Earnings Call: H1 2018

Jul 26, 2018

Good morning, good afternoon and good evening to everyone. Thank you for joining Giroveritas H1 2018 results call. Nicolas Tissot, our CFO, is here with me to present the financial review. Let's move to the Page 5. I'm going to go through a few key highlights for H1 2018. Our OpEx Services business signed its largest ever contract with Qatar Gas. In digital, we accelerated our collaborative BIM initiatives by partnering with Autodesk. On the M and A side, we successfully completed a number of acquisitions, on track with our 2020 plan, and we further strengthened our group's organization. For the first half, we achieved a robust set of numbers and this confirms the acceleration of our organic growth compared to last year. Our 5 growth initiatives continue to deliver strong growth. Revenue for the quarter was €2,340,000,000 up 6.1% at constant currency, with organic growth at 3.5%. On the M and A side, acquisitions continue to support our growth, adding 2.6%. As anticipated, the currency impact was negative 7%. Adjusted operating revenue increased by 20 basis points at constant currency, in line with our full year guidance. Adjusted net profit was up 12.9% at constant currency and free cash flow improved. Our full year 2018 outlook is Since the start of 2018, we have added around €85,000,000 of annualized revenue with 6 acquisitions, all supporting our growth initiatives. More recent M and A has been oriented towards the agri food space in order to complete our footprint notably in Asia. Early July, we made the acquisition of Permulab in Malaysia, a leader player in food, water and environment testing services. This means that we are fully on track with our 2020 plan with nearly 50% of our external growth ambition already achieved. Page 2, a few words now on the large Qatar Gas contract, which we are very pleased to have been awarded. Qatar Gas is the world's largest LNG producer. We are now their primary supplier for inspection, NDT and asset management services for all their assets in Qatar. The estimated total value of the contract is €64,000,000 over a fixed term of 5 years with a 2 year extension option. This contract illustrates the success of our OpEx strategy growth initiative. It has been awarded as a result of the newly developed integrated solution approach. The aim is to replicate this across neuroveritas globally. Page 8. In H1, we made further significant steps in the rollout of our digital strategy for build ins and infrastructure. Building information modeling is now a prerequisite to winning most B and I tenders. As China is the most mature and growing market for collaborative BIM, we have chosen to set up our BIM center of expertise in Shanghai. To support the deployment of this strategy, we are pleased to announce the global partnership with Autodesk, leader in 3 d software. Its tools enable automated verification from the earlier stages of building project design. As an illustration, Page 9 of how BIM is critical for B and I project management, We are currently working on the Shanghai Planetarium, where we provide technical and management services for the whole lifecycle of the asset. The benefits are numerous, quicker, safer and cheaper for the customer. For instance, it enables a 70% reduction in design changes to be resolved by the BIM technology. Now I'm going to hand over to Nicolas for the financial review. Thank you, Didier. Starting with the revenue bridge for H 1 on slide 11. Organic growth reached 3.5 percent. Acquisitions had a 2.6 percent contribution to top line growth, net of a negative impact of 0.3% following the 2017 divestment of non strategic NDT activities in Europe. ForEx had a negative impact of 7%. This is due to the appreciation of the euro against the USD and BEC currencies, as well as the depreciation of several emerging country currencies. For the full year, we still expect top line to be negatively impacted by around 4% and adjusted operating profit by around 6%. The recent strengthening of the USD versus euro to the 1.15, 1.20 level is offset by the weakening of many emerging countries' currencies. All in all, revenue growth accelerated to 6.1% at constant currency. In Q2 2018 on slide 12, organic growth accelerated to 4 point 4%, acquisitions had a 3% contribution to top line growth, ForEx had a more limited 6.1% negative impact. All in all, revenue growth moved up to 7.4% at constant currency. Turning to growth by business on slide 13. The first point is that 5 out of 6 businesses representing 90 3% of the group's revenue reached a solid pace of organic growth of 4.3% on average. 3 businesses grew mid single digit and Industry confirmed its return to positive organic growth. Certification recorded double digit growth, thanks to the ongoing standards revision impact. As expected, only Marine and Offshore is still suffering from the past market downturn. Secondly, B and I achieved double digit growth at constant currency, boosted by a strong contribution of recent acquisitions, including EMG in the U. S. Since February 2018. Moving to Slide 14, in H1 2018 growth was fueled by both the base business and the 5 growth initiatives. The base business is up 2% organically year on year with an acceleration to 3.1% in Q2. Most of the activities performed well with the exception of Marine and Offshore and Oil and Gas CapEx related activities. Excluding these, the base business grew organically at 4% in H1. Our growth initiatives continued to deliver, up 6.6% organically and 7% in