Earnings Call: H1 2018

Aug 7, 2018

Hello, and welcome to Incotec Half Year Results Conference Call. My name is Amelia, and I'll be your coordinator for today's conference. For duration of the call, you'll be on listen only. However, you'll have the opportunity to ask questions at the end of the conference. Star 0 on your telephone keypad and you'll be connected to an operator. I will now hand you over to your host, Angela Croft, to begin today's conference. Thank you. Good morning to you all, and thanks for joining us following the release of our 6 month results this morning. We are pleased with the performance of our H1 results. And we will give you a full briefing on how we see the trend in H1 and importantly, moving forward for H2. We continue to make progress on revenue margin and cash, and we are on track to deliver our 2018 full year target. So I'll start with the performance highlights of 2 the 1st 6 months of the year then Ed will take you through the detailed financial results, and I'll come back to give you more insight on strategy and performance moving forward. Let's start with our performance for the 1st 6 months of the year. We continue to make progress on revenue margin and cash. The group generated revenues of 1,000,000,000, up 3.9% at constant currency, down year on year by 1.8% at actual currency. Our revenue performance at constant currency was driven by a good organic growth of 3.4%, in line with expectations and by the contribution 1,000,000, up 6.4% at constant currency and up 0.8% at actual currency. Delivered a strong operating margin of 16.8 percent, up 40 basis points at constant currency and 50 basis points at actual rates. I adjusted EPS was 91.2p@6.8percent at constant currencyand4.9percent at actual currency. We continue to make progress so that disciplined approach to working capital management and our working capital was down year on year by 6.5%. In line with our new dividend policy that targets a payout ratio circa 50%. We've announced an interim dividend of 31.9p up 35.7% compared to last year. Sequentially, we saw an acceleration of organic revenue momentum with 3.4% growth at constant currency, which compares to 2.5% in the second half of twenty seventeen, and plus 1.7% in 1st 6 months of 'seventeen. We benefit from broad based organic revenue growth in our product and trade divisions, growing, respectively, at 5.7% and 0.7% at constant currency. We saw a marked improvement of our performance in the Resource business with organic revenue almost flat at constant currency. As you know, margin management is an important priority for us, and I'm pleased We continue progress we are making on margin. We've delivered an operating margin improvement of 40 basis points at constant currency, benefiting from operating leverage linked to revenue growth for activity improvement and from our portfolio strategy. I'll now hand over to Ed who will take you through our financial results in detail. Thank you, Andre, and good morning, everyone. And I'll now take you through some detail underlying our results In summary to the first half, we delivered good revenue, profit and EPS growth at constant currency. Margin improved year on year at both actual and constant and our cash flow performance was strong. Total revenue growth was 3.9% at constant currency and down 1.8% at actual rates. With FX translation reducing our revenue by 5.70 bps, driven by the appreciation of sterling. Organic revenue at consummate was up 3.4% Operating profit at constant rates was up 6.4 percent to 1000000 and margin was up 40 basis points The effect affected the half year resulted in operating profit up 0.8% at actual rates. Net finance costs are $12,200,000 or 10.3% lower last year through a combination of lower debt and with a stronger pound reducing our dollar interest costs. So overall, fully diluted EPS grew to 91 0.2p being up 0.9% at actual rates and up 6.8% at constant rates. I'll now take you through the high level margin performance by division. The group recorded a 50 basis point improvement in operating margin in the first half, increasing to 16.8%. Margin improved by 40 basis points at constant rates, driven by strong margin accretion in products, which was partially offset by the margin performance in trade and resources. The margin also benefited from the stronger portfolio mix, which contributed 20 basis points. We had a further 10 bps accretive impact from acquisitions completed in the past 18 months. The group realized a gain from the implementation of a pensionable salary freeze for the You Can scheme which was partially offset by other specific costs, resulting in net gain of 10 basis points. Finally, and as expected, FX had a positive 10 bps impact on the group margin. Now turning to group cash flow and net debt. So our disciplined focus on cash management continued throughout the period with working capital down 6.5% year on year, and reducing as a percentage of revenue year on year. Cash flow from operations was 204,000,000, down 22,000,000 due to 2 factors: firstly, a negative FX translation impact on EBITDA of circa 13,000,000 