Ladies and gentlemen, thank you for standing by. Welcome to the trading update of IWG conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. I must advise you that this conference is being recorded today, Tuesday, 5th of November, 2019. I would now like to hand the conference over to your first speaker today, Mark Dixon. Sir, please go ahead.
Thank you very much, operator. Good morning, everyone. Thank you for joining us this morning to discuss our third quarter trading update. I'm joined on the call today by Eric Hageman, our CFO. Firstly, I'd like to take you through the key points from the update, and then I'll hand over the call to Eric to comment on the financial performance, and then we'll open up, as usual, for questions. For me, the key message today is about the scale of the momentum that we have in building our business, both on the supplier side and the demand side. From a demand point of view, you can see here in these numbers, we're trading strongly with excellent revenue growth, the best we've seen for a long while, which is translating through into occupancy. We're also growing our enterprise account business.
This is the business we're doing with larger accounts, where we're gaining more accounts and doing more business with the ones we already have. That's very pleasing, continued development there. On the demand side, we're well set and we've got good momentum. On the supply side, whilst you continue to see us invest in centers, you can also see continued progress in partnering with franchise partners of our business, and most recently, of course, Switzerland on Monday, with the Safra and Peress Groups. Very, very strong real estate partners, who we think will supercharge the growth in Switzerland and will get to our target much more quickly to have full market coverage in Switzerland. These partnerships, yes, they bring in return on our capital. The most important thing is they're a great platform for future growth.
As we do more of these, I'm particularly optimistic that the combination of ourselves with these partners will see a step change in growth. We've also made great progress in investing capital. You'll see here, we'll talk about the recent investments trading very well. At the same time, we have rationalized our networks, reducing about 4% in sq m, the space we have, at some cost, but certainly the right thing to do to improve future profitability. Finally, we've generated a record amount of cash through both our trading and the franchise strategy working together. As I speak to you today, we are in a fantastic financial position, and that will, of course, improve by the year-end. Let me just turn first to the trading performance.
Pleased to report that sales activity is good across the group, and this continues to deliver strong revenue growth. The momentum here is broadly based. It's not in any particular place, it's pretty much across the board. Again, likewise, enterprise accounts, broadly based, it's not any particular country. What we can see here, especially with enterprise accounts, is that more and more companies are adopting a flexible outsourced approach. I think the basics really make it appealing. It's cheaper, it's off the balance sheet, easier to do, and reduces or even eliminates IFRS, and it's very popular with teams. We continue to see momentum build in that area. That translated into revenue growth from all open centers of 15.5% at constant currency, much more at actual currency. It's up almost 20% in actual.
That, if you look at the first three quarters, good revenue growth, 15% so far in the nine months, 18% at actual rates. This is coming from many countries, if you look at them in just the sort of larger market groupings, it's the Americas and EMEA that are really providing the best contribution. What we can also see is the newer centers, i.e., the 2018s and the 2019s, are shaping up to be excellent investments in terms of returns on capital. We have been doing a lot of the right things in the past few years. On the pre-2018 business, revenues in the third quarter were up 3.3% on the pre-2018s. That's 7% at actual rates. This is bearing in mind that we're now starting to anniversary against stronger comparatives because we significantly improved trading performance in the second half of 2018.
Also pleased to report that the U.K. business contributed to the group's pre-2018 revenue growth in the third quarter. Still early days, and particularly with the many macro uncertainties around, maybe a little bit too early to call. Certainly, the U.K. business in the second half of this year has traded much better, and it seems that we may have passed the inflection point. The work that we did, and we took you through in previous calls and presentations, is starting to have very much the desired positive effect on the business. A big lever we have to drive even better momentum in the business is increasing occupancy. This is, again, the whole business rather than just the U.K. Pre-2018 occupancy has increased 2.2 percentage points to 76.4% in Q3.
This, just to give this a comparison, is the highest level we've seen for like occupancy since Q4 2016. Many countries have driven this occupancy momentum. We called a few notable contributors in today's statement. Brazil. This is another country like the U.K., where we put a lot of actions in place to improve performance, and that's worked well. As well as China. You wouldn't expect it there, but that's done very well. India, North America, Spain, and Switzerland. As we've said, also great improvement in the U.K. occupancy numbers. Year-to-date occupancy is at 76%, and I think this represents an excellent year-on-year improvement of 3.1 percentage points. We believe there's still a lot more headroom to improve this further, and we're laser-focused on this. Excuse me just one moment. I'm going to change phones because I can hear interference. Hello. Okay.