Q2. Looking further at the 5 growth initiatives on Slide 15, B and I performed strongly, up 9.7%. After a slow start, OpEx grew 4.2% with an improvement in Q2. Agri Food grew 3.2% with strong performance in food, while agri was impacted by volatile market conditions. Automotive recorded 7.2% led by connectivity testing. Smart World achieved double digit growth. The contribution from acquisitions was strong as all our M and A efforts are focused on the growth initiatives. Overall, our total growth continues as planned, up 15.5% at constant currency. A few key points regarding these robust H1 results on slide 16. An adjusted operating margin of 14.9%, up 20 basis points at constant currency adjusted EPS of 2.3% year on year and 13.1% at constant currency. Free cash flow stood at €62,900,000 up 182% at constant currency year on year. This is from low levels last year and I'll go further into the details later in the presentation. Adjusted net debt is up 8.5%, mainly due to higher acquisitions versus last year. Turning to adjusted operating margin of 14.9 percent in H1 2018 on slide 17. It reflects a 10 bps organic improvement to 15.3 percent, a 10 bps accretive impact of acquisitions, so margin at constant currency is up 20 bps, a 50 bps negative ForEx impact. On a full year basis, we still expect ForEx to impact negatively our margin by around 30 bps. 2 thirds of the portfolio have stable or improving margins, adding 40 basis points to group organic margin. This is led by a significant improvement in Certification and by a high margin in consumer products. This improvement is the result of a combination of operating leverage, strict cost management, lean efforts and restructuring payback. A third of the portfolio has a minus 30 bps impact on the group's organic margin with minus 10 bps coming from Marine and Offshore due to lower volume of activity, notably for new construction and offshore services, minus 20 bps resulting from negative mix and price effects in Buildings and Infrastructure. Looking at the operating profit bridge on slide 18, our half year operating profit is slightly up compared to last year at €291,000,000 Restructuring costs of €19,500,000 were significantly lower than last year, but allowed the continuation of our proactive cost management and efficiency improvements. Actions were taken in government services, building in service operations in France, marine and offshore in service activity and commodities. This restructuring will continue to support our margins. Under net financial expenses on Slide 19, we have first a decrease of financial charges due to lower average gross debt, while our average cost of debt is stable year on year at 3.2%. Secondly, the depreciation of several emerging country currencies reduces the ForEx impact from minus €10,900,000 to minus €2,000,000 Moving to tax rate on slide 20. The adjusted effective tax rate of the group was down 110 bps at 32.8 percent, mainly resulting from the absence of the 3% dividend contribution in France after this was canceled in 2017. For the full year 2018, we still expect our adjusted ETR to be in the 33% to 34% range. The tax rate should be higher in H2 as a result of higher withholding taxes on internal dividends. Looking at cash flow on Slide 21, there are several elements to mention. The increase in profit before income tax, mainly driven by less restructuring items and financial expenses. The reduction of the cash tax payment linked to the absence of the 3% dividend contribution in France and one off payments in 2017 related to tax audits. Working capital outflow was contained versus last year, while organic revenue growth accelerated in Q2. As a result, operating cash flow is at €165,500,000 up 10.7% year on year. Net CapEx stands at €59,000,000 showing a disciplined approach by the group at 2.5% of revenue. For 2018, we still expect CapEx to be in the range of 3% to 3.5%, notably to support our digital transformation. And lastly, the decrease in interest paid due to a lower average gross debt. All in all, free cash flow increased by 182% on a constant currency basis, benefiting from a favorable comparison base. Regarding our financial structure on slide 22, the adjusted net debt stands at €2,460,000,000 compared to €2,090,000,000 in December 2017. This reflects a €62,900,000 free cash flow, €123,700,000 for the acquisitions and earn outs paid in H1 2018, €254,800,000 of dividends distributed to shareholders in H1, €24,100,000 on share buyback and €26,500,000 negative ForEx impact. The net debt to EBITDA ratio stands at 2.82 times, well below our 3.25 times bank covenant. Thank you. I now hand it back to Didier for the business review. Thank you, Nicolas. Thank you. Starting with Marine and Offshore on Page 24, as anticipated, the business was down 5.4% organically in H1 as a result of high single digit decline in new construction, which eased in Q2 with activity in Asia remaining at a low level, slight decline in current service due to the unfavorable timing offshore related activities due to the lack of deep sea projects and the reduction of risk assessment studies notably in Asia and in the Americas. On the upside now. New orders amounted to 3,500,000 gross tons at the end of June 2018, compared to 2,900,000 a year ago, confirming the recovery of the market. The order book, which stood at 13,400,000 gross tons at the end of the quarter, has now stabilized. Commercial wins include passenger ships in Norway, FPSO in China and boat carriers in Japan. Margins were down to 