Investor Update

Aug 19, 2019

Ladies and gentlemen, welcome to the DSV Panalpina Analyst Conference Call and Live Webcast. I'm Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jens Bjorn Anderson, CEO of DSV Panalpina. Please go ahead, sir. Thank you very much, and good morning here from Basel where I'm joined today with Jens Lund. We are extremely pleased to be able to speak to you this morning after the initial announcement of the deal of combination of DSV and Panalpina, the 1st April. We worked very hard to get the period as short as possible between the signing of the deal on that particular day and today. And before I start, I'd just like to give my recognition to, to the whole team between DSV and Panalpina who worked extremely hard for making this possible and actually making it possible for us to close the deal probably slightly faster than what we had anticipated when we first announced it. It's really been, amazing the job, which has been done. Also, some credit should go through the people and the management of Panalpina who've actually been extremely forthcoming in the period. And allowed us to prepare as well as possible. We really, really appreciate that. That has been extremely helpful. So thank you very much for that. If we dig into the presentation, first we have the disclaimer on page number 2, it is slightly more comprehensive than normal, but I would advise you to to read that. And after that, we have the agenda for this morning on Page number 3. Where we will talk a little bit about the new combined company, DSV, Panalpina. First, and then I will hand over to, to Jens Lund, who will in more detail speak about the settlement of the exchange offer. A little bit about the synergies and the costs related to doing the integration. Also, just, we want to emphasize that nothing has changed when it comes to our capital structure and the capital allocation. Of course, that is natural just to touch upon that. And then we will just go through the next steps and we will do the plenty of time for Q And A So on page number 4, you will see DSV Panalpina. As of today, we have a leading market decision, we are very proud and happy about that. We are now, as of right now, 60,000 dedicated employees in more than 90 countries. This is exactly what we wanted with the combination of the 2 companies. We will be a clear number 2 when it comes to air freight. Seafreight, we will be number 3 and road freight in Europe, we are the 4th largest and when it comes to contract logistics, in our solutions division, we are a top 10 company. We've talked to you guys, the analysts and investors a lot about this in the past. We are a very fragmented industry for us. It makes a lot of sense to consolidate the industry the statement that Big is beautiful, still very much is correct. There are a lot of benefits by growing your network and the service offerings. And we are in a position to offer significant different opportunities and options to our customers as of today. So on page number 5, We have said that together, we can achieve more. This is not just a slogan. This is something I truly believe in. We will now take the strength of 2 good companies put them together. And if we manage this correctly, as I hope and expect that we will, we can actually achieve not on than we could as 2 individual companies. You saw, you can see, as I said before, we will be at top for transport and logistics player. We are not obsessed with the leaked tables or anything like this, and we will come back to it later. The main reason for putting the two companies together is that we want to create a shareholder value. We are expanding our global network. We are still a network business. We do offer train calls from anywhere in the world. To anywhere in the world. So the fact that we have a very dense and strong network has always been important for us. We realized that more than seen years ago when we started to build up our network in Europe. And I know we we already before this combination said that we were a truly global company, but now we are even more global. There's no doubt about that. There are some really exciting additions to the network now with the ex Panalpina locations are now in more than 90 countries, and we have, we'll have more than 1500 offices and logistics facilities. Then we are not ashamed also to say that we are a top performing company. The results, we are humble about that, but they speak for themselves. We have industry leading margins across the divisions. And, I think if we, we will come back to that when we look at the business case, if we seats, we will be able to create a lot of value for shareholders if we manage to bring the margins of combined company to the margin that we have, to date. We also take comfort when we stand on the task of this integration challenge that we have a strong integration, a track record. We have tried this before, at least the the people coming from the PSV side of things. They have been involved in numerous integrations and that was also, of course, for both Jens Lund and myself, who have been part in many also larger acquisitions and transactions. And the integration template we will use this time is not very different from the ones we have used before. We like very much IIT and processes, but we are still a people's business. It is something we reconfirm. Every time we meet up, it is staff and the people of our company that makes the difference so that we are now 60,000 dedicated employees are very, very important for us. We, have skilled people and it is supported by a very strong and also scalable IT systems that we will use. So when we are now getting together, it's all about combining the strengths of the 2 companies. And, I'm sure we will make this as success. So the last slide before I hand over to Jens Lund is also, it's on page number 6. Some more statistics. I talked about it before. People makes