Earnings Call: H2 2018

Nov 8, 2018

Good morning. Thank you for standing by, and welcome to Sotexco's fiscal 2018 results conference Call. I advise you that this conference is being recorded today on Thursday, November 8, 2018. At this time, I'd like to hand the conference over to the Sidesco team. Please go ahead. Thank you. Good morning, everyone. I'm very sorry because I gather some of you have had some delays in connecting. So we're starting a little bit late. Very sorry to those who are on time. Welcome to our full year fiscal 2018 results call. On the call today are CEO, Denis Machuel and CFO, Mark Conner. As usual, if you haven't already done so, the slides and press releases are available at sodexo.com, and you'll be able to access this call on our website for the next 12 months. The call is being recorded and may not be reproduced or transmitted without our consent. I remind you that this presentation contains statements that may be considered as forward looking statements and as such may not relate strictly to historical or current facts. These statements represent management's views as of the date they're made, and we assume no obligation to update them. You are cautioned not to place undue reliance on our forward looking statements. Please get back to the IR team. If you have any further questions after the call, And I remind you that the next announcement will be the first quarter figures on January 10, 2019. I now hand you over to Denis. Thank you. Good morning to all of you, and thanks for being with us this morning. So since it's been only 2 months since our Capital Markets Day, we thought we would keep this cold short given that we communicated extensively with you at that time. But of course, we are very open to all your questions. So let's now get into the figures. Firstly, we have published figures that are in line with the revised guidance that we issued on March 29th. Organic growth was 2% excluding the 53rd week in North America. And the underlying operating profit margin was 5.7% on 2017 currencies. So on the Slide 6, you will see the breakdown of this 2% growth. In on-site services, we have achieved 1.9% with North America down 1.1% but outside of North America, we are up 4.5%. In benefits in our services, our growth was 5.1% with Latin America positive at 2.4%. And excluding Latin America, strong growth of 7 point was strong in both benefits and awards and on-site services with a good summer season in France and the expected both days shifts from Q3 to Q4 in education. And this was also helped by the really strong pickup in benefits and awards in Brazil in the second half, but much more strongly in Q4. India benefits and rewards activity also banned stack now than the card migration is over. In this context, on Slide 7, you can see that although, profits are strongly impacted by the underperformance in Education And Healthcare in North America, and in a few large accounts, our financials are very much under control, with a strong free cash flow, a solid balance sheet, despite million of M and A and million of share buybacks. As a result, the board has decided to maintain the dividend at which implies a payout ratio on underlying net profit of 58%, slightly above the historic norm And this confirms the board's confidence in our strategy. So On Slide 8, you can see that I'm really confident that in the second half of the year, we put in place the necessary measures to get Sodexo back on track. The acceleration in growth in Q4 is good news, but not necessarily sustainable at the same levels going into the first quarter of fiscal 2019. I'm very proud of our teams, particularly finance teams who have strictly controlled our cash. Delivering a record free cash flow. All the action plans that we announced over the past year, whether they were for accelerating growth or improving productivity are strongly on the way. And my number one priority, as you know, is to get North America back into sustainable growth. And we know that the full turnaround will take time. Overall, we're confident that we are going in the right direction, and we have the right teams to take us there. The board shares this confidence and decided to propose to maintain the dividend, which would be voted at the AGM in January. So I'll now pass you over to Mark to go through the financials, and I'll come back later to talk about the business Thanks. Well, thank you, Denis, and good morning, everyone. I'm very pleased to be here with you this morning. As usual, you will find the alternative performance measures definition in the appendix. Now let's start with the performance in the P and L on next slide. This has been a top year for our P and L. It's been impacted by a CVR currency translation all the way down to the P and L due to the strengths of the euro relative to most of our major other currencies. Revenues at 1,000,000,000 was down 1.4% or up 4.4% excluding the currency effect. The underlying operating profit at 1,128,000,000 was down 15.8% or 8.6% excluding currencies. The underlying operating profit margin at 5 0.5% was down 100 basis points, but 80 basis points, excluding the currency impact. This is in line with our revised guidance of 5.7% at constant exchange rates. I would like to remind you that currencies have a translational effect on our P and L as all our costs are in the same currencies as our revenues. However, there is also a mixed effect from the BRL because of the very high profitability of BRS in Brazil. When the BRL falls, the weight of this highly profitable business decline and the margin rate decline. On the other hand, the opposite is true when the BRL goes up. The average PRL euro rate fell by 13.5% on average in fiscal 2018 versus fiscal 2017. Other operating income and expenses were at EUR 131,000,000, EUR 20,000,000 better than last year, and I shall come back to this in the next slide. Financial expenses improved by 1,000,000. Last year, we had paid an exceptional indemnity of 1,000,000 due to the early redemption of some debt and this year, we cashed in late interest for EUR 7,000,000 related to the prior year dividend tax refund in France. The effective tax rate was significantly down at 27.1 percent. This was due to the reinvestment of past dividend taxes in trends for EUR 43,000,000, which we got back in January. Then we had a lower rate in the USA with a blended tax rate of 25.7 percent for our fiscal year 2018. But we've had some negative one offs in the USA with the impact of the deemed repatriation tax and the deferred tax adjustments. Because of all of this, the underlying net profit was 1,000,000, down 8.6% excluding currencies. Net profit was 1,000,000, down 4% excluding currencies. The earning per share benefited from a lower share count due to the ongoing share buybacks. Now I would like to come back on the other income and expenses. Restructuring costs were 42,000,000 As expected, they were substantially below the previous year's $137,000,000 of exceptional cost, However, they were up relative to the first half of the year where it was 7,000,000. After the disappointing result in H1, we have taken a number of measures and made some changes in Europe and in the U. S. Linked to performance but also to start simplifying the organization. We will do what is necessary In line with the capital market day messages, usual model about 1,000,000 of ongoing restructuring spend in the 2 coming years. The M and A cost the quarter 2018. Operating cash flow was up 5.9 percent, helped by much improved cash tax thanks principally to the reimbursement of the dividend tax and the positive impact of the tax reform in the U. S. The positive inflow of working capital of 1,000,000 was due to improvements on the components of the working capital throughout the group with a particularly strong contribution expenditure, including the net impact of client investment, amounted to 1,000,000, representing 1.4% of revenues compared to 1.5% last year. As you know, we have not been signing enough business, especially in education. So free cash flow reached 1,000,007,000,000, up 1,000,000 versus last year. This is a great year, and please do not count on such a high cash conversion every year. As you already saw in H1, Net acquisition and disposal of subsidiaries increased significantly to 1,000,000 from million last year. The big one was center place for a total of 1,000,000. After taking into account the share buyback