Earnings Call: H1 2018

Aug 6, 2018

Wayne, how are we doing time wise? Get it started. But I've always wondered what it would be like to be a headmaster actually, for standing here to be in this, old school, something similar there. Good morning, everyone. And, welcome to our 2018 interim results. So first of all, as you would have seen, yesterday, we announced that we've terminated talks with the various interested parties in IWG. This was following a period of significant strategic interest in our company. We examined this interest carefully and thoroughly, but I would simply draw your attention to the last bullet points on this page. And we are very confident in our ability to create value as a standalone company, and we'll only consummate the transaction represents sufficient value for shareholders. So turning to the results, the good news is that we saw strong top line growth across our business. With, open center revenues increasing by almost 10% and group revenues rising by 7.1%, both at constant currency. Revenue from our mature business, which now includes the openings of 2016, increased by 2.4 percent to 1,100,000,000. This reflects improving performances across most of our key geographies. At the center level, this performance has allowed us to increase the gross profit margin by 60 basis points to 19.7%. Group operating profit is, however, around 1,000,000 as we've targeted more investment in overhead to both strengthen the business going forward and also to support the additional growth levels that we we have globally. The investments are going into more marketing, building up our corporate account sales teams. And, of course, all the extra costs you get, when you open a significant amounts of space. There's a lot of upfront costs, but we are confident we'll reap the benefit of these investments in future periods. Our ability to convert profit into cash remains an incredibly attractive feature of our business model, And in the 1st 6 months, we generated cash of £75,700,000. This before net growth expenditure. This coupled with our view of the outlook for IWG in this exciting growth industry with this with the outlook for our industry we've announced today, an 11% increase in the dividend. Thereby, thereby maintaining our progressive dividend policy. Furthermore, we have announced a share buyback program and we'll supply additional information on share buyback activity periodically. We'll update on that periodically. So just a slide on the UK, whilst we're pleased with performance overall, just wanted to use this slide to update you on the clear plans that we have in place for our UK business. 2018 will be a transitional year. But it's a year of transition that will put the UK business in great shape for 2019 and beyond. So our plans are focused on a few areas. Firstly, we've been busy upgrading centers in just at the moment, as an example, we have 11 major refurbishments underway. Now this obviously involves investment, but it also means you have an interruption to revenues and clearly profits as these centers go part or fully offline for refurbishment you still have all the costs. You just don't have the revenue. So that that has been part of our issue in the first half. But, again, once those centers are refurbished. We can see them coming back strong. There's plenty of demand in the UK. Secondly, we continue to invest in expanding our estates. So we have great performance in both the 2017 and 18 new additions in the UK. These are performing strongly. This is an indication again that we're doing we're investing well on the one hand, but also, you know, that that it's not a problem with the UK. The UK is a good place to invest. There is plenty of demand for what we do. It it it is it is just a question of the restructuring of the older business that we have in the UK. Once that's done, we think we can get the UK back back to a a a a good performer. And a good addition to the group. We're also investing in the things I mentioned before better sales and marketing effort, more investment behind growth, corporate accounts and investment into basic customer service in the UK to improve improve that. So every single aspect, underway comprehensive plan, get this UK business to be best in the world, very possible for us to achieve that this year, but it is a year, of transition. So, you know, demand for our industry, I mean, this is just a this is a summary of a a a report that was done, where 18,000 business leaders were interviewed in 96 countries. So variable. These are some of our customers, but most of them, not our customers. So we we do this survey each year to test demand and look for what companies are looking for in the future. But when you look at these numbers, don't you don't have to read the details. They're just all high 80s, early 90s, as a percent of people interested in our industry. So what has happened is over the past couple of years in particular, this year, our business become even more mainstream. So this is at a business a business tool that is absolutely now on the agenda of nearly all medium and large corporations in most countries in the world. So and and this is reinforcing it. I think it's good for their people. It's what they and what their employees want. It they know it's gonna save the money. They know it's off the balance sheet. They know it gives them more flexibility. It's obvious. The question is why aren't we doing it already? I've talked to you before on many occasions about us getting more corporate business. So corporate business is companies of of a certain size that are using us in more than one location. Systematically, we're getting more and more of those every single month. And, you know, that's one of the things that is helping revenue growth, and has helped it in the first half. And that is another reason why we're having to strengthen even further our corporate account team to keep up with, and some of these conversations are complex significant size. It required more people. Those