the difference. We will be 60,000 employees. The pro rata or what should you say, annual revenue will be a 1 point or 118 1,000,000,000 Danish Kronos, and you can see the distribution below, 79 coming from DSV and 39 coming from Panalpina. We will move more than 1,700,000 tons of air freight. Panalpina has a bigger volume than the DSV. It's one of the things that really attracted us to Panalina. And for you, analysts, before you too many, calculations. You have to remember, and we've talked about that many times that the mix of business is a little bit different where Panalpina are very strong within the perishables segment. It is about of the air volume, it carries a much lower GP, but it is only about 5% of the GP. So think it's important to take that into consideration. On the seafreight, we will handle slightly less than the 3,000,000 TEUs put together. We have a similar size We are very, very pleased about that. Also here, there's a little bit difference in the mix where some of the the CUs handled by Panalpina, they carry a lower GP than what we have in DSV, but it is only approximately 10% So it's not too much. And we are excited to get in and analyze this and see how this will add value all or through the DSV network. We know, for instance, that there is a very strong LCL network in Palatina that we don't have in fee today. And I'm sure this is something that our customers will very much appreciate. We're still very strong in road, and it's important to say once again that we are not 3 companies. We are one company. So, the road business will also benefit from the combination, approximately $2,000,000,000 of revenue from Panalpina will go into GSV Road. And we also, I know that the rogue guys, they cannot wait to get out and the services to all the Panalpina customers because it goes without saying that the road capabilities of DSV is somewhat stronger than what was in Argentina. We have, together, we will have approximately 6,000,000 square meters of warehouses in our logistics division, the solutions division, This is also something that will be an added benefit. And I'm sure that cross selling opportunities will be big. And after the initial integration, this is, of course, something that we expect a great deal from. So, we will build a solid market leader, a strong company with hopefully industry leading margins when we have integrated the 2 companies. The journey starts today. We have prepared well. We have planned well, and it's great to sit here together today and be able to speak to you. And with these words on from page number 7, I will hand over the microphone so to say to you, Jens. Take it away. Thank you very much. And I'll quickly just go through the final details on the settlement. So we've increased the share capital almost 30%. So we have now 241,500,000 shares in GSV. And we had success rate on the offer of almost 98.5%. And that's sort of leaves us with another 1.5% that we will have to sort of squeeze out and there will be a process for that. The enterprise value has also been discussed a little bit initially, the enterprise was somewhat lower, but since we have an all share transaction and all share price has come up, the enterprise value, without the inclusion of IFRS 16 liabilities is 1,000,000,000 you include IFRS 16, it's 1,000,000,000,000 Dkk. So it's certainly a very significant transaction for us. The delisting of Panalpina, we will request this today. Then we can go to the authorities. They will have a look at it and, I've been informed that it will take 2 to 3 weeks and the panel PNS sales will be de listed. So I'm not traded on the stock exchange anymore. And I said, the squeeze out, there's a longer procedure for that because it has some legal requirements that has to be satisfied, and we will work with that. We have now our new 10 point percent shareholder call them because, the entrepreneurs, Deepgram will wants to have received the TSB shares to pay the above the 10% mark, and there will be a sharp note on that, but we just put this in here as well to confirm. And then of course, there are still some household items that are outstanding. One is that the list company, we will have to call for an extraordinary general meeting and change the name of listed companies. So that we call a DSV Panalpina AS. We've also, in the transaction agreement, I agree that we would propose a member to be voted in from foundation, to the board, and that will also be part of the next extraordinary general meeting. And we will soon send an invite off for that. If we skip to Slide number 8, we have made an overview of the synergies, and I think This is more or less in line with what the market had already expected 1,000,000,000 And it is, of course, a consequence of merging operations and facilities, but certainly also that we will have a combination of the back office capabilities in both companies. We've not said anything specifically about the 1 off costs, the so called special items, but typically they are more or less, at the same level as expected synergies, but we will have to, make or prepare the plans in detail before we can be 100% specific on that. But so far, I would use the same number for my calculations and then if I had to do the spreadsheets. I think we will come out or we have plans to come out with more guidance on this when we publish our Q3 numbers And if you notice, it has been changed to the 1st November in order for us to be able to have the opening balance ready, but also here, we will have more detailed confirmation on the synergies as well as the one off costs ready. We will also say something about the timing by then. And so far, I would just use, if I had to do my spreadsheet so that we look at that perhaps a similar timing. Like you saw on the initial announcement on the UTI transaction. But we do reserve our right to come back and change it a little bit once we have the plans sort of