Earnings Call: Q3 2020

Oct 22, 2020

Welcome to the Eurofins Q3 NM twenty twenty Interim Management Statement Conference Call. For the first part of this call, all participants will be in listen only mode and afterwards there will be a question and answer session. During this call, management may make forward looking statements, including, but not limited to, statements with respect to outlook and the related assumptions. Management will also discuss alternative performance measures such as organic growth, which are defined in the footnotes of our press releases. Actual results may differ materially from objectives discussed. Risks and uncertainties that may affect Eurofin's future results include, but are not limited to, those described in the Risk Factors section of the Eurofin's annual report. Please also read the disclaimer on Page two of this presentation subject to which this call and question and answer session are made. Today, I'm pleased to present Doctor. Gil Martin, Eurofin's CEO. Please begin your meeting. Thank you for the introduction. Hello, everybody, and thank you for joining our quarterly results call. I hope that you are all well and are not suffering too much from the current circumstances. So I want to start with my best wishes to all of you. I wish we can meet in person soon. So I'm happy to report a good result for Q3. I think the main things, and I will jump to page four of the slideshow, that maybe we can all remember is, I think the result of Q3 above everything demonstrate the agility of Eurofins and Eurofins teams. You are our shareholders and you have been supporting over the last fifteen years, the development of what is today a very outstanding laboratories network. And Eurofins has been always long term focused context, we have invested not only in sites and facilities, I mean very competent R and D teams. And of course, when crisis hits, that's when you see the strengths of your teams and the ability of a company to respond. And I'm especially pleased by what our teams have been able to do. Urofins is not a big IVD company, we are not Roche, we are not Abbott, we are not Thermo Fisher, we are very small IVD company. Our IVD product development companies are only since a couple of years in our group. Urofence is also not a large clinical diagnostics company. We are compared to companies like LabCorp and others or Synlab in Europe, we have a very smooth routine clinical diagnostic. Yet, as you can see in the results of Q3, our company has been able to mobilize to focus to develop an outstanding range of solutions. We have an incredible portfolio of tests and capabilities. And I'm not even talking of what we do in our pharma labs to help vaccines developers and therapeutics developers just on the testing side where we are basically a nobody in this 160,000,000,000 global markets for clinical diagnostics. This is maybe 15% to 20% of Europe's total revenues. We've been able to mobilize quickly pool our R and D talent for both divisions or business lines across the world from our genomics team, from our food testing teams, our pharma testing teams to generate a very strong response. And we've done millions of tests, as you can see, and lots of patients have benefited from our R and D. I So think that's the main point is that it has demonstrated that thanks to all the investments we did in the past, all the money we spent that diluted our margins for many years to build teams that can develop IVD product And those IVD products take three years to of cost until you get them approved. While adding that infrastructure, I mean, made those investments over the last few years, of course, in this time of crisis, we've been able to mobilize they have enabled us to really regenerate a response, a capability to response that is over proportional to our presence in clinical diagnostics and even more in IVD product. And I think that's the main message I'd like to convey with this Q3 results. The second message is maybe the resilience of our business. In my tenure as a CEO of Europeans, I've seen many crisis, the one you will all remember is the one in 02/2008, where many, many companies saw negative revenues development. Well, Eurofins at that time in 2008 and 2009 continue to grow organically, unlike many other companies. And we're going to see that again this year, core business, even outside of the COVID testing, proving very resilient. Of course, we have some companies that just cannot operate, we cannot test restaurants, food in restaurants, if restaurants are closed, but the bulk of our focus on life science and testing for life enables us to overcompensate that. So that's the other I think learning that we can all see from those Q3 results is on top of the agility and the capacity to innovate that Eurofence has built over the years, our focus on the testing for life and markets that are basically not affected by the cycle very non cyclical market is proving beneficial. And that's why probably over long periods, you're talking decades, our average organic growth or in compound organic growth is I think very good for a company of our size. Financially, you can see the results, I will not comment on them, you have read them. What we will do, we haven't talked about much with many of our investors have started to since many years, in fact, to comment that our share unit price is a bit too high and liquidity is difficult. So we wanted to do something, especially for small investors. So we're going to propose to the general assembly, a stock split one in 10. That's the second one in 10 stock split that we did. If we hadn't done that, our share price would be about €7,000 worth today from something like 16 when we went public. So it demonstrates, I think the benefit of investing for the long term. And that's what we intend to do going forward. Invest in science to be truly an innovator in a market to be the company that clients want to go to, because the services we offer are on balance superior. Doesn't mean they will always be superior, we will always have a weak point here and there. But that's what we are trading for, through innovation, through R and D, through the best equipment and the best labs in the world in our markets to offer services to our clients that are pretty unique. I will move to page five. I've discussed most of that. I think our companies are doing fine. We still have companies unfortunately that are affected. But this is now in Q3, it wasn't the case in Q2, but in Q3 overcompensated by those that are doing very well and continuing to grow even outside of COVID. One key event I would like to stress is what we announced early this week is that we receive an emergency use authorization from the FDA for the urethanes at home COVID nasal PCR test. You know, we've done a lot of announcement on COVID testing modalities, I think this one is particularly important. We've all experienced difficulty to get tested, we will experience that it was difficult to get an appointment with a doctor to get a prescription, it was difficult to find a slot in a lab where we could be sampled, or potentially we could use less efficient, less reliable, soon antigen test, we have to see that in all labs, the antigen test, they miss twenty percent to fifty percent of the positive depending on the situation. So what we all want to do is have something that is simple. And I think this test that if we just got approved from the FDA and that others have been been selling for a while similar test, I think our test is going to be positively sensitive because we do it on a nasal swab, not on saliva. Saliva is much less sensitive because you cannot lots of people were positive, well, you can be positive with NP swab or a nasal swab, but all of that will come out with experience. The simplest thing that one can have is as in a company, at work, in a factory or at home, a bunch of test kits. And when there is any reason to suspect that one has been in contact with a positive person, or just one wants to go and visit one's grandmother and wants to be sure. It's very simple, you take the swab, put it you can all go on our website of EmpowerDX and see how it works. You just drop it in an envelope, and the next day you get an email with your results and you can print your own certificate. If you want to travel, you get a testing of the gold standard, which is real time PCR, that's the best that can be done in the current state of science. And okay, it doesn't take one hour, but you don't have to mess with a test that you have to do yourself or find a doctor for you, even if it will be faster, you get the gold standard test from your home. And we think this type of test will really go a long way to increase the accessibility of the gold standard PCR test. Of course, we have to see how we distribute that with which partners, etcetera, which