21.3 percent, explained by the decline of volumes and by the negative FX impact. Further restructuring actions were taken in the in service activity. Looking ahead in 2018, we still expect full year organic growth to be slightly negative. The in service activity should remain resilient. For new construction, we still expect H2 to be stable to positive, benefiting from the ramp up of recent order wins. Award now on the upcoming IMO 2020 regulation, which will benefit a number of our businesses from 2019. Ship owners can meet the new standards using low sulfur compliant fuel oil. This will support our oil and petrochemical business. An increasing number of ships are also using gas as a fuel, which will support the LNG segment for new construction, where we have a leading position. Ships may also meet the SOx emission requirements with the installation of scrubbers, which will increase our accreditation work. Moving to Agri Food and Commodities. The business continues to improve with revenue up 4% organically in H1 and 4.8% in Q1. By segment, Metals and Minerals confirmed its sound recovery, up 11.4% in organic growth, supported by 18% growth for upstream activities across all geographies. Trade achieved low single digit with improvement over Q2. Agri Food grew by 3.9% organically, thanks to a strong food performance. The Agri segment was, however, more volatile, affected notably by weak trade volumes in Europe and the trucker strike in Brazil, which impacted exports. We expect the situation to normalize as we move into H2. Oil and Petrochemicals is up by 1.2% organically, reflecting mix situation by geography. Solid performance in Europe, thanks to new services and market share gains, while more difficult conditions continued in North America. Lastly, government services were down by 1.5%, though the organic growth rebounded in Q2, thanks to progressive ramp up of VOC and single window contracts. The margin was stable on an organic basis as mix and operating leverage was offset by price pressure in oil and petrochemicals. The outlook for 2018. We expect improved growth versus 2017, fueled by recovery in metals and minerals market, healthy agri food businesses and stabilizing development services. Turning to Industry, Page 27. The business confirmed its positive growth of 2.2% organically with 2.8% in Q2 as a result of our successful diversification. All AmCast CapEx related activities, 15% of divisional revenue, are now showing easing rates of decline being down 12% in Q2 after minus 17% in Q1. Oil and Gas OpEx was slightly up with solid volume increase largely offsetting price pressure. We achieved 20% organic growth in Power and Utilities OpEx with the ramp up of flat contract wins in LatAm. This segment is now as big as the Oil and Gas CapEx business, accounting for 14% of divisional revenue. The margin was stable year on year. We expect the business to return to slightly positive organic revenue growth overall. Our strategy of diversification will continue to pay off. For the year, we expect to see Oil and Gas CapEx markets bottoming out. In B and I, Building and Infrastructure, Page 28, Revenue increased by 4.1 percent organically, with a similar organic growth in both construction related activities and buildings in service activities. Organic growth performance was mid single digit in France with uptick in Q2, high single digit in Asia, driven essentially by China at 8% and by the more mature Japanese market, up 9%. Our geographical diversification is well underway. Chinese business now represents 15% of B and I revenue and North America 14%, thanks to our recent acquisitions including EMG. The margin was slightly down primarily due to mix and price effects. Acquisitions contributed positively to the divisional margin. For the full year 2018, the outlook for the business remains positive overall with strong growth in Asia notably in China, improving gross momentum in Europe compared to last year notably in France driven by both CapEx and OpEx. Certification. Certification, Page 29, was our top performing business in 20 18 delivering 10.8% organic growth with a strong performance spread across most regions and categories. Q2 was up 14%. Overall, the growth was fueled by renewed standards like ISO 9000, 14000 and iATF in the automotive sector. Q2 benefited strongly from most customers anticipating audits ahead of the revised standard transition deadline. At the end of June, 96% of Bureau Veritas clients were in the transition process or already complied with the new QHSC standards. Supply Chain and Global Certification grew by double digits. Margins were healthy, improving slightly to 17.9%. This reflects a strong organic increase, which mostly offset the significant negative ForEx impact. We expect the business to deliver robust growth on a full year basis. This implies a slower pace in the second half due to the revised standard transition deadline in September. Consumer Products. Consumer Products recorded a robust organic growth of 5% with growth across all regions and most categories. Electrical and electronics grew by high single digit organically, primarily driven by automotive and wireless. Hardlines also achieved high single digit growth, while tolls stabilized. Softlines delivered growth below divisional average despite a robust performance in Asia. Commercial wins in the semester include contracts with Amazon and Spotify in the U. S. H1 margin progressed organically by 30 basis points to a strong 23.8%. Operating leverage and margin initiatives