gone through in a more detailed way with the organization. Let's go to slide number 9. Overall, we see that we expect to lift the markets to a level that is on the same level as TSE level and that means that with current performance, it is more than 7% in margin. We have seen that this has also been possible on the other transaction So this is the ambition for this transaction as well. We expect the EPS will be accretive in 'twenty one. When you make your calculations, you have to take into account that the amortization of customer relations will mean something. We don't have this number yet. But if I should make an estimate for my spreadsheet, I would use to 3% of the transaction value put that in. And then in the annual report, you will see that the amortized is with 30% per year. On growth, Of course, when we make the integration, we will grow a little bit slower. So also when you make your spreadsheet, please take that into consideration as well. We do expect a small loss of volumes. This is normal when you make an integration. Typically, we guide, less than 5% and probably lower impact on the GP margin for this This is also based on historical experience. Actually, we've typically managed to perform quite well on this So it's quite conservative what we put into the business case. The way we have gone organized the company is that we've emerged the 2 companies and the foundation for the future entity will be the way we are organized in DSV today. This also means that some of the volumes that are produced in Panatina will go into the Road division. If I should use an estimate, I'll probably take 50 percent of the volumes in contract logistics and add to road we have to go out and see exactly what type of operation we're talking about before we make a final decision on this. And then I think final note is our long term financial targets. They actually sort of had a target of 2020 when we had to reach them. We will now come out and new targets. This will be in the second half of twenty twenty before we announce these targets. And it will be based on the combined entity. So a little bit on the long term targets there. We move to the next slide, capital structure has also been quite a lot of interest into that, because it's clear that when we have funded the transaction with all shares. This means that we have, if you want to put it like there's too much liquidity in the company and we will lever the company up. We have a target leverage of less than 2 times EBITDA, and we're going to stick to that. There. So this means that we can, repurchase significant volumes of shares. And right now, have a share buyback program running of $3,500,000,000 $3,000,000,000 DKK5,000,000. We have roughly repurchased shares for half of that amount. This program will run out on the 8th November and then we will launch a new one. We will also come back next year, perhaps and make a plan so that you know exactly what's going to happen on the share buyback. Including any sort of unusual adjustments that we might make in order to reach our target levels. The dividend policy is also important. We have made an agreement with the shareholders that going forward, we will allocate approximately 15% of our net profit in dividend. So slightly more than what we have done so far. If we move to the next slide, the timetable, we are now on 19th August. We settle now, and we plan to have an extraordinary general meeting September, as I mentioned before. And then we will announce the Q3 numbers on the first November. And I just repeat once more, the date has changed. So make sure that you pencil that in for the 1st November. And then the last thing that we need to do in the second half of twenty twenty is to publish the long term financial targets. And I think with that, we are ready for the Q And A session. So we're happy to take questions. We will now you. Participants The first question comes from Daniel Roeschka, Bernstein Research. Please go ahead. Good morning, gentlemen, and congratulations on the deal in closing this morning. And 3, if I may, could you talk a little bit about Panalapina's business portfolio, the mix in the business and how do you expect that to develop over the 2 years, you said you expect minimal revenue loss, but Panapina's business mix is quite different from yours in terms customer sizes sometimes in terms of the nature of the contracts and maybe also the specialized work they offer. So how are you thinking about that? Are you keeping all the contracts? Will you be returning some of the contracts? 2nd question, you mentioned IT as a source of saving and the elephant in the room is, of course, What's your day 0 hypothesis? When you think about this deal and the 2 systems in place, what are the key aspects to considering around that IT? And lastly, you mentioned a little bit about your organizational principles moving them into the DSV business structure. My third question would be, will you keep kind of the DSV country focused approach and how does DSV and the Panalpina organization on the country level then actually fits together? Yes, I will try to ask answer the 2 of the questions, then maybe, Jens, you can elaborate on the IT when it comes to the business mix, we are very comfortable with what we have seen. We have no hands of changing any of the contracts. We, now this is one of the items that we have not been granted so much to antitrust and competitive reasons. We will now go in and evaluate the agreements that lies but with the knowledge we have right now, there would be no need to do any major changes. We are excited about custom relationships that Panalpina has, it seems like they have a very longstanding relationships with some high quality customers. I'm I hope very much that they like what they see and like that even more, in the future. But of course, we will evaluate everything and see something that we don't like, we will, of