pounds and secondly, the base effect of our low working capital exit point in December 2017. We invested 1,000,000 in CapEx, up from 1,000,000 in 2017 to expand our market coverage and develop innovative ATIC solutions. Free cash flows in the period was 1,000,000. The able performance in cash flow resulted in a reduction in net debt to 1,000,000, £128,000,000 or 18 percent versus June last year. Now turning to our financial guidance for full year 2018. The expected net finance costs will be around 1000000 to 1000000, with the increase versus previous guidance, reflecting the acquisition of Alchemy. The effective tax rate is expected to be in the 25.3percentto25.8percent range, and minority interests will be circa 1,000,000. Through the models, I've set out a number of shares for EPS calculation. We're expecting the full year CapEx to be GBP 130,000,000 to GBP140 1,000,000 and based on acquisitions in the first half, the acquisition of Alchemy and FX effect on our U. S. Debt, we have updated the net debt guidance to close the year between GBP 800,000,000 and GBP 850,000,000. This guidance is stated before any further M and A completions and any material movements in FFOs. And that's just beforehand. I'll hand you back to Andre. Thank you, Ed, and I'd like to start the second part of the presentation today with a brief update on strategy. We provide independent quota assurance services as our mission critical for our clients. That's exactly what industry stands for in the market. We refer AP solutions to customers operating in 3 sectors of the economy for our trade and resources. Importantly, we operate a capital light business model, which combined with renewal culture enables us to react quickly to new growth opportunities by following the supply chain of our customers in new geographies. As you know, our approach to value creation for the mid to long term is based on what we call the Intertek Vertus Economics, global GDP plus organic growth. Plus margin accretion, plus strong cash conversion, and importantly, plus disciplined capital allocation. The compounding effect of our business economic earnings model year after year will continue to create shareholder value creation. The growth opportunity in our market are very attractive. The total quotations market is circa 200 $50,000,000,000. We see strong growth opportunities with existing and new customers, but we also see attractive growth opportunities to get access to the quality assurance work that Confluence currently do in house. Moving forward, our future growth outlook is global GDP plus organic revenue growth in real terms. We expect our Product division that represents 76% of the group's earnings to go ahead of global GDP, We expect our trade division, so it represents 18% of the group earnings to go to light blue or lithium air to GDP through the cycle and the growth prospect of our Resource Division, which represents 6% of the group's earning, adding to the global growth drivers in the energy sector. The main objective of our 5 by 5 strategy is to move the center of gravity of the group towards a high growth and high margin sectors in the industry. We are very focused on feeding the exciting growth opportunities and high growth, high margin with our differentiated TTA value proposition ASIC. Globally, we support the existing and emerging policy assurance need of our clients to each area of their operations, R and D, raw material sourcing, component suppliers, manufacturers, manufacturing transportation, distribution and consumer management. We spend a lot of time with our clients, and each time I meet one of our clients talking about our AT opportunity dot com, are really excited about the broad data folks we take to help them in a day to day quality assurance work. Importantly, we focus on innovations to accelerate growth and improve our margin. And our customer facing innovations are either based on digital solutions or on Leading Edge Technology. I'll cover it later that we get access to industry leading solutions with our M and A activities that enable us to bring unique IPs and scale this up into the world of Intertek. I'd like to share with you now some of the recent innovations that we've launched based on the innovation work we do in our businesses, which is always starting from customer insights with our 6000 monthly Net Promoter Score survey. To have our customers better leverage their customer feedback, we have launched both of the customer. This is a service that gives big data analysis techniques to get identified quality issues and deliver actionable product quality improvement for our customers. Another very strong area of growth is sustainability. And we developed a comprehensive suite of services across all hires of the supply chain of our customers and our sustainability approach is industry agnostic. We've continued to expand our in line solutions that offers a trusted software as a solution platform. Through the unique platform, customers are able to gain great visibility of their supply chain and build resilience in their global operation to reduce risk. You