more than offset some price pressure and a negative business mix. In 2018, we expect consumer products to maintain mid single digit growth reflecting strong growth in electrical and electronics led by Smart Road and automotive initiatives. Solid growth for hardlines with stabilization in the Turus sub segment. I move to the outlook, Page 32. For full year 2018, our outlook is confirmed. We expect an acceleration in organic growth revenue compared to full year 2017, a slightly improved adjusted operating margin at constant currency and improved cash flow generation at constant currencies. To conclude, page 33, the first half of twenty eighteen shows that the group transformation is well underway and that our 2020 ambition is on track. Thank you for your attention. This concludes our presentation. We can now open the queue And your first question comes from the line of Paul Sullivan of Barclays. Please ask your question, sir. Hello. Good afternoon. Just two questions from me. Didier, I'm noticing you're mentioning price pressure or the term price pressure is featuring in quite a number of your comments about the divisional performance. Is that something we should take note of? Are we seeing a step change? Or is that business as usual? And in B and I in particular, I think you're talking about pricing pressure, I think, for the first time. What's going on there? That's the first question. And then secondly, in terms of restructuring, we're seeing it on an annual basis now and for the last 4, 5 years. Do you think we'll see more of it in the second half? And even as organic revenue growth is accelerating, I'm just not sure I get why you're still seeing why we are still seeing quite heavy restructuring charges? Thank you. [SPEAKER JEAN FRANCOIS XAVIER BOUVIGNIES:] Okay, Paul. Thank you for your question. I'm going to start of course with your question regarding the price pressure. I would say it's business as usual. There is nothing really special of course on Oil and Gas because of the conditions which are still challenging. There is probably more pressure than to the case 3 or 4 years ago. But I would say now it has stabilized and I could even see now a lot more stability for the future. Regarding the B and I, you noticed a very good point. In fact, it's I'm talking not about new construction, I'm talking essentially about some price pressure that we had, I hope, for one time here in France on the big contracts regarding inspection and service. And in fact, we had renegotiated 2 contracts, which are quite high. And because it was big contracts, we had, of course, some price pressure. But again, it's not something you should note off. It's really something which is business as usual, but these two contracts in France. Regarding the restructuring now, so your question is very important, because in the past 2 years, what we did is we had to adapt our workforce principally to the activities. And we know that we had to adapt it in oil and gas, in particular in Latin America, in the U. S. We had to adapt also in Australia because of the metals and minerals crisis. We had to adapt in the Marine division as well because construction was down. The restructuring we work on now is different. It's more aggressive restructuring preparing the future to achieve our 17% margin in 2020. So it's quite a different restructuring. It's less adapting to the activity than clearly taking into consideration the fact that we have accelerated digitalization to improve productivity. And the second point also is in some countries, in particular in Europe, the delay in, which had to be done and that we focus on now. And to answer your question to Diane, we imagine probably the same level of restructuring in the 2nd part of the year and we will discuss of course at the end of this year from next year, but restructuring is going to decrease after 2019. It's going to decrease this year already compared to last year by probably €17,000,000 to €20,000,000 And next year will be even lower because again the workforce is totally adapting now to our activity. What we do, we are refocusing now on potential productivity improvement, again to deliver our 17% at 2015 constant currency in 2020. Very clear. Thank you very much. My pleasure, Paul. Thank you. And your next question comes from the line of Aymeric Poulan of Kepler Cheuvreux. Please ask your question. Yes, thank you. Good afternoon. The question I have is on the construction on B and I and the organic growth. You mentioned in Q1 some potential calendar positive calendar effect in Q2 that don't seem to really appear. And here we see also a slowdown in China, which put more emphasis on the French turnaround and growth prospects. Could you give a bit more color on the situation in France and when we should start seeing the impact of some of the infrastructure projects you involve with? That's the first question. And second question is on the free cash flow and the prospect in terms of the improvement of that free cash margin. I understand you mentioned in the past some effort that you would like to do on the working capital side of the equation. So I was wondering how you see that panning out in the second half in terms of cash collection and how you manage the growth and the balance between the growth prospect and the cash collection efforts? Thank you. Thank you for your question. Numis, I'm going to start with your first question regarding billion and infrastructure in France. In fact, to be very transparent with you, France was up 2% in