of 1,000,000, the dividend payment of 4.11 and other changes, principally linked to currency impacts and perimeter changes net debt rose by 1000000. As a result of the very strong increase in free cash flow, CASK cash conversion reached 165% compared to 123% in fiscal 2017, both call 2019, we aim to be above 100%, but not a lot above it. So with net debt increasing by EUR 648,000,000, to EUR 1,260,000, our gearing has increased to 38% and the net debt to EBITDA ratio is is just now into our targeted 1 to 2 range. During fiscal year 2018, we issued a 5 year US private for $400,000,000 at 3.7 percent to find and centerplate and we also issued a 7 year bond for 1,000,000 at 1.125 percent to finance share buyback. Despite this increased debt level, the average rate at the end of the year on our gross debt was 2.5% against 2.4% last year, and we have an average maturity of 5.6 years. At the end of fiscal 2018, the group had an operating cash position of 1,000,000,000. This cash position includes almost 1,000,000,000 from BRS, including restricted cash for 1,000,000, financial assets for 1,000,000 and $28,000,000 of bank overdraft. In next slide, you can see that the dividend proposed by the board is 0.75 stable than last year. Despite the decline in profits, the board fell at on the good performance on cash and its confidence in group strategy that the dividend should be maintained. As a result, the payout will be a bit higher than usual at 58% on underlying net profit and 63% on published net profit. Let's go onto the review of the operations. Let's start with revenue growth on Slide 17. This year, revenue was down 1.4% impacted by a 5.9% negative currency effect. Due to the strength of more significant than in 1,000,000 or 2.4 percent to this growth. On the other hand, there were also negative effects among which the disposal of Veeva Box. As a result, organic growth is slightly above our revised guidance of 1 to 1.5. We effectively finished the year with a 4th quarter that was up 3.5% and 3.3% just for on-site services excluding the 50 3rd week. On-site services were up 1.9% excluding 3rd week and benefits and rewards was up 5.1%. Let's look at the KPIs. In fiscal year 2018, new business reached 6.8% and retention 93.8% both up by 30 basis point. Same site sales growth improved by 110 basis points to 2.6%. We've had strong momentum in contract extension, And in the release, you can see a lot of good examples. The really good news is that we've seen a significantly better retention in universities in North America driving an improvement of 300 basis points for education globally and some better developments too, especially in schools. So we start the fiscal year 2019 with a neutral net new business impact from prior year in education. We have also seen some signs of improvement in health care wins in the last quarter, but we remain prudent because retention has not been particular good in fiscal year 2018. There were no significant changes in the performance of business and administration overall in fiscal year 2018 versus fiscal year 2017 in terms of retention and development. On this slide, you see the underperformance of activities in North America, down 1.1 percent due mainly to the significant downturn in education. Outside North America, Europe is up 1.5% and our activities in all of the regions are up double digit at 11.7%. The growth outside North America amounts to 4.5% in line with past quarters performance. Starting with business and administration on Slide 21, you will note that all these organic growth figures in green are excluding the 53rd week impact. Organic growth was +.1 percent, In North America, organic growth was services continue to generate solid growth with further development of facility management services. However, energy and resources remain challenging due to a significant site closure in Canada. Government and agency was flat due to generally weak demand in some and mess closures in the Marine Corps. And as you may have noted, we were successful in retaining the U. S. Marine Corp contract. In Europe, sales were up 1.5 percent organically. The tourists were back in Paris, which boosted our sports and leisure activities. Corporate Services has done well with new business and particularly strong growth in same site sales in Southern and Eastern Europe and this has helped to compensate for several losses affected the pretty sharp losses in the UK, energy and resources are stabilized in the second half, but was still negative for the year. In Africa, Asia, Australia, Latin America and Middle East, organic revenue growth remained strong at 11.2% reflecting strong new business and same site sales in corporate services in all regions and a better environment in energy and resources, particularly in mining. Moving on to Healthcare. Excluding the 53rd week, organic growth was +1 percent. In North America, organic growth was minus 0.5%, excluding the impact of the 53rd week. Due to slow new business and weak retentions this year. The second half activity though was better than the first due to an easier comparable base. The management team and new sales organization are now well in place. New business staff signature started to pick up this summer. The 0.6% in Europe is due to solid progress on existing sites, particularly in the UK. On the other hand, net new business in Europe was slightly negative in the year due to a lack of significant development opportunities. There was an improved trend in Zeniors and France in hospitals in Belgium and the Nordics. In Africa, Asia, Australia, Latin America and Middle East, the plus 17.2 percent organic growth reflects many new contract startups in Brazil and particularly strong same site sales growth in Asia. We do expect the rhythm of openings to calm down a little bit going forward as especially in Brazil, although we still expect above average growth. The 2.5% decline, excluding the 53rd week impact in education on slide 23, 3 sorry, was due to poor performance in North America, which still account for 75% of the segment's revenue. North America was down 3.9% excluding the 53rd week impact. Schools were up due to new business and strong same site sales growth, universities suffered from the high level of contract losses of the previous year, which was not offset by enough new business or growth in same site sales in fiscal year 2018. As I said earlier, the good news is that retention has increased by 300 basis points in the recent selling season so that for education overall, net new business going into fiscal 2019 is neutral. In Europe, organic growth was plus 3%. Driven by prior contract wins, same site sales growth in the UK and Spain, and additional base in Italy. France was flat due to weak prior year development. In the rest of the world, education is principally focused in Asia where organic growth was almost particularly in China, Singapore and India. Now let's move on to benefits and rewards performance where we are introducing some new disclosures. But first let's go through our traditional figures. Issue volume organic growth was plus 6.8 percent and revenue growth of 5.1%. On Slide 26, in Europe, Asia and the USA, you will see the very sustained growth in revenue of 7.5%. On issue volume up 6.7%. We've seen robust growth from solid face value increases in the traditional mill and food is across Western Europe, rising to double digit growth in Eastern Europe and around the Mediterranean The weakness in India due to the massive digital migration at the beginning of 2018 is now behind us and we saw a good acceleration in Q4. Incentive and recognition and the mobility and expenses activities are also continuing to generate good growth. In Latin America on Slide 27, the year starts with a very competitive Brazilian market due to the lack of recovery in employment and much lower interest rate. However, there was a much improved environment in the second half, accelerating in the fourth quarter. As a result, organic revenue growth in Latin America +2.4 percent for the full year on issue volume growth ending the year up 7% and this was helped by increases in face value and a number of beneficiaries in the second half. From the third quarter, inflation and interest rate in Brazil have been progressively stabilizing and the comparative base has become easier. To meet some of your requests on additional closure for PRS, which will now break down the revenue