Another strength of our business model is the quantum of revenue we derive from ancillary services. There's more than 120 lines of ancillary activity. There's approximately 27% of group revenue coming from these services. This is one of the things that we believe to be well above average in our industry and gives us a strong and unique competitive advantage. It's a key characteristic that underpins our profitable and cash-generative business model. We continue to focus on this, continually adjusting and adding new services that we believe customers want and enhance the overall model. We've continued to develop our network to grow in the right places with the right brands, so multi-brand growth. 66 new locations were added in Q3, taking the total new openings to 180 for the year. Importantly, about a third of these were via various forms of partnering to achieve much more asset-light growth.
In Q3, we added 2.2 million sq ft of space, taking the year-to-date totals to 5.2 million sq ft, and we're now at just over 60 million sq ft across the network, with 3,348 locations. The 66 locations added in Q3 were all organic. We're however seeing increasing opportunities to grow our business and develop our multi-brand strategy further via M&A. As we had anticipated, many companies that entered this market are now struggling, and this presents us with opportunities. For example, since the third quarter, we acquired The Clubhouse in the U.K. from the administrator. We can bolt this business into our existing platform to generate attractive returns, but it also adds a brand which we believe we can roll out internationally in the years to come.
We're working on a number of other similar opportunities at the moment, one of which has already been made public, which is Central Working in the U.K. It's about operator number 7 in the U.K. We think that in 2020, we should have a good flow coming from this area as the market inevitably consolidates in the sort of post-WeWork scene that we're in at the moment. We've also made excellent progress in rationalizing our network to improve value generation. We've taken out about 4% of the network, underperforming marginal sites. This, although we take pain as we do that, mainly non-cash pain, writing off some assets that we can't reuse, this will add to returns in future years. In line with our strategy of lower risk and more capital-light growth, we're experiencing excellent momentum in our franchising activities.
Interest is very strong. We significantly grew traction in this area. Our team, by putting in the experienced M&A team, one of our problems has been, and it's a quality problem, but quite frustrating, is that we've got so much demand, we just didn't have enough people to deal with it. We now have those people, and we are dealing with it. Again, the move here is not just trying to sell our businesses for cash. This is all about finding the right partner. If we find the right partners, that really sets us up for the next stage of our business' growth, which we think will be the most exciting stage that we've seen so far. Again, we announced on Monday, Switzerland, this goes along with Japan and Taiwan, already completed, but also multiple other smaller franchise agreements.
We've now got 26 franchise partners across 31 countries, combined commitments to add over 330 new centers. That excludes anything in Switzerland which has not concluded yet. We've signed, but not completed. As announced today or yesterday, the strategic partnership with Safra and Peress Group. We have 38 centers in Switzerland. Gross consideration, CHF 120 million, about GBP 94 million. Completion at the end of the month. Fantastic partner. Lots of real estate experience based in Switzerland. Peress Group and Safra, huge opportunities going forward. Switzerland is a great market. We'll complete it more quickly with this partner. Through our improved trading, moving to cash, our improved trading and our franchising strategy, clearly record cash generation. Cash flow, pre-investment and growth totaled 466 million, or just over GBP 0.52 a share. This doesn't include the CHF 120 million gross proceeds from Switzerland.
That will complete at the end of the month. It does leave us in a very strong financial position. Net debt substantially reduced year to date to CHF 301 million, which represents a leverage ratio of just 0.8%. 0.8 times, sorry. This ratio is at 0.4 times if you take the property away from that, the property CHF 60 on our balance sheet at the moment. With Switzerland, the debt will reduce to 2.2 times. We're in a pretty good position, I think, cash-wise, and we also have very strong debt capacity to use if we need it and the right opportunities come along. In summary, good sales activity is translated into strong sales revenue as occupancy increases and our newer locations develop strongly. We've grown the network coverage through company-owned investment and growing momentum in franchising, and with all of that, record cash generation.
Good financial position, and I think prospects looking very exciting as we go into 2020. With that, I'll hand over to Eric to discuss the performance in more detail.