we think with that we can also make a meaningful from our R and D lab, a meaningful contribution to society. So on pages seven, you will see some of the business development related to COVID. Of course, increasingly, we've been asked by governments, by airlines, by cruise lines, by companies, by airports to set up testing modalities. This is not our core business. Know, Eurofins core business is not to put containers in front of an airport like the one you see in the picture and have people sampling, we hate doing the sampling and that's why we developed this at home test and maybe this is also a modality that airports we want to use or where people get tested. Actually, in my opinion, the best way is to get people that this is what Italy is doing. To go to Italy, you have to get tested in the seventy two hours that are before your trip, and you have to show that certificate on arrival. This is one of the best way to to one of the safety. And then, okay, you can test people again on arrival, but that's put them in quarantine for five days if you really want to be sure. But if you do both of that, people should be able to travel. And that is something we can do with our central labs. Eurofence model is to build very efficient central labs that carry out testing. And we have invested over the last three months significantly in our central labs, and we'll be able to produce even more COVID test at much lower, especially since we are vertically integrated. And this is one of the developments. On page eight, you see a couple of developments. We have talked of the home test, we can all go online and Empower DX. And I think you can order it if you're interested, are looking forward to launching similar tests in Europe, because that requires some government approval in some countries. So it won't be available all over Europe immediately. But we hope to launch it in as many geographies as possible. Another important thing is we are launching multi pathogen panel. Thiatrix is a company of the Eurofins Group that has been doing for a long time, very broad respiratory panels with up to 20 or 25 pathogens. We've offered now smaller tests that include COVID And we will be launching similar combined tests in Europe. Because you know, it's always good if somebody is coughing to know exactly why they are coughing, not only to know it's not COVID or COVID is not detectable, it's much more reassuring to find out or it's on the respiratory syncytial virus or it's a flu. On Page nine, we have other things, I think we have a really good panel of offering because in high prevalence times like we have now unfortunately in Europe and North America, what you want to do is mostly test people. But in low prevalence time where more people are negative, you want to catch a new wave before it becomes too big on a university, on a campus, on in a city, in a factory. And for that, the wastewater testing that we have launched as part of Eurofins COVID-nineteen works very well. And this might be something that we could be offering for a long, long time. The other thing is once the vaccines become available, the question will be for many people, am I immunized? Do I have antibodies and more importantly, are those antibodies offering serial neutralization? And we published evidence that our tests do that and we're working on a range of tests that will do more in that direction. Developments on our core business this quarter, where we've had many, you cannot read them, you've seen the press releases to stress is that we are more and more asked by big pharma and smaller pharma companies and biotech companies to be involved in the development and validation and stability study of vaccines and pharmaceutical products in the context of COVID. The other thing of course that we've seen is this will be a boom year for funding of biotech and probably this huge funding of biotech will continue over the next few years. And this will also fuel the growth for many years to come of our biopharma laboratories, which represent about close to a third of Europeans now. On Page 11, M and A. So M and A, we turned down a lot, which we're doing in M and A this year, we've only acquired a few small companies. Of course, Eurofins has achieved market leadership in Europe and North America in many areas, while we are still very small in Asia. So we're pivoting a little bit of our investment to Asia, and two areas which we think will experience high growth in the future. Non invasive process testing is an area where we've become leader in Europe. And now with this investment in Japan, we also are becoming the leader in Japan. We becoming leader in environmental testing in Taiwan and other countries. In Japan, we're very close to that. So it's steps we are taking to expand on that continent. On the outlook, I will go to page 13. The main thing is that we are making very strong progress in spite of the COVID pandemic in building out our laboratory network. This was a major undertaking, a five year investment program to build this hub and spoke model and having very large laboratories that are extremely efficient, fast and productive that carry out complex assays and a network of local laboratories that carry out time critical assays like pathogens in food and or water, etcetera. I think with COVID and the cyber attack we had last year, we probably will be six months late or something like that, but we are getting very close to being done with that. And we also have a couple of buildings that we'll only finish building next year, but we'll make a strong progress this year. We'll finish the integration of Covance this year, they will all be in their new European side out of LabCorp sites by the end of the year. All the buildings will be ready and they'll move in January for the last one. So this is all doing well. We've built very strong market positions in many markets that will be very high growth. You've seen what our small IVD business can do. Our genomics business is also a high growth area with the advance of NGS. AgroScience, we're by far the market leader, we've built a business in six, of course, this business is a bit hurt right now because of we cannot do patient testing or clinical trials for new cosmetics, but this is a high growth business generally. So we're getting done. And the good thing of that is we will have less CapEx going forward and less reorganization costs because we're not moving people miles away into new buildings or new sites, etcetera. Objectives on Page 14 require a little bit of explanation. So what we've done to set well, first of all, for 2020 and 2021, it's impossible to know what will happen. Obviously, at the moment, we're testing a lot for COVID and it's likely to continue, but how much we will do exactly in Q4, how much we will do next year, I think nobody can tell. So therefore, I mean, this goes away faster than our food restaurant testing, our cosmetic testing, our clinical trial testing business will pick up faster and we'll do less COVID. If it continues through 2021, we do more COVID testing, but it's really impossible. So but what we think is definitely we can achieve the objectives we had set for those years, when we set them at the beginning of 2020. So our objectives for 2020 and 2021, we are confident we should be able to achieve them as we said them. For 2022, we have never said anything. And what we did for that, we said, we had a big cyber attack in 2019, we lost a lot of revenues and we have shown that as soon as our labs were able to operate again, that revenue came back. And so we believe once COVID goes away, and we're making the hypothesis that by January 2022, the COVID pandemic will be under control. We hope that will be before that time, because there's no certain this will be the case, but we think it's a reasonable hypothesis to make. Anyway, we can only make hypothesis and the range of potential outcomes is very, very broad unfortunately, as we all know, but we're making that hypothesis. If we are back to a normal situation by January 2022, then the few businesses at Eurofins that cannot operate normally should go back to normal. And therefore, we should catch up this 5% is missing will be missing this year and next year we have no idea what it will be. And therefore, we're just taking our revenues for 2019, we put them to the current FX rate. And on top of that, we had 5%, we correct for the cyber attack, and we had 5% organic growth per annum for 2020, 2021 and 2022. And we think it is a reasonable objective for 2022. Obviously, are some hypotheses beyond that, but we think it something that is a reasonably likely scenario. There could still be a lot of COVID disruptions and testing then, we hope not. And that we could do better, we could business could pick up faster. But that's, I think as good as we can set an objective right