in three ways. On Slide 29, firstly, the split by service line between employee benefits and the service diversification, including incentive and recognition, mobility and expenses activities and the public benefits. On Slide 30, you will see that revenues for the employee benefits grew by 4.9% While the new services grew by 5.9% due to the development of incentive and recognition and the mobility and expenses offers which are widening as we speak. We should continue to give you the issue volume for employee benefits, which you can see was up 7.2% and represented a total of 1000000000. However, the issue volume on the other activities is either non existent or much less homogeneous between offers. So we do not believe the information is useful anymore we should no longer provide you the issue volume of the other activities going forward. On Slide 31, you will find our traditional geographical breakdown, which I have already commented. On Slide 32, we shall now also provide the breakdown between operating revenues and financial revenues. And you can see, operating revenues were up by 7% while the financial revenues were down 11%, which is mainly due to the fall in interest rate in Brazil in recent quarters. We shall now provide all this on quarterly basis. On Slide 34 now, I would like to finish up with the underlying operating profit. Our underlying operating profit was down 8.6% 8 excluding the currency effect. As a result, the underlying operating margin was 5.5%, down 100 basis points relative to the previous year. Excluding the currency impact, the margin was 5.7 percent down 80 basis points, in line with the revised guidance provided on March 29. We had explained at the start of the year that BRS margins will be down due to lower interest rates in Brazil higher cost linked to digital migration and the investment in Rydoo's travel and expense offer launch. The recovery observed in H2 in Brazil has helped mitigate somewhat site services, the positive news is that there was an improvement in the margin in healthcare and seniors and in business and administration in the second half versus first half. This is a result of the many operational action plans put in place. However, the second half comparative base from last year was very high. The issues for the first half have not fully gone away, but we've made some improvements and keep on working at it. With regards to the ramp up of profitability of some of our large contracts, rehab resolved some of those issues, and it has led to improvement in the second half, but we must not stop our efforts on all of these contracts. Even though the plans are now in place, there remain a shortfall in education and health care and seniors, particularly in North America, due to the slow start in execution during the first half. Corporate expenses are up due to the announced investment in marketing, digital and innovation. Now let's go into by 70 basis points due to execution issues in some of our larger accounts as well as investments in sales, marketing and new offers that are being launched in order to boost our growth. I think you saw some of these initiatives at the Capital Market Day. In Healthcare And Senior, the margins declined by 30 basis points to 6.4%. This reflects the weakness in the top line, particularly in North America, and delays in the delivery of efficiencies from the productivity programs. Productivity is improving now and should accelerate into fiscal 2019. As we said earlier, the new global segment management team and the North American team as well as the sales structures are now all in place. In education, the underlying operating margins fell by 90 basis points. This was directly linked to the much lower retention in North America While the labor scheduling and SKU management programs are starting to come through, their impact in H2 was limited due to low level of activities in the second half linked to the high seasonality of this business. Inflation in labor costs, which affected us seriously in H1, was covered by productivity measures and we've seen pricing adjustments confirming that labor inflation has been passed through recently. In Benefits And Rewards Services, The underlying the currency impact, the margin was down 180 basis points for the full year after a first half where which was down 320 basis points due to the of digital migration, particularly in India and Czech Republic, the lower interest rates in Brazil and investments in the mobility and expenses. However, the second half was better, down only 60 basis points, benefiting from the strong recovery in volumes and progressive stabilization of the interest rate impacts both in Brazil. I thank you for your attention and I now hand you to Denis with going to cover the outlook. Thank you, Mark. In the following slides, I want to give you a first update on the focus on growth strategic agenda that I presented during our Capital Markets Day. And some of the different initiatives that we launched to better position our business to take advantage of growth opportunities to get back to excellent execution and thereby accelerate our growth rates back up to best in class So out of the several initiatives that we have on our strategic agenda, I will only highlight a few examples today. And we will update you regularly on other initiatives. So let's focus on new food offers that are there to meet the latest consumer trends on the top left corner of the slide. Over the past few years and months, we have invested to drive innovative change and hence our offers and meet the latest consumer and food trends. We've started to use a multi brand approach, which goes back to the heart of being client and consumer centric. So I'm typically talking here about urban professionals who expect the same top quality seasonal food at their company restaurants as at their favorite trendy bistro or busy people on the go who need the convenience of anywhere, anytime food delivery. And there's also a growing demand across the board for locally sourced sustainable ingredients and more vegan and vegetarian options. So let's talk first about the good eating company. It's, it really carries a sophisticated urban offer, in the UK. We acquired the good ethane company in 2017. And with that company, we can compete in the high treaty in London with a very sophisticated food offer. Since the acquisition, the Goody thing company has operated as a stand alone business keeping its own brand and with distinctive culinary propositions that are there to capture the premium end of the market together with 100 percent client retention, 100 percent management churn, 20,000 daily consumers, and new clients like MSC Cruises, you probably know it's the world's largest privately held cruise company. And also Nomura Bank. And with Nomura, we are particularly proud of this win because the good eating company will manage the restaurants for the 4200 employees at their own London Head Office as well as the fine dining, hospitality, conferencing and events business and the on-site convenience store. So in fact, we have grown the existing company business now by over 20%. When we look at optimizing overhead costs and it's the top right corner. I just want to highlight that since the Capital Markets Day, we have moved into execution mode in North America, in France and in the UK, in terms of our fit for the future program. We have identified 1,000,000 run rate of costs that can be taken out to redeploy on boosting sales. In the accounting program that Mark has presented at the CMD, The new portal center is live and the UK accounting has been transferred. The next country to transition will be the Netherlands. Now the, on our nurturing talents, the bottom left corner, you know, we shared with you on the Capital Markets Day that nurturing talent is a fundamental pillar of our strategic agenda. And in this pillar, we have used, a general approach to develop the digital passport program. We started with an initial test and learn phase with 1500 users. It's now ready to be deployed across the organization targeting connected employees and covering digital topics that are impacting the world we live in and Sodexus business. And among them, of course, consumer experience Big Data Innovation Mindset, Data Analytics, Internet of Things, robotics, virtual reality, Digital Food And FM Design Thinking, a lot of topics. It's a very impressive virtual learning program