Thank you, Mark, and good morning to everyone on today's call. I will look at the financial performance in some more detail. Let's start with the third quarter, specifically. Group revenue in Q3 increased 9.4% at constant currency, and with a tailwind from prevailing exchange rates, was up 13.2% at actual rates to CHF 692.3 million in the third quarter. Revenue from open centers, a better indicator of the future, was up 19.5% at actual and 15.5% at constant currency. Still on Q3, pre-2018, like-for-like revenue growth was up 3.3% or 7% at actual rates. This reflects the ongoing development of newer year groups added to this space, but also, as Mark just said, the much improved trading performance of the business, which we saw in the second half of last year. Occupancy for the third quarter increased 2.2 percentage points to 76.4%.
Many countries have contributed to this improvement, as we say in today's statement, including the U.K. It may be premature to call this an inflection point for our U.K. business, it's very encouraging to see positive evidence that the actions taken in the U.K. are benefiting our performance. Let's now look at the first nine months' performance. Group revenue for the nine months to 30th of September increased 9.9% at constant currency or 12.6% at actual rates to GBP 1.99 billion. Revenue growth from open centers over the same period was very strong at 15.4% or 18.3% at actual rates. Pre-2018 revenue increased to GBP 1,724.8 million, up from GBP 1.6 billion last year, which is an increase of 4.7% at constant and 7.3% at actual rates.
The improvement in occupancy is also reflected over these nine months, with an increase of 3.1 percentage points to 76%. On investments, we invested CHF 249.9 million of net growth CapEx after partner contributions of CHF 165.9 million in developing a leading network in the nine months to September. The investment in Q3 was CHF 64.4 million, net of partner contributions and CHF 134.9 million gross. These numbers illustrate the growing contribution to our network growth from our partners. We also have more visibility at the end of October over our growth pipeline for the whole of 2019. Currently, we see net growth CapEx for 2019 of approximately CHF 280 million, and that's roughly 260 locations and 7.5 million sq ft of new space. As Mark said, we have been increasingly proactive and accelerated the rationalization of our network. In total, we've rationalized approximately 4% of the network year to date.
We expect this activity to continue in the fourth quarter and into the early part of 2020. While these actions have a very positive impact on the future performance of the business and shareholder creation in the future, there is in the short term a negative impact on profitability. In the nine months to 30th of September, the impact was just below CHF 28 million. There will be more to come as this rationalization program continues in the remainder of the year. To end with our financial strength at the signing of our first strategic franchise deals, which raised gross proceeds of CHF 436.8 million. That's the sum of Japan, Taiwan and Switzerland. We made it clear that with our interim results that we are focused on shareholder returns. As well as committed to a sustainable and progressive dividend policy, we believe excess cash should be returned to shareholders.
To this end, in August, we announced CHF 100 million share repurchase program. During the third quarter, we acquired approximately 5.5 million shares for a total consideration of CHF 22.4 million. This share repurchase program continues in the fourth quarter. Thank you, and I will hand back to Mark.
Thanks, Eric. In conclusion, we remain confident in our leading global position in this exciting market. Sales activity has been showing very good momentum across all the trading groups from the pre 2018s to the later groups of 2018 and 2019. Occupancy continues to improve as that translates. We've got strong momentum in our enterprise account business, larger accounts. We're winning more accounts and doing business with the accounts we already have as more and more of them decide to either expand or convert to a more outsourced approach to a larger part of their business. Forward order book, very healthy and in a much stronger position than it's been for several years as we look out to 2020. We've got excellent momentum in the franchising model and we look forward to reporting further progress as we go through the next couple of years.
I've said on many occasions, this will take a couple of years to execute as we are very choosy when it comes to who we are partnering with. Financial position is strong, a prudent approach to risk and a balance between growing and giving returns to investors. We're very carefully weighing things up as we go forward now. New accounting rules are helping us. More and more companies are starting to look at this and these long-term leasing liabilities that are translating onto the balance sheet will start looking more and more like debt as the years go by.
I think the other big change is really that underlying everything apart from lower cost is that there certainly seems to now be more of a trend for workers wanting to work closer to home, not at home, and companies starting to consider whether that helps in sort of saving the planet if they can reduce commuting. Underlying that, of course, is much cheaper, and it's what the workers want. It can be quite an interesting mix. Certainly in particular in the U.S., we can see companies starting to think and act that way, which could be very good for us. Again, what's important then is a lot more development into smaller towns and cities, so that you can actually have somewhere to work closer to where people live. We are the industry leader. We've got a great business.
