Trading Update

May 21, 2020

Hello, and welcome to the Intertechnic 2020 trading update. My name is Carys, and I will be your coordinator for today's event. For the duration of this call, your lines will be on listen only. However, I will now hand you over to your host, Andre Lequire, to begin today's conference. Thank you. Good morning, everyone, and thanks for joining us. Today, I plan to speak for a little longer than usual. I'll discuss how we have reacted to COVID-nineteen 19, responding quickly to the needs of our employees and customers, I will cover trading in the 1st 4 months of the year, which has demonstrated the defensive characteristic of our earnings model, and I will explain why we believe we are well positioned to navigate an unprecedented pandemic and benefit from attractive growth opportunities post COVID-nineteen. In a few short weeks COVID-nineteen has had a big impact in our lives and in communities, and on behalf of everyone at Intertake has valued health care and frontline workers around the world for their magnificent response. You know, a leader business that edits for is about bringing quality, safety, and systemity to life. For a role at the intake has never been more relevant in making the world a better, safer, and more table place. In short, COVID 19 has magnified the great importance of Intertek's role in society. We have remained open 247 since day 1 of the pandemic, to make sure the supply chains of our clients operate safely. We are, of course, not immune to the impact of COVID-nineteen on the global economy. However, I'm confident, you know, our ability to navigate what will be a challenging 2020 for the world, and let me explain you why. First, we are a strong company with a track record of consistent value creation. We are a global leader in an attractive quality assurance market, We have a global network of well invested state of the art operations in 100 plus countries run by innovative subject matter experts, a significant pool of intellectual capital. We benefit from diversified revenue streams both geographically and across several end markets verticals, where we operate at scale with leadership positions. We provide our clients with the real depth and breadth of ATIC quality assurance solutions. We run a high performance and passionate organization with engaged talents, leading with an ever better mindset, and we operate a high margin, strongly cash generative earnings model with a disciplined capital irrigation policy. We've entered 2020 with a strong momentum and a track record of consistent value creation over the last 5 years, indeed, between 2014 2019, our revenues grew by by 43%. Operating margin has increased from 15.5% to 17.2%. Our adjusted EPS has grown by 60% of cash generation more than doubled, our ICS progressed from 16.3to22.8percent, and our employee productivity has increased by 21%. Importantly, Intertek has long operated with a strong balance sheet based on the financial policy of keeping leverage within a range of 1.5 to 2 times net debt to EBITDA on IAS 17 basis. At the end of 'nineteen, our net debt was £629,000,000 just one time net debt to EBITDA down from one point four times at the end of the prior year, reflecting our strong continued cash generation. This debt has a long duration maturity profile. The company has refinanced in 2020, and we have extended our revolving credit facility $850,000,000 with a syndicate of 8 banks for a 5 year term. At the end of 2019, we had an undrawn committed borrowing CETI of circa £325,000,000. In addition, we have confirmed that we're in a position to draw down on the Bank of England's CFF facility should we need to do so. The group operates a progressive dividend policy with a targeted payout ratio of circa 50 cent. Intertek ranks 2nd highest in a FTSE 100 in terms of dividend progression since the IPO in 2002, the 2019 dividend of 105.8p is up year on year by 6.8%. And as you would expect, we will pay our final dividend of 71 point fee of £150,000,000 on June 11th this year. Our sustainable performance, inspired by our purpose of quality, safety, and systemic life demonstrates the core strength of the company, our total quality assurance, value proposition, our powerful portfolio, our high quality partners earning models or passionate customer centric organization, and of course, our disciplined performance organization. Being agile and fast is paramount in today's environments. Now I would like to explain how fast we've adapted Enabios to respond decisively to a nonprecedented catch your minds back a few short weeks. When we all go back from Christmas, none of could foresee what was going to happen in 2020. On 16 17th January, I was in China myself in Guangzhou and Shanghai precisely, meeting with our top clients to thank them for their business and present or 2020 innovation. COVID-nineteen at this time was already in the news, but it wasn't yet on the agenda of every company, but that changed just a week later. The city of Huhan and Uwe. Twins went into lockdown on January 23rd, just as a Chinese New Year celebration ready to start I was then back in London and on 26th January on Sunday, I called our China team to discuss the immediate action and priority We set up a daily call to ensure efficient communication. We start preparing our health and safety approach for when more people return to work, and we agreed that the team from China, I would not join our global conference early in February. We were right to get organized because the very next day, the Chinese New Year holiday was deferred until 3rd February, and then it was announced that the return to work would be on 10th. So from 10th February, we had 2 main priorities. First, to make sure that all the right processes were in place to protect the health