which aims at supporting our employees on the deployment of digital solutions in their countries, in their regions or segments. Now on the, the anchoring corporate responsibility pillar on the bottom right corner, I'd like to highlight the recent launch of 200 new plant based menus across 100 of university, healthcare and corporate services accounts in the U. S. With, I have to highlight that delicious and trendy dishes, like, typically, carrots, Osobuko, Tiramisu make with cashew nut cream, etcetera, and the likes, very well received These offers, they respond both to consumer trends and environmental concerns, you may know that, food production accounts for a quarter of all greenhouse gas emissions. And so helping people increase the share of plant based foods and reduce meat in their diets is a critical step in reducing those emissions. So let's now turn, to the outlook and the fiscal nineteen objectives. So while the growth rate of the fourth quarter is not immediately sustainable particularly at that rate going forward, we are convinced that growth in Europe should be maintainable at between 1% 2%. We expect to see continued solid growth and we certainly expect to see some improvements in North America. The education selling season was better in terms of retention So even if the business doesn't grow in fiscal 2019, it certainly should be down. However, I I repeat that the full turnaround in North America is going to take time. So all this leads to an expected organic revenue growth of between 2% 3% for fiscal 2019. Our action plans are delivering the efficiency gains that the teams are driving across the group with the fit for the future project and many other initiatives will be reinvested in growth initiatives. So we expect to generate an underlying operating profit margin of between 5.5% 5.7%, excluding currency effects. I remind you that our strategic agenda is aimed at delivering market leading growth. The first steps to return to this performance are to achieve organic growth of more than 3% from fiscal year 2020, and then improve margins back up over 6% sustainably. And as we explained during the Capital Markets Day, margin improvement will come with the right levels of growth. So, thank you for your attention and I now open up the call to your questions. Thank you. Thank you. We will take the first question from Simon Lesheepre from Raymond James. Please go ahead. Good morning. I would have three questions, if I may. First of all, regarding Q4, if you could please give us the level of contribution to organic growth of the shift in the timing of board days in university in the U. S? And also, just would like to know if you did benefit from any other exceptional factors during the quarter? My second question regarding organic growth for next year, is it fair to assume that it will be back end loaded with the organic growth at the low end target in the first half and then accelerating in the second half? And finally, if you could also give us some additional color on your performance in benefits and rewards in Brazil in Q4, especially in terms of the evolution of the level of condition, please? Thank you. Well, thank you for your questions. Yes, in Q4, there was a few elements. We, we estimate that the recurrent parts in our Q4 results, is more around 2%. And the gap to 3.3 difference to 3.3 comes from various items, 1 of which are the transfer of day from Q3 to Q4 in universities, but there was also a number of projects during the summer in education, whether it's in schools or universities, which contribute punctually to Q4. We also had, a very strong sports and leisure activity in Q4 in France. We also saw some very good attendance in our corporate sites in France in Q4 which was actually more than what we had expected or experienced in the previous quarters. So we don't want to capitalize on this as becoming recurrent And then there were some technical issues because we did a lot of claims with a number of clients and some of those claims turn out as extra billing, a retroactive billing and so forth. And they were booked in Q4 as revenue And when we had forecasted, we were not too sure that this will go through revenues or whether it will go through improvement of our costs, but some of those went into revenue. So we do expect for H1 to be I will say at the bottom of the range of 2 to 3 and then with H2, to increase gradually. Now if I want to speak about BRS, if I may, BRS Brazil actually saw some high single digit growth in Q4, which was very strong, much stronger than what we had seen in Q3 where it was more low small single digit growth and where it was very neutral at the end of each one. So we see a momentum building in Brazil. It's hard to project it into the next year, but we expect that Brazil will grow in revenues year, maybe not at the same rhythm than Q4 for the entire year, but we see solid growth in Brazil next year. Good. Thanks very much. So our next question comes from Jamie Rollo from Morgan Stanley. Please go ahead. Your line is open. Thanks. Good morning, everyone. And the first question is just on Slide 19. You've helped you given us the breakdown of sales in the year. I think I'm right in saying that implies about 3.2% organic sales in 2018 and obviously you delivered something below that in OSS. But I think also some of your business development numbers and retention figures are sort of year end number rather than in the year numbers. So could you just help us understand the sort of mathematical mechanics if those numbers because they do imply a nice acceleration to come, but that's not sort of what you're talking about for next year. And secondly, on margins, for U. S. Labor costs, you're saying for education that's being passed through for 2019. How about in the other other parts of the market in North America, please? And then finally on the balance sheet, you talk about IFRS 16 adding point 7 times leverage. You're obviously doing more acquisitions. How much balance sheet upside do you have for more acquisition spend or indeed buybacks, please? Thank you. When you look at the at our indicators on slide 19, there are full year indicators, okay? So definitely, we are I would say we are reasonably pleased with the 30 basis improvements, both in retention and in business development. But I'd say that we are still not satisfied with the level of retention that, that we have currently, you know, that we target, to be, closer to above 95 as a more, more midterm target. But it's true that we've improved our retention, particularly in, in the universities because we entered this year with a neutral net new loss in education, which is much better than last year. We're still cautious about retention in health care in the U. S, particularly. Business development, we also we have a 30% increase and, I'd say that we would ideally target as a 7% would like to be above 7% this year. But to be clear, I don't want to sign contracts for the sake the sole sake of top line growth without the margin potentials that goes with it. So we will be, of course, boosting sales, but we are, we'll be careful about ensuring that what we sell is sold at the right level of margins. And regarding the, what we call the comparable unit growth, we are at 2.6% and it's pretty much a good level. So being in the same range would be satisfactory to us. So that's how we could, you could look at those 3 KPIs for the year to come. Yes. And for your second question, I will say the dynamic in business and administration, as I said in my comments, we we have seen very steady development rate and retention rates in the corporate world. So I think we can expect a similar type of growth that what we've experienced in fiscal year 2018 into fiscal year 2019 which was a decent growth. The balance between regions might be slightly different because we are expecting more growth in North America and maybe not such a dynamic growth in Asia where it was very, very strong. But we are expecting probably the same type of growth in business and administration. In Healthcare And seniors, I would say that the difficulty we have is that retention has not been too good in health care in North America. And the picture in fiscal year 2019 will depend on how we can control that retention going forward. As we said, we've seen better wins. So this is very encouraging because it means that the new sales organization we put in place, it seems to be