We're confident in our ability to continue to grow as we move forward. We think we've ticked many boxes. We are paranoid in terms of our way we think about our business and what can affect us, but we've spent our time ticking positive boxes. This is a business that benefits from scale, but it's not just about size. You need to be diversified. You need to be global. You need to have multi-brands so you can give a lot more choice to customers in price and work style. You need to get those ancillary revenues. If you don't, then you have no possibility of making money in our view. We think that the timing is working on our side at the moment.
We think there's going to be a very big opportunity in years to come, both in growing through our franchise partners, in consolidating the industry, and we think overall, the interest in the industry as a whole from a customer demand point of view, will just continue to grow. The customers will be looking much more to the quality of the provider and not just the notoriety of a provider. With all that in mind, we're quite excited and optimistic about the future. At the same time, we remain cautious on the point we are in the cycle. We remain steadfastly in cautious mode. We continue to grow, but we do so in a way that is very risk-averse. We're very focused on return on capital.
The discussions we have with our franchise partners are all around the same as they grow their businesses. It is all about maximizing return and minimizing risk. That being said, as we come towards the end of 2019, in the best position we've been in for many, many years. It is with some cautious optimism we look out to next year. With that, I'll hand back to the operator, who will explain the procedure for asking questions.
Thank you, ladies and gentlemen. We will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star one if you wish to ask a question. Your first question comes from the line of Alexander Meeth from JP Morgan. Your line is open.
Thank you. Good morning, gentlemen. Two questions, please. Firstly, Mark, I'm not sure if it's possible to generalize about pricing. Given occupancy is strong, I wonder if you can pull out any general statements about the direction of pricing at the moment, particularly given your comments around the economic cycle. Secondly, I wonder if you could just explain a little bit more the rationale behind the accelerated rationalization of the network, just with regard to how it fits into the strategy around franchising, please. Thank you.
Okay. We're gaining occupancy at slightly improved pricing, is the short answer. You'll notice that we don't talk about pricing in this document, That is because it's mainly occupancy, small pricing. Clearly, if we move the occupancy further forward, there may be more pricing opportunities. Thus far, this is about occupancy. Our objective is to continue to move that occupancy up through next year. Maybe there'll be some pricing opportunity. There's typically, again, I'm generalizing, There's a lack of property inflation. On average, we're not seeing rents move up, the underlying rents, That would be one of the causes of pricing increase. We're not seeing that. In fact, I would say that we're seeing quite benign average rental increase. We've got quite a lot going down now, which helps us.
I think on the rationalization, this is basically a painful exercise, and I've talked about this on several occasions on previous calls and meetings. This is sort of tidying up older centers and marginal performers. It hasn't really got anything to do with the franchising business, but it has got to do with just the maximization of profit. It is a long process, and it's one that started over a year ago, pretty much when I sort of came back and got much more involved in running the business and sort of post the going right back to the private equity interest. This was a job we had to do, and it's a job that private equity would have done. We've just got on and done it. It's closing marginals and retaining the revenue. It costs money in the short term, not really in cash, but write-offs.
The returns on that cost of write-off are attractive. It just takes time to do. There's a bit more to do this year. We should be pretty complete on this by Q1, Q2 next year. It's just the final parts to do.
That's very clear. Thank you, Mark.
Your next question comes from the line of Michael Donnelly. Your line is open. You may ask your question.
Good morning. Just two from me. Eric, could you give us some guidance what the average fit-out cost per square foot is for the franchising locations that you've been dealing with this year? The second question is on the CHF 28 million of broadly non-cash costs for the rationalization. Can you just, in any way, split that out into profits and the closure costs? So, the profit or the loss that you're removing from the P&L, and then the one-offs that you take above the line to close them down. Thank you.
Maybe, Erik, can I ask just a question? Your question on the fit-out costs for franchisees, just explain that one again.
The total fit-out cost per square foot for the locations as they accelerate their growth, which is part of the rationale for doing the deals. I'm just wondering how much, not necessarily who contributes it, but how much it's likely to cost on average to fit out these locations.
It's for a franchisee, not for us. If it's a franchisee, we do not put the investment in. It's the franchisee who is investing the capital.
How much would it be per square foot?