and safety of our employees. To do this, we implemented a specific COVID-nineteen health and safety policy to protect all of our colleagues. Our second priority was to ensure we could give our clients all the help they needed to resume their operations. And I'm sure you've noticed that since February 3rd, we've been updating the progress on 2 initiatives on our website to keep all stakeholders informed. Then things took another step up. On 22nd February map, China MD told me about the risk of pandemic in Italy. We immediately put in place the same health and safety policy we had in China. When I gave you an update on March 3rd, this is what I said at Intotech, are not immune to the impact of coronavirus, and our 2020 performance will be affected by the temporary disruption to supply chains of our clients in people at work in public space and at home. Take is based on a systemic approach to quality assurance. It's a comprehensive offering covering people, systems and processes, facilities, material services and product. Let me give you a bit more detail on the protect offering. Project people assurance provide an on demand e learning certification program to help our cardiovascular employee training on health and safety topics. Of course, from a world leading platforms within Alchemy. Our product business assurance solutions provide an end to end audit of operating procedures and systems enabling crowns to demonstrate their commitment to the well-being of their employees and and customers. And we deliver that through our global business assurance organizations. Protect facility assurance offers health and safety audit and inspection solutions for all time facilities from hotels. Restaurants, retail outlets, tools, transportation hubs, manufacturing sites where consumers and employees look for visible safety verification. Protect material and surfaces provide complete testing solution to ensure space's material and surfaces are safe for employees and customers in the workplace and topics The reaction of our client is we launched ProTech a few weeks ago at Intermountain. ProTech is very much in line with what the world needs right now. You can read more about these and how we're supporting our clients with COVID-nineteen related invasions on our website. Of our teams. In addition to the development and launch of all these innovations, our teams have taken the time to support their communities and who on and around the world. Intertake, we really believe that we are born to make the world ever better. Our 3rd overriding priority is margin management. Over the years, we've built a very disciplined approach to margin management, our strict controls on pricing and costs remain, of course, in place. We're also taking a number of additional steps protector margin. This includes a pause on our recruitment, a delay of 6 months of the 2020 annual salary increase and further activities in the UK, France, and Italy based on existing government skills. We believe that our clouds are facing temporary disruptions in their operations, and all of our margin initiatives ensure we have the ability to service to me well when our clients go up to normal. Our 4th priority is cash management. Disciplined cash collection remains in place. We've also conducted a CapEx review, reducing our plan expenditures this year by around 3rd. We're running the launch reseller deferral skin from March to October, that involves a 50% salary deferrals for all board members, Ross and I, our executive 30% for Senior Vice Presidents and 20% for the management. I'm extremely impressed by the willingness of circa 1200 individuals to support the business during these periods. We're also benefiting from local authorities, tax payment deferrals were available. Our 5th priority is employee engagement. We 20% of our people working remotely, it has never been more important to stay connected every day. A world class digital communication platform has made it possible for us reach out frequently to everybody in the organization. We use Watson, our internal social media channels to recognize inter tech colleagues every day who have gone beyond our expectations to help their customers and colleagues. I post a personal audio message on Watson to the entire guys every week. And as I mentioned, earlier, I'm having dedicated calls, our regional teams around the world. Turning now to trading. We have delivered a resilient trading performance in the 1st 4 months of 2020, These demonstrate the strengths of our business model, its geographic and business line diversity, and our disciplined approach to performance management. As usual, there is a lot of detail into this release, so I will now summarize the previous trading highlights. But before I do so, I want to emphasize the speed at which the gold pandemic has unfolded and the broad based nature of the lockdown initiatives in every country. This makes it difficult to attempt any precise guidance, and it is too early to quantify the impact of COVID-nineteen for 2020, we'll provide an update on our full year guidance once we have more visibility on when and how. Problem restrictions will be lifted around the world. Group revenues in the 1st 4 months was £882,000,000, down 4.6% year on year at constant currency at actual rate with a resilient like for like revenue performance of minus 4.9%. Our disciplined approach to cost and margin management remained firmly in place, We continue to be very focused on cash conversion and discipline capital to location. Our product related businesses delivered resilient revenue performance of 5 £1,000,000, down 6.1% at constant currency with a like for like revenue performance of 6.6% below last year. We operate a diversified global portfolio of several end market verticals with leadership market