producing better each rate, better results than what we had experienced a year before. So the good news on the sales, on the retention, we've got a lot of work to do, but the team is focused on this. So it will depend on the quality and the results of work. Of our work on retention. And in education, as we said, schools had a very strong selling year last year, retention was much improved. So we expect education to be especially in North America not to be dragging the North American results, but to be very neutral in the coming year. And as you may have seen in France, we have a number of wins or retentions, successes in education. We retain Marseille. We retain And we extended the CD78, which is the Evelyn department. Now we got all the schools. It will only start in January, but it's a big win for us. And we also retain, one of the district in Paris. And so we should have a very, very decent year in education in France next year. And on the balance sheet, We discussed with the board recently about buybacks. And right now, we decided to pause on the buybacks, but we have a decent envelope for M and A. I mean, we were discussing with the board to be spending another 1,000,000 potentially on M and A this year. So the leverage should increase gently. I mean, we are currently at 1 I think it will probably increase gently above 1, but I don't expect a massive jump to 2 immediately. So I think it's going to be a gentle increase of our leverage. Thank you. Can I just please just clarify my question North America? It was really about the second question was about, margins and passing on U. S. Labor costs. You say that's passed on education in 2019, but how about in B And A And Healthcare? And on the question about organic sales breakdown, that's Slide 19, if they are in the year numbers implies 3.2 percent organic sales growth and you reported 1.4 executing the extra week. So I was wondering what the difference is? Yes, on margin, so I think I had explained that the very sensitive issues we had last year was in education because we started having the hourly labor inflation impact in Q1 while most of the anniversary of our contracts are during the summer. So this was really where the most acute squeezed walls in terms of inflation. And what we see is that during the summer and recently, we passed inflation very nicely to our clients. And so at least we've rebalanced the past year impact. Now if inflation carries on in an explosive way, we'll still have another squeeze. But what is very reassuring is that even though there is a lag, we pass it on. In the other segments in North America because the contract starts in every period. So the passing on the inflation is more linear so to speak. And so we felt some impact, but there was more passing on quickly. So but in general, we are experiencing and we experienced an inflation in labor last year about 2.8%. And we are passing it on. The risk we have is that inflation comes back of maintaining in North America for education. They are still this like to pass it on, but so far so good. And regarding your question on KPIs, you know, cougar comparable unit growth is in year, but retention and development are not. So these KPIs will be will impact revenue as when the the deals really start up. So that's where you have to. Yes, on difficult to extrapolate. On this one, it's because when we calculate development rates, we calculate the pro form a 1 year revenue, but the contract, let's take CD78. We wanted in August. It will only start in January with a ramp up. So we will not see the full effect of that significant contract before H2. Well, actually, it's actually booked in development in fiscal year 2018. Retention is the same. Retention, we book it full year when it happens, but it happens when it happens. It can be 3 months later or 6 months later. What is important in your calculation is right is if we keep on having a sum of KPIs above 3%, it's an advanced sign that we should be able to reach 3% in the future. And I think you're right that the signs are telling us than reaching 3%. If we maintain KPIs like this should be in our reach. Thank you. We'll now take our next question from erode Castle from UBS London. Please go ahead. Your line is open. Thank you, and good morning, everyone. 3 from me as well. You've spoken about M and A, but could you give a bit of color in on your thoughts in terms of disposals and country exits, first? Secondly, you've also spoken about phasing of 1,000,000 redeployable costs. So maybe you could just talk a little bit about where you see that being redeployed. And then lastly, the Brexit question, just in terms of how you feel about your own preparation going into next year in the UK for a Brexit. And also if you've seen any change in client behavior, behavior in the UK related to next year? Hi, Gerald, and thanks for your question. So regarding, disposals and contracts, it's we are active in terms of, identifying pieces of the business, not massive ones, but that we could dispose off. You've seen that last year, we we, we've done some. Regarding the country exits, we have, you know, that this is sensitive. So we have 4 countries identified to actively, we've launched the exit process. 2 more are being finalized in terms of how we would exit. So this is the 1st phase Mark said that we would be, around 50 plus countries permanently and probably a dozen more more into project mode where we go there only for a project and exit afterwards. So this is in process. As I said, 4 countries identified to processes launched 2 more finalizing how we will do it. And, and we will continue I cannot promise that, this, that all of them would be, done by this year because we're talking about people, we're talking about plan contracts. So there's a sensitivity about that. There's, of course, a people issue, but, we have rhythm into it. And we'll update you as we move on. For the moment, we don't communicate, of course, on the, the countries. The name of the countries because it's sensitive. You can imagine that. So, but it's, we're doing good progress here and we will keep the momentum And, yes, that's it. In terms of the redeployable cost, so what we explained at the Capital Market Day is that we focused first on France, UK and Naram, This is where we identified $100,000,000 of redeployable cost. What we're trying to do it because those are deep transformation. Most of the savings are relying to investment in ISNT being significant and being deployed. So we do expect some impact in terms of redeployment in fiscal year 2019, but it will not be more than 20,000,000 the we have a number of things in terms of transformation of our systems to do, and we expect the bulk of the redeployment to be in 2020 T1. So those are relatively very deep transformation that we need to do, but we will do them. And regarding Brexit, I'd say that we don't see particular signs or changes in our client behavior for the moment. I think there is a big question mark into what's going to happen. No one knows, actually, you know, wherever we land. I'd say, you know, yeah, we are prepared as we can. We, I remind you that our business is very local. And so, the impact that we have country remains local. So we are, as I said, we already are as ready as we can. But so far, no changes in any plan behavior. Thank you. Our next question comes from Jaffray Masari from Exane. Please go ahead. Your line is open. Good morning, everyone. I've got two questions, please, if that's okay, I'd like to ask them one or say the other. So just on margins, I'm slightly infused by the outlook and the order of priority for the next 3, 4 years? Because there are many statements where you reiterate that the margins will come after the top line is fixed will only come at the right level of growth. Productivity benefits will be reinvested in growth, etcetera. But then separately, you seem to be guiding on a constant currency basis, for actually slight year on year improvement in 2019. So to clarify this for 2019, 2020, that the short term are you promising any source of margin improvements before your explorative guidance of 6% in 2021? We've, we've guided a 5.5 percent to 5.7 percent, UP for this coming year. And, this it's a range, which we are confident about. What we've said in the Capital Markets Day that we would, our objectives is to, is to reach 6%. I think our fundamental objective is to deliver more than 6% margin