course, try to speak to customers about that. But I think, the whole idea of lifting the margins comes not so much from a GP uplift, but more from a productivity improvement, so conversion ratio improvement. Then when it comes to the organization, We have indicated this morning that it would be the DSV structure that would be the structure prevailing going forward. We have the deepest respect for the way that that Panalpina has been organized, but you can only organize yourself one way. And I think we, we like very much in DSV the way that we empower our people. We have a very strong, very firm framework that you can never even dent or break out of. But within that framework, we'd like to give our management, a lot of freedom to organize themselves the way they want to be organized and to take rational decisions that supports the P and L. So, that does not mean that it will be a carbon copy going forward of the way we organize today. It will be some sort of hybrid, but you can say that the overall principles will probably be the ones that we know it from DSV today. Maybe on the IT? Yes, I think on the IT side, it's clear that given that the system evolverated in DSV has a very high productivity and our team has been on a journey where they've been increasing the productivity. We will take, of course, many of the things out of the DSV system, but there are also things in panel teams that have worked well. So we will take advantage of them. And I think It's fair to say that on the major production systems, it will be the infrastructure software stack that sort of has been used in DSV that we will use going forward. We cannot afford to go into a project where we will continue to develop the platform we needed a platform that is developed in order to drive the company forward. So I think that's what we can say on the IT side right now. But I would say that I've met a lot of things on the IT side in Pennsylvania. That we can learn from as well know about it. Excellent, gentlemen. Thank you very clear. The next question comes from Andy Chu from Deutsche Bank. Please go ahead. Good morning. Two questions, please. Firstly, on the Capital struck you alluded to potentially some unusual adjustments. I wondered if you could just outline what you might mean by unusual adjustments. Your capital structure to your sort of target sort of 2 times net debt to EBITDA? And then secondly, in terms of the synergy calculation, have you sort of a macro scenario have you baked in? Have you put in any sort of recession out to 2022 given that we're probably likely quite late cycle, just have in the back of my mind, ABX, where you ran into the financial crisis, again, put a one off sort of unusual sort of macro scenarios, but you then upped the synergy targets. So what's baked in, please? I think, I'll answer that on the capital structure. Normally, we would do, these share buybacks that are done under the safe ARBA model. And this is also what we prefer is very open. It's very transparent for the market. But let's say that we would like to make one bigger adjustment, we might do the unusual thing of having a reverse auction. We've not decided on that yet, but if that will be the case, it will happen in the first half of next year. So that's a little bit on that. We would prefer it actually to do the other thing, but it might be that this is beneficial. We're analyzing that together with the licenses. On the synergies, we basically baked in the current growth environment. And of course, as you alluded to, when we acquired ABX, that was a big economic turn down and we had to make some additional adjustments If that becomes relevant, we will let you know that so far our base case is that the economies growing in line with what we see today. Can I just ask one more in terms of just housekeeping on tax right? And, CapEx, is there anything that you can say there on that front on those fronts, please? Or do we have to wait till, 1st November? The tax rate, I would just use the current tax rate. We don't think it's going to be materially different. So please use that on the CapEx think we will have to await November, but It's not going to be a dramatically different from what we have today. We might spend a little bit extra in particular on the IT side investing in the future. But apart from that, I think it's going to be rather similar. And just on tax rate that just used the DSV tax rates or blend of, the 2 companies? Probably use DSV tax rate, because we've gone to our TPE structure and things like that. So, so we will use the framework that is available in TSB today. Thank you very much. The next question comes from Lars Heindorf, SEB. Please go ahead. Yes. Good morning, gentlemen. Two questions from my side. Firstly, regarding the EPS indication, the given that it will be accretive from 'twenty one. I just wonder if you could share with us, at least give us some of the indication of how much buyback you're factoring into that calculation, if any, at all. That's the first one. And then the second one is sort of more broad about the integration process in general. It's not so long since you did the same thing to Chai, which were very, very successful. UGI was a bit more mixed when it comes to the portfolio. Do you actually believe that this will be more or less complicated compared to what you saw at UTI and also, I mean, normally with size comes also complexity or maybe I'm wrong. So that's two questions. Yes, Lars, I'll take the last one before I forget in getting older. If we don't have the same sense of urgency maybe as we have with UTI, it was more a little bit without saying too much the rescue mission we were on with UCIA. We've spent a lot of time with the Panalpina management and staff saying we do not in any shape or form compared Panalpina to UTI. That would be highly wrong. As I said, initially, we will use the same template it will be cascaded down and we will