is all now in our cost base, and hence will have no impact as in second half or into the future. Good progress was made in converting technology trials into contracts.
The first multiple year WebGen contract, the wireless detonators, has been signed with an underground mining customer in Canada. We are currently negotiating the first WebGen open cut contract also in Canada. We have also signed up a number of mines to BlastIQ, and a lot of interest is being shown by the quarry and construction sector in the U.S.A. Penetration on the electronic detonators continues with growth of 17%. Looking into the second half, we expect EBIT to recover from the first half, supported by the natural seasonality uplift in volumes. The non-repeat of cost and manufacturing cost in the second half of 2017 will have a positive impact on a PCP basis. Moving now to Latin America.
While overall explosives volumes were in line with the PCP and have been quite stable in the past years, EBIT was negatively impacted by increased competition from current suppliers and several new contracts. If you look at the numbers of H1 versus H1 of last year, it was an AUD 5 million that comes from pricing pressures. There was an AUD 5 million of one-offs. In percentage terms it looks pretty bad, but those AUD 10 million explains all of the decline from H1 of 2017 into H1 of 2018. In the first half of 2017, so that is the other one, we booked a one-off benefit from an asset sale, and so all of this accounted for approximately AUD 5 million in the period EBIT comparison.
The second half EBIT should be similar to the PCP supported by a seasonal uplift in volume demand and further regional support and logistics cost reduction initiatives. Whilst the region remains challenging in the short term, we believe that the medium to long-term fundamentals are strong. Copper, the most significant commodity for the region, is now seeing increased prices supporting improved activity in the sector. The gold market continues to be strong with increased demand from both new and existing customers in the sector. Overall, the economic and political conditions across the regions have improved with lifts in GDP growth as several countries emerge from recession. Europe, Middle East, and Africa. This region was significantly impacted by various factors in the half.
First, changes to volume and product mix due to changes in mine plans and mines going into care and maintenance in Africa, plus the impact on cyanide volumes from a mine closure and contract loss. This accounts for about AUD 9 million of reduction in the EBIT. Just a clarification on cyanide. This impacted the region. It doesn't impact at Orica because as long as we sell every ton we produce, we are okay. We were able to sell everything we produced in our plant in Yarwun. It impacts more EMEA, but it impacts much less Orica as a whole. There was approximately AUD 5 million impact for additional sourcing costs following the Geita explosion in the second half of last year.
One-off restructuring and relocation costs associated with moving EMEA's head office from Australia to the U.K., and the non-repeat from a divestment last year accounted for some AUD 6 million in the reduced EBIT result. The good news is that the vast majority of these impacts are temporary. Earning growths in the second half will be supported by strong volume growth from recent new contract wins and further manufacturing and operational initiatives. We expect EBIT to be similar to the second half of 2017, like in Latin America. Now turning to Minova. Progress stalled for many months. I've said that in the previous sort of statements, how this has gone slower than I would have wanted. However, revenue did increase by 13% on the PCP.
Margins in the half were impacted by a change of product mix, increased raw material costs, and costs associated with relocating production facilities from Germany to Poland. As a result of the slower than expected pace of recovery, a non-cash impairment charge of AUD 204 million has been recognized in this half, including the write-off of all the goodwill in Minova. This is exactly in line what we flagged in March. Having said that, during this half, a new management team was appointed with clearer goals relating to improved margins, production efficiency and reduced overheads. A strategy has been implemented to deliver on these objectives. We are seeing encouraging signs with a positive trading result achieved in March and a plan to secure the increased pricing for key products.
In March, we're already at an annualized EBIT rate of about AUD 12 million. We expect again to have a better sort of outcome as we continue to progress in the three regions in the update in November. The auxiliary segment is a newly created segment comprising of Nitro Consult and the recently acquired GroundProbe. You remember Nitro Consult monitors vibrations, explosive sound vibration. GroundProbe monitors wall stability. They operate in a sort of similar field and will go into similar platforms and will have a lot of things in common. It makes sense that they will be reporting and actually from a management point of view will also be reporting into the same group. The acquisition of GroundProbe was completed in January of 2018. Integration into the group is progressing well and is scheduled to be completed by the end of this financial year.
GroundProbe is a global market leader in the provision of critical monitoring and measurement technologies for the mining sector. With a similar profile to Orica, GroundProbe is highly complementary to many parts of the group, including Nitro Consult, sound and vibration monitoring capabilities, which strengthens a customer monitoring value proposition. Furthermore, it is aligned with Orica's digital strategy with wall stability data, a key input for BlastIQ tool. The contribution from GroundProbe in this half is in line with our expectations. The first half loss of AUD 1 million from auxiliaries includes acquisition costs, which will not be repeated in the second half. The business is expected to deliver a positive contribution to fiscal year 2018 results. On acquisition, we said that GroundProbe would be accretive in the first full financial year of ownership, and that will be the case.
We are confident that it will deliver somewhere around 10% of RONA in year one and a +15% within three to five years. I will now hand over to Vince to talk about the financials.