sustainably And we said, you know, what, a Capital Markets Day ideally by 2021, okay? Definitely, we had a exchange rate impact on our margins, I think you noticed that. The impact of the currency is shouldn't be more than 20 basis points overall given the split of, our revenue portfolio. So, of course, 2017 was our reference when we mentioned that, but I want to say that, our objective is to deliver more than 6% margin, sustainably, whatever the rates. That's, and of course, they delivered a swing on that linked to currencies. But fundamentally, our objective is to sustainably deliver more than 6%. Thank you very much for that. And then just to clarify in the full year 2019 margin outlook, 5.5to5.7 is constant currency and when you Yes, constant rate, concentrate, on fiscal year 2018. And when you mentioned no more than 20 basis points currency impact, it's the potential negative currency impact in full year 2019? Yes, when we model, the currency impact we've seen this year is due to the CVR drop in the reais, but also the CVR drop in the average rate of the dollar and the U. S. And Brazil are our 2 highest margin countries. So having a 13% to 12% drop in both currencies, giving 20 basis points this is what we see as the worst it can get. Now it can go the other way, but what we say that the the currency impact should not be more than plus or minus 20 basis points on a yearly basis. And that's why Denise says, look, the 6% we alluded to is a 6% whatever what, so on the currency because we need to we need to be more than 6% anyway. Okay. And it could go both ways. Obviously, at current exchange rates, is it a negative or a positive? Yes. Currently, I mean, currently, when we look at the exchange rate at the end of right now, after 2 months, we still see a slight deterioration in the reais probably 4% to 5%, but we see an improvement in the dollar by another 4% to 5%. So one is minus, one is plus, but it's very early. We calculate the rates an average of every month and for a year. So it will depend and what's happening in Brazil from political point of view and the currency point of view, we'll have a great influence, obviously, on the reaish average rate, but it's too early to see. The dollar is getting better. Okay. Thanks. At the moment, who knows in Brazil. Yes. And then my second question is on the brand strategy. So as you mentioned, for the last year or so now, you seem to have explored the idea of having dedicated B2B brands for certain sectors. You did spend a bit time on the good eating company on this presentation. If I remember correctly, when you acquired it though, it was a 1,000,000 sterling business. And so if I take the good eating company and Novae and even if I consider sojares France to be new ish because you've relaunched it and since plate. Altogether, it's less than 10% of group revenue. So my question is, where do we go from here? You've tested it on a small scale. Do you keep buying small brands? Do you start launching sub brands of a bigger scale organically? Or do you aim for the same results without the brands, so a different Salesforce organization, different segmentation, etcetera? I think it's, and thanks, it's a very, very good question. Yes, definitely, you understood that we are shifting our brand strategy. We keep the brands, of course, when they are relevant, So we will keep the Novae brand in Switzerland. We keep the we've kept the Centerplate brand and the Goody thing company. We plan to, develop further the Goody thing company and export that brand into new markets because this brand carries an offer, as I said, that is very relevant for typically urban clients and employees. So And typically, if we do that, we will, we will do it with different sales teams because it's quite specific. So we will enter into that it's too early to give you, an order of magnitude of that development, but it's very precisely something that we have in mind, and it's true also, of course, for center plates, particularly, wherever the consumer, centricity is important, the brand is important. So, typically in corporate services, we've launched we've won recently, and it's still not to be fully published, but we, we won a very important account on the West Coast in the tech sector, with our brand, which is called local artisan, who will deploy local autism at a greater scale in the U. S. So there's we're moving ahead on that. Okay. Thank you very much. Thank you. We will now take our next question from Keane Martin from Jefferies. Please go ahead. Your line is open. Morning. May I return again to Brazil? And I just wonder if you can give us some background on whether the improvement in revenue momentum that you've seen. Is that due to your market share change in competitive dynamics? Or is that the economy picking up And then secondly, a quick question for Mark. If my calculation is correct, the change in the French subsidy regime that we've seen proposed Would that lead to about 1,000,000 headwind to your EBIT in the fiscal 2019 year? Regarding Brazil, I think we've seen, yes, we definitely see a pickup into the economy. We see, so, you know, we've suffered from a lot of our clients laying off staff. And of course, that has an impact on the number of beneficiaries that we serve. We see that. We see also a good dynamic coming from our sales team. We put typically in place a strong digital marketing and sales machine that helps us capture, small and medium companies in a very more in a very efficient way. So that helps, it helps also on the margins because, of course, margins are better commissions are better with smaller companies than big ones where fight, the fight can be sometimes a bit tough. So I think those 2 elements are explaining this, this, I would say, promising pickup of our results in Brazil. And now on the French Seys here, as you said, We've actually already suffered in fiscal year 2018, a negative impact at your peer level, about 1,000,000 And we are expecting a further impact next year by 1,000,000, which is factored in our guidance. There is also a secondary impact that is tricky is that it also affects our ETR And, it's costing us, actually, also an extra EUR 9,000,000 of tax, because now the safe year being a the social charges reduction, it's actually increasing our profit base, taxable, while before it was a tax credit. So it was actually not it was not taxed. So we we this is why also we guided for a need of 29% because without this, we will have been at 28%, but it costs us 100 basis points of ETR as well. So $8,000,000 on UOP and 1 full percentage point in ETR. Yes, that's great. And I just got a follow-up on that, Mark. Do you feel now that that's the end to the change in the subsidy regime in France? You've had a degree of of disruption over the last 18 months, or so? Is that it now? Can we look forward to something a little bit more stable for a while? I wish I could tell you at the end. On the tax side, it's not the end because there will be a further impact because of our split years and so forth, we will have another 50 basis point impact on the ETR the following year. In terms of reforms, now the government is reforming left, right, and center, you can expect more. But I cannot tell you where it's going to come it could also be positive, I'm hopeful, but right now on this one, the EBIT impact, I think we should almost see the full in 2019, the ETR impact there, there is a further impact in 2019, in 2020. We will now take our next question from Yes. Good morning, everybody. And two questions remaining from me, please. First is on the margin outlook. You've given us clear guidance full year, but could you talk about the phasing of the margin improvement between the first and second half of the year? Should we in other words, should we expect margins to dip in the first half? And then secondly, moving on to the recent GPO wins in the U. S, is that going to be a driver of margin improvement as we go into 2019? And secondly, is that also are you finding that helping to drive new business at stage or is it too early to make that call? Thanks. Thanks, James. Regarding your first question, we give a guidance on the margins for the full year. We don't particularly, give any outlook in terms of, phasing of, of, between the halves. I think, We still have the margin factors in many, many different criteria. And, I wouldn't take any risk or anything in giving any information on phasing. I