might have noticed that we rebranded our cargo business credit to strengthen our service differentiation, leveraging more than 130 years of heritage in the industry where we have pioneered marine surveillance. Another exciting example innovations in the trade business is what we've done with ExxonMobil in Mexico where we've created a model laboratory to transform quality across a fast growing network and improve the capability and the skills of their staff. Another example of a mobile solution is the unique crop quality toolkit that our extensive develop for small farmers in Sub Saharan Africa, making it easier for all of our clients to get to the highest level of quality. Another very interesting project is what is in these green lines to minimize the impact on the mining environment I stood at providing vital support for the project, ensuring regulatory compliance. In our industry, we developed the only data base on near infrared spectrum analysis of crude oil in the world. You might remember that in 2017, we launched PIFO where an industry leading supplier solution that allows our plan asset owners to accept real time information on their asset inspections through the manufacturing stages. Now Papaware, other way of 2, has expanded its functionality and helped customers track all aspects during construction phase 2. I could get on and on all these innovations happening in the world of Intertek, but let's go back to business and talk about the outlook for the group in 2018. In 2018, we expect to deliver good organic revenue growth at constant currency, We expect our good organic revenue growth to be driven by robust organic growth in our product related businesses, solid organic growth in our trade related businesses, and stable organic revenue in our resources businesses. From a profitability standpoint, we expect to deliver a moderate margin progression. We continue to invest in growth with full year CapEx investments of circa GBP 130,000,000 to GBP140 1,000,000. We are maintaining the full year guidance we gave you on currency in March. Based on last 3 months, the average sterling rate applies to the full year results of 2017, would provide a reduction of 400 bps at the revenue level and 3.60 bps at the operating profit level. Let's now discuss the performance and the outlook for each of our divisions. I'm really pleased with the continuous progress we are making on our product businesses, and we delivered an excellent performance in H1. 5.7 percent organic revenue growth after 3 years of robust organic growth and all that, driven by broad based revenue growth across business lines and geographies. We delivered a very strong operating profit of 1,000,000, up 10.3%. And that enabled us to do the margin of 21.3%, which is up 17 basis points versus last year, a tremendous performance as we benefit from operating leverage cost discipline and pricing power. Let's talk about each of our important business lines in our product business. Our Softline business delivered solid organic revenue growth as expected, benefiting from supply chain expansion of our clients in new markets, rapid expansion in the footwear sector, and increased demand for chemical testing. Our Highline business had a very good first half and We benefit from innovation from our customers, leveraging wireless technology and increased demand for chemical testing. I'm really proud about the performance of our electrical and network assurance where we delivered robust organic revenue growth. We are benefiting worldwide from electrical advanced innovations that provide better efficiency and connectivity to consumers. And importantly, we are benefiting from increased demand for IoT assurance services, of coal, including cybersecurity. Our business assurance continues to go from strength to strength and delivered strong organic revenue growth, driven by Azure standards upgrade, increased focus of corporations, supply chain and risk management, and importantly, increase consumer and government focus on ethical and sustainable supply. Our Building And Construction business largely focused in the U. S. Had a very strong performance, and we delivered a robust organic revenue growth. In the 1st 6 months of the year, we assume a growing demand for greener and high quality commercial buildings and increased investments in now's infrastructure projects in the U. S. Our transportation technology delivered double digit revenue growth, driven by one of our clients in new models and new fuel efficient engines, and importantly, the increased strategy on emissions. We generated robust organic revenue growth in our food business. The food business is a very exciting sector where we see continuous growth driven by full innovations and increased focus on the safety of the supply chain from both the regulator and consumers. We saw robust organic revenue growth in our Chemical and pharma business as expected. We are seeing a growth of SKUs around the world from here again. An increased concern from the regulator and the consumer on fraud safety and traceability. For the full year of 2018, we expect our