people have been added, and we will add more in the second half. So You know, we just to take, again, stand back and look at who we are, what we are. You know, what we think is that we are uniquely positioned to service this growing demand. We've got the leading physical network with over 3200 locations, in over 1000 cities. We're pretty much the market leader in every country we operate in. You know, many others claim that somehow they're the biggest this or the biggest that, but we budget share the sheer size of our networks really to pass this, anything else that's out there. We've got a unique suite of multi brand products to address different customer requirements, absolutely clear that cuss not all customers want the same thing. The ability to offer different price, different work style, is is working and working well. And we also continue to invest in our digital capabilities, what is critical for a company like ours with 2,500,000 customers a huge number of new demands each week each month is the ability to interact with customers in a in a digital way with great digital platform. So a key part of our, a key part of our business, of our model, it's not only a great property platform, but also a digital platform that sits over that and that allows us to interact, with our customers. On top of that, we've got by far the most cost efficient operating model. So if you look, there are many competitors out there their overheads are just they're just a multiples of hours in in in percentage terms. And we believe that this will increasingly become a very strong and important competitive differentiation as we move forward. So we will continue to focus on on ensuring that we find efficiencies all the time, both as we grow just the efficiency of having more scale, but also in everything we do. And that's a lot about converting, bringing more digital into the business to get even smoother self servicing interactions with customers, which is what they want. It's much, obviously, much cheaper for us to manage. And it's much more immediate. So with all of this in mind, we believe we're in a great position and reassure that we'll be able to keep driving shareholder value. So, again, we've highlighted this during the first half. This has been a period where we've accelerated our network growth. There's growing demand. That's very clear. We want to satisfy that demand. And so we have expanding our network at a much faster pace than we have done in previous years. This year, we've invested over 130,000,000 of net growth capital expenditure, and we've added 2,800,000 square feet of new space 132 locations. What's important to understand is almost all of that growth was organic. In most years, if not all years, we're adding acquisitions, sometimes quite large ones. When we add acquisitions, they come in the higher price that they come in with profits. This year, above the 132 locations, so far, a 120 were organic openings. So those organic openings have a lot more upfront costs and clearly, have a lot more drag on the profits because you have all the costs and other revenue. So they're different to acquisitions. It's an important difference this year. We've also continued to be successful in working with partners to drive capital efficiency and lower risk with a we've got about a 40% of these organic openings with earning various forms of partnering deals with, 100 of partners around the world. Where we built further on the base. We've already achieved a very strong rollout of spaces. And we added 45 new locations, taking the total to 30th June to 124 locations. There's a lot more coming in the second half. And just going to get it into perspective about the end of this year, beginning of next year, first quarter, our spaces, which is identical to WeWork, will be about half of their current size. So, you know, we we are catching them up quite quickly. We're in more countries and these centers are performing very well. And by performing, we like to have things that make a profit. So, you know, we're we're happy with with the performance of these new locations. Overall, global no no global networks up to, over 3200 locations now, 54,000,000 square feet of of of space. So let's just take a look forward. What's still to come. So as a reflection of our confidence, as well as the strong returns developed from recent openings, we've got significant a significant growth pipeline for the remainder of the year as well. So just to give you our estimate for the whole year, we expect to do about 275 locations and about 6,700,000 square feet of space. Remember, as we're doing large format spaces, the amount of space per location has gone up quite a lot. So that's a lot more space added. So it's important to focus on square meters and square feet. Not just locations. Just to put that in perspective, the 6.7000000 Square Feet is the equivalent to the entire restates of most of our competitors. Just that's what we added in the year. Just to get in perspective, this is a lot of growth And, you know, this took us probably 20 years to get to this stage. We've just done all of 20 years work in 1 year. So it it's it's quite a big undertaking. And we expect about 40 5 percent of that space or the 45% growth rate in the organic growth this year. So that's an investment of this year of about 230,000,000. So that's what we can see at the moment, and, you know, that's we're a long way through the year. But maybe, you know, we can answer questions later on what we'd expect that to be higher or lower. So with that, I'll pass over to Dominic to talk to the financial review. Thank you, I would like to kick off with the group income statement. Mark mentioned already at the beginning, we had a good start in terms of growth in revenues. Our open centers had a growth rate of almost 10% in the first half, which basically means in the second quarter, double digit revenue growth of our open center. Our reported revenues were up 7.1%. However, after the adverse impact of currency