Thank you, Alberto, and welcome, ladies and gentlemen. Sales revenue for the first half was just over AUD 2.5 billion, up 4% from the first half of FY 2017. The revenue increase reflected both volume growth and pricing that shows signs of firming. As mentioned, we flagged in early March that the first half results would be impacted by a range of one-off operational and plant issues, and these impacts are evident in our lower earnings. Underlying EBITDA was down by 15% to AUD 379 million, and underlying EBIT was down by 20% to AUD 252 million. Underlying NPAT was lower than the prior comparable period as a result of lower earnings in the half and increased net interest expense in line with higher debt due to acquisitions and borrow interest not being capitalized.
The change in non-controlling interest was mainly driven by an improvement in the performance of our JV in China and also FX impacts. Statutory net profit after tax was impacted by individually significant items, which I'll go through in the next slide. The effective tax rate of 30.7% compared to 28.4% in the prior comparable period was higher due to a reduction in foreign deductions and non-taxable gains on disposal of assets, plus non-creditable withholding taxes on foreign dividends. We expect the tax rate to be around this level going forward. Individually significant items. We flagged in March that we would be taking some non-cash adjustments in the half. The first adjustment is a non-cash impairment of AUD 204 million to the Minova business, which Alberto has covered. The second adjustment is an increase of AUD 115 million to our environmental provision for the remediation of the Botany site.
This reflects a change to how we account for these costs rather than a change to the estimate of the costs. The situation on the ground is unchanged. The adjustment resulted from a detailed review of the costs and operational duration of the groundwater treatment plant, and is an intermediate containment measure, which is an intermediate containment measure for contamination at the Botany Industrial Park. The findings of the review indicated the potential cessation of the containment measures is possible, but within an 18-year timeframe. We sought updated advice and adopted a suitably conservative accounting approach. The provision has been increased to reflect the change in current estimates. The third adjustment is a one-off restatement to the value of our U.S. deferred tax assets as a result of the lower U.S. federal corporate tax rate.
Orica has substantial operations in the U.S., which are an important part of our global supply chain. The impact of the U.S. federal tax return, reform rather, is expected to be neutral given net operating loss carryovers, goodwill amortization, and interest deductions arising from past acquisitions. We've also taken the opportunity to complete an impairment assessment on other assets. A further AUD 21 million of IT, and other assets which no longer have future economic benefit have been impaired. In total, the value of these adjustments is AUD 353 million after tax, which is slightly higher than what we anticipated in March. Turning to the EBIT bridge and looking at the EBIT bridge at a high level. There are two parts of the bridge, the expected on the left and the unexpected on the right. The first four bars totaling AUD 63 million we expected to negatively impact the first half.
The manufacturing plant reliability issues and increased sourcing and freight costs due to the operational issues at Burrup total just under AUD 40 million and were expected. Over half of these negative impacts are considered one-off in nature. We don't expect them to impact in half 2. Adjusting for those impacts, the underlying performance of the business was relatively unchanged. Going through the bars individually. PPE and asset sales. This includes the non-repeat of one-off benefits in 2017, including the divestment of land in the Philippines for AUD 8 million and the profit on the sale of our Minova business in China for AUD 8 million. FX and inflation on overheads. Inflation on fixed cost overheads had an adverse effect of AUD 14 million. The AUD also appreciated against most major currencies, adversely impacting earnings by AUD 3 million in the first half of 2018. Material input costs. The AUD 16 million is the last flow-through of the increase in contracted gas and ammonia prices, which were effective from the second quarter of the prior period.
Going forward, they're in the cost base. Contract pricing. Contract renewals have continued to align to current market prices. The impact of price renewals of AUD 9 million in the half was lower than expected due to the deferral of some contract renegotiations into the 2019 year. We expect around AUD 20 million of the AUD 50 million-AUD 55 million originally forecast earlier in the year to be deferred into FY 2019. The impact in the second half is expected to be around AUD 20 million. As Alberto mentioned earlier, AN pricing is now firming in the APA region, which is our biggest region, we should start seeing some positive benefits as contracts get renewed over time. Explosives volume, mix, and margin.
New business and improved demand from existing customers, particularly in Australia, the higher margin region, and Indonesia, drove an increase in AN volumes of 3% and positively contributed to EBIT. A higher proportion of emulsing product sales also contributed positively. Electronic blasting systems, EBS, increased across all regions with a combined increase of 22% in EBS volumes compared to the prior period. The AUD 27 million that you see there is net of approximately AUD 12 million of increased sourcing and freight costs as a result of the operational issues in Burrup, as we discussed in the March update. The gross benefit of explosives volume, mix, and margin is close to AUD 40 million, as I mentioned before. We also flagged in March that unplanned maintenance shuts at Yarwun and Kooragang Island led to unrecovered labor and operational costs, as well as higher short-term third-party AN product purchases.
The total variance of AUD 20 million includes the AUD 17 million of manufacturing costs, plus also lower cyanide production. Lastly, Minova. After adjusting for the one-off asset disposal in the prior comparable period, Minova EBIT declined AUD 5 million due to unfavorable mix and cost pressures, despite the increases in volume and revenue. As Alberto mentioned, there has been some improvement in March, and we expect a monthly run rate of around AUD 1 million to continue for the remainder of the year. Turning now to capital expenditure. We continue to practice a disciplined approach to CapEx. As mentioned over the past few results, at all times, we ensure that CapEx related to safety, environmental obligations, and the requirements relating to our license to operate is maintained. In essence, capital allocations for these purposes will not be subject to financial metrics.