product related businesses to deliver robust organic revenue growth. Our trade business delivered a solid performance in line with expectations and organic revenue growth of 0.7%. Operating profit was 1,000,000, slightly down year on year, and operating margin of 13.4 percent was also slightly down year on year, driven essentially by country mix. Our Cadillac Bank business reported stable revenue performance as expected. We continue to benefit from the global and regional trade structural drivers in all regions except in North America, where we have seen an industry destocking of crude and refined products. Of government and trade selling businesses, David, robust organic revenue growth, driven by volume growth of existing contracts as well as the win of several new contracts. Our agri world business was in line with expectations, reporting our revenue performance slightly below last year as we saw a lower level of export activities due to baseline effect in some of the largest market that benefited from strong trading activities in 20162017. For the full year, we continue to expect our trade related businesses to deliver solid organic revenue growth. I'm really pleased with the performance of our Resource business that delivered an improved trading performance following several years of revenue decline. However, we were broadly in line with last year, slightly down, 0.7% versus last year. Operating margin was 5.5% slightly down versus last year due to contract mix. The revenue from CapEx inspections was lower than last year, Importantly, we benefit from stable level of CapEx inspection activities, adding the volumes that we are seeing from our clients as stabilized while we continue to see price pressure in the market, again, as expected. Good news on the OpEx Menton Service, where our revenue is now stable. And we continue to see an improved level of demand for testing activities in the neural business that delivers robust organic growth performance the best performance for many years. For the full year, we expect our resource businesses to deliver a stable organic running performance in 2018. Our M and A strategy is focused on the acquisitions of leading and innovative solutions that are scalable across Intertek. In the last 18 months, we've made several acquisitions in attractive growth and margin sectors. And as Ed has explained, these acquisitions have contributed to the progress we are making on margin. Last week, we announced that we've entered into an agreement to acquire Kinney, a leading software and solution provider, which will spend of global assurance offering into people assurance services. In case some of you couldn't be thrown on a webcast last Friday, I'd just like to recap the key features of the acquisition. I can be focused on frontline staff and industries with high turnover where traditional classroom training is too costly and now efficient. Today, the integrated solutions impact more than 3,000,000 frontline workers at 50,000 locations worldwide. The demand is growing for solutions that identify, monitor, and efficiently close skills gaps along frontline employees. Akermes gives us further exposure to the highly attractive food industry where demand for quality assurance is stronger than ever. Driven by increased regulations and increased consumer expectations. And frankly, where operational and compliance consistently are a non learning challenge for companies. Akermes is a high quality business with scalable solutions that can be rolled out across many different industries and geographies inside Intertek. That will accelerate the growth momentum of our capital light and high margin assurance business. The transaction is value accretive for our shareholders on both the billing and IFRS revenue basis, we expect strong growth to the 5 year CAGR of 20 percent. I think we operate a high margin business model and have got strong cash conversion above 100%. Building EPS will be accretive in year 1, and we expect Alchemy's return invested capital to exceed the group who are great by EFI. A few concluding remarks before our Q And A session. In H1, we've continued to make progress on revenue margin cash and returns with our increased dividend of 35.7% compared to last year. We offer a client differentiated TQA value proposition that provides superior service. Moving forward, we're uniquely positioned to be the GDP plus organic revenue growth in real terms, we will continue to pursue a disciplined approach to margin and cash management, and M and A will continue to focus on attractive growth and margin prospects. So in summary, we are on track on a good to great journey, making good progress, both on performance and strategy. We'll not answer any questions you might have. You. K. We have some questions coming through now. The first one comes from the line of Rory McKenzie from UBS. Please go ahead. Good morning. Well, thanks for taking my questions. Just two quick ones first. Can you just clarify the working day impacts, towards the end of each one? So we understand the growth trends and whether that was different across the