movements, the revenue increase at actual rates was 2.9% as you can see. Our revenue growth in our mature business was this 2.4% solid in the first half of twenty eighteen. We experienced a lot of market good revenue acceleration and looking to our biggest markets globally. We posted just the exception of the UK very solid to strong mature revenue growth rates. So some of our biggest markets had even double digit mature revenue growth rates. But it's very encouraging. It's a strong sales trend in terms of new sales activity. And how it's reflected in our forward order book. So basically what we see in the business in terms of revenues coming in, in the second half. We see in the majority of our market strong sales trends for the total business business but also for the material business. So on the one hand, we're filling our new standard, the 1780s, the new openings but we see also clear occupancy increase in our mature business. If we look to the investment into overhead, we have done considerable investments. So excluding the recognition of the negative goodwill, on an acquisition of 6,200,000 underlying overheads as a percentage of revenues, 11.7%. This is industry leading and a strong point of differentiation for us in a competitive market. Effective tax rate was 20.1% in the first half. And our expectation for the full year with the around this 20% level. Finally, an increase of the interim dividend of 11% was announced yesterday. On the next slide, I presented the revenue development year on year for the first half, the upper part of the slide, and then sequentially. So from Q1 to Q2, on the lower part of the slide. Estates the waterfall chart, which walks through the development of our business based on the contribution to the overall movement, the 2.2 percent, which you see for the mature business is not comparable with the year over year growth of 2.4% in terms of material revenue growth. In addition to the growth in material business, which added 2.2% as such said, with a very positive contribution from our 2017 2018 openings, adding additional 7% to our total revenue growth in the first half. Our new sensors, which we opened, performing strongly as we also said in our statement, Yesterday. The chart also highlights the negative impact from closures in both periods. In H1, FX was a negative, but as you can see from the quarterly sequential chart on the bottom, the current environment became more benign in the second quarter. So looking to the sequential development, we see a nice pickup in our mature business, adding 2.4% sequentially. This is, of course, partly also related to the seasonality. But also underlying improvement. Then the continuous moderation of the 20 7, 2018 Estates added additional 2.6% sequentially, while the impact of closures was negative 0.5% and currency sequentially was the benefit of 1.7%. If you then have a look to the gross margin development, as Mark already said, our your business increased gross margins. The gross margins were up 60 basis points, which is solid, and this is a positive feature since the beginning of this year after having had several quarters of a declining trend, when it comes to mature gross margin. We then had incremental losses on the new openings of 6,400,000 reflecting stronger growth reflecting more organic growth and you also see, the impact of closures of 12,900,000 So both items are very important investments, so to say, for strengthening our earnings, but also our cash flow profile in the years ahead. As a consequence, taking all these parts together, the group gross margin reduced in the first half from 18.1% the prior year to 16.2%. If we now have a look to our mature performance by geography. With the mature business back into revenue growth, we have been able to improve the gross profit margin. What we can see from this table is that it is where not for the UK performance, the margin performance would have been considerably better. The mature performance has been driven primarily by the Americas, our largest region accounting for 43% of our mature gross profit and Asia Pacific. There's also a very solid performance from our business in EMEA, for which we see strong improving trends in the second half of this year. The improvement in our 3 largest regions underpins our confidence looking forward. In particular, the good performance in Americas is after absorbing and more challenging conditions in Latin America. The U. S. Is growing strongly and Canada has maintained its already high level of double digit mature revenue growth. The improving sales momentum is a positive trend and is expected to deliver total and mature revenue growth acceleration in the quarters to come. After having significantly improved our cost leadership position in recent years, we took the cautious decision this year to strategically invest into overhead, deliver the growth achieved and planned, as well as to unlock the potentials we see for IWT in a very exciting industry. The increase in overhead of 11% is primarily count additions into growth organization, corporate accounts, a strong focus area, as well as marketing spend and other growth related investments. These investments in the first half were partly offset by the recognition of the negative good way. For the full year, we expect a similar year on year cost increase as reported in the first half. Looking forward, we are convinced that these investments will allow us to scale our business further, which will bring further efficiency to it. Moving on to the gross margin before depreciation. The year group's 15 shows an improving gross margin trend, while the younger years are ramping up as planned. All through this does not automatically translate into better returns performance. It is a good indicator that things are moving in the right direction. The slight decline of the 2014 and older state reflects the only modest growth we have so far achieved this year. However, we expect that given the sales activity, which we are seeing, revenues