It can be anything from zero to GBP 40. It's around about GBP 40. It depends where it is, what it is. That's a very elastic number. The cost of doing it in Brunei, not the same as the cost of doing it in Central London, for example.
Understood. That's really helpful. Thank you.
When we're working with franchisees, franchise partners, these are business people. It's return on capital. What this business enjoys and always has done is, if it's run properly, you get exceptionally high returns on capital invested. Pretty much without calculating any additional benefit from leverage. That is what the franchise partners are interested in. If they can invest and make returns on capital that are unleveraged 20% plus, that's why they invest. They buy the platform, make a return on that. It's about completing the platform, scale benefits in a country as well, done well, it just becomes very beneficial, both return on capital. Finally, you get the icing on the cake is the national network, where you get even higher returns because you have full coverage.
Maybe we can talk to you about that offline, Michael, and give you a good bit more information. In terms, if you take the CHF 28 million, just to understand your question, you're saying, of the CHF 28 million, the benefit, sort of conversion into profit, or?
No. Is all the CHF 28 million one-off non-cash costs associated with closures? Presumably, you're also losing some, let's say they were all break even, then it would be zero profit would be in that. Is the number zero plus 28 or is it one plus 27 or is it minus one plus 29?
Sorry. Erik, do you want to have a stab at that one?
Yeah. We'll try to find out what exactly the split is. It's much more a closure cost than a profit leakage, if you will. Rather than guessing, make sure you give everyone the right.
It's hardly any profit leakage. Otherwise, you wouldn't be closing them.
Yeah.
We're just.
That's great.
We've taken a much more aggressive stance, so we know. We're just running the business incredibly tightly. Very often, the margins can be because someone tries to increase the rent on us. Whereas before we may have weathered it, we don't now. We just move.
Yeah. Maybe a bit of color around these costs. It works out to be, what is it? CHF 8 or 9 million a quarter, roughly. I think if you look at where we are doing those, and the 138 that we've closed so far this year, it's very evenly split in those four regions, and across the Americas, Asia, EMEA, and the U.K., roughly 30-35 per region. It is across the board costing similar money per those regions as well. As we said, it is related to closure costs. There will be no reason to close something that is making a profit for us.
Thank you.
Okay. Thanks, Michael.
Next question comes from the line of Kartik Kumar from Artemis. Your line is open.
Hi, Michael. I was just wondering if you could comment on the impact WeWork's had on the market, and particularly perhaps on you in the last few weeks. Sort of referring to reading about winning business in Canada for Spaces, and the sort of FT articles about slowing down capacity growth in London. The second question, I was just wondering if you could comment briefly on a bit more on the inorganic opportunities that you mentioned, say, taking Central Working. I was just wondering what the economics look like when you bought them and what the return on capital is, and also, what the sort of pipeline of opportunities in terms of scale might be there.
Okay. Good question. Let me deal with the WeWork one first. WeWork are in the process of reorganizing. We know that. Good new management, Marcelo Claure is, we think, an excellent manager. There's a huge legacy problem, sort of mountainous problem that has to be dealt with, which is all the commitments from leases and lots of some profitable but a lot of loss-making operations. It will take them time to reorganize, and clearly there's been damage to the brand. That has led to a flight to quality. First impact is companies that were going to them are now more cautious about going to them. They've also sort of put the prices to the right level and aren't giving crazy discounts and/or broker discounts and all sorts of things that they were using to buy the market.
Just to be clear, when you look at our third quarter numbers, most of that third quarter was with WeWork going through absolute extremes in terms of trying to drive revenue growth, and yet we had very good revenue growth. The impact of WeWork doesn't really affect the third quarter because it happened at the end of it. What it has done is led to more demand for us, and it's created an even brighter spotlight on the industry. My taxi driver on the way to the airport on Sunday, black cab driver, was telling me, he didn't know who I was. He was telling me about WeWork, and I'm not sure if that's a good thing or a bad thing, by the way. The knowledge of the industry went up by many notches during that whole period. That is definitely helping us.
The key benefit is yet to come. One of the things that WeWork was doing was giving people hope. Lots of people, lots of investors backed entrepreneurs who set up in this industry, multitude of them. They put good money in, bit like SoftBank, but small scale and backed people that said they were entrepreneurs, but many of them couldn't run a business. It is an easy business, low barriers to entry, hard lots and very high barriers to making money. The effect of WeWork is it sort of the balloon got punctured, which was the balloon that said, yeah, you could sell your business at 20x revenue. That became myth. The reality of you need a business that actually makes money, otherwise it's worthless, and investors have stopped investing.