now for two years from now in those circumstances. So you'll see the breakdown of that on Page 15. There's a more summary of this on Page 16. And overall, if I jump to the conclusion page on Page 17, I think we can be proud and thankful for what our teams have achieved. And I think there will be a lot of developments over the next few months. We have a big R and D pipeline on COVID and COVID tests that we think would be very useful in fighting the pandemic. We are working very closely with our biopharma and vaccine partners, we hope that they will be successful. We hope that some people can be protected. Obviously, herd immunity with vaccines will require a lot of compliance, which would mean ninety percent of people accept to be vaccinated before me half of the population accepts to be vaccinated, even if the vaccines work, that might not provide enough herd immunity. So there's still open questions, but we are working very closely with our clients and health authorities to contribute as well as we can. We've seen our core business has been very resilient. I'd like to conclude to say, okay, assuming the COVID goes away as we hope by 2022, what will our shareholders get? Well, by 2022, I think they will get a very strong company with a huge potential. We'll have the best laboratory network in the world in those markets, leading position in those markets, are high growth and very resilient, a very strong capabilities that we have even strengthened during this crisis. We'll have an additional leg with big factories to produce our own reagents for our labs, for clinical labs and for our food labs and our environmental labs and our pharma labs. Of course, we've increased the testing platforms in many of our labs and probably will be in two markets that might grow even faster than we were used to because of the realization that came from the pandemic. Of course, this is a bit unknown, but I think we should deliver through this crisis, a very strong company to our shareholders by 2022. No more reorganization costs, fully digital company, perfect lab network, both of R and D and innovation and position in very exciting markets. So that's it for my introduction. And I think we can go through question and answers. Laurent Leroy is here on the call. If you want questions, we have slides on the appendix to explain our objectives and maybe answer those questions. Thank you. Thank Our first question comes from the line of Edward Stanley of Morgan Stanley. Please go ahead. Your line is now open. Afternoon. Thank you for taking my questions. If I go one by one, it might be easier. We haven't talked very much in the call so far about the base business particularly. And I'm interested you call out catering and hospitality. Can you give us a feel for how big those segments are together as a portion of the group and where we are on their recovery for those sort of worst hit relative to where they troughed? Yeah, thank you. Our base business is really a mix of so many different companies, which have different profile. We've had some companies growing more significantly more than ten percent even outside of the COVID area. As you would guess, biopharma has been quite dynamic, but also we've had environmental testing labs doing extremely well. The areas that have been the most hardest hit are, I think by order, Latin America, and we all see Brazil is really in trouble. I think that's where we've had the biggest negatives, followed by France. And of course, Europe is large in France and The UK. The UK is not in a great shape generally. So France and The UK have probably suffered the most in Europe. And our environmental testing in business in America is also suffering because of the sampling. It's basically, certain things require people to go and pick up a sample, and we will travel restriction factories closing access to external parties and contractors, etcetera. This presents some limitation. We also have a central lab, which is supporting biopharma in doing clinical trials. Well, in some part of this crisis, it has been difficult to enroll patients in clinical trials. So we've had here and there some impact. I don't have exactly the percent of the total group that has been affected. It's in food testing, the catering area is a small part time, maybe I would say 5% maybe, catering and travel 510% of our food testing, probably not 10% business just to give you an order of magnitude. Perfect and the second question on COVID, the testing volumes have obviously been very strong but there's some evidence that price per test particularly in The U. S. Is moving lower by as much as 25%. Is that something that's impacting you yet? Have you seen any evidence of price deflation on PCR testing either there or in Europe? My opinion on this is that ultimately, should do way more PCR testing at significantly lower cost. That's where the market should go. The availability of test extremely limited. If you look at a country like The United States that is maybe only testing 1,400,000 people per day, I don't know where Europe is, but probably not so far from that. This is nothing. This is absolutely nothing compared to the level that should be done to to really enable people to to isolate themselves or motivate them to isolate themselves. So we we still face a global shortage. And as you aptly pointed out, there are other modalities like antigen test where for certain things where it doesn't really matter too much, if you miss some positives, when it's better than nothing, but yes, nothing like getting into a street or an open air stadium and things like that. There will be a lot millions of antigen tests will be done. But frankly, what the lab industry should do is make the test faster. And that has been Europeans focus. We've always tried to make our PCR test within twenty four hour. If you saw this announcement we made for France, we organized ourselves to do all the tests or 99 something percent of the test within twenty four hours. In my opinion, a test after twenty four hours or after forty eight hours is useless for most purposes, it's too late. And that's why actually Medicare decided to punish the labs who are too late, if they can't provide the result within forty eight hours, they will instead of getting $100 they'll get $75 That's maybe what you're referring to. On the private market, frankly, think Eurofence on a business to business point of view, if we don't have to deal with uncertain insurance reimbursement, a lot of state bureaucracy, we don't have to do the sampling. If we just get swabs that have been collected properly to our labs, we can operate very efficiently at significantly lower reimbursement level than the current ones and still be profitable. And our view we want to contribute, of course, we're making investments, we're taking risks, it is fair that we get a margin on it, but our goal with that is to contribute in helping countries, helping everybody to get done with this pandemic and return to our normal lives. We have to try to not dilute our margins and so far we're definitely not diluting our margins with COVID, which we've all the investments we're doing in automation, etcetera. Even I mean, goal is we should be doing four times more testing at half or quarter of the price and I think our contribution will be even bigger. But anyway, we'll see what happens. We'll see how this develops and more importantly, we'll see our government's response to it because it's the response of governments to COVID has been, let's put it this way, very diverse and we'll see what the future brings. Fair enough. And I think you touched on briefly there on turnaround times. You announced recently the addition of biomass capacity. Is that because your existing French capacity is near 100% or is this to preempt further growth in volumes? Because I'm just trying to establish at Q2, you said you were flagging that these tests were being done at 30% EBITDA margins or maybe more, but the utilization of your labs at that point was pretty low. Has the rising utilization in Q3 led to better EBITDA margins of mental PCR tests? Or is that not really how it's working? Yeah, well, you know, of course, volumes drives profitability. No, it's hard for us to know exactly how much we do in COVID, because we do it in many, many labs and those labs also do respiratory panels, including COVID, not including COVID, how do we split the cake. So that's why we're not publishing exact results on COVID. And for profitability, this will be even impossible because we have shifted people as we're doing something else to do COVID, how do we allocate our overhead to COVID, non COVID. Mean, of course, if you add revenues and we don't have to hire a lot of people marginally it is contributing, but in the meantime, we're not doing all the stuff that we should be doing always. So I don't know