going forward will accelerate and with this, gross margins will improve as a lot of this incremental revenue will, to a large extent, drop down to profit. The trend in respect of gross margin development are reflected in the development of our charts. However, the year grew 15, and as Mark mentioned, there were also a lot of acquisitions in 2015, as well as the 14 older states, has have had incremental maintenance CapEx, which impacting, for example, the 2014 and older estates, the returns by roughly 110 basis points on a one time basis. Given the organic nature, Of the 'sixteen, 'seventeen and 'eighteen estates, we believe that in particular, this year, proofs will show in the midterm supplier returns. Even though operating profit is down the 1st half, we're showing a strong cash conversion as a result of good working capital inflows. We continue to spend more maintenance CapEx and head from a time important of you in the first half, a slightly higher outflow when it comes to tax payments. Leading to a cash flow before net growth CapEx of $75,700,000 in the first half. With the strength of this guest conversation, we have maintained a healthy and prudent balance sheet with a net debt to EBITDA ratio of 1.1 times. Furthermore, we have 140,000,000 pounds property assets on our balance sheet, which we, at the start moment, intend to monetize for an appropriate price. As obviously, our strategy is to look towards a capital light model. Finally, I would like to update you on the RCF, which we have increased in May end of May this year from 550,000,000 to 750,000,000, and the maturity was extended by 1 year to 2023, which provides additional flexibility to run our business. And with this, I hand back to Mark. Thank you. So in summary, we're pleased with the acceleration we're seeing in some of our key key growth regions. Particularly America, Asia Pacific And Europe. This reflects strong local management execution and the benefits from group wide initiatives. As you know, the bin business continues to generate considerable cash flow, and this is what allows us to invest significantly in our business while distributing capital to shareholders. As it relates to the outlook, we're seeing very strong sales activity, and we have an order book that gives us confidence momentum will be sustained into H2 and beyond. We also have a strong pipeline of growth investments to capture the in to capture industry growth is going on, and we're confident that these in turn will deliver excellent returns. At the same time, reflecting our excellent cash flow, we are establishing a buyback program alongside a based dividend policy. As global leader in an exciting growth industry, we look forward to the future with confidence. And with that, thank you for your attention. We'll be happy to open up to questions. Andrew. In terms of the various bids that weren't executable or recommendable. And as part of that, what have you learned about your business from all the work that was done? What changes might you make going forward? I think, well, what happened was, I think, timing more than anything else, you know, this sort of extended takeover with 2 extensions It just just went on for too long. So it is a distraction for the business. You know, the bidders did a lot of work. But I think the board felt that, you know, they've had enough time and there wasn't anything there that would say, you know, it's worth doing another extension. So it's a question of just bringing it to a head. So when it says executable kind of pronunciations, what does that mean? Does that mean that nobody was coming up with some with a coherent offer that made sense or what? I mean They're from price. Look, without going to the detail because all of the stuff is NDAed and so on. And and, you know, we could stand here and talk for an hour or 2 about what may have happened. And what happened. You know, this this is, in the end, the board made the decision unanimously that enough was enough. We need to focus on the business And there's huge value in the business. I mean, again, coming back to your second question, if I can answer the second question, it helps out the first question. Know, we had a lot of very smart people, you know, 3 separate bidders here who did, who forced us to do a lot of work. And in doing so, sort of helped us with the road map of what could be achieved in value creation from what we already have and from what we would do in the future. So it you know, this was a a difficult process, but a very intense evaluation and interrogation of the business. So number 1. Number 2, because of all the publicity that surrounds these things naturally, you know, we've had interest that's come in from different parts of the world, not not to bid for the company, but to say Look, we we like this space. We see what you're doing, and we can clearly, we can see what we work and others are doing. But we like your platform, would you be interested in doing something with us? So if you come back to our strategy of partnering, what we see is there's a lot more upside in more significant partnering in some of the different countries we work in around the world already, but getting those more on 2 steroids, if you like, by partnering up with strong local players. So partnering's 1, lots of focus on every number in the business. There's lots of just low hanging fruits all over the business. During the process, we got focused on releasing those. So there's a lot of programs in place. That can release more cash in the medium term, without any more investment. And some things that require more investment that again, equally in Dominic referred to them. And I referred to them, you know, investments in overhead that we make today to extract more return in the future. So, look, this was a lot of extra work, but it was very worthwhile. You know, we couldn't go on forever because we think we've got a very attractive asset here and not one that we should, you know, sell the wrong price or on the wrong