take, hopefully, the right decisions and the ownership will for taking the decisions out in the countries and the branches will be taken by the local people. But of course, as you correctly point out, each each transaction and each integration is different. So of course, that's something we need to be aware of here in Argentina, but it's not something that leads us to do this in a very different way than what we have done and what may be apart from what I said initially. Okay. Can I just ask a follow-up on that? I mean, I know that it's limited to how much you maybe can say at this point of time, but Have you already, I mean, Linda, but the UTI acquisition, if I understand it correctly, you had very specific targets all the way out into the different branches people need to fulfill, I mean, how far have you come into that planning? That has not this is why we say it is preliminary number we are giving on the synergies. That does not mean that we expect that to change a lot, but we would like that. And it's the same is going to happen now. It will be anchored out to the furthest possible degree, meaning that if you sit with a department at a specific location, you will also be, allocated your kind of a synergy target. This is the way we normally like it. The synergy number does not stay in the office of Jens Lund. On my office, it needs to be alive out in the country. So we have it anchored. This is the only way and we will follow-up and measure this very, very closely as we have done in the past also. But of course, this has only worked that can start now last because we have not had access and we don't have the organization in place. Of course, we have relatively granular, what you say, idea about the synergies already now. It's not like it's just one big number. It is spread out amongst the divisions and some countries, but there's still some work to be done on that. Okay. And then on the buyback, and what have we included in this? We've basically taken the cash flow that produced and made no extraordinary adjustment. So we're quite comfortable with that number, last on the EPSA accretion. Okay. Just a clarification, do you expect to spend the free cash flow that you generate to buy back shares? That's what we put into the calculation. We might then make some extra adjustments. I could just make the number more robust. What has been key for us is? Can we articulate a number? That is accretive in the announcement in 'twenty one and we can. Okay. So do you do you expect that you will be able to buy back the 55,000,000 shares that you have issued or worry the C, 3 year periods? I heard that from many investors. We will see the So, there's a lot of moving parts in there. So, we will see last, but, we will certainly allocate, you know, a significant amount of money. And it would of course be a nice kind of feeling if it was possible. But trust us, there's no change. This is the message we want to give notes gains in the structure and the policy is exactly as it has been. And you should take comfort in the history. Also, if you go back and I think we demonstrated that we've been willing to have this capital allocation structure, I don't know, as for, I don't know if it's 15 or 20 years. So no changes on that front. The next question comes from Marcus Ballander from Nordea. Please go ahead. Thank you. Just want to try to understand the synergies a little bit better. And I'm wondering if the 2,200,000,000, does that include procurement synergies or is it just sort of operational synergies? Think if we look at this, it's a little bit complex because we perhaps have a little bit of different way to measure the GP Panalpina and TSB. So if we just have that as a reservation, I will say that 90% of the synergies is below the GP and 10% is above. And of course, the 10% above can be that we make extra good procurement or it can be that we sort of run the gateways and the more efficient way it can be these kinds of things. So that was what I would use as an assumption. If I was making much purchase. Okay, great. Thank you. Second question, Jens Bjorn, you mentioned that cross selling opportunities were big and I realized that it difficult to quantify them at this point. But could you perhaps give an indication of how big they were when you bought UTI? Yes, you know, it's, we would have a lot to have said a lot more about this today and also on procurement synergies, but though it would be like a free lunch, you would never we couldn't we couldn't quantify it. You could not hold us accountable for that afterwards. But of course, you can discuss what is the reason that DSV has performed better than the markets in recent quarters or years? Is that because of UTI, would that have happened anyway? Nobody knows. I'm sure that part of the reason is actually due to the UTI accuracy that the product we have has been much better. Our buying power has increased and the network is stronger. So I think that actually plays a big role. And we hope that we will see the same now after Palantina as we alluded to in the presentation. You might see a dip in the out performance when it comes to taking market share because we are so focused on the combination of the 2 companies. But after that, we expect that we will be able once again to outgrow the market and probably also outgrow it faster than what we would have done. We have now the characteristics of the combined company will change now and I truly believe that we have a better product to the market. But it would be too easy, so to say for us today to put a number on that because nobody would ever be able to find that in the P and L households. Okay, understood. And the final question, just regarding the timing of the readjustment of the capital structure. Will you start that immediately or could you start it immediately or do you have to wait until you finish your and share buyback program or what's the timeline