what our margin is in COVID. Our goal is that our margin in COVID is not dilutive. And we want to contribute to society, don't want to be penalized by analysts who say, oh, COVID is diluting your margin. You guys understand that. And the bottom is yes, I think capacity is the thing. The problem is with this pandemic is we don't know and the governments have not proven very good at guessing when the next peak will come and more importantly telling us how they will respond and prescribe testing, mandate testing, a load testing, all those things change all the time in every country. And therefore, we have to build extra capacity in every geography. If we want to contribute our share, we have to invest to be able to test maybe three or five times the actual volume that will come. And then there will be a peak and then all of a sudden within two weeks, all the labs are full. In France, it was the case in the August, September. There was a huge backlog and the labs could not test. And then as a result, the government say, then we will reduce the applicability of testing, which is a wrong result. And I think our industry collectively is to blame and the IVD industry too for not being able to ramp the production and capacity of testing fast enough. That's why we've decided to significantly increase our capacity, but do it in a way that we can maintain and guarantee short term on time. I hope that answers your question. Thank you. Our next question comes from the line of Suhusani of Varanese of Goldman Sachs. Please go ahead. Your line is now open. Thank you. Good afternoon, everyone. Thank you for taking my questions. I have a few, please. The first one, can you give some color on how the revenues excluding COVID have improved through the quarter? In the press release this morning, you mentioned that the core business returned to some small positive organic growth in Q3. Would it be fair to say that you saw sequential improvement and probably September was a low single digit exit rate on the core ex COVID? Yes, thank you. Indeed, this is true. I don't know why, because it's a mixed situation actually was better on the like level of virus in Europe. It was better in probably in July than in September, but still overall we've seen a return to growth that was improving through the quarter. Whether we can extrapolate that for next quarter, it is really hard to say. I hope so, I hope so. But you know it's more or less one or zero. We have activities that are pretty much stopped and our clients that are pretty much stopped and others that are booming. So it's pretty much everywhere, Got all over the it. Thank you. The next one was on the revenue benefit from COVID testing. Think at the time of the first half results, you mentioned that the July revenue benefit was 55,000,000 And given the kind of acceleration we've seen in the testing through August and September, would it be fair to say that your monthly revenue exit rate in September was like over EUR 100,000,000 from quarter? Yes, I'm not sure I have the exact number and I don't want you to extrapolate those too much because the problem of this testing is it's I saw some of your reports on that. It's not necessarily directly linearly proportional to the number of testing done on a given geography, because it might depend on some government contract that we get or some specific programs we're in. It can be a bit lumpy sometime. So but yes, I mean, what I can say is in Q3, million of COVID testing and that is airing on the safe side in case of the cutoff is not done in a way that our auditors would approve. We don't want to put up a huge bureaucracy to give you a three digit for many COVID tests we did or revenues, because some of it depends on payment that is deferred and some insurance payment in America, especially needs to be exactly we need to get the cash to know exactly how much we're going to get. And we're being careful with that. The exit is definitely more than 55,000,000 and maybe close to 100,000,000 is possible and somewhere in that range anywhere between 55 and 100. But we're not a COVID testing company, we're doing that to contribute. Obviously, this will add to our margins, this will add to cover our fixed costs and our investments. The main thing with COVID is that we do our share of contribution. And the main the other thing, I think it's a good demonstration of what a small company like Eurofins can do. The fact that although we're a tiny IVD company and a tiny relatively tiny clinical testing company, we can create so much impact on the whole scope of Eurofins and maybe 20% of Eurofins is not nothing. That's I think it bodes well for other growth opportunities that we'll be confronted with in the future. That Understand. Might be more Thank you. Just a last one, please. You've done a few deals, announced a few deals in recent months. But just to better for the full year, would you be able to clarify how much has been the total M and A spend and the total annual revenues from all the M and A that you've done so far this year? What is signed and closed and so on, I don't have the exact number, but what we mentioned is we think we will close this year acquisitions that will generate €150,000,000 revenues, but they will be closed mostly towards the end of the year. So the contribution about EUR 50,000,000, which we will consolidate this year and the spend for that would be about 200,000,000. Thank you. Some are not quite signed yet, but we're very close to sign it or are not quite close. They are signed, but not closed. But it's a lot of small deals. We don't announce a lot of them because they're very tiny. Understand. Thank you very much. Thank you. Our next question comes from the line of Thomas Bolton of Hooke. Please go ahead. Your line is now open. Yeah. Good afternoon. Good afternoon, Gio. Thanks for taking questions. I've got I'll just start with the first one. On the safer work initiative, you've signed the 900 contract mentioned in the presentation and you mentioned another 1,100 under negotiation, some of which could be significant. Are you able to offer any more detail around revenue model or how the revenue contribution might look under an average contract, if that's possible, to get an understanding of sort of the potential materiality if you were to indeed sign another 1,100 of those, how do we think about that? Thanks, Tom. That's unfortunately fourth and what I was saying about unpredictability of all this. We can have a contract to the government on the safer at work that can be 100,000,000 contracts or more and we can have a contract to a food factory that is, I don't know, 100,000 or 50,000. So the range is very, very broad. So, and I don't know that the mean so much, maybe the median would mean something. I think on safer at work, people are still pretty much on a wait and see mode. The governments are still not 100% clear as to what they would recommend. There are still, I saw yesterday something in Germany where people are afraid that there won't be enough tests. So in Belgium, they are definitely saying there are not enough tests available and therefore they are not necessarily obviously governments are not necessarily encouraging to test their stuff or to make it easy for their stuff to be testing it. I hope that with all the antigen tests that are going to be in the market soon and the increase of capacity of labs that they would relax that because frankly there's not enough accessibility to test right now. And so some of our clients are a bit waiting to say, and I'm not talking of the airline industry that and the airports, the thing they want is to restart and the only way for them to restart is to offer proper testing. And I think antigen of course would be a quick fix like what they do we need for now, but I don't think every receiving country will accept an antigen test that's being reliable enough for letting people in. So I think the answer would be to do very significant and frequent PCR tests with self sampling as we are offering or sampling by that doesn't require a doctor to poke something deep in somebody's nose. Okay. Just on that point, just as a follow-up, if I could, just looking maybe beyond the antigen test in terms of sort of the rapid tests that are out there like the LAMP test or rapid PCR testing, for example, and thinking about the Heathrow contract that's been in the news in recent days in The UK. Just wondering on your views in terms of sort of the other rapid test out there, rapid PCR testing, LAMP testing, whether you're positioned to offer any of those either directly in terms of the testing or in terms of sort of primers, probes, reagents and some of the inputs into the supply chain. Any comments on any of those? Yes, of course. Yes, we are using them. When we operate a testing station at an airport or crossover at the