All other capital requests are the subject of a rigorous review and approval process. CapEx in the first half is in line with expectations. The implementation of SAP across the organization is progressing well. Part of the increase in sustaining CapEx is driven by the ramp-up of this project. The cost of the maintenance shuts at KI and Yarwun are also included in sustaining CapEx, as well as our ongoing investment in the MMU fleet. We believe that the full-year CapEx will be at the upper end of the guidance range of AUD 300 million-AUD 320 million. Turning to debt. As Alberto has mentioned, Orica has had a challenging first half impacted by a range of one-off operational and plant issues, and we indicated this in March. This combined with increased trade working capital and higher sustenance capital spend has meant our cash conversion is at 37%.
The higher working capital has been impacted by additional trade working capital following the acquisition of GroundProbe, increased debtors balances of around AUD 55 million on the back of higher sales volumes, and an inventory build of approximately AUD 60 million, with the largest impact being the additional inventory build for Burrup and higher stock levels in Minova due to higher sales volumes there, plus a cyanide rebuild due to very low cyanide stock levels in the prior period. Higher sustaining capital spend in 2018 versus the prior comparable period is really a function of our SAP upgrade investment in MMUs across the business and the spend associated with shutdowns at KI and Yarwun. Going forward, we expect cash conversion, including sustaining capital, to be at 80%. Net debt increased to AUD 1.9 billion, driven by the investments made in GroundProbe and the additional 5% shareholding in Burrup.
This leaves gearing at 40.7%, still comfortably within our targeted range. Maintaining a strong and flexible balance sheet through the cycle is something that we continue to be committed to. Our disciplined approach to CapEx will ensure our balance sheet remains strong. As Alberto mentioned, we are confident about the second half. As such, despite a soft first half as guided and a policy of a 40%-70% dividend payout ratio, we have chosen a strong payout at the top end of the range of 61%. With that, I will hand back to Alberto.
Thanks, Vince. We have continued to deliver sustainable business initiative benefits in this half of approximately AUD 35 million to offset some of the previously flagged headwinds. Of the AUD 35 million delivered this half, the majority of benefits were from supply chain efficiencies and adding value to our customers. The next phase of the program involves a strong focus on manufacturing efficiencies. We are very confident that the manufacturing will deliver significant improvements, but it will take probably longer than we expected, maybe two to three years. Given the recent plant reliability issues we have experienced at some of our plants, we are committed to getting the basics right and reliability back to where it should be. We need to pay closer attention to ensuring we can capitalize on a stronger demand outlook without compromising our production capabilities or incurring unexpected additional cost. This is an important priority for our business.
We will defer some of the initiatives aimed at securing cost savings in our manufacturing operations until we can be confident that we have taken all of the measures necessary to ensure we are not exposing the business to further manufacturing interruptions. I am confident that the manufacturing initiatives that we have identified will deliver significant benefits in years to come, but it will take more time, as I mentioned previously. The deferment of some manufacturing efficiency initiatives means we are expecting the second half contribution from the business initiatives program to be similar to the first half. It is expected that the total net benefits of some AUD 70 million for the full year will offset the 2018 headwinds after taking into account the lower negative impact of current price resets.
At the March update, we mentioned that further streamlining of the business across each of the operating regions had commenced, which would result in further reductions to overall headcount. When we started the business initiatives program a few years ago, I said that the overall objective was to focus on embedding new ways of working that fundamentally make Orica a better business by buying better, producing more efficiently, and bringing more value to our customers. I feel comfortable now that the program has helped drive cultural change to the business, and we are at that stage where efficiency has become an important part of our everyday thinking and actions at Orica. The program benefits are increasingly being embedded in the broad cross-section of our operation and results. Passing to technology. New technology is a key enabler of our differentiated strategy and provides a significant competitive advantage for Orica.
We continue to invest in new technology to meet our customer needs and complement their continual drive for improved productivity and safety. One key area of improvement is our digital platform, BlastIQ, which is designed to improve blasting outcomes by integrating insights from digitally connected technologies at every stage in the drill and blast process to drive continuous improvement for our customers. Importantly, this technology will enable us to quantify value delivered and capture more of that value. Our vision is to partner with those customers to dynamically optimize the drill and a blast process through a service-led model and have identified four key areas of investment and development to achieve this vision. One, understanding the resource by measuring, collating, and analyzing detailed geotechnical data, we can better understand the geology and apply that to improve blast designs. Two, designing for output.
We will combine Orica's technical expertise with predictive blast modeling and design based on detailed geological data as well as data analytic models to produce blast designs for desired customer outcomes such as optimized fragmentation and vibration control. Three, digitizing on-bench drill and blast operations. Increasingly digitized on-bench operations enabled by technologies including our truck, the new Bulkmaster 7 smart explosive delivery system will accurately implement intelligent blast designs to specification, improving efficiency and accuracy of drill and blast operations. Lastly, measured outcomes. Finally, blast outcomes are measured and validated to form an integrated view of blast outputs. This data is then used to improve future drill and blast outcomes based on machine learning. This is not a vision of the future. We are already doing this with our large customers. This is already being implemented. Returns of technology. That is often a question.