here? No, as I said, we've finished this one. We've probably kick off another one in in November under the Safe Harbor rules. And when we've gotten into the next year, we've done the annual report and we have a very good picture of what's going to happen next year. And we wouldn't have a debate with our advisors. It's advisable to make reverse that to auction or should we just continue as is and will we have significant enough capacity to adjust the structure during next year. So that's really the debate that's going to happen. And I think when we have announced the annual report and And we have sort of a more clear picture, we will be able to give transparency when it comes to that. But in reality, it needs the same. It's just some quarters of difference, that we're talking about when we allocate the capital And what we would like to do is we would like to interfere as little as possible with the way that the market had worked on a daily basis. The next question comes from Dan Togo Jenssen from Carnegie. For my husband. And could you maybe give me 1,500,000,000 or maybe the end of the call? Then I do not pay the phone bill. We cannot hear you. So okay, the 4 pillars you have facilities, can you maybe elaborate a bit on where you see both impacts that is on the policy that you have on slide 18? Then we can say something about, in general, of course, if you go below the GDP line, then two thirds or perhaps even a little bit more is of course on the rates on the staff side and the remaining part is all the external costs. And of course, if we should give you some guidance, I think I would just have to say, have a look at that and make your calculations. Then going back to UTI again here because as far as I recall, you had an initial sourcing synergy target. And then you have this soft tax on top cost pointing to around the $0.20 and this is maybe the synergies that Jensperand is alluding to coming afterwards, could we expect, so to say, a similar soft factor here, I. E. Around 20% on top, or how should we think about that? I think then what you should expect is exactly what we have announced this morning. And nothing more, nothing else than that. That does not mean that we will not strive for improvements all time, but it's simply too early for us to say that you will see this margin uplift, but we have said in the announcement that we have traditionally seen that the productivity of the company has increased after an acquisition because of the size we get But it's simply too early. It's a number 1 now for us and we will of course, along the lines, adjust the case, if we see that it becomes different from what we have announced today, but I think you should just keep it to what we have put out this morning. The next question comes from Damian Breuer RBC. Please go ahead. I've got 3 questions, please. First one, just housekeeping, just on the dividend, the 15% payout of net profits. Is that 15% all in after special charges and everything else? Or is that based on some sort of clean number? And then the other two questions, historically Panalpina had the dedicated Air network you give us your initial thoughts about what you can do with that and whether there's greater utilization and benefits you can get out of that with your bigger scale? And if so, how that works? And then secondly, what obviously you don't own very much or becoming a sizable real estate renter or lease Where are you on your real estate strategy and given the greater scale of the business, particularly over the last 3 years with Panalpina being added to it? What are you thinking about in terms of going forward there? Is there better consolidation to be done, not just in contract logistics, but across the businesses? I'll take the Damien, the question about the air network. It's correct that the Palatina, the APeca and terms of volume than what we are in air freight. And, to some degree, but only to some degree, there has rotted a little bit different to us where they have a so called charter network. That is correct. But you shouldn't put too much emphasis on that. That is only I wouldn't say fraction, but a limited amount of the volumes that from Panalpina that goes into that. But of course, this is the whole idea, as you correctly point out, that combining the 2 companies, you can utilize the capacity much better I know this as an old freight forward that when you get bigger volumes, you have the opportunity to plan the specific trench trends out much, much better than you could if you did not have a large volume. So of course, we expect that we will get some benefits from that. And we're also excited to get to know the capabilities of this network that Panalpina has built up. It's a small structure than what we have in DSV with some gateways. And you need that because of the sheer volumes and I think we, if we plan this right, that I think there's a lot of opportunities here. And I think on the dividend side, we will make some adjustments before we make that calculation. Otherwise, we will have a situation where the dividend will fluctuate dramatically. And I don't think that's very productive comes to the way that the analysts take to see this. So we will clearly make some adjustments and make the calculation. So that we have a more steady development of dividends. When it comes to the real estate, I think it's something that have been putting a lot of resources into in DSV for years because we believe that it's very important we sit in modern facilities and that we consolidate our activities in these facilities, Panadina, volume or the combined entity going forward will continue down that path. And I think that There's really no major changes to the way that has been operated. We just get more volume to work with and therefore, we are probably also a more attractive partner for our counter policies. The next question comes from Neil Glynn, Credit Suisse. Please go