organic growth in Q1 and 4% in Q2. So we know on top of it that there were some strikes in France in Maine, in particular, which could have offset a part of this organic growth. So clearly, we can see now we are moving back to organic growth in France. And again, and we had the opportunity to discuss it before, the real positive impact of infrastructure on Grand Paris is going to start really in 2019. So it's coming from what I would say the base business, meaning the inspection and service and in construction. So quite a better news in France. Now regarding the other part of the world, China IT is delivering very well. Of course, in China, from a quarter to another, depending on the type of contract you work on and we are talking about huge contracts, as we invest and you record revenue, you can enter a different from a quarter to another, but we are still extremely optimistic with the backlog we have for the Chinese B and I business. And maybe some words about the 2 acquisitions we've made in the U. S, Primary Integration and EMG. We are after just 3 or 4 months very happy with these acquisitions. Of course, we record them in the scope, but the organic growth is very good. I'm going to let Nicolas maybe say some words about the free cash flow and our move for cash, which are starting to pay off Nicolas, but we are accelerating to deliver our cash at the end of the year. Yes, absolutely, Didier. Yes, we are actually rolling out the program. First, I want to remind that the free cash flow of H1 in 2018 is the best level of free cash flow generation over the last 3 years if you look at the H1s of 2016 2017. So there's a clear rebound. And an element of satisfaction for us is that despite the acceleration of growth during the Q4 the Q2, sorry, 4.4% organic growth. We see the movement in working capital very similar to last year and we believe that this is a first result of Move For Cash initiative. Move For Cash initiative is now rolled out all over the world. The project was deployed in many countries. We trained around 400 managers. We have chosen more than 100 what we call cash champions to implement the initiative. And we start to feel it in the working capital evolution, but we strongly believe that more is coming because we are really full speed only in the last few weeks months. So more is coming and we that's why we feel absolutely confident on the guidance we have given regarding free cash flow for this year towards an improvement compared to last year. And after maybe 2 important points that I should mention on top for Nicolas, if I may, is the fact that now 20% of the bonuses of the people of the manager of the company is linked to cash flow. So it's quite a change. And of course, the attention is very important on cash. And the second important point is the fact that the pressure on working capital and after 3 years saving all the cycles down, we can focus now on key metrics margin and of course working capital is very high. We have started to get some payoff, but we are very confident that we will get more for H2 in the years to come. Okay. Thank you. My pleasure, Henrik. Thank you. And your next question comes from the line of Rajesh Kumar of HSBC. Please ask your question. Good afternoon, gents. Thanks for taking the question. If we look at the margin progression, 30 bps pressure, do you think you are in a decent position now and then half of it is coming from marine and it's been very difficult to predict what the marine business would do. But if you look excluding marine, do you see the incremental pricing environment supportive of sequential improvement? Or do you think there's a bit more to go or you need to cut more cost to stay where you are? Related to that, the second question is, could you give us some color on what was the impact of provisions on the margins? And also when we look at the EBITDA margin decline, that's more like 55 bps, whereas the EBITDA margin decline is 30 bps. So what's driving that difference? That would really help because assets haven't come down, depreciation and amortization have. So, yes. So again, it's important, Rajesh, that you understand that again in the last, let's say, 3 years because of all the cycles been down, we had to restructure the company, we had to focus on digitalization and so on. Now clearly, we can see organic growth is coming back. Telcos Marine included Marine Offshore included is bottoming out. So the focus of the company, even if it had been the case before and we defended the margin very well in very challenging circumstances, is clearly to improve the margin and again to achieve our 2020 plan at 17% and plus. So we have a margin program in the company. We work on, let's say, on 4 main topics. The first one is still some restructuring and what I call delaying. The second one is clearly lean management tools that we implemented 5 years ago, but still running. And of course, when you do not restructure anymore because of the global purchasing. And the 4th one, which is important for us today, again accelerating in some countries, in particular in Europe, is digitalization to help us to improve productivity. These are the 4 main topics we are working on to achieve our commitment to the market in 2020. I'll let maybe you Nicolas to answer about the some color about the impact of provision and Yes. And I think there was also a question on Marine and Offshore margin impact. Okay. So regarding provision movement, we had some movements. I mean, things to highlight. Firstly, we started to