Our investment in technology is delivering returns, and this is evident in the numbers. From a sales perspective, we have introduced a new NT5 KPI. This is what percentage of the EBIT comes from new technologies. So you take the last five years and you calculate that one. By implementing this KPI, we can now benchmark and continuously measure revenue generated from new technologies as a percentage of our total revenue. This enable us to measure adoption of new technology and ensures we're investing in the right areas that deliver the greatest returns to Orica and shareholders while delivering on our customers' needs. We have also introduced a new commercialization process that streamlines the development of new technology and dedicates resources to rapidly commercializing our new technologies into the market.
As a result of these processes, changes, and new technologies released in this half, we are seeing over 20% growth in NT5 across all regions, and we expect to see further growth in this measure over the coming years in line with our continued investment in technology. More importantly, our continued investment in new technology is delivering improved results returns. For example, in our market leading electronic blasting systems portfolio, we are seeing significant gains in margins when compared to conventional technologies. For example, for every AUD 1 invested in EBS, Orica captures three times. So every AUD 1 invested within five years, we see a multiple of three. New technologies is also enable us to drive increased market conversion globally to more modern technologies that deliver greater outcomes for customers and supports our differentiated strategy by moving our customers away from less effective and more commoditized technologies. Technology platform.
Technology pathway to drill and blasting operations, I'm sorry, automation. Another key area of technology investment for us is in automation. That is really the end game of all of these technology, and that will be certainly our game changer. The automation of drill and blast will be exactly that, just like the introduction of ammonium nitrate was in the '50s and '60s. Unlocking billions of AUD for the industry by granting access to ore reserves and reducing waste and operational delays. Our technology that is hitting the market today is not only delivering step changes in safety, productivity, and efficiency, but forms the critical building blocks of our vision of automating blasting in the future.
These three key building blocks include WebGen, the world's first and only wireless blasting system which improves safety by removing people from harm's way, productivity by removing the constraints imposed by wired connections, and is fundamentally changing the way blasting and mining is approached by enabling new blasting practices. Goldcorp has recently signed a long-term commercial WebGen service agreement in North America, and we continue to expand our trial programs globally with successful trials completed in Latin America in this half. BlastIQ. As we covered earlier, BlastIQ is our digital platform designed to improve blasting outcomes. It does this by integrating insights from digitally connected technologies at every stage in the drill and blast process to drive continuous improvement for our customers.
We are seeing increased interest and adoption in BlastIQ with a key Australian customer adopting BlastIQ technology in over 35 sites as a platform for all their blasting activities. We have also got a key customer in North America adding over 30 additional sites to enhance their blasting outcomes by digitally enabling blast management through their operations. Finally, the Bulkmaster 7 is the latest evolution of Orica's market-leading delivery systems providing a step change in safety and productivity on bench. Combined with BlastIQ enables smart delivery systems, LOADPlus, the BM7 will wireless receive blast designs while on bench, load the correct explosives mix, and deliver the design outcome in a fully integrated and automated process. The BM7 can deliver up to 27% productivity improvement on bench, and the initial deployment of these systems is ratifying these gains.
Again, these trucks are already operating in the Pilbara, and we will continue to deploy at a rate of about two or three per month in the coming months and years. The big miners are moving rapidly towards an automated future. The introduction of these new technologies signifies that we are serious about being a part of this automated future and are really the only explosives company globally that can operate in this space. We're investing in new technologies and partnering with customers and industry to ensure we get there first. Finally, for the outlook. The second half 2018 outlook remains unchanged from the updated release on the 1st of March 2018. The run rate required to achieve the second half uplift has already begun. The second quarter results indicate that we are tracking in line to deliver a substantial uplift in the third and fourth quarters.
I am confident that this run rate will continue for the rest of fiscal year 2018 and into fiscal year 2019. From a volume perspective, we're expecting volumes to grow close to 10% from the first half to the second half, and these are already contracted tons. This is across all regions, but particularly in Australia. This will take the full year global AN volume forecast for up to the upper end of the stated region of 3.65 million plus 5%. Significantly stronger 2H 2018 EBIT contribution is expected from continued volume growth, particularly in Australia, improved performance across all regions business, contribution from the recently acquired GroundProbe business, and focus on improving manufacturing reliability. Looking forward. Turning now to the high-level outlook, obviously we will have a much more detailed outlook in November for the 2019 year.
As we look forward, we expect a stronger run rate from the second half of 2018 to continue into fiscal year 2019. Additionally, fiscal year 2019 is expected to have AN volume growth supported by positive commodity growth and mine plan outlooks. Firmer AN pricing, improved manufacturing reliability at Orica plants. However, the performance of the Burrup plant remains uncertain until the permanent fix is completed by the operator, Yara. Finally, a full contribution from GroundProbe. We remain positive that the majority of market and internal headwinds are behind us, and we can capitalize on the improved outlook for volume demand and firmer pricing. More importantly, we will continue to maintain a strong and flexible balance sheet as we pursue continued profitable growth for Orica, all of which will deliver strong shareholder returns. Thank you. We're now open to questions. Richard.
Thanks, Alberto. It's Richard Johnson from CLSA. Can I just clarify the one thing around the price reset deferral? You talked about the AUD 20 million difference.
Yeah.