divisions? And then secondly, the margin drivers in trade, a bit a bit more, obviously, still a negative incremental margin, in H1. So we expect that H2 on the longer term, please. Okay. Thanks. I'm glad you're asking the questions on working days, because I can't imagine what's thinking. Look, May June had one working day less than last year, which basically reduced organic growth rate as you would expect in, the trading days sensitive businesses. So if you look at sequentially, right? Our products and resource business were impacted by 1 less trading days, but our trade was better than, than January, April. So overall, this is, as we expected, we are not worried about, you know, 2 months we look at the trends on a much longer term basis. And this is, you know, bang in line with what we were expecting in our own forecast. As far as the, trading performance in our trade business, let me just frame it a little bit. You might remember that we had a very good performance in the first half of last year when we grew organic growth by 4.5%. And our margin was 14%. That was a really strong performance and we basically saw, continuous strong performance in GTS this year. We saw a lower in a momentum in the U. S. That has obviously impacted the, cattle bed business. And the U. S. Is one of our, you know, strongest markets where we've got really good margins. And then our agribusiness after 3 years of consecutive high single digit revenue growth was basically, you know, comping against a very tough base. And we saw, crops being weaker in three markets. That are allowed for us. So basically, you have a high base to compare you against in terms of both revenue, growth and margin, and you have very, strong margin in the first half last year. If you look at the margin of 13.4% in H1, that is bang in line with H2 last year. So we are now seeing any deterioration sequentially. Yeah. And then I wanted to just, if I if I can, one more, sorry, dig into that ongoing productivity improvement. You mentioned, you know, you have these monthly performance reviews to your businesses, you know, country benchmarking. I'm sure they're all much improved compared to when you first started. Yeah. Could you give a give a sense of the range or or the spectrum still within there. I mean, we're trying to get a sense of how much further, if there's, you know, upside to come out of all these businesses and maybe which ones are still underperforming, do you think? Look, I think what's happening with the new manager business that is multi site, multi country, the beds get better, the weaker gets slightly better, but the benchmark moves up. And this is if you are the spirit of performance management, we believe we can always be better. And frankly speaking, the new styles are defying new best in class benchmarks because innovations in terms of processes and productivity, and equipment help us also to make progress. So while I wouldn't expect the type of year on year increase we did in 2017. Moving forward, I remain of the view that we still have some, opportunities to improve margin. And you saw it in the first half. The team did a very good job in that view, and then it's more to come. So I wouldn't, said that we are running out of skin. Are you still producing the lemon? Okay. It is time to install. How can Thank you very much. Yes. The next question comes from the line of Roxanne from HSBC. Please go ahead. Hi, thanks for taking the question. If I may, have you given the noise around trade wars. Have you spoken with your customers, suppliers? What might be the potential sensitivity Have you run any scenario analysis around that? If you could share some thoughts on that subject, it will be quite helpful. Second one on the incremental growth commentary you made about q 4. So one trading day in 2 months is quite a meaningful impact. So If I look at the 4 month statement, you were running at an organic growth of 4%, one trading in in 2 months is about 2% plus impact. If not more, So are you suggesting, that the underlying growth actually improved in the last 2 months? Okay. Let me just take, the last question first because it's relatively easy from a number standpoint. We reported a 4% organic growth at the end of April for the 1st 4 months, and there was no trading the impact, which in my view is a good representations of the underlying trend of the business. We reported 3.4% organic growth for the 1st 6 months. And, the reason why we moved from 4% to 3.4% is because we had 1 less trading days in May June, which basically took basically 2% of your base in that period and reduced mathematically your organic growth, from 4% to 3.4%. That said, just for clarity, there was also 1 less trading day in H1 compared to last year. So I'm not worried about it. We should not read the trends on 2 month basis in that view, 3.4% organic growth is sequential improvement. On the previous 2 semesters and we'll continue to focus on driving organic growth moving forward. Having said that, by always being very careful that we do that without reducing prices, I mean, leveraging our pricing power. So I'm not