airport, for example, we offer two options, either the normal PCR test and you get the response the next day and it costs EUR65 or you get the rapid PCR test and you pay EUR135 and you get the result within six hours. Because frankly, the problem is those rapid PCR tests, if you do one, you can do it in one hour. If you've got a line of people waiting to provide for each patient to one hour response time is logistically almost impossible. If you've got hundreds of people to test, and it could be done that you'd need a massive overcapacity in machines, You'd need to know how many people you're going to get, you need to have a capacity for it needs. I mean, for the producers, they are producing enough machines, they cannot deliver those fast testing machines fast enough. I'm not saying that two years down the road, they won't be there or one year down the road, they won't be there and that's for me that's a better option actually, the rapid PCR than the antigen testing, because I don't think the world will want to rely on something that misses twenty percent to fifty percent of the positives, of the positives that can be detected by PCR by the way, because PCR doesn't always detect all positives, because the virus is not always in the nose or throat. So, yes, we're using that, we're working with those companies to develop primers and probe also for multi panels. We are involved in that, it's the same question and point of care. There have been a big push since fifteen years to bring the testing, a lot of clinical testing to point of care. But for that to work in point of care, the test has to be done in every case within forty five minutes. The patient stays forty five minutes at his doctor and being at an airport or a stadium is about the same. People can wait maybe one hour for the results, but if it's longer than that, they will go home. If they're going to go home and they have to come back anyway, whether it's six hours, the average testing time or whether the practical one, not the technical time, the time that really hundreds of people observe. If it's six hours or if it's twelve or twenty four, it doesn't make a huge difference. People have to be tested before they go to the airport or they have to be tested after they left the doctor office and then they get an email. And I think the solutions that are sufficiently easy to do, sufficiently reliable, sufficiently high throughput that people can really be tested on mass, hundreds of people within forty five minutes, I don't think we're there yet. But it can be organized in specific situation, if you employ enough doctors, enough people to run the machines, and you have huge stocks of machines and and kids, you can you can make it work. But not we can make it work at the White House probably when you have unlimited resources, but maybe not at every airport or every other occasion where you'd want to do it. That's very clear. Thank you very much. Just one final question, if I can. It's just on the free cash flow bridges that you helped me put into the presentation pack. Just to understand the sort of bridge into FY 2021, where there's still a column for the cyber attack. We would have expected that to have sort of fully annualized by 2021. So I'm just curious, is that the insurance payment that you are still expecting to receive sort of going into next year? And if so, A, you able to sort of quantify that? It looks like it's probably about €35,000,000 And B, how confident can you be about getting that, please? Yeah, thank you. No, I think if I understand well, but Laurent can answer, what we have in 2020 is a positive, but then we compare 2021 to 2020. So compared to 2020, then there is fifty percent fifty or something like that, whatever, million less from the insurance. Laurent, is that correct? Yes, that's correct. That's a comparison between the two years. So you look at the variation of cash needs and this is a negative impact the year after. So no more reimbursement. I mean, we didn't forecast yet reimbursement into 2021. We might have collected all the reimbursement in 2020. We might have a few collections in 2021. But in these bridges, we didn't forecast it yet. It's a negative comparison to the year before. That's very clear. Thank you very much. Thank you. Our next question comes from the line of Andy Grobler of Credit Suisse. Please go ahead. Your line is now open. Hi, good afternoon, everybody. Thanks for taking the calls. Just a couple from me, kind of building on some of the previous questions. Again, going back to your longer term targets, so the 2022 targets, there's quite a significant margin increase through that period. And given the expectation by 2022 is that all the high margin COVID work will have fallen through, kind of how to balance out those two facts and what is going to drive that margin increase? And then secondly, you talked earlier about the PCR test expansion, particularly in France. Just where are you at the moment in terms of capacity? And how does that compare to the 2,000,000 tests that you talked about earlier in the year? Thank you very much. Thank you very much, Andy. Yes, it's a small margin increase every year. We've been investing heavily into our lab network over the years. We've been investing heavily into becoming fully digital and this costs a lot of money. Of course, once it's done, we have it. We should have also less disruption for all the moves and we think we can focus more on our clients. We have a lot of efficiency initiatives in our labs by specializing the labs. So I think we plan between 2019 and 2022, maybe 50 to 60 bp improvement per annum in margin. So it is of course, it is not done yet, but we think it can be achieved. Mostly also by removing the negative, we have a lot of our startups that we brought back in our mature perimeter, but that are not yet at the 20% margin level. So we hope as those startup matures, their margins will increase and they won't provide a dilution. Some of the acquisitions we did like TestAmerica, they came in at a very low margin and and of course you don't go from 6% or 8% to 20% within one year. So, think as we integrate their network, next year we're building a big lab in California to merge two sites where we're building we're consolidating in Texas activities. We had a couple of underperforming labs that we have restructured. All those things over time should benefit our margins, we believe. Coming back to yes, sorry. Well, yes, I think you're going to answer, but just in terms of the COVID element, to what extent is that going be a negative mix through that process? No, I mean, what could happen if and then I'll answer the two questions. You asked about our capacity. Our capacity, we said, I think back in April or May, that we are going to build the capacity to test 100,000 tests a day times twenty days, that's 2,000,000 a month by PCR. And the same for antibody, but there's very little demand for antibodies testing at the moment. We have by the end, I think by the October or mid November, we will be we will have doubled that. We have capacity between U. S. And Europe to test probably 200,000 samples a day, which is about 4,000,000 a month. But don't forget, this is peak capacity and it will never be used all at the same time in all countries where we have capacity. That would be very unlikely and if that happened, that would be very sad, that would mean the world is really facing a much bigger problem than we think today. But we need to be able, if there is a surge one month somewhere, then we need to be able to cope And soon we're going to be able we're going to have to test not only for COVID, but to test for COVID plus other pathogens. And it's not 100 clear whether this will mean just one using one test capacity or two test capacity because some governments will have different requirements. So that's why we did extra capacity. And I'll go back to the question from your colleagues about what should we expect or what is the exit rate. If you take this capacity and an average price, you come to an enormous number per month. We could be generating $2.300000400 million dollars revenues per month, that won't be the case. And I would urge you to not overestimate that. It could happen. I mean, problem with COVID is we have to deal with a range of scenario and the range of the scenarios is extremely broad. Normally you do a base case, your worst case and the best case and maybe the best case is 20% higher than the worst case. Here between the worst case and the best case, you have factors of one to ten, one in ten maybe or one in twenty. So they have nothing to do with each other. It could also be that things come out and the virus proves not to be as little as we think and we have a much bigger herd immunity than we think and all governments take it in house or they decide that basically testing