positions. Clearly, some businesses performed better than others, for example, electrical, transportation the building construction business assurance while, understandably, somewhat impacted more significantly, like self lines and hard line. In our trade business, we've delivered a resilient revenue of £201,000,000 with like for like revenue performance of minus 5.9 at constant currency. Our business line remain open for business during the pandemic to make sure that the essential global trade activities are functioning safely. It And I would like to highlight the strong resilience of our agribusiness in the 1st 4 months of the year. Turning to our Resources rated business, where we have delivered revenue of £161,000,000 with good like for like revenue growth of 2.4 percent at constant currency. We are pleased with the robust revenue growth with soy murals, and a good like for our growth in CapEx inspection. Now let me take through the key components of our financial guidance at constant currency on an IFRS 16 basis, expect the net finance cost to be around 1,000,000 to 1,000,000. We expect the effective tax rate to be in a 25.526 range, annuity interest between 1,000,001,000,000. We're investing in growth, but as I mentioned, we've reviewed our CapEx plans, and we now expect a full year CapEx investment to be circa. £90,000,000 to £100,000,000. In terms of financial debt, we expect to close a year between 1,000,001,000,000 before any M and A and any material movement in Forex. A quick update on currency for your model based on the year to date performance and the average Forex the last 3 months applied for the remainder of the year, ForEx would be broadly neutral at the revenue and earn level. So moving to our summary. We are well positioned to navigate an unprecedented pandemic in 2020, and we are confident moving forward. Quite simply, overall green quality, safe and society to life has never been more important. We are mission critical to making the world ever safer. The global pandemic is demonstrating that the world interact with more than ever or insights or innovations or expectations or passion. And by staying open for business, we've enabled companies to operate safely wherever they are Of course, we don't know how long it will take for all lockdown measures to be lifted, and how long we'll have to wait for a pure VAC in. But just consider for a minute how the pandemic will continue to affect the way people live their lives every day. How will we know if your home delivery is clean? It will be safe in a restaurant if our children are risk free at school, and even if it's safe to have a family reunion, health, safety, and welding issues are now the number one concern for the for the entire world. And this is not going to go anyway away anytime soon. So what does it mean for us? At Intertek. This is the 1st pandemic to take place in a highly connected global world. And that make the case for quality assurance even stronger. It is clear that the need for solution and make the world a better and safer place is much greater than anybody had previously imagined. We are more confident than ever about the future growth prospect of intake as the exciting structural growth drivers pre COVID-nineteen have now been joined by a wide array of nuclear assurance opportunities in areas, health, safety, and what increased assurance in a workplace and public spaces at home, growing demand in how care sector for PPE for new medical devices, for stronger healthcare infrastructure, and increasing need for risk management and supply chain to divest the approach to sourcing a changing corporate environment where working remotely will create new operational risks, a changing retail lens. Where the growth of e commerce will create supply challenges for retailers and a changing approach to investment and research globally in the health sector. That world will lead us more than ever. We are truly mission critical for the whole society in the post COVID-ninety world, and we will benefit from all these opportunities and more. In conclusion, Intertek has been an industry leader for more than 130 years, and we have demonstrated many times that we can successfully navigate challenging external environments. We work with more than 300,000 companies across 17 industries and 100 plus countries. Or heritage of delivering uninterrupted quality assurance to our clients during such times has created incredible loyalty. This trust means a lot to our clients. Know they can count on intake to keep their supply chains operating safely during these challenging times. We are confident moving forward This is the simple way of putting it. Intertek is a strong agile, responsive, resilient, and responsible company. We are well positioned to navigate a nonprecedented pandemic and will benefit from additional growth opportunities post COVID-nineteen. So thanks for being on the call today, and we'll take any questions you might have. The first question we have in the queue comes from the line of David Drew from Bank of America. Good morning, Andre, and thank you very much for the comprehensive updates. I've just got three questions from my side. The first one on aggregates, what proportion of the revenue lost this year or in the first half due to COVID, do you believe can be recovered at some stage? So I. E. In addition to your sort of usual budget to revenue, how much of the lost revenue or volumes this year can be, recovered? My second question relates to, the oil and gas CapEx inspection business and even OpEx. In recent weeks, in your discussions with clients, have you seen the tone change and perhaps any postponements or cancellations of projects due to the oil price. And then lastly, just on group overall revenue growth, could you perhaps give us the