worried about organic growth. We are in a good, in a good position. I suggest I I I think your first question was about the global trade measures. Yeah. Trade was, basically. Yes. Thank you for asking that questions. Of course, we are monitoring the situations very carefully. You know, all view is that, changes in tariffs around the world will not change the structural growth drivers, that basically enable us to grow businesses around the world. The demand for products today is truly global. And we know that global trade is around 60% of GDP. Would there be tariff changes between, you know, countries, it will not change the global demand for products. But it's a market for driven, you know, supply model around the world. And what will happen is that would be, material. You might see some structural challenge in a supply chains. I would say that, you know, you know, we are very well positioned with our global network to be very flexible and very entrepreneurial and for the supply chain of our clients, wherever they want to go, it's they believe it's economic for them. We've done that in the past. We'll continue to do that. I think, you know, we are obviously mindful of the news flow and we continue to monitor it But just to give you a sense of the quantum based on our analysis, the measure announced today, by the various players, represent around 0.2% of in the global GDP. So we are really in a situation where we need to continue to monitor it I'm not worried about structurally moving forward. And frankly speaking, what has been announced today is not of great meaning for the world. Okay. So understood. Thank you. Thank you very much. We have the next question comes from the line of Luca Sarhani from Deutsche Bank. Please go ahead. Yes. Good morning, everybody. It's especially Tom Sykes at Deutsche Bank. Thank you. Just on the cash conversion in H2. Could you maybe just go through where you're actually spending the increases in CapEx whether we should think about a slightly higher level of CapEx than an ongoing basis that you're only giving, a view for 1 year, but how thinking about that? And when it's at all when we actually see it through the depreciation line because obviously that's come down as a percentage of sales again, please. Thanks for asking the question. Important question. As you know, we've always guided for CapEx being circa 5%. Of our revenue. And you have to be right, in the last years, we have not spent the 5%. And the reason why we have not spent the 5% is because colleagues, we're not meeting the investments. I think as you've heard us talk about the strategy over the last few years, we are increasing our focus on innovation. We believe that our value proposition is clear in the eyes of our customers and we believe that, you know, there is a lot of innovation, that can be done and, you know, involving technology if you look at a good example that I talked about today, our in light, risk management solution, which is basically a technology enabled platform that we build, for our customers that is truly scalable is an important investment because it helps our clients to basically monitor track and quantify their risk and take a risk based approach. If you look at what we are doing in, in oil and gas, Packerware is a great example of where our team are investing in technology to develop solutions that are software based to enable their clients. I talked about another interesting innovation last time around interplay, which is, an algorithm based simulation software. So You're absolutely right. We are investing not only in replacement CapEx, but also in, innovations, and it's important moving forward. And, you know, we will, you know, guide accordingly year by year. Okay. But when you look, I mean, it looks like you're probably going to spend about double in the second half, that which you spent in in the first half, where exactly is the step up in in CapEx and investment actually going into, where, in the second half of the year? We always have a bit of a back loaded CapEx investment. That's the way you start the year with a budget that can approved in January, February before start planning for it. So in the second half, we will invest in products. So, I've talked about assurance mean, there is another very interesting investment for us, which is, ITQ, which is, again, a software enabled platform for inspection that we are now scaling up across the world. We're doing a lot of work, with our teams on data intelligence. So it would be going into product, trade and resources, supporting organic growth, as well as CapEx investment to replace, you know, CapEx where it needs to be replaced. And let's not forget, IT, which is a continuous investment. We invest in our feedback office, frontline or also security. Okay. Thank you. And just a final question on that for me. Does it include any capitalized staff costs personnel costs in there, the, you know, thinking maybe in the software side, but will there be other parts if there's any capitalized staff costs, please? I mean, not not of any significance. No. I mean, it's a little around, you