is not really required unless you're really very sick. There are so many unknowns in all those maybe 20 jurisdictions we're doing this COVID test that we can't predict it. In reality, it doesn't matter. So please you as analysts, don't put it as a huge focus and if next quarter we do 200,000,000 or 300,000,000 or 400,000,000 or 100,000,000, frankly it doesn't really matter in the greatest scheme of things long term. Obviously, we do CHF300 million and that goes for margin. Of course, the more we do, the more the margin will be higher because it will be incremental revenue on a fixed basis. And as I already pointed out, we will try to write down our equipment fast because we have no visibility on the long term of that. So that we don't go into next year with a lot of equipment that still need to be depreciated. Our goal is the margin is at least our average group margin. If the margin happens to be double for PCR, that's good, then that will mean 2020 and 2021, we'll have a margin significantly above what we plan for 2022. But yes, if you look at the company, I think the value of the company is what you will get post 2022 as a shareholder. You get a leader in very exciting market that twice in two decades have proven to be extremely resilient to crisis. We've had an organic growth CAGR over the last thirteen years, that's probably 6% or 7%. And if we look forward, we probably have a similarly good outlook for the organic growth of that company. Company will be very well invested, good laboratories, very digital, way ahead of many other companies. I think that's the main thing we are building and of course, all the cash we get from COVID, we're using, we're going to use next year to invest and get more R and D and get more tests validated for our food business and our pharma business, strengthen our R and D team, strengthen our ability to produce our own kits for other divisions, other business lines, which it will help. But whether we do ultimately 50,000 tests a day in the next few months or quarters or 150,000 tests a day and whether the margin is 20% or 30% or 40% on those, I don't know. I don't think there is any way to know. And I don't know that it really matters so much in the greatest scheme of things. I hope you're okay with that. Yes. That's very clear. Thank you very much. Thank you. Our next question comes from the line of James Rose of Barclays. Please go ahead. Your line is now open. Hi, there. Good afternoon. If we could touch on the market post COVID, what do you think sort of the longer term beneficial impacts might be? Could you run through sort of different divisions and sort the impacts you might see there? And then secondly, on 2022, I guess the M and A guidance is still fairly muted. What was the rationale for this? And then should we expect SDI and restructuring costs to be lower year on year versus 2021 as a result of that as the business matures further? Thank you. Thank you very much. Yes, I think the markets for post COVID, well, if we have to look market by market for biopharma, I think it will be obvious for everybody that biopharma can contribute a lot. And that biologics, I mean, you saw the antibodies, and of course, you could still fail. All the new vaccines, those vaccines that are ahead, both the BioNTech vaccine with Pfizer and the Moderna are really new modalities that were previously a bit unexplored and unproven. They could fail, but if they don't fail or if even if they partly fail and we learn that they could work, that's going to trigger massive investment in those areas. Biotech is good, as I from what information I get, and you probably are much better informed than me, there is a massive wave of funding that's already started and that's going to roll over biopharma for the next few years. So that segment for Europe, I think is where we help those companies do their work and especially the biotech companies, they don't have their own labs. So they need to outsource more. I think that's going to probably be boosted for many years to come. On clinical testing, I think this COVID thing will bring so much massive investment that maybe things that were not possible or thinkable before will become possible, like massive testing for a broad range of pathogens. We were selling that in America for $250 a test and obviously the insurances are not really happy to pay $250 every time somebody is coughing. Maybe after COVID this will be possible for $25 or $10 I don't know and even faster and maybe then this will become part of the norm. So there will be more investments, there will be more solution. People, everybody has heard the word testing and so clinical testing could advance in many areas because of that. Environmental and food testing, I think we're getting simply more aware of all the risk of viruses and contaminants and we think there might be more surveillance and more requirements. And again, the innovation that we've done in this COVID area, we will bring to our food clients and we'll bring to our environmental clients, to governments, we will propose solutions because of course you can screen for this virus, but you could screen for many other viruses at the same time. So those are some of the things, there could be more regulations or not, of course, are also political elements. But generally, think testing will from what I hear from every direction, clients, governments, testing probably will stay in focus for a while. The other thing, the guidance of M and A, yes, we just reverted to our historic guidance where we said we think we can do a few bolt on deals, smaller companies that add either technology or entrance in the market for about 200,000,000 per annum, creating the need for a lot of restructuring, without paying too much of management time and without paying too much because the larger deals are very expensive. We've experienced the frustration of some analysts and some investors when we had leveraged that were above 3.5 times and I don't think it's a place we want to be. We know other ratings, so we would need to manage our leverage. Of course, if COVID brings a lot of cash that will help us to deleverage even faster and would give more headroom on that count. But it's not really required. We can do a lot organically. I don't say something super exciting come our way that we won't do a little bit more, but then we'll ensure our ratios stay reasonable. So that could be the case. And yes, SDI should trend lower. I hope this year will be the last year where we have significant SDI and even from next year, this should be much lower because we should be done with this program of integration. Our startups are maturing, of course, some of them are a bit delayed by COVID. If they happen to be in a sector where COVID is preventing operations or in a country with very strict lockdown that might delay some of our startups by six months, hopefully not more. But overall, 2021, 2022, we should see as we can judge now much less separately disclosed items be there from startups or restructuring. Great. Thanks very much. Thank you. Our next question comes from the line of Neil Tyler of Redburn. Please go ahead. Your line is now open. Yeah, thank you. Good afternoon. Two questions, please. Firstly, on the 2022 targets and the balance sheet leverage figure of below 2x. I understand that the EBITDA excludes any COVID impact. Just coming back to some comments, Gil, that you made a minute ago about the cash generation from the COVID testing and the likelihood that some of this would be reinvested. Would you, on balance, expect some significant free cash flow from COVID? Or do you expect to reinvest the majority? And that's the first question. And the second one is on customer prospecting, really. When you think about the you expect your markets to grow more quickly. Have you put had to put any of your customer prospecting in terms of the trajectory that you're expecting businesses to grow at and fill those new laboratories? Have you had to put any of that on hold? Or has the demand for your capabilities, I suppose, accelerated at the rate of new customer acquisition? Thank you very much. Yes, that's a good point. Maybe the two times leverage is conservative, I mean, if we only do that level of M and A, and if indeed in 2020 and 2021, we end up doing very significant amount of COVID testing, that would be then higher margin if we do a lot, the more we do the higher margin. Yes, we could deliver it faster. And if COVID continues, don't think we do major M and A either because we can't travel, we can't it's very hard to integrate any company. So we'll be and of course, free cash flow and our leverage, none of our free cash flow, but our leverage will depend on how much dividend we end up paying for next year and so on. So there are a couple of unknowns. But yes, you're right. If we do a lot, if we