ahead. Questions, please. The first first two, both on integration. Just firstly, I guess it seems like quite a a positive that Stephan and Robert will remain within the company or at least on the integration committee per the announcement this morning. But is there any specific timeline envisage that they will remain within the company? I'm just interested in your thoughts on that at this point. Second question, more, more housekeeping. You've obviously touched on the SAP, the lack of future for SAP TMS within palapina in the future. Can I confirm that your integration costs do not include a seemingly likely write down of the SAP spend to date? And if you can give us any kind of feel for how large that might write down might actually be, that would be helpful. And then a third question with respect to potential future buybacks. However, whatever form any equity repurchase thing might take, is are there any provisions to prevent the Ernst Schooner Shifton stake rising appreciably over time? Because I guess if they weren't to participate in those transactions. Clearly, if you're buying back stock that they could rise quite significantly if you look out a few years. Yes, I will, I'll start off, Neil. Look at Stephan and Robert, we are, as you say, we are extremely pleased with the cooperation we've had. They've been super transparent and and open and they've really helped us to prepare the integration so far and we are very pleased about the fact that they can and they have expressed the willingness to stay on the information, Mitsubishi. They've given us a lot of valuable information and they, of course, for obvious reasons, know the company is very well. They've handled it in a professional manner, and we expect to be able to change information in the period to come. How long that's going to be. We have not defined that. They will stay on the integration committee as long as it is needed and necessary in a way you can say a lot of the of the work has already been done for the integration committee, but there's still a lot of information that needs to be exchanged And it's also maybe important to stress that the tasks and the job of the integration committee is to draw the bigger lines, so to say, the integration committee is not going to get involved in a very local, what you say decision about what going to happen further down in a particular country. It's a couple of top layers of the organization. They will be a part of. But we are super pleased about the fact that they are a part of the team going forward. And I think if we look at the SAP and the housekeeping question, I think Panathina have already written down most of investments that they have made on the IT side. But let's say there are investments still lift and they're minor. And there will be some system that we don't need, then it will be part of an opening balance discussion. So we will write it down and then they will turn into a good way. The money they have left when it's sitting in the balance sheet. So that's gone, whether we like it or not. But it shouldn't really mean a lot. And then I think with the buyback and the Amscaler stiff tone, I'm not an expert on the system, but I see that they do actually allocate a significant amount of money to different architects at the year. And it's probably not going to be sufficient for them without me knowing just to rely on the dividend because it's somewhat lower than what they've been used to. So I would have thought that they would have plan where they would keep a certain shareholding and they might then, over time, decide to sell a few days So otherwise, they would, as you mentioned, perhaps increase in size, but it would be a while before they would reach the 15 percent mark. We would like to pay many sales buyback, but it'll take some time. We'll do what we can, if they stay on to make them a 15% shareholder, we can promise you that. Yes, now I would also maybe if I could just add something, I wouldn't be too that was the question. The freight, so to say, of that, they are extremely supportive. They are happy of the transaction. They are very excited to take part in the future value creation. We have discussed that a lot with them in the initial phase. So, they are fully committed to the strategy of DSV and they are supportive and we look forward to seeing them in the boardroom of the combined also. The next question comes from David Kerstens Jefferies. Please go ahead. Good morning, gentlemen. Congratulations with the completion of the Panopino takeover. Two questions, please. First on the target for EPS accretion by 2021. Is it fair to assume that that is consistent with with value accretion in the same year as well. And to what extent is value accretion dependent on refinancing the balance sheet after the 30 percent capital increase, what is the hurdle rate you would be using in that analysis? Then the second question is regarding the addition to the road business, complicating the molding a little bit. Maybe can you provide a bit more clarity on where that business set within PAMA Pina and how profitable it was? I didn't exactly hear the comments you made in the opening remarks? Thank you very much. I think if we look at the calculations and the value accretion. Of course, we've made our own assumptions when it comes to realization of the synergies and the business case, overall, And I would say that I think we will leave that for now until we come to November, but we do feel comfortable with information we have internally that we can deliver on the execution in 2021. So when you prepare your model hours, tweak it in such a way, if you believe in us, that it would also be accretive in 21. And you have to make it, of course, diluted adjusted so that you take the of course, it doesn't include special items and stuff like that. So that's a little bit on that. And when it comes to the road, volume. It's, of course, based