know, software building I start building software. It's just used, but that's it is not material. Okay. Thanks very much. Thank you. Thanks, Simon. We have the next question comes from the line of Steve Wolf from Numis Securities. Please go ahead. Hi, guys. Is there any of that CapEx end up going into Alchemy at all? And also just to follow-up on that, I think, last week, you sort of mentioned that you would give a little bit more guidance on sort of forecasting on Alchemy going forward. I guess, you mentioned on billings basis of the accretion. And working through that back on a revenues basis. I guess, obviously, the contribution to this year is is rather minimal given the timing of closure. And then the the contribution on a 12 month basis on a revenue basis, I guess, again, the the contribution on that side to given the scale of the, you know, the underlying business is still relatively small to, you know, down to a couple of percent on an on an EBITDA basis just your thoughts on that level of calculation, please? So, I mean, firstly, the CapEx we talked about today does not include any additional investments in our community. We still don't own the business as you know. And then obviously, we'll do that when we acquire the business fully. As far as the guidance is concerned, if you have not spent time with Ed and Denis, we're very happy to do that to take you through step by step, try to give an explanation of the accounting implications in the 1st years of the acquisitions We are only guiding, this time around for 'eighteen. And as you know, for 'eighteen, Alchemy is gonna be, a bit neutral. For the group. There will be a bit of additional finance costs, which Ed has reflected in his guidance, and you've seen that, that impact will start guiding for 2019 when we announce our results in March, I will, as we always do. We have the next question comes from the line of Eric Klein from Kepler Cheuvreux. Please go ahead. Thank you. And a follow-up on this Alkini acquisition, is that right that it's going to be mostly impacting the product division, or will it be allocated to the all of the division. Bear in mind that that that you I think you last week, you you mentioned also some potential internal synergies, such as, you know, saving on your, you know, training, needs at the interconnect. So, on that, do you have a number in terms of the potential cost synergies that you could expect next year from from Alchemy very minor. You said it also can be deployed quite fast. Uh-uh. So so that's that's the the final question. The second question is on your resource, guidance for stabilization of the organic growth. Could you remind us of the current split of CapEx, OpEx, oil, OpEx inspection and and minerals to to to get a sense of the moving parts. I think you you mentioned strong minerals continuing. Into the the second half just to to to to get a sense of when we should expect the CapEx to to improve most significantly, please. Thank you. Okay, great. Thanks. As far as Alchemy is concerned, it is people assurance solution that is industry agnostic. And we will obviously, report the, Alchemy performance inside the product divisions. Why? Because this is where we have business assurance, which is industry agnostic and people assurance will basically add people assurance to systems assurance into our BA business. So that's basically, where it would be reported moving forward. As far as the internal synergies, you're right, that, you know, there are some interesting internal synergies in terms of applying, Alchemy to our own internal training. As I mentioned, in the call last week, there will not be too much cost synergy because we are just staffing, with our own development for digital based, group wide training platform. So we've not really invested too much money, I think, but it will do it. We'll accelerate the development process and we'll certainly make it much more cost efficient for us, to do that, very exciting. As far as resource is concerned, the large majority of our revenues in CapEx Inspections. And then after that, it's minerals and OpEx. So we don't disclose the percentages. But getting CapEx inspections to grow again is very important for resources because it's the last majority. And as I said, we are seeing a stable level of volume, which is good, but pricing continue to be a negative driver as expected. Because we are basically exiting a cycle where our clients had to repair the balance sheet and margin and had to basically negotiate lower prices. But we believe that the right sequence is volume should start growing again. And after that, you can get some pricing. So we are pleased to to see sequential improvement in the Resource business. And we are waiting for more questions. Okay. It looks like we don't have any more questions. Thanks for being on the call this morning. I know it's a busy day, and obviously, Danny, an ad, you know, will be available for any more questions that you have. Feel free to give us a call. Thanks, everyone, and have a good day. Thank you for joining today's call. You may now disconnect your handsets.