Investors now will not buy in anymore, generally, to these sort of hockey sticks that never arrive in the hope of an exit valuation. There's a steady stream of people that are in financial difficulty now. Clubhouse we did, Central Working we're doing at the moment. There's a number of others, and it's worldwide as well. That is the real effect, and it will lead to consolidation. Why would we want to do it? The economics are for them, generally, even if they're good at running the business, and most are average, some poor, they don't have any economies of scale. Their overhead completely submerges any gross margin they have. It's just a loss-making proposition. Clearly, if you can use synergies, these things can have value. Central Working has value, but you have to eliminate the cost, otherwise it is never going to work.
On the one hand, I think there will be many of these opportunities that will arrive in the next 12 months. On the other hand, there will be perhaps more significant opportunities to consolidate from other players that may be good players. There's always the possibility of events unfolding. We are an industry where scale is a key winning factor. It could be some of the other players that we have been talking to over the years that sort of may come to the party in 2021. We're in a very good position to have the right discussion at the right price at the right time. I think inorganic growth could be a bigger factor in the coming year. This we would do. It doesn't interfere with franchising because we would do this with our franchise partners when those opportunities come up.
Mark, thank you. Sorry, may I just follow up on one point? I was wondering how, if you could give your comment on how competitive Switzerland was, because I know you previously made a comment that Japan was competitive from the franchise-?
Switzerland was also competitive. We had a number of buyers for Switzerland. It wasn't one.
In the end, we choose one to go exclusive with, as you typically do in these processes. You run them down to a handful, and then you choose one. With that, we did a deal.
Yes. Brilliant. Thank you. That's it from me.
Your next question comes from the line of Andy Grobler from Credit Suisse. The line is open.
Hi, good morning. Just one from me, if I may. Just in terms of the franchising deals, could you talk a little bit about your pipeline of deals that are still out there, and just the extent to which the partners you're talking to are property-related counter parties rather than people with franchise experience? I suppose there's an add-on to that. To what extent are those partners looking at the revenue synergies for their existing business by owning parts of IWG rather than just the assets themselves?
Sorry, what was the last one?
When your partners are looking to buy a range of.
Yeah
franchise agreements with you, to what extent are they thinking about the revenue synergies for their existing business?
To maybe deal with that first, Steve. It is interesting that some, not all, but some of the franchise partners see it as very synergistic with They like to buy and own property, and they can add this into properties they own or would want to buy. That is an interesting area. They can and will, I think, combine, not all of them, but combine some property ownership with the operation. I think, in answer to the first part of your question, that it's a mix between the two, franchise specialists and real estate specialists. Some of the real estate specialists, some in the middle, do both the real estate specialists and franchise specialists. It's about 50/50. If you look at some of the bigger ones, you've got people coming at them very much from a property angle.
Where they have substantial funds, it makes a lot of sense. If you believe that this is the real estate of the future, the ability to combine both can make the terms even more attractive because it adds a whole new level of efficiency.
Thanks, Doug. In terms of the pipeline, over the next six months, how are you seeing that shape up?
Look, the pipeline's busy. What we don't want to do is get into any sort of situation where we're over-promising here. Look, the underlying business is doing very well anyway, so there's no rush. We've got lots of things now underway. Lots of discussions, some transactions underway. They take time. We would expect that there'll be a steady stream throughout the next year of announcements as we do small and large arrangements. It is time-consuming. Every one of these partnerships is very important. It's a big investment for them, and it's a big commitment also from us, so we're being careful in what we do. So far, so good. The partners we have so far, excellent. They're accelerating growth. Lots of good ideas on how to improve things. It's very symbiotic.
I'm seeing the sum of the parts is more than just a financial transaction here.
Thank you. Thanks very much.
There are no further questions at this time. Please continue.
Okay. If there's no further questions, I thank you all very much for your time this morning. As always, we'll be available if you have any follow-up questions that we can clarify in the coming days. Thank you all very much for joining.
That does conclude our conference for today. Thank you for participating. You may all disconnect at this time. Please stand by.