I just want to double-check that you're not saying the impact in 2019 is going to be AUD 20 because presumably on a like for like basis, it should be less given the fact the market's recovered since you originally put out that number.
It should be less. Also, we should have the positive benefits of contracts that we are now rolling over at a higher price. The market actually has been firming up in Australia for the past 18 months, so it should be less. As I said, that will again wash, and we will not be referring to any of those headwinds in 2019 or beyond.
That's helpful. Thank you. Then on, I don't know how much you can say, but I'm just sort of thinking through what the options are for Minova going forward, given you've effectively written off the business. It's threatened to make a profit, I don't know, what it was a year or 18 months ago. It seems to have slipped back again. I'm just trying to think through what sort of options you have at your disposal and how we should think about it medium term.
Look, we have a good management team. The new president came from a business where a 3% margin was what he was used to, so he's very focused on that. We've already pushed prices up for the first time in six years in North America, and North America moved from a loss-making to a profit-making. EMEA, Europe is still the engine of that, so let's see. I'm confident that in November you will see an outlook where monthly EBIT will be somewhere at a minimum of AUD 1 million and more probably around AUD 1.5 million. After that, which is sort of the minimum that I think this business can deliver, we'll have an assessment if this can continue to improve or if we should look at other opportunities.
For the time being, it just needs to be run better. We probably should have gone quicker, as I've said in the past. I think it's going to be an interesting contributor. We'll take it from there.
That's great. Thanks very much.
We take from the phones.
Thank you. Your first question comes from Mark Wilson from Deutsche Bank. Please go ahead.
Alberto, just on the volume growth outlook in the second half, just wondering what gives you the confidence that we will begin to see such strong volume growth
That's great.
Thanks very much, Alberto.
Thank you. Your next question comes from Sophie Spartalis from Merrill Lynch. Please go ahead.
Good morning, Alberto. Just in terms of the Pilbara, if we can just focus there. Obviously, Burrup is still remaining quite uncertain in terms of the timeline. Just in terms of the servicing of those contracts, if that continues to ramp up quite nicely, is there still the need to buy third-party tons, or can you service that all internally?
Thanks for the question. We can service it internally, but that's the problem. When we have hiccups like we had in October and November, and that really hits us, then we have to source externally. If the plants are reliable, and we believe that, as I said, that they're going to be much more reliable in the past, we will be able to source internally. Now, there's also discussions with CSBP, but they're pretty much obviously up to full capacity and other players. Bontang is also full, which paradoxically is we used to bring tons from Bontang, but in the future, there's some flexibility on that. Yeah, the answer is yes, we can source it internally. Burrup, we believe will operate. It's just going to operate at a lower availability than we envisioned originally.
That should give us even more space for Yarwun to really have any hiccups would not have the impact that we had in October and November.
Okay. Just to follow up on Burrup, the increase in shareholding by 5%. Was that part of a previous contractual clause, or there was an option to increase your stake there?
No. That was negotiated before my time, we had agreed to buy it. It was a pre-agreed price and all of that. I think that this is a 30-year joint venture, you have to be 50/50. In any case, having been, maybe we could have pulled out, the remaining 45, 55 just doesn't work in a 30-year joint venture. It was something that had been agreed and negotiated before my time.
Okay, great. Thank you.
Perhaps I could add that it's been bought at fair value, there was no premium paid. We've just chosen to equalize preexisting option, it's at fair value. Okay?
Thanks for that.
Yeah.
Thank you. Your next question comes from Daniel Kang from Citigroup. Please go ahead.
Morning, everyone. We've just got a few questions. Firstly, on revenues. I'm just looking at a 4% rise in revenues. Can you comment on to what extent that reflects the rise in cost of the raw materials, ammonia and ammonium nitrate? Second one would be on volume. Should volume rise by 5% in FY 2018 and rise again in FY 2019, it would be fairly close to previous volume highs. Just wondering where the company's global capacity level will be. That's it from me.
We are not hearing you very well. I'm sorry, if you can repeat. I'm a bit lost in the question.
Use the microphone.
You're talking about a revenue growth of four and a volume of more. What is the question?
Is that better, Alberto? Just the question is, to what extent the revenue rise reflects the higher costs of ammonia and ammonium nitrate.
Oh, okay. Actually, it's a bit different because ammonia has been going There are lags on that, but the answer is no. The revenue, as I see it depends by region, but if you take Australia, the revenue is very similar to the volume growth. Then there's a little bit down that is probably from that price reset, but nothing more than that. Ammonia does play a bit of a lag, but it catches up, and then in the long term, it doesn't make much of a difference. As I looked at the numbers, there's a clear match between revenue and volumes in Australia. Actually North America, you see the same thing. They're quite matched.
Thanks, Alberto. The second question was on where you see the company's global capacity lies.
The global capacity. That is in terms of AN. Look, when Burrup is working like it should, we would be the only producers that have some spare capacity. I think that would be about, we would still have about 100,000 tons in Yarwun, roughly, and would be the only producer, let's say, that would have that capacity in two or three years. We're already thinking of debottlenecking. Can we do something in KI or can we do something? Again, that's why it's important to do something better in Yarwun. There are possibilities in Bontang too. With very little capital, little I mean AUD 5 million or AUD 10 million, we can probably increase 10% or 15%. There's a very small capital debottleneck initiative that we are studying right now.