we had the first implementation of IFRS 9, as you know, on bad debt and we used some of the provision we have built at the end of last year facing some bad debt issues. So this is the first implementation of that new IFRS rule, which is happening and it's going to be the case in the future because this provision will keep on being fueled and concerned depending on the situation of some of our bad debt. And the second element I can significant element I can mention is linked to one litigation in Marine. I'm not going to mention it specifically, but we had an improvement of our position in that litigation and we could release the provision which we have taken on this litigation. So that's the 2 key elements which explain the swing compared to last year. So that's about 40 bps benefit combined? Yes. I think the total amount at stake is a small €10,000,000 in total. Okay. So because you're saying constant currency, you had 20 bps of margin improvement, but at actual currency, you had a 30 bps decline. Now the 20 bps improvement, almost all of it can be seen as depreciation as a proportion of sales, D and A as a proportion of sales has declined. So if I take that provision benefit, which is a real benefit because you won't be paying that cash in the future, then it looks like even on constant currency, the underlying margin declined by something like 30 bps and at constant currency. No? No, no. Maybe you could have outside this call a conversation with Laurent, Ronald, but we will give you more details now because it's about the calculation. So I prefer that we do it outside this call. But no, no, we confirm the 20 basis points improvement at constant currency with 2 activities usually at the high level of margin, Marine and Offshore and CapEx along gas, which are today bottoming out. So this is clear. So you and you think this trend can continue in the coming quarters? We are working hard on it. Yes. And we hope also of course, and I may have some question about it to have Marine. We are confident that Marine is going to recover progressively because we have the backlog now. And we can see already some CapEx oil and gas projects being back. Of course, we need to win them, but it's going to help us on top of the 4 actions that I mentioned to you to improve to continue to improve our margin. Understood. Thank you very much. My pleasure. Thank you. Your next question comes from the line of Tom Sykes of Deutsche Bank. Please ask your question. Yes. Good afternoon, everybody. Just firstly, coming back on the working capital, because your reported revenues were down and organically you added about €85,000,000 €90,000,000 of revenues. So how do you then have €150,000,000 of working capital outflow? And why should we see that as an improvement? Sorry, I just don't quite see where the improvement is coming from. And which particular business lines or geographies are actually causing the biggest effect on working capital outflow at the moment, please? And then I also just had a question on you mentioned that the certification growth might be a little bit slow in the second half of the year. What about answering answering the first question on working capital. Yes. So I'm not sure I completely understood your point on working capital. What we can say is that usually the seasonality of working capital evolution in the group is an absorption of cash during first half, which is the usual pattern and then a generation of cash in the second half. So this profile is confirmed and what we feel is that compared to last year when we had an organic growth of 1 0.6% in the first half, we were able to deliver an absorption of cash through working capital, which is roughly at the same level, while the incremental the extra growth we had in H1 this year should have, could have brought an extra consumption of several tens of 1,000,000 of euros, which we did not get because of the actions through Move For Cash. Right. So I would say the change of revenues, I mean, the change of revenues is actually down. Your reported revenue number H1 2018 is below your reported revenue number of H1 2017. So just setting aside the first half, second half seasonality, your revenues are lower, but your working capital is actually slightly higher through the cash flow statement. And even if I look at the organic growth, setting aside that the FX has probably reduced that working capital amount, then organically, you've only increased revenues by $80,000,000 $90,000,000 So I just don't quite understand why year on year that would still consume so much working capital. Yes. But you are you get that because actually I'm talking about the movement in working capital all inclusive. So if you take into account the ForEx impact, it's a reduction of the absorption of working capital. So you really get the impact of the ForEx movement. And I think the most interesting element is really the fact that at constant currency, we are not consuming more and we are even at constant currency consuming less than last year. Okay. And just on the French dividend issue in the operating cash flow, sorry, could you just remind us whether that is a full year effect as well? It's just the half year effect. I can't remember. You mean the amount of the dividend? Yes. Just the tax benefit that you had in the cash flow from The impact of the 3 percent tax on dividend was a €7,200,000 charge in 2017 in H1. Okay. Okay. Fine. Thank you. And then maybe just on the sustainability of the certification margin if things slow down there