generate a lot of revenues and cash from COVID that we presumably won't use for anything, okay, maybe if we spend a lot more in our network than we planned, we're talking spending EUR 100,000,000 more or EUR 50,000,000 more than planned. It's not we're not going to spend huge amounts more. So that's a good observation. Prospecting, it's harder to prospect, but there we benefit because we are the market leader. So we are known and people come to us. So I think in crisis like this, you're very right, it's going be very hard to go and sell and find new customers. In online, you can do some, etcetera, but you really benefit from being a leader. Where it's harder is for startups. Indeed, if we have a startup in a new country, and we're nobody and we're not known, it's much harder to start a startup if you can't visit customers. And one thing I'd like to say, I'd like to thank you for your note and thank all of you who put a lot of work in initiating. I think one of your colleagues also initiated, I don't want to advertise for anybody, but thank you very much. For you too, it's hard without traveling, without visiting sites and I saw you all put a lot of efforts in understanding our company and bringing also the biopharma look from your experience of biopharma. So, we're happy to have broadened our coverage over the last year. And many of you have joined also have a good experience of peer companies that are mostly in The U. S. Be it in biopharma or biopharma services or clinical. So thank you for shedding an additional light to the analysis of our company and all the efforts you put into it. Thank you, Joao. Thank you. Our next question comes from the line of Alan Walls of Exane BNP Paribas. Please go ahead. Your line is now open. Hey, good afternoon, Gilles. Just a very quick question, most of mine have been asked already. Can you just maybe talk a little bit about the visibility that you have on the COVID side? And you talked a bit and you mentioned sort of government contracts now in place, but obviously some lumpiness. I mean, what sort of actual visibility do you have on revenues on either day by day or month by month basis? And how do we think about that into year end, if possible? By definition, nothing is visible with this COVID. We have contracts, we have big contracts, have a big contract to test pretty much everybody in The Netherlands, for example, but that still depends on how many people get sick or how many people want to get tested and you can't force a government to test people that don't want to be tested. So, I mean, it's pretty obvious that we will continue to test and whether but whether we test at the same level than we're testing in September, higher, lower, I don't know. I don't really know. And yes, have quite some significant contractual commitments, but some contracts are for two months, some contracts we don't have contracts for three years of COVID testing obviously, as you would imagine. Everybody is hoping this will go away, including governments. So it would not be reasonable to commit for two or three years on that. But do you have like minimum volume requirements on those contracts as an example, just to obviously justify you setting up and investing in the capacity in the first place or is that not how it works? I'm just trying to understand on that side. Yes, yes, we do. We have different contracts obviously, but if government or a client expects us to set aside capacity for them at low turnaround time, then they have to commit to something. And then okay, they are arranged and they don't necessarily commit to the maximum demand they could give, but then they have to commit to at least a substantial amount. If they say it's basically based on availability, then they don't have to commit, but then we don't have to serve them if we are full at that time. That's how everybody, governments and others are trying to cope with this unpredictability. And then instead of interest, do you have any contracts that run well into 2021 or are most people just getting to the end of the year and they'll roll over at the end of the year? I'm just interested in how customers are looking at next year versus this year. Yeah, think they're starting to be rather worried about the whole winter. I don't think we have contract that go beyond this winter, but we have contract that go through the winter, so into 2021 I believe. But you know, it's I don't think I would want to force somebody or we have some take or pay contract, but this is a public service we're doing. I don't think we want to force anybody to take testing that they don't want to take. I think it won't be necessary because you know, the other thing is, if assuming the world gets lucky, and we all end up being either immune because we were immune already, or the vaccines are incredibly efficient and incredibly well accepted by the population and these go the way, there must be some level of surveillance and we probably will switch to more statistical testing, surveillance testing, fentanyl testing, maybe at a lower level. I don't think it's going go completely to zero from January 1, even if we I mean, January 1 is never going to happen, but maybe March 1, let's put it this way. And then just very quick follow-up question, Jim. You mentioned about obviously some of this machinery that you've acquired, you depreciate it quickly given sort of, I guess, an unknown useful life. And the scenario that you've essentially planned for with your 2022 guidance, Given the potential, obviously, assuming recovery in the core Diagnostics business, etcetera, would it be right that you'd be still be left with excess capacity that you'd even have to sell the machines? Or is there the view that you'd almost certainly just grow into the capacity that you've got you're setting up within these machines for COVID as well? I think the street has been thinking that Eurofence is not conservative in its accounting. I believe the opposite is true and we've always been extremely conservative in everything we do. Whenever we buy a company, we realize that we depreciate stuff much faster than the companies we acquire and many other aspects of our accounting are actually very conservative. Of course, we do disclose exceptional items and SDIs because we think it gives the best information we can to analysts and investors. But the visibility on COVID being what it is, we will depreciate faster those machines so that we go into 2021 with very little left to depreciate, unless we have as you say, firm contract for whatever usage next year in which case of course they be depreciated over the duration of those contracts. We don't intend to go into 2022 with anything left that was made specifically for COVID that is bothering us. Okay, great. Thanks a lot. Thank you. Our next question comes from the line of Geoffroy Michelet of ODDO BHF. Please go ahead. Your line is now open. Hi, good afternoon. Thank you for taking my question. I have a first one regarding 2022 and beyond on the organic growth above 5%. I just wanted to know if you could share with us an idea of the price and volume effect split between the two? And also to which extent you suspect you could have this sustainable rate without reinvesting more in a new start up plan, for instance? Second question is, while you partially answered it, is which part of the business are negative organically speaking in terms of growth or below 5%? And the third one is, in the coming years, would you intend to modify a bit your dividend policy and increase it since your free cash flow will drastically dramatically increase? Thank you. Thank you. Yes, our organic growth except for maybe 02/2009, organic growth was 2% or 3%, we're always above 5%. And so I think 5% is probably a reasonable objective. What is price, what is volume, maybe price is between one and two and volume is between three and four gives you an idea or maybe three and two. It's very hard to really calculate because we offer new tests all the time because this year we have COVID, we didn't have COVID before. So I wouldn't be able to calculate the price effect in this year, maybe on part of our revenues. Reinvest and for that we don't need to do so much. Have indicated that with 6% CapEx, we're very comfortable and the 6% CapEx allow for definitely those 5% organic growth and probably more. So probably if we were going to only stay at 5% probably would be less than 6% CapEx, maybe 3% or 4%. So I think it's that won't require and the 6% CapEx will include some level of startups obviously. But which parts are below 5%? I think I'll point you to our press release. I think we've disclosed a bit the areas clinical clinical testing. Look at it this way. If people need to travel to either take a sample or to get tested, in some geographies, this is difficult or if they need to go inside when you have