March April like for like revenue growth members. Thank you very much. Thanks for your question. And, I'll start with last question, which obviously was to be expected. Look, We we do not break down the disclosure by months where we do uttering statements. I understand, the question. What I can say that, obviously, you know, we are pleased with the 1st 4 months of the year, but I expect Q2 to be more challenging than Q1, given the fact that the broad based impact of lockdown restrictions will be really across the world. So that's what I would say, on this question. As far as oil and gas, look, we've done very well in the 1st 4 months in in in CapEx inspect. Which is our main business. We have won quite a lot of new projects in the last, you know, few years as we've talked about previously. And of course, we have seen, the, announcements from our oil and gas ponds in terms of future CapEx. What's not clear at this stage is when will these CapEx reductions take effect. Because think of a, you know, refinery, or platform being built it's like, you know, when when when you build a house, right, although you want to protect your short term cash, you've got to finish the project. So think, you know, we will have to take it a step at a time. We are in contact with our clients. And, you know, there will be, of course, some impact, but it's very difficult at this stage to quantify until we or precisely from them where they want to make this CapEx reduction because it can be very difficult for them to stop existing projects going on. As far as, you know, how much of the revenue, lost due to COVID-nineteen can be can be created or recuperating in the rest of the year? It's a very difficult question. I'm going to try to help you, a bit I think in a trade, in a, in a trade businesses, this is really very much a function of, you know, global supply in demand. And, you know, it's gonna depend on, you know, how the demand for energy oil and gas, you know, pick up in the rest of the year. But, initially, you know, if you've not driven car for the 1st 4 months of the year, you're not gonna drive it much more, you know, in the rest of the year. So I don't think there will be much in in in, in in global trade as far as project cost is concerned, this is obviously, a bit different because a lot of our activities are base or SKU base. And we know that, you know, clients want to go back on on on the offensive and we know, for instance, you know, business assurance that some of the audits that, where, you know, can solve that nothing can can So I hope it helps. It will be a bit different between product and trade. Thank you. Thank you. The next question comes from the line of Sohazni Varanasi from Goldman Sachs. You are unmuted. Please go ahead. Good morning, Audrey. Thank you for taking my questions. Just two please. You mentioned in your earlier statement that you expect Q2 to be worse than Q1. I'm guessing you mean the April to June period to be worse than Jan to March. Given April holiday in your numbers and the reported numbers. Can you give us a sense of whether you think you are now past the worst, in terms of revenue declines? And what was your second question? Thanks. Capital and the net debt guidance. It's at a degree of caution on the working capital, that has gone into the net debt guidance for the year. And are you actually seeing any weakness in terms of longer payment terms from customers or shopper payment cycles from suppliers, for example? Yeah. I mean, on debt and working capital guidance, we are always very prudent, and it's true that, you know, this guidance, looked at the various components EBITDA interest, minority interest, CapEx, and working capital. And I think it is prudent to expect that could be some in capital, you know, increase during the year. Obviously, we'll report on that when we announce our results in in June. Look, I think it's, it's very difficult to answer your first question, along having run, companies in multiple sectors all my life and having, to deal with, external events, maybe not of that nature, but similar in terms of the impact it has on the business. I've learned a very simple lesson. Don't call the button until you've seen it. And then you remember we have these questions in the oil and gas sector for several years. And until I've seen the bottom, I'm not going to call it, sorry, to, not give you the answer. Maybe you want to hear. But I think, this is an unprecedented year. There are multiple trends in our business as explained, and I will call the button when we see it. Thank you. The next question comes from the line of Paul Sullivan from Barclays. Paul, your unmuted. Please go ahead. Good morning, Andre. Thank you. Hi. Just firstly for me, the 10th reduction in minority interest guidance is relatively modest. What does that tell us about the profitability of, of I would imagine the Chinese operations Can we read anything into that? Secondly, more broadly, can you give us any sort of regional color and where are we in the sort of return to work across Asia? And, improving activity levels there. And then finally, how concerned are you about retail bankruptcies and And what are customers telling you about sort of product innovation and launches as we go into the second half? Obviously, people are starting to think about or plan for the, sort of pre Christmas season, and I know that SKUs are very important to you. Thanks. Okay. Thanks, Paul. I'll take the last, 3 and Ross will be happy to answer the first one. Look, I think, you know, what are we hearing from our clients? Look, what we are all feeling in this incredible, you know, time in our life, you know, applies to everyone around the world. I mean, there is a, strongly, for everyone to go back to normal. Obviously, when the pandemic