terms and also one that we have to wait forever for for the right offers to come through. It's still, you know, basically the door is closed for the moment. We'll see what happens going forward. Hi, Andy Grover from Credit Suisse. Slightly more micro questions, if I may. You talked about the UK and some of the impact of the refurbishments. Could you just talk us through how much that's costing you this year? And kind of what the benefit is going to be into next year on a sequential basis. And I guess also, is is that it, or is this going to be a normal and larger part of the business. I know you've always done this, but it's become a bit bigger. It's something we're just gonna have to accept kind of every year going forward. On the UK, you mean? Well, on the UK end and across the broader business, 2. And then secondly, just on debt, what are your I know you've got the buyback, which might vary, but as of now, kind of pre buyback, what are your expectations for debt at the end of the year? Let's just look at the let's look at the UK first of all and just deal with the UK. So UK UK is a special case, a unique case, and it all it's all tied in with There are lots of unique things about the UK that make it dissimilar to any other country in the world. The nearest equivalent is actually only Australia. And that's because of the way lease structures work, the way incentives work, the fact that in the UK, there's a lot of acquisitions. We consolidated the UK in the in the early 2000s on weakness brought things very cheaply, great returns. You know, there's what we're doing now is reas you know, we've re those are the centers that we're redoing at the moment. So it's the combination of all of those acquisitions, which were great acquisitions in their time, but now, you know, they're coming to the end of life, and there's a whole rash of them. So just just that, you know, you're gonna have an impact in the second half. There has been an impact in the first half. Will there be an impact in 'nineteen yes, but a much smaller one. You know, the transitional year, really the impact year is this year, but we won't finish everything this year. There will be some wobbling over into next year. But overall, when you look at them again, we can only look at things on a very much a center by center basis, and you look at it on a very strict cash investment basis, do we do we close this one? Because we can, or do we reinvest because it's gonna get us a good return on that investment? So quite a lot of the closures that Dominic talks about. Again, this is a closure to reopen. They're not you're not closing to close. But the way it works in the accounts is we're closing them because they're in an older state. You open them. They come into the 18 or 17 estate. Because they're new centers. So your closure to open, but there were a few closures that are absolute closures, and we never open again. Most of them would be you're either consolidating to another center, or you are opening a new center. To bring those customers into. So short answer is more impact in the second half. And a little bit hanging over into 19, but most of the heavy lifting has already been done end of end of 17 and during the course of this year. Bench. Marked expectation for net debt were at the time 1,000,000. What's happened since then? We had the trading update where we, on the one hand, increased the net CapEx was 1,000,000 and lowered the profit guidance between 1,000,001,201,000,000, which brings you to $3.25 to $3.30 before share buybacks, yes? So now it's, of course, then your view how much share buyback, you consider to come to come at that number. Obviously, if you look to share buybacks, we not intending to materially change our net debt to EBITDA ratio. Right? So it's it's whatever you put in your model, you have you have to add to this net debt number before share buybacks. Thank you. And just one slightly different topic on pricing. What are you seeing in your major markets? What are you seeing in terms of pricing? Are you getting an uplift either your sales or market driven uplift? And are there parts the world where you're seeing either competitive or macro pressure? On average, the pricing is improving. I mean, we see month to month good trends. On the one hand, when you have new clients, we have good possibilities to pass on some inflation. So in general, good trends in pricing. So we can see steady. We talked earlier, solid forward order book. There's lots of things going on where the nature of the customers is changing. More corporate accounts, more larger customers. So term has lengthened. Pricing has improved, but it takes all of these things take a while to affect the book. But what we've got is a steady increase, I think, throughout the first half. Yep. Yeah. It's fair to say each month. In price. Yeah. So, you know, that's a good sign. That's pretty much universal. It would be different in the UK, because you've got so much noise going on. Okay. It's different. But what we know is we get good prices on those centers on the centers outside of the noise, you know, again, we've got good pricing performance in the UK as well. So it's pretty universal. Stebel from Numis. Just to follow-up to Andy's point, just on the cost of the new the refurbs in the UK. Was that covered in the CapEx guidance and just a number, if possible, just to tie that off? So if we if you look, I mean, the the the referral of our maintenance CapEx, right? So they are they're obviously in the accounts capitalized. And in the return calculation, it's a cash to cash. So it's kind of expense and the return calculation. And if you look to the maintenance CapEx, for the year, we had the kind of increased than one and a half years ago, and we basically said it will be cross maintenance CapEx total revenues between 4% 4.5%, which is between 33.5% after lender contribution, and this is the guidance. And the UK is the prominent part of it, right? So the UK itself it's less than 20 percent of revenues, but