Again, to put it in sum, we're the only ones that can sort of control that debottleneck issues, and we think we will need it in about three years, something like that.
Perfect. That's all from me. Thank you.
Thank you. Your next question comes from Niraj Shah from Morgan Stanley. Please go ahead.
Morning, guys. Just a couple questions from me. One on business improvement savings. You mentioned that it's likely to be more gradual as you're, I guess, more prudent on savings you extract from manufacturing. I guess how much of your original sort of targets were savings derived from manufacturing to begin with?
Okay. We were always thinking that manufacturing should grow up to about 30% to 35% of the total savings. That is still the case. We believe that we will deliver, let's say, significant amounts of value manufacturing, but it will take longer. Let me give you what does that mean. In continuous manufacturing, we believe we can increase about 10 points of OEE, which is a measure of availability, on average, in 24 to 30 months. This is a gradual process, but 10 points availability has a significant impact when you're really constrained like we would be. On IS, we are doing projects that significantly reduce the number of SKUs of products that we produce, and we will be able to do something which is increase utilization of plants and rationalization of plants around the world.
Those are all, let's say, multimillion-dollar initiatives that will eventually flow to the bottom line. As I said before, that will be part of business as usual. We think we can deliver that again, in this space gradually, but the full extent, we should be able to keep delivering those benefits 2019, 2020, and 2021. It's just a bit more space, but at the total levels that we have flagged probably in the past. It's just going to take longer. In sum, and probably I wasn't very clear, we were always expecting in 2019 that manufacturing will be about, let's say, 35% or 40%. Take of AUD 100, AUD 35 million or AUD 40 million, AUD 30 million. We'll still deliver that, but it'll take longer to deliver.
Got it. Thank you. Just a second question. You mentioned in this period emulsion was quite strong, and it had a mixed contribution. What drove the strength in emulsion, and I guess, how sustainable is that?
Look, if you look at EBS growing and mix growing, it is all part of this increasing blasting performance. You see it in Australia very significantly. Those are all now business as usual, but they really started in the breakaway program saying, "How can we deliver more value to our customers?" It is sustainable. It is not, let's say, part of it. A small part may be weather driven, but it is more structural. As you know, emulsion, there's more power into the explosions. As we're able to prove to our customers how we can deliver more precise blasting, which is the EBS, and more power through the emulsions and through more complicated high-end explosives. We've been able to show that it's more productive, slightly higher cost, but greater productivity. It's sustainable. Not 100%, but most of it.
Got it. Thank you. Sorry, just one more last one. Just on your slide on FY 2019 assumptions, do you assume a full year contribution from Burrup depreciation and amortization?
That's a good question. Our view, and we're working with our accountants on that, is that Burrup, we will only begin expensing it when Burrup is reliably operating. Again, that may be a definition of, let's say, if during three months, four months it is operating at an 80% capacity availability, that would fit the definition of reliable. At that moment, we would begin expensing it. Having said that, if Burrup is not operating or is operating very unreliable, that means it is operating three weeks and then three weeks off, three weeks on at availabilities of 20% or 30% or 40%, that would not fit the definition of a plant that is ready to continuously operate. The answer is, we will let you know when that moment comes. For sure, it will come when it's permanently fixed.
If it comes before, at this stage, we do not know. That's why I was very careful in my statement saying for 2019, we are assuming low reliabilities of Burrup in the current sort of state of the world. In November, we will have much better evidence of how it has been operating. Then we will update the market of where it is. If it's 80%, then you will have one answer. If it's 40%, then we will not be expensing it.
Understood. Thank you.
We do not, unfortunately, run this. We have a good understanding, but the level of influence that we can have is not as high. Hence, we were giving you our best estimates. As I said, we're working actually very closely with them. At this stage, we thought it would be prudent to assume the low reliability, and hence the guidance has a low reliability. Even with that, 2019, as implicit in our numbers, would have a, let's say, interesting financial results in 2019.
Thank you.
Thank you. Your next question comes from John Purtell from Macquarie Group. Please go ahead.
Good morning. Alberto, just had a couple of questions. Look, just following on from Neeraj's question there on Burrup. Just appreciate it's difficult to call, but given that you've got stronger West Australian demand over the next sort of 12-18 months, if we don't see an improvement in production performance, does that mean that sourcing and transport costs for Burrup might indeed increase over the next 12-18 months, or can you mitigate that?
Thanks, John. Look, let me be explicit. The market consensus before this call, after the guidance, was around 350 for the second half. Yes. That market consensus, I'm not validating that it's our, because we don't put results, but basically if you take our guidance, you would be somewhere around those lines. That does not assume Burrup operating. It's only one month of operations, which means it assumes that we are sourcing from Yarwun and whatever other places. If you extrapolate our guidance into 2019, it talks about, we believe that the strong performance of the second half will carry into 2019. That is assuming very low reliabilities of Burrup. The answer to your question is no, it wouldn't increase anything versus the second half of 2018.
Okay. Thank you. Just the second question, if we reflect on some of the manufacturing issues, is there an increase in CapEx required here in your view, Alberto, or are you simply just taking a more measured approach to the sustainability of the improvement?