became a worldwide issue, you you people under shock and dealing with themselves internally in their businesses. But we are seeing quite a lot of interest from our clients wanting to go back into action because, you know, I think everybody has realized that there might be a second wave, but we're gonna be, living with the COVID-nineteen virus in the year, if I could say it like this for quite a while. And we are seeing clients to start planning again for, on offensive activities, which is what you would expect. So, look, I think, this is, the mood of our plants around the world. Of course, they are careful with cost and cash, for the obvious reasons, but there is a strong willingness to go back to normal starting with planning new launch activities. And certainly, a lot of companies are using these spheres like trust to innovate and make sure that improve their value proposition to customers. As far as retail bankruptcies look, the the financial difficulties of retailers did start, as you recall, before COVID-nineteen. So and and And what we basically see is not necessarily, retail brands getting out of the high street. Mean, it's about restructuring, it's about cutting their costs, rethinking their strategy. And, you know, typically we keep, our relationships because, you know, they will want to reinvent themselves and new product, will be, interesting to them and our approach to quality assurance. Is is also very interesting for them to take a risk based approach. As far as regions are concerned, look, if you look in the chronology, you know, China has been, you know, back to normal in terms of capacity for inter tech beginning of April or clients was slightly, slightly later the supply chain is much more complex than ours. It doesn't mean that, you know, we are back to the revenue level we were in China. Because what's happening obviously in China is they have the, you know, impact of less, exports toward the Western world given shutdown in in North in North America and in Europe. I think the rest, the rest of Asia is, not back to the restrictions have been lifted to small Asian economies, as you've seen, have been quite good at mitigating the impact of, of coronavirus, and and and you can see that, you know, there is there is light at the end of the tunnel. Obviously, you know what's happening you know, part of the world in Europe. So we have different speed in different economy, first one to get into the pandemic is definitely now, going back to normal and it's good news. It's not the case obviously in Okay. Alright. That's, that's very helpful. Thank you very much. Thanks, Paul. Thank you. The next question comes from the line of Will Karmes from Jefferies. You are unmuted. Please go ahead. Thanks very much. I had a couple of questions, please. Firstly, this is clearly not an update on margins here, but just wondered if you could talk a bit about, you've been able to to protect the EBIT, and whether that sort of if our fears around, the drop through from revenue defines the EBIT, and maybe not as bad. Clearly there are some countries that are offering quite good support there. And then secondly, you spoke quite a lot about the new and extra testing and inspections you would expect to see. I just wondered so far whether that's actually been noticeable to the growth rates in the business is. Thanks so much. Thanks, Will, and thanks for asking the gross margin. Look, Let me just give you the, the full year perspective. When we went into 2020, we were expecting continuous organic growth as you, as you remember. And therefore, we basically budgeted for continuous growth in our business. And, what we are trying to do, if you want, is trying the right balance between number 1 protecting a margin as much as we can with the initiatives available to us. So I've talked about several in the call. But in addition to that, you know, there are other opportunities, travel expenses, energy bills, consumables, marketing, over time costs in peak periods. But also want to strike the other side of the equation, right, which is I don't want to undermine the quality of customer service that, we are providing to our clients and also We are a highly skilled workforce, with a lot of PhD scientists, tremendous IP in all parts of the world, And we believe that it's a temporary, disruption in the global economy from a supply chain quality assurance standpoint, and and we are B2B, as you know, we B2C. So what's really important for me is to do the right thing, technically, in a short term, but not undermine our ability to deliver our superior customer service today, also to be ready when, you know, our clients start, you know, increasing their spendings again in supply chain, for because they want us to be well positioned for the upturn in the in in in in the market. So, I hope that that how you know, understanding, but we are obviously very discipline, as you know, in terms of, margin manage. And we're very careful in terms of, in terms of pricing. And there is also the mix management, which is quite important As far as the new initiatives are concerned, look, we've been quite quick, at, coming up with, you know, the relevant innovations. I believe that when you manage such an external event. You got to play both defense and offense, and defense will all understand health and safety. It's, it obviously costs and cash management that the fans is is custom service innovations and, and, and, and, and revenue management. And, I have to say that, you know, our remote, audit, you know, solutions has done very, very well in our business assurance, you know, operations. As, as, as you've seen in numbers, it has also done very, very well in our, you know, CapEx Inspections activities. If you look at some of the, innovations that we are doing in terms of