on what we have seen so far. We've not been able to go into great detail on entertainment, they have created a little bit of a difference. So they do handle certain road volumes, or we consider to grow volumes in, a logistics division and then maybe might even be a certain volumes also within that freight forwarding. We will go in and have a look at that. We cannot be more specific than what we have been so far because it depends on what we see in detail. But what I did say to I say that at the beginning of presentation was with the knowledge we have right now, it looks like it could be in round numbers. Daimler's turnover in addition to the Road division of the combined company and CHF 2,000,000,000 to the Solutions division. We have coming from the contract logistics division of Panatina. But we know and we apologize for that that there will be a couple of quarters where numbers needs to be aligned, but we have been, we are committed to making it as transparent as open, but there needs to be a realignment of principles and ways of, yeah, booking different cost but we will come back to that as quickly as we can. Understood. Understood. And do you have a sense of the profitability that $2,000,000,000 in road business that will enter the road division? What is the best assumption to make sense? That GP looks fairly okay. EBIT may be not fantastic, but it's something we need to work on. We don't have full overview of that for the time be. All right. Thank you very much, gentlemen. The next question comes from Fin Peterson from Bankhaus Bank. Please go ahead. Yes, good morning and congrats with the deal. Again. You normally talk about loss of revenue around 5%. I wonder what you have put into your calculations here. And secondly, now you have been cooperating with the with the previous management of Panalpina and been through discussions and reach the synergy number, what kind of prices have you seen so far positive and negative in the process? I think the loss of revenue, we typically put a high end number into the business case of 5% and with a lower GP margin, so it probably accounts 3% of the specifically, that we see that on these small marginal contracts, we have to find a way forward. And that's sort of what we put into the business case. When we look back, we've probably done better than that, but better safe. I'm sorry. I think when it comes to synergies and where we are at right now, I would say that it's been a broad us, that has, you know, sort of been without too many, big surprises, as you allude to Panalpina as well organized company. And therefore, there's a lot of transparency, great detail in the numbers, good overview of all the things. And if you look at the reporting of Panalpina, you will also see no surprises at least for the last long period in time. So I think it's been a steady process and, without too many surprises of of magnitude or actually without any. So, so nothing really comes to mind. Okay. Thank you. The last question comes from Aymeric Pulan, Kepler. Please go ahead, sir. Yes, thank you. Good morning, everybody. I've got two questions. The first one is on the consolidation of Panalpina. Can you confirm it's going to be consolidated as of Q4? And if so, should we use the current consensus numbers I think it's 1,000,000 EBIT for the year and about 1,000,000 for Q4 as a starting block. I'm Swiss franc, obviously. And then secondly, you didn't give an indication about the phasing of the special items and also the payback for the for this restructuring effort. So could you give us a bit more indication about how the billion splits between Q4 20202021, please. That would be helpful. I think if we take the consolidation of Pernod Ricina, I don't think we can be allowed to wait until the first October. So it'll probably I will be consolidated from the 1st September and So it will impact the Q3 results of the combined entity the income that I would use, I would probably look at what was accomplished last year. I think this is also been the performance of the Panalpina so far this year. So, that was probably what I would put into my spreadsheet. We have not said anything about it, and we're not going to until the Q3 announcement. When it comes to special items, as I said, we will also say a little bit more on that on Q3 because we need to go out to the countries and have the business case agreed for them So we will need to do that work before we can be specific. Again, you need to make a spreadsheet. I understand that. Have a look at what we said initially on your and you'll probably not be too far off. So have a look at that. And don't expect too much to happen here in 2019, because this will see a lot of planning and a little bit of execution only. Ladies and gentlemen, that was the last question. I would now like to turn the conference back to Jensbern Anderson. For closing remarks. Please go ahead. Yes. Thank you. Thank you everybody for listening in. Thank you for coming up with all the good questions that you came up with. I hope we have been able to answer them through your satisfaction. Not, you're always welcome to contact us on our IR department. As you know, we are extremely excited about the task that lies ahead of us. I know there could be a few DSV and Panalpina employees listening in. To the Panalpina people. Welcome to the new combined company. We are super excited and also to the DSV people, please embrace your new colleagues together, we will achieve a lot. This company, will hopefully be the extreme successful going forward. So I really appreciate everything that has been happening so far. We will it going with the integration work now. And, as James Lund said previously, we will come back and announce the Q3 numbers on the 1st November, and we look very much forward to that. So in the meantime, take care and by here from and thank you for participating in the conference. You may now disconnect.