I am very confident of the new management team. We brought people basically from Schlumberger. We relied the second company on somebody who ran all manufacturing in Schlumberger. We have very capable people from Orica too, that we've moved around. Their current views on that topic is, look, we would not need any significant amounts of sustaining capital. We may need something more, but in the past, we probably should have also invested part of the sustaining capital in a more disciplined and probably prioritized way. The answer in numbers is, we've given guidance of AUD 300 million-AUD 320 million. At this stage, I don't know, if maybe after six months it goes to AUD 350 million, but it's not going to go to AUD 400 million, to put it that way.
We may have some small increase as a result of all of the evaluations and new focus standardization that the new team is having. They don't expect it to be meaningful, but it could be somewhat higher than the guidance that we gave.
Thank you.
Thank you. Your next question comes from Scott Ryall, from Rimor Equity Research. Please go ahead.
Hi. Thanks very much. Maybe I'll just continue on with the manufacturing issues. Can you, Alberto, just be really clear on Yarwun and KI in terms of the unplanned issues there, that they are done now?
On KI, we had the turnaround that was pretty well implemented. As I said, the first one in five years under budget and on time. For the second half, I think it's reasonable to expect that it will operate at high availabilities and at a good rate. These are all planned, so they may always have some hiccups, but we do not expect that. I think that it is reasonable to expect that KI will work pretty well and at close to full capacity in the second half and into 2019. In terms of Yarwun, the issues that we had in the first quarter was on mothballing or recommissioning. All these plants are made to run like airplanes, and you always dread, and manufacturing guys who understand this much better than I, always dread mothballing plants, because precisely when you're recommissioning them, you have all sorts of issues.
That was the big issue that we had. If you look at the manufacturing impact, a big part of that that we outlay was the Yarwun, and it was when we had to pressure it because of lack of issues in Burrup, and we had to demand from it, and it just couldn't cope. Especially the two plants that were recommissioned had significant failure issues. What is happening now? We have now run them. We have stabilized them. We are currently doing a turnaround in the one that was always operating. We're doing that turnaround right now. All, again, I can tell from my manufacturing guys, they expect Yarwun in the second half to be much more reliable than especially in the first quarter of the year. Is it fixed? No.
There's a lot of work to ensure, there's a lot of catch-up work to do, to ensure that these plants are run at the levels of availability that we expect them to run. The answer is, we should improve, but I don't expect them to say everything is done, and we fixed it. It will take much longer. On a trend basis, things will be better.
Okay.
Let me say, lastly, as I said, if Burrup operates, because it hasn't operated at all in the past six months. If Burrup is able to operate, let's say, at 40% availability, that will take a lot of pressure off Yarwun. Hence, I think, it will de-risk completely the whole manufacturing. In other words, manufacturing was under such pressure because we had just recommissioned the plant, and Burrup was producing zero.
Mm-hmm. Yep. Understood. Further to that, you mentioned in your prepared comments the importance as you see volume growth of being able to deliver reliable supply increases or words to that effect. Could you just tell me, leaving aside Burrup, which obviously is not in your control, the last couple of years you've seen unplanned issues at pretty much every one of your plants. Could you detail for us what you've done to change, I guess, the notifications internally that are coming up to you, if that's necessary to make sure that you as CEO are receiving timely information around some of these issues that are coming up? Perhaps what you're doing also to implement predictive maintenance technologies or whatever else so that you don't have so many unplanned issues, please.
Yes. Thanks for the question. Let me give a bit of history, and again, this is how these things evolved. If you look at the whole, for the past five years, what happened, obviously even five years ago, without Burrup, we had these plants at a level of excess supply. Even during the boom, you had excess supply versus demand. When the whole crisis happened, you remember the mines high-graded enormously. The strip ratios collapsed in many places. That's where we were hit significantly. We went down. Remember, we used to sell up to 3.9 million tons at the peak, and in our worst year, we sold about 3.55 million tons, if I remember correctly. There was about a 400,000 tons decline in our volume of explosives. Most of that was in Australia. When that happens, the plants may function inefficiently, and nobody notices.
Again, we were focused on commercial. We were trying to renegotiate. The whole manufacturing team obviously continued, and they obviously tried to do a good job. Because if they didn't perform, it wasn't an issue. It just didn't pop up into the radar. What has happened in the past 12 months is that the demand has grown significantly. As you will see, we will hit a probably close to record volume of tons in Australia this year. Hence the pressure, now you see it. While in the past, if the plant didn't perform, it wasn't an issue. Now it goes straight to the bottom line. That's the first thing of why we are seeing it. The second thing, obviously, is what you are saying. The disciplines required to have successful manufacturing operations go around having a significant increase in planned maintenance and minimizing unplanned maintenance.
When we benchmark our plants, we would see unplanned maintenance being double or more than double what a second quartile plant should have. That really in manufacturing is the most significant issue. You need to minimize unplanned maintenance, obviously, and maximize planned maintenance. That has all sorts of virtuous circle, and when you have unplanned maintenance, you have a vicious circle. The most vicious of unplanned maintenance is that these continuous plants, when they are stopped abruptly, the whole plant suffers. You always have issues when you restart it. In sum, I think manufacturing for maybe seven or eight years was not an area of focus of the company. That's no excuse. We should have had it. It now is having the attention that it deserves. It is affecting the bottom line, and we should do everything in our power to have probably a much better operation.