medical devices, we have, you know, strong presence globally with our electrical, business. We are, you know, a global leader in terms of certifications for all medical devices, OEMs around the world. So you can imagine the demand, ventilators, and other for, the emergency, you know, you know, rooms in, in hospitals. And we basically have changed the way we prioritize and basically have offered express you know, you know, solutions, protect, I have to say, is is is really, really, really strong. You know, we've just launched it a few, a few weeks ago, and therefore, it's not the numbers. But clearly, we are seeing very strong demand across the board. I mean, you've seen probably in the news yesterday, on DC that, you know, all countries in Europe are now getting ready to go back in terms of, you know, tourism activity is so important part of the economy in in, in, in Southern Europe, and obviously North Africa and, and the Middle East. And, you know, the, you know, the, you know, PoziCheck, which is basically a hotel solution. That's got a tremendous buzz. And, with people assurance, you know, we are seeing some legal traction in in North America, facility inspection. So now, I think, it's very important in these difficult, periods for any companies to play both defense and offense. And, and I think we've played the offense card, you know, quite, quite well so far. The next question comes from the line of Andy Godler from Credit Suisse. You are unmuted. Please go ahead. Hi, good morning. Just just a couple from me if I may. Firstly, on Alchemy, I just wanted if you could update us on how that's that's been trading through through this year. In broad terms. And then secondly, just going back to the the net debt guidance with the expectation that it goes up a bit. Is, you know, am I missing something, or is that implying that cash from operations roughly halved from, from last year given the CapEx guidance and ongoing dividend payments? On Alchemy, you know, we had a really, really strong start to the year. As you know, you know, our contracts are multi year, and we've had, you know, good wins last year. So, you know, we are really pleased with Alchemy and the Alchemy platform we have has given us the ability to go with the people assurance, you know, offering within ProTech, because we have, if you want, a subject matter expertise, and we and offer this training and certifications for people in factories and in retail outlets, you know, very, very, very easily. So it's, you know, it's it's doing well. As far as that obviously we're not gonna go into into a lot of details. I would suggest that, you know, you walk through, the cash flow and and and you take an assumptions on on EBITDA and and you've got some guidance on, on the various other lines, you know, CapEx, minority, minorities, finance. And then you take a view on on working capital, you will see that, you know, our guidance is, is quite there. Obviously, we are always very prudent as we, as you know, I'm not going to make any statements on any metrics moving forward as you know, we don't do that. Thank you. A couple more questions in the queue. The next question comes from the line of Tom Sykes from Deutsche Bank. Sorry. So just following on from your comments, please, on the planning of people for the second half of the year. Could you is there any more detail that you can give on to the hard line soft lines? Is there a there has been a bit of a narrowing of SKUs across consumer perhaps? And do you think you're going going to get the same breadth of testing, or do you expect sort of the volume of testing coming back maybe not with the same breadth, please? And maybe sort of related to that, the overnight tests and the rapid turnaround tests where you tend to get quite high margin. Are you seeing a turn of those, and does that suggest that there is quite high appetite and quite a high level of innovation taking place now. I wondered if you can if there are any comments you can make about competitors capacity, not necessarily the ones that we may cover, but a view of capacity in any areas of your business where you think people have particularly pulled out or seen any difficulty? And then I guess just finally on China, and your headcount, you alluded before to wanting to retain the capacity. But or changes that you are going to make to the way your cost base is perhaps in China or elsewhere because of this, pandemic that you've taken the chance to actually make some longer term changes to the cost base at all and and would that indeed be in a way letting to go with anybody in China? Tom, and is it your last intake call? Are we gonna say farewell to you on this call, or are you gonna come for the next It is my last call. It's my last call, full stop, actually. So yes. Okay. Then, before I answer all these questions, just want to you on behalf of all your colleagues for your tremendous support of the years. And, and I know that a lot of people in the the analyst communities have learned a lot from you over the years. Feeling directly. So it's been a pleasure to, to work with you. Now go back to to business. I think, on the express service, yes, I mean, we have seen an increased demand, as I said, in several sectors. No question that, you know, medical device is high in demand. No questions that, you know, you have companies wanting to to go back into the innovation agenda. And it's good news. So yes, we are seeing, and it's good margin for us because we charge, you know, the right price for it. As far as competitors are concerned, they will be indeed a few instance is where, where competitors will have difficulties in terms of cash if they don't have, quality business models. And you're right, that will make some of the, consolidations may be easier in the