think, we are clear on where we aim to be at the end of the year. And, that's it. Yeah. Pat, on the GPO, so you've seen, we announced it in August. We signed a partnership with Dining Alliance. This partnership is progressively starting from October. It's going to be a ramp up and we have to onboard all their merchants. It will take time. But we do expect a revenue uplift for from that partnership. We expect this uplift to be $30,000,000 to $40,000,000 in this year. We, as you know, I mean, because of IFRS 15 and the fact that it's it's not a gross revenue recognition, but the net revenue recognition, this is not a lot of revenue. From a margin point of view, it's going to be but not highly positive in the 1st year. What is important is that it has a lot of billions of potential purchasing to our current volume. And this is a long game. I mean, we have to work the catalog. We have to renegotiate with suppliers And we will improve purchasing income because we are buying more now. Now in this current fiscal year, the impact will be there positive, but it's not going to be a great impact, but this is more a long term strategic move that we wanted to do to increase our volume and our purchasing power in North America. What's good though in this win is that it demonstrates that, our current GPO was competitive. And that's, I think, that was a good sign to be able to win dining alliance demonstrates that, even though our volume CTC compared to food buy were lower, we could be competitive on pricing. And I think it's a positive sign. Our competitiveness, which will be improved, as Mark said, as we move on. Thanks to the volumes. Very good. Thank you. We will now take our next question from Tim Ramskull from Credit Suisse. Please go ahead. The first is just back to Slide 19, which Jamie asked about earlier. The improvement in comparable unit growth, can you just talk a little bit about whether that's driven by volume or pricing? Second question is, I don't know if I had lots of discussion and debate about the margin guidance and the impact of FX, but just to make it really simple. So your comments about getting back to 6% margins when you account for current interest sorry, current exchange rates, does that leave that at 5.8? Is that kind of some simple sort of yes or no? And then finally, just in terms of cash tax which was low in the first half and low for the whole of this year. Do you expect the difference between cash tax and P and L tax to come into a much more sort of similar band going forward into 2019? Thank you. Thanks, Tim. Regarding the cougar, it's, you know, it's driven by a compound effect of, of many parameters. It's a multi criteria indicator Inflation, of course, comes in, but also cross selling, consumer trends, employment growth on the sites etcetera. So it's, it's really a mixed bag of things. What I can say is roughly inflation as is more or less around 2 third of that and the rest being all the other parameters that I mentioned. Regarding our margin guidance, when yes, we reduced 20 basis points Yeah. So we landed at 5.7. So, and so published is 5.5. So if we were strictly sensible to say, we communicated on 6%, 6% mathematically means with a new exchange rate 5.8, okay? That's mathematically. Now what I just said was 6% sustainably as our targets was to be understood, whatever the rates, of course, it can fluctuate But what we want is to be sustainably over 6%, whatever the exchange rates, okay? So that means, and with a plus or minus around this 20 basis points. So that's our target. We're not there. We clearly stated that we have to do 2 things. We have to reignite top line growth because top line growth helps the margins. We also have to do all the work on our efficiencies, reducing admin costs and investing in in sales and marketing and digital and everything and systems. So that's the Fit for the Future program. It's all that that will help us be, sustainably at 6%, again, whatever the rates. That's our objective. And on the cash tax, yes, there is a mass difference this year, I think it's about 1,000,000 between the P and L tax and the cash tax. And I would say no, you cannot expect this to reproduce itself in the coming year. There could be a positive difference still because of the timing of improvement on the tax rates and so forth. But this was really an exceptional year in fiscal year 2018. So do not expect such an impact in the future. Okay, great. And then just one last clarification. So that the phasing of those FX impacts on margins was a little bit greater in the second half of the year than it was in the first half of the year. But still that you don't I suppose what I'm trying to get to is your guidance for next year on margins, you talk about it, you know, in terms of constant currency, do you still expect, again, based seeing at the moment in terms of FX rates, there to be a further precious stemming from FX or not? When we were at S1, the real had dropped by 8.7%. And at the end of the year, it's 13.5%. But the 13.5 apply to the full year, the 8.7% applied to 6 months. So you have a 13.5% on H2 And then you have a gap between 13.58.7 on H1. And the difference in margin in S1 was 10 basis points, but it turned out become 20 basis points because of that. The same applies to the U. S. Where the gap at S-one was much lower than the gap for the full year. So the dramatic effect in S2 was very, very strong because the deterioration of the currency accelerated. Now when we are simulating the impact for fiscal year 2019 based on what we know today, And we are very early in the year because we only we took the rate at the end of October. What I said is that the impact on the dollar today on average, if I reproduce the current rate I see till the end of the year, the impact is plus 5% on the dollars, minus 5% on the reais. This should have a neutral impact in margin. But again, it's by reproducing for the rest of the year, the rates I observed today. And I will not dare projecting currency in the future. It's not my job. But what I can tell you is right now the trend is minus 5+5 each will be relatively neutral. Okay, excellent. Thanks for that, Mark. We will now take our next question from Harry Martin from Bernstein. Yes, good morning. 2 questions on free cash flow, please. Firstly, how much of the $100,000,000 improvement in working capital is underlying versus some one offs, a bit more color on that would be useful. And then sort of on to CapEx, presumably going into next year, an acceleration in organic growth probably comes with a bit more CapEx. So could you just talk a bit about the sort of the longer term run rate of CapEx for sales and also guidance into next year? Thanks. So on the working capital, I alluded to the fact that our teams did pretty well. I think we did a good work on the basic components of the working capital, collecting the cash, increasing supplier payment terms and so forth. And I will say it accounts it for probably a half of what you see The other half comes from a fantastic BRS working capital improvement, but some of it is linked to the cutoff of issue volume and reimbursement for a few services. I'll give you an example. In Romania, we should only pass and we collected a lot, but it was not reimbursed before the new year. So this is a one off and it's actually going to reverse a year after So I am not expecting a very strong working capital improvement next year because we will have some of those balancing effects What I can tell you is that the basics of collecting cash and managing our payment terms is well under control and it contributed positively. But for next year, it's going to be a bit more challenging because of those cuts of issues. Now when I look at CapEx, this year was a very low year, You will see also we created an appendix to show you how to take our net CapEx to sales into growth CapEx to sales. I think it's appendix 10. We'll let you look into it. And if you have any question, you can get back to Virginia and high on that. What we are seeing is that we will have more CapEx next year. This was really a low point. We have a few CapEx to pay in education. We've won contracts. We know we have we committed CapEx in education. We committed CapEx in sports And Leisure with Centerplate because of some wins. And we've encouraged our corporate team to also spend more CapEx for retention. So there will be more CapEx in fiscal year 2019. It's now difficult