I am confident that the focus, the quality of the team, and the focus that we have now will deliver that within a reasonable amount of time, and that the trend of improvement will be continuous. We should have a better second half than the first half. We should have a better 2019 than the second half of 2018, and so on.
All right. Thank you. Let me just switch hopefully to a quicker question around technology, which I'm pretty interested in. You mentioned in your last BlastIQ section that you have a key Australian account that's adopted the technology in over 35 sites. What's the timeframe over which you believe that there will be some interesting data that shows that there is continuous improvements to be made? How quickly does the other customer get confirmation of the return on investment, if you like?
That's a good question. It's immediately. Before we used to have, because this was all captured in paper, and then it took a long time to process, and it was in different data sheets. It would take us four or five months to come back to the customer. Now, actually, what happens is that you have, and this is operating right now with several customers. You have a committee where we agree on a plan of improvement, and that plan of improvement is measured in meetings every month. We have the data to validate. It's important that you have that plan where we say, "Okay, this is what we're seeing. This is whatever. This is the spacing between drill holes. This is the type of fragmentation. This is the quality. This is the variability in fragmentation," et cetera.
there's a plan of improvement, and then you validate the plan of improvement to the actual results, and that is in real time. That is happening in Australia as we speak, and it's in real time.
All right, great. Thank you. That's all I had.
Thank you. Your next question comes from Grant Saligari from Credit Suisse. Please go ahead.
Good morning. Thank you. Just a couple. Just first on the revenue in Australia. It was interesting that EBS sales were up 50%, yet the revenue grew significantly more slowly than the volume. What was the reason for that?
I know the answer. It was about one or two points below, let me come back to that. I know the answer. I'll come back to you in a second.
Okay, I appreciate that. Just a second one, perhaps while we think about that one. Latin America and EMEA, you're projecting quite big turnarounds of the EBIT line for both of those businesses in the second half. How much visibility around that turnaround do you have, and I guess, could you maybe just elaborate on any of the risks sort of positively or negatively we should be, sort of, I guess, cognizant about in that profit improvement?
We have good visibility in, again, Latin America in the sense that, well, we know the one-offs are not going to happen in the second half, and we have the volume. We have volumes contracted already, we have a good visibility on how volumes are going to grow, and we have a good visibility on the prices. We were careful when we put out the guidance that we say we expect a second half similar to the second half of last year is because we have some level of confidence that that's going to happen. Getting back to your first question, the answer is we are selling significantly more into the Pilbara and into Indonesia. On average, as you know, the margins are lower in the Pilbara and Indonesia than versus in the East Coast of Australia.
That's why the volume increase you see a smaller percentage than the revenue.
Okay. That makes sense. Thanks. Could we maybe just come back to some of the risks around that guidance for LATAM and EMEA, please?
The risks for-
Well, there's a projection of a significant improvement in EBIT from LATAM and from Europe. You said LATAM, you've got contracted volume and price, so that's the basis, your visibility. Any other risks on the cost side that we should be cognizant of?
As we look at that AUD 20 million price sort of impact on revenue, it's almost one or two is Australia. The rest are basically between EMEA and Latin America. Even with that, we still believe that we will be able to overcompensate that and then have something EBIT similar. In terms of risk, we know that price reset, we know the volumes, and there's really no manufacturing. It would be maybe weather, maybe something. Latin America is negotiating right now contracts with It's one of the only pending things with a large supplier. That could be one thing. There's a large tender. If we don't make that could impact Latin America something. That's probably the only thing that I would think. EMEA. David Noon, who was the former CEO, is the President.
He has a very good team right now. I think, again, his understanding of the business right now is up to speed. I'm confident again that we should be close to H2. The issues on manufacturing of Geita are basically almost all solved. We mentioned, we flagged that there was an issue with a large customer that had production issues and stocking issues in the first half that's in Mozambique. That's been solved. That's a very large contract. We've been able to renew that contract, and we believe that it's going to operate at full capacity. My level of comfort of EMEA is probably quite high. In Latin America, it's a bit less high.
Okay, that's helpful. Just finally, if I could quickly. Operating cash flow was surprising, I guess, in the first half, from the working capital perspective. Will operating cash flow improve in the second half? Should we expect any significant change in the working capital position, please?
I'll let Vince answer that. I would just say that it was low, without the one-offs, it should have been around 50% or something like that. We should expect something around 80. Vince?
80 is what we target, including sustaining CapEx. It was lower. As I think I mentioned in my presentation, there was a working capital build. There was a slight increase in debtors as well, in line with sales. The working capital build, the biggest impact was inventory. We ran down stocks of cyanide in the prior comparable period. We built that up. At the same time as we built it up, there was a slight fall off of cyanide sales in the current period. The short answer to your question is, we expect our cash conversion and our working capital position to improve in the second half. We absolutely do. Anything less than 80% is frankly disappointing. That's what we target. 80% inclusive of spend on sustaining CapEx is the target. I think in the last period, from memory, we got about 60%-67%?
Which was actually short of the mark as well. We've clearly got more work to do there. I hope I've answered your question frankly and directly.
Yes. Thank you. That's very helpful.
Thank you very much for your questions. Very comprehensive. Thanks all for attending.