market. Obviously, we keep monitoring that. I think I'll take the first and last question together, on, you know, headcount planning and, and, and restructuring activities Look, we, we, on the restructuring front, as you know, we, we started, a 5 year program, going through our portfolio, and we are running into last year of this program. And of course, we are looking at the various metrics to see, you know, how we bring this program to, to a close at the end of the year. So yes, we are looking at, restructuring some of the businesses that have been underperforming, and we believe it's the right thing to do. I wouldn't label anyone at this stage, and I wouldn't want you to it's targeted to China. As far as China is concerned and planning in terms of people, look, we expected, we expected, 2020 to be slightly more challenging in, in, in softlines. Huddlines, I have to say, is a different situation. As we are seeing good demand in terms of, traditional headline testing inspections, e commerce is booming. And, you know, we are seeing a lot of good demand for toy testing. Obviously, Softline is slightly more difficult. Softline got into 2020 with some structural issues. And, you know, we are looking into it. We have to be careful, because, you know, we we work with lots, lots lots of brands around the world. And I and I don't have any brand that has stopped ordering testing activities, you know, for us. The volume has obviously been impacted given the shutdown. So we're gonna monitor it. Tom, it's a good question. The only thing I would say is that, you know, Softline is based, you know, category for us in terms of testing. You've got to be the traditional fecal testing with chemical testings. We are obviously seeing a lot of demand for PPEs, gowns, masks, blows, as you can imagine. And also, you know, we are seeing a lot of interest from a lot of brands for sustainability So although the traditional testing for the high street brands that we know might not be the same, I think some of the brands that want they're very fit going forward. I also investing, and we see a lot of demand in sustainability. And I'm sure we'll take it. I'm sure we'll stay in touch. It's been a pleasure. Thank you. The next question comes from the line of Rory McKenzie from UBS. Good morning. It's Roy here. I'm just trying to think ahead to the post COVID wells. I want to ask about the risks that this disruption accelerates global protectionism or or reallensuring of manufacturing. Obviously, it's a trend we already discussed a lot last year, So could you share your latest thoughts, whether you do see it accelerating that, and how Intersect is positioned? And then secondly, just to attempt to follow-up on Alchemy could you at all quantify the boost that it gave to the products like for like growth rates in this IMS? Thank you. Okay. So, thanks. I'll start with the second one. Unfortunately not, sorry to be frustrating you. We don't disclose more than what's being publicly discussed. Look, I think the question about post COVID-nineteen is, is, is very good. And I don't know if you saw it, but the, the minister of, of Commerce in Germany you know, did a very interesting, speech recently. And what the world has basically come to realize is that you know, the the speed component of supply chain management, which means fewer suppliers, to go faster what it's good. It's an impediment when you've got, supply chain, you know, issue that we have today. So There is no question that there will be some, activities inside corporations to think through how they derisk their supply chain. Medical devices in in in PPs. I mean, it's on news every every single day. Having said that, I think everybody knows that the global trade is a reality. It's, you know, the, the trade flow are very intertwined, and it's going to be difficult to, to, to change that. So my sense is going to be evolution, more than anything else, obviously, we can for clients, if they want to rethink their supply chain risk, this part of what we do with VA, but I wouldn't, I wouldn't expect a big bang, you know, move on that. It's going to be, you know, step by step. If I may just follow-up, so I guess it's this trend of moving from just in time to just in case supply gains. Can you talk about the world of within the world of products and where, obviously, at the moment today, you get you gain the revenue from the client is largely it's quite a lot to do with, you know, fast turn around me to get, you know, products or shelves quickly. Would more elongated supply chains didn't change the the pricing power, have you in the industry there, or should that, that would be unaffected? Look, I don't think, it will affect or pricing power because at the end of the day, you know, we tend to price our subject matter expertise based on our cost base and the added value ring for our clients. And our offering is global. So, of course, you know, the price is not exactly a semi per country, depending on the cost of the business. So it's very difficult to, to be precise. But I think, you know, it would change our our pricing power. What I think it it will do, it will reinforce, the approach we take with companies, which is to talk about risk based quality assurance which is basically looking at subtraction end to end, not, you know, just in time, as you said, but, you know, with the right quality and and and and and and the right, you know, supply all the time. So it I think it's gonna be interesting. Yeah, interesting. Great. Thank you. Thank you. The next question comes from the line of Rajesh Kumar from HSBC. You are Anmute. Please go ahead. Hi, good morning. Thanks for taking the questions. Welcome. 