a lockdown, they can't go inside a building, etcetera. And dividends, a long time ago, we talked to our investors and we were of the opinion that as a growth company, we should reinvest 100% of our profits, but they said yes, but you have to show some commitment to investors even if the amount are modest. So we said, okay, we'll distribute about a quarter of our net profit. We didn't do it in 02/2019 because of COVID and it would not come down very well in countries like France, if we pay the dividend while putting people on so much technique or furlough. But I think we will revert to that from this year from the dividend for 2020. Okay, that's very clear. Thank you. All right. I think we can take maybe one last question because we are a bit running over in time, if there is one. Thank you. Our final question for today comes from the line of Stephen Bourdain of Deutsche Bank. Please go ahead. Your line is now open. Hi, there. Thanks for taking the question. I just wanted to ask on if you look at the figures that the NHS and The UK published, you can actually see the split of public versus private capacity. And over the last few months, there's been a big move towards private. And I just wondered if you could give us any kind of high level I'm sorry, I'm talking about COVID here, obviously. Could you just give us a feel for how various governments in your core markets are well, how the capacity between public and private really is building in core markets? And then you said earlier on that you hope to be at around 200,000 tests a day, I think by I think you said by late November. Could you just give us a feel for how quickly I mean, implies so 4,000,000 tests a month, How quickly you could say take that to 8,000,000 if the demand was there? What's the kind of practical realities? What are the bottlenecks? Is it just getting access to equipment? Is it logistical? Is it having the real estate, for example? Any kind of color there would be really helpful. Thanks a lot. Yes, thank you very much. This is a very good question. I think the world didn't do itself a service because initially the testing was very limited to public labs. I think the worst was The US where CDC limited testing very strictly in March, February and March. But then they opened the foot gates and they encourage every private lab to build capacity. The US has been building massive capacity. So I think we'll be at millions of tests a day capacity by the end of this year, in The US market collectively. Europe has been traditionally more towards the public sector. France was very reluctant to push private labs, but then in April, I think they realized that if they only asked the hospital labs to do testing, it wouldn't work out. Then at some point hospital labs are just too much and they said, we need help from private sector. Belgium has been very much oriented to public, because it's a small market, but eventually they realized that maybe private labs were more efficient at doing very large volumes. In The UK, I think the private sector with the Lighthouse Labs was involved, I think it was Deloitte running those, it was maybe public private partnership. And yeah, the governments have to approve other labs. It's I think if the government has asked the private sector from day one to deal with it, we will be much further, especially if the governments have given a better visibility as to what their long term or let's say one or two years need would be, the capacity would have been much faster and more reliably than it has been. France was hit with a shortage of tests in September, which would never had happened. In my opinion, capacity had been built in April from April, but anyway, now in the meantime, it has been caught up. Yeah, you know, going from 4,000,000 to 8,000,000 is not all that hard. Now we've got so much experience in developing dedicated software for it, in automating, we produce our own reagents, we have built factories to produce reagents, we're building factories to produce plastics. We could do it. I hope we don't have to do it. I hope that we've 200,000 tests a day that obviously we won't use those 200,000 tests a day capacity, maybe we'll on peak times, maybe we'll use half of it. I don't know. I hope we, you know, my hope is we use as little as possible, so this thing goes away and we can return to our normal lives. That's basically what we're doing at Eurofence. Now, of course, since this is our core business and we're good at it, we are in the countries where governments accept our help, we're doing what we can to help and we're building that capacity. So if some governments say, okay, we think this will continue beyond the winter and we need more capacity within two or three months, we could move from 4,000,000 to 8,000,000. But we won't do it. We're not the only ones. I think capacity is building all over. So I hope to be enough capacity. The real problem, the real bottleneck is in something, is in removing the bottleneck to people getting actually physically tested. And I think the biggest hurdle is that at the moment. And so if we get approval from governments to do self sampling in most European countries, then we might need much more capacity actually because that would be easiest for everybody, including for employers to test their stuff. Because you have to bring a nurse, bring a doctor, that's why at times it's much more complicated. All right. I think we have one more question and then that's it then. Thank you. Our final question then comes from the line of Nicolas Tabar of MainFirst Bank. You very much for taking my questions. I wanted to call back on your beyond 2022 guidance of further margin improvement. I wanted to see what's your long term vision there and where could possibly EBITDA margin go? I remember that in the past, we used the 20% pre IFRS 16 EBITDA margin as more normative level, the adjusted one, I mean. So what would be a normative maybe EBITDA margin that we could reach over the long term compared to what we were looking at over the past years? Thank you very much. Thank you very much. It really depends on the mix, I think and the mix and how fast we want to grow and how many startups we allow ourselves to open that might be dilutive. One big market that we leave open is China. We're not investing massively in China, others are doing it. We're a bit concerned as to whether long term foreign companies will be able to have a large market share in China. But of course, this is an area where we could revise that and find ways to derisk those investments. We haven't invested so much yet in many Asian countries. So that would be more the cursor to in the bigger markets, once we reach maturity and we have all that network and we utilize it well, I think we can have good margins. That's why we've now got setting as an objective something that's above 20% pre IFRS, what we target for 2022 is already above that. I think if we do that, it's already pretty good. If you have a company that has already this level of margin and cash flow that is growing organically 10 per annum, but it is little by little improving, even if we improve 20 bps per year or whatever from there, I think it's already a pretty good company. And actually, if you can get that company at the current multiples now that are equal or lower to companies that definitely don't have the secular growth rate, I think it's already quite good. But that's for you to judge, it's not for me. All right, I would like to conclude the call now and thank all of you for all the time you're putting in analyzing our numbers, if you're analyst or if you're an investor for your support through those years of building the company. I'm very happy of what our teams have achieved in this year, in the first nine months of this year, which has been incredible work in very difficult conditions. A lot of people have had to come to the office or to the lab when their friends and colleagues were staying at home and doing home working, so we could serve our clients, do our research, operate our labs. They've they've been doing a lot of work, and I think the the results show what is possible with the strength of R and D and the commitment of our teams and also what is possible because we are an entrepreneurial company made of many small companies that are very agile and reactive and entrepreneurial. So, we'll try to continue to do our best, we'll try to help your respective governments to tackle the virus and get everybody tested quickly that needs to be tested. That hasn't been so great. The lab industry hasn't done a great job over the last six months to make that possible. Now we've all learned, we've all gotten better, I think collectively the lab industry will help and the IVD providers will help, and we're definitely going to work hard for that. Thank you very much and have a very good day.