to tell you exactly how much, but I expect this to be significantly higher in fiscal year 2019 than in fiscal year 2018. And just to follow-up on that, are you saying you say you're encouraging your teams to spend a bit more to win contracts. Are you seeing the higher CapEx put in up front, allowing you to win of higher quality and longer term contracts or is it sort of a fairly similar mix to what you would have had before? I think, what we see is if we had low CapEx, it was because we had low sales activity and low wins So, we've always put we have no problem to put CapEx if we have good pro form a proposals with good margins coming up. So, that's for us in terms of wins, It's, we, we, as Mark said, we are really encouraging our teams to, to, to come up with. And specifically in universities, a little bit in corporate services, but, universities and sports and Asia. CapEx can also be used for retention purposes. When we innovate, with our clients ahead of any tender, that helps retain the client. And sometimes putting a little bit CapEx is interesting. So we know we those are good practices when we have good contract, good margins, that's it's something which is, really, really good CapEx, I would say. So we hope as sales pick up, as, in the in the segments that I mentioned, that will have more CapEx. Very clear. Thank you. We will now take the next question from David from Bank of America. Please go ahead. Good morning guys. Earlier in the year you called out a handful of large contracts has contributed to your margin declines. I just wanted to get an update on how those specific large contracts are developing in to next year? Yes, we've, I can tell you we put a quite significant efforts on that. I would say it's, given the complexity of those last contracts, it's a permanent focus We've done I think we've solved some of our, critical on the performing last contracts. As I said, it's it's a constant focus and we always, we have to be cautious every day. What we've done is for some of them, we've renegotiated, with the clients. We renegotiated contract terms We've renegotiated scope sometimes, and we've turned around some of them. That's the first action that we do with with a few of them we've exited, because we thought that there was no possible negotiation. There was no possible outcome. So we exited. And for a very few, we've put the necessary provisions on those ones, but we are talking very, very few contracts. But our main goal is to roll about sleeves get into, constructive talks with the clients, adjusted scope is necessary, adjust contractors, And in the vast majority of the cases, the clients wants us to be successful because it's also, his interest. So with the right level of conversations provided, of course, we deliver the service that is expected. We are able to to have, to turn them around. We will now take the next question from Joanna Jordan from Ojo. Please go ahead. Good morning. Two questions for me, please. First one regarding the margin outlook for 2019 and the mix effect, given that the fact that you are investing in growth the On-site Services Division in particular, should we expect some margin improvement in this division or should margin improvement come mostly from the benefits in the Wealth division? And my second question is regarding France. Could you revert on the pricing situation there and as well your organic growth in 2018 and also in Q4 in particular, please? Regarding the, thanks, Joanna, for your question. The in terms of margins outlook, I would say that we don't expect, significant margin improvements in on-site. We are focusing in really having them under control, as I said, operational efficiency actions are critical. We've seen we are seeing positive things on typically in health care in North America, which, as you know, was an issue in the past year. So, but you shouldn't expect should be marginal mix improvement on the margins in on-site, but it's true that BRS can kind of contribute, with its development. Regarding France, France, I would say that the French market has been very, very challenging. It still remains, even though maybe the situation has calm down a little bit, on the pricing, but it's still it's still one of the challenging market. We have to improve, we have to improve our, particularly on retention, I think we can improve we have a better overall growth, but still not that the level that we expect. And, in terms of splits, Yes. Q4 in France, as I mentioned, contributing to our strong Q4 at the group level because of of good sports and leisure activity and good attendance in corporate services. But overall, when we look at France, I mean, the last four quarters have all been positive. I won't say the momentum is strongly picking up, but Q4 was good for the reason I described. We are expecting next year to be gently positive and as the market softened a bit on the pricing, we will expect, growth to pick up. But it's too early to to really see a very, very strong momentum in France, but it is positive. It's growing quarter after quarter. So it's steady. Yes, Brent is back to, let's say, reasonable growth after several years of decrease. So, we see that as a positive sign. Yeah. Thank you very much. Sure. Our next question comes from James Lynch Clark from Barclays. Please go ahead. Your line is open. Hi, good morning. Just a couple of quick questions, please. Are you sticking with your effective tax rate guidance of between 28% 30% after the 27.1% you had this year? And then secondly, on the comparable unit growth, you saw, I think you said it was 2 thirds of pricing and the rest volume you just remind us of how that compares to last year and if possible, how that's of that twothree onethree in FY 'eighteen? How that phase throughout the year, if that's possible? The ETR, so it's It's actually we will need to sit on and I need to do you a little graph because the U. S. Tax rate is going to go down further for because this year was what we call a blended rate, because we were 4 months in fiscal year 2017 8 months in fiscal year 2018 for calendar year 2017 8 months. So last year was 25.7% and it will become 21% last year. But at the same time, we had EUR 43,000,000 of dividend tax credit and that EUR 43,000,000 rose alone alone is about 400 basis points of ETR. And then we have the SEYS being factored in next year, which is costing us 1%. So when you factor all of this, the range of 28 to 30 is actually what we see currently, I mean, I think, which will be around 29 and without, without the stage there, we will have been at 28. So I'm aiming for 2019. If we can do better, we'll do better, but this is what I'm aiming for at the moment. Regarding the, the cougar, we, the twothree of pricing and inflation related increase. It's more or less something that we see, leverage as an average. This year was helped by several project work on some sites. And, so this this has helped. We particularly had the FEMA project in energy and resources that helped CUGAR. It's a special project work. But you should, for this coming year, I think you should, you should estimate that this would be more or less in that range. Okay. I think this should be the last question please. Yes, it appears that there are no further questions in the queue. So I'd like to hand the call back to the Sodexpo team for any additional or closing remarks. I think, well, thank you very much for your questions. Just want to reiterate the confidence that we have in the action plans that we put, both on, consolidating the way we deliver our business, doing all the consequence management decisions that we have to take into ensuring that we have all the right people at the right place. We see, let's say, a positive trend on H2 that, that will make us, that makes us confident for this year to come. Still, as I said, North America turnaround will take some time. We see positive signs, but North America is a big, it's a big business. So we put all the necessary efforts. And, I think we're doing all the right things. The executive committee is absolutely aligned absolutely focused on executing our plans. And so looking forward to this year, And of course, to exchanging with you in a couple of months, actually. Thank you. Very much to all of you. Thank you for your questions. Thank you. Bye bye. Ladies and gentlemen, this concludes today's conference call. Thank you all your participation. You may now disconnect.