1st of all, when you look at, you've very helpfully provided capacity utilization numbers at the full year presentation for China. We've gone into lockdown in many other geographies since. But just in terms of where we are, when it comes to some of the key high margin product businesses in terms of capacity utilization or capacity back online and operating. Could we get some color on that? And would it be fair to say that your comments earlier about being prepared for a recovery meant that you're not, doing Moss capacity reductions across different businesses. The second question is on, your March April trading trends. Totally appreciate you don't want to give out monthly trading patterns. Some of your peers have indicated and a lot of people in your supply chain have given April and, May trading updates, which sort of suggests that the step down had been quite sharp and meaningful. Just when we read the release, it's a double digit in soft line that could be in tees. That could be 25%. Just an order of magnitude, for self deploying hard line. Right? Where you have said double digit, does it mean double digit, 25%, double digit, 15%, some order of magnitude that would really help? And final is a follow-up from an earlier question. So when we look at your net debt for the full year, £650,000,000 to £700,000,000. You've very clearly given that number in the release, it will assume what you have done for Divvy, a dividend, and what you've done, what you're saying for you know, CapEx, it implies, an operating cash flow between 330,000,000 to £370,000,000 which is, down quite a lot. You made some comments about working capital. So should we assume that the step down is because you're keeping capacity and you you will bear some negative operation of gearing, or is working capital a bigger part of that? Okay. Thanks. I'll try to, to transfer all your questions, starting maybe with the last one. Look, what I said to previous question is what we can say at this stage. I think if you work your way through from, you know, the EBITDA assumptions that, you will make for the business and you take line by line and you take an assumption that expect working capital to increase you will see that, you know, you come to these numbers. So as I said, we always, but we want to be helpful by giving you a net debt range so that you get a sense when you reverse engineer the numbers of what the outlook could be. As far as people are concerned, no, we are not, doing, capacity reduction across the board. As I said, you're doing open for us to make sure we continue to put to provide the super custom service to our accounts, and we are ready for when, the supply chain activity is, you know, resumed fully. So we want to, to, to benefit from that, and, and we don't want to undermine our quality today. And as far as capacity, you know, availability around the world, I think, you know, we are open for business. So our business fully operational around the world, with the exception, as I said, on the call, of India, which is still quite, quite, quite difficult. Okay? Thank you. And, the decline rates? Sorry. I cannot say more than what we said today, look, we try to be helpful. Double digit double digit in the 25 with the 15 order of magnitude, the different numbers, very different. Yeah. Of course. So if it was, not easy to read or to understand, it will say it differently. So, I will leave it to that. Sorry. We're not giving any more color on that. I'm sorry. Thank you. The next question comes from the line of Ed Steele from Citi. Good morning, everyone. Morning, Andre. Good morning, good morning, Ed. Just one question really, please. You've given a pretty tight, net debt guidance for end of 20 20, just 50,000,000 range that's the sort of, the tightness of guidance bond would expect in a more normal year. Obviously this year, there's going to be really quite a variety of profit performances depending on how COVID-nineteen a lockdowns ease, whether it's second spike, etcetera. So profit guidance is very difficult as you've acknowledged. CapEx guidance is is tight, minority guidance is tight, working capital is not necessarily fully in your control, So I I'm just trying to understand what the flex is within your control to ensure your delivery of net debt within that guidance range The one missing component of course is the interim dividend for 2020. Is that something you consider a flex item to ensure you deliver net debt within the range given that profit could fall short by a material amount, please? So, look, the, the answer on, on the interim dev, obviously, is, is not for now, and this is, as you, as seen today, you know, we are we are gonna pay off for 2019, you know, and and this is something that, is a is a bold decision. Look, I reckon your point, but, the range being, a bit on the narrow side. Gross and I have run multiple scenarios as you can, as you can imagine. It didn't amount of time. We believe that's the right guidance to be helpful to you and your colleagues. And, you know, what can we do to manage the businesses? Obviously, we can influence revenue, we can influence margin, we can influence, working capital, we can CapEx. So we've got quite a few levels. And all in all, I believe it's, it's the right guidance. Obviously, it's only the end of April. So I will remember your questions at the end of the year, and then we can check our books. Thanks. Bye bye. Okay. If no questions coming through. I'll turn the call back to you, Andre. Time. We know it's a busy time. Obviously, Denise is available. Will you have any any question? And, you know, on behalf of all of us, I'm sure we're wishing Tom a fantastic future in his next, career opportunities at Bank. And thanks, Tom, again, for your support over the years. Have a good day, everyone. Bye bye. Thank you for joining today's conference. You may now disconnect your handsets. Hosts. Please stay connected.