please? [SPEAKER SEBASTIEN DE MONTESSUS:] Okay. So on the margin, we are still optimistic because we are doing a good job. On top, of course, today, as we explained to you, we are working on the updating, I would say, of the certification ISO. But at the same time, we are developing a lot of new certification schemes regarding particular brand protection and supply chain, which is growing by the way by double digit. And the margin on this part of the business is quite good because usually it's voluntary decision from the clients. So the best way to answer this question is to confirm slightly improved adjusted operating margin at constant currency for the year. After the mix can change a little bit knowing that margin should recover, we will start to see a good impact, positive impact on what we have done in some countries, thanks to digitalization. So overall, we will achieve our guidance. On the certification side, it's a little bit too early to tell you, could be a small decrease, but again, might be at the same level. Okay. Thank you very much indeed. My pleasure. Thank Your next Hi, good afternoon. A couple of questions from me as well. Just on the Industry division, when does the Qatar Gas contract start? And I was also just trying to work out that with 2.8% organic growth in Q2, why you're only forecasting slight organic improvement for the full year? Is that not a bit conservative given the progression? And then secondly, within Consumer, looking at the Q2 growth rates for Hardlines and E and E, the implication is that Softlines was down in Q2 organically. Is that correct? And if so, where is the weakness within that part of the business coming from? Thank you. My pleasure on this. So I'm going to start with Andrew Street. In fact, the Catarquay's contract has already started. In fact, it started in May and it's going to be a gradual ramp up. It should bring €10,000,000 of revenue per year when it's going to be full speed. So it's going to be a little bit progressive this year, but it should bring some good revenue next year. We are very pleased with this contract because on top of the size of the contract by itself, This is a combination of services and this is the way we want to move because this is not too much commoditize, because the combination of services would be called risk asset management, asset risk management. So helping the client really to optimize its assets. So it's an opportunity for us to go and meet some minor clients, which we do today to sell this type of contract. On the consumer business, last year consumer product was quite strong in Q2. So if there is a question of compare, we are still optimistic and we feel that we will achieve the same level of organic growth for the year as the one we enjoyed for H1. And within that, just going back to the specific part of the question, was Softlines down in Q2? And if so, where was the weakness coming from? No, it's more a question of compared to last year. We had a very, very strong June last year, in particular on Softline. So it's a real question of compare, but we are more or less on the same pace for the end of the year. Okay. Thank you. My pleasure, Andy. Thank you. And your final question comes from the line I'm sorry, I have no further questions. Rory McKenzie, if you do wish to ask a question, could you please press star and one again. Thank you. Your final question comes from the line of Rory McKenzie of UBS. Please ask your question. Good afternoon. I got there in the end. Thanks for taking the question. Just on that certification slowdown you discussed, do you expect to see still strong growth all the way up to the deadline for the revision of standards in September? So should we be expecting double digit growth again in Q3 and then a sharp change, maybe even organic declines in Q4? Or do you think the slowdown will be more gradual? Then my second question again is on the margin drags. You commented that building caused a 20 bps drag on the margin in H1. Will that be still there or any easier in H2? Thank you. So I'm going to start with Certification. We do not expect a double digit growth, organic growth in Q3 neither in Q4. It is going to slow down because we have already done 96% of what the clients are expecting, but we still continue to foresee good growth in certification, thanks to the new certification schemes that we have launched this year and the years before. So we are still optimistic, not at the level we enjoy today clearly. So it's going to slow down for sure in Q3 and Q4. For the margin question, Nicolas, could you answer please? So on the margin, I think we delivered a margin in H1, which is coherent with the I'm talking about the global margin. We are coherent with our full year guidance, which is towards a slight improvement at constant currency and we are pleased to confirm that we expect H2 to allow for that guidance to be achieved. Okay. No more question. I think there is no more question. Rory, thank you for this question by the way. Excuse me, sir. We do have one final question come in. Will you take this question? Okay. Yes, I'm going to take it. Lovely. Thank you. It comes from the line of Rajesh Kumar of HSBC. Please ask your question. Hello, Mr. Kumar. Please ask your question. Okay. So maybe what we do is maybe Rajesh Kumar could call Laurent because we need to end this call. So I wish all of you because his team is not on the line anymore. I wish you good morning, good afternoon and good evening and thank you for your attention. Bye bye. Thank you.