more towards 40 percent of maintenance CapEx, reflecting this refurbishment, which we are undergoing in the UK. And then just on the way you think about the corporate accounts, you mentioned in the statement there are significant proportion of the business now. What proportion of revenues would they now take up if you can sort of put a number on that? And then how do you think about the returns the corporate accounts versus, you know, other, as it were sort of, you know, 1 man, 2 man, 3 man bands, you know, versus that, how does that sort of marry up I think first the text is there was significant part of new stylus. I don't think they're still not a significant part of the overall boast. But they are growing in the base. It takes time to grow the base. So again, what what a corporate counts that people are using you in multiple places. So the arrow contract that we talked to you about whenever it was one year on ago. There's there's they are there are quite a number of companies that have come in like that. Most of them don't want any publicity. But they're multi site deals, long term deals. So they're pushing up the forward order book. When you look at pricing on these, And if you look at net yield on the corporate account as opposed to just the pricing, but if I start with price, price, What we're providing them with is a massive reduction from what they're paying at the moment. They were paying before some big costs. So they are interested in. They want good value, but price is not the main driver because they're already saving. 30%, 40% on their previous previous cost. But what they want is something that's reliable, something that works, something that's good for their people, they want good onboarding. You know, they say they need a sort of white glove service when you're moving, you know, a 1000, 2000, whatever the number. They don't want to have disruption in their business. So the better you do that, that's what they're looking for. So if you imagine the disruption moving lots of people over from one office to another, once you move them in, price wasn't the major thing. It's disruption that I saved in money. Is it right for my people? Am I gonna look good? Because I'm the property guy, It's my job to make all those things work to have no problems. Can I tick all those boxes? Yes. The next thing is, right, well, are they stickier? Yes. They are. Once you get them in, you know, so long as there's not someone else out there, with a similar network that's gonna do it for 30%, say, less than us. Okay. Then they're sticky. And even if there was someone out there with 30%, that's the message, 30% of a very small number, we'd argue that's not the available because that is the margin in the end or more than the margin. So it's not going to be that much cheaper. And it's the aggravation of moving and the disruption of moving, they're only gonna do it for one big safe. They don't don't there's not a continual change that they would make. So that is and that has been our experience for many years. It's not an include up to and including this year. Once they moved, they moved. That's it. So if you look at yields long term, much better overall yield from a multiple site customer, then a very mobile sort of smaller business that can pick up and just move down the road for a better price. I think, also, the investments we've made into systems to make it very easy, So is it the right price? Is it very easy to use? Did we get good customer service? Are the places and the places we want you know, if you're providing those things, you know, the you've got the customer quite some time. And and much less cost of sale. Because when you, you know, one of the one of the issues in our business is the investment into a customer that's taking a couple of desks from you in terms of sales and marketing is not that dissimilar to the investment that you would make in sales and marketing to get a corporate account, taking 1000 people from you. You know, it's not you know, maybe it's three times more effort to get, but it's to get 500 times more income. So, you know, obviously, more and more corporate accounts coming in is a very, very good sum. But we have to invest in advance. We are we have added, but we're still short, of corporate account, senior level people that can convert these deals. Plenty of demand. It's all about conversion. Any more questions? Good morning, guys. It's Cameron Batory from Berenberg. I'm just trying to understand in terms of the, say, H1 to H2 profit bridge for this year. If we say that GBP 60,000,000 of operating profit in the first half, guidance is around GBP 160,000,000 for the full year. What would be the main determinants of the improvement from H1 to H2 2 and kind of what should be seen as the biggest reasons it's going to step up from H1, H2? So if you look to it, Historically, not the last 2 years, but if you look historically to the profit split, it's very common that you have roughly 40% a little bit less of the profit in H1 and 60% or a bit more in H2. The last year was a lot different because last year we had this profit warning in the UK in the 2nd half, which reflects earnings down. We had quite a good first half and slow down. And in the year before, it was, in general, a bit more equal because the year before, if you recall 2016, we kind of decelerate the throughout the year, the mature business, and ended pretty weak at the end. Yeah. So, now what is driving this if you look at H1, H2? The main driver is revenues. There's no question. And this is basically the mature revenues, but also the new 'seventeen, 'eighteen, which kicking in, and this is supported by the, by the fact that we see good revenue trends that, as Margo just said, see a good good pricing trends. But the most important thing is that on the one hand, we have seen since late autumn last year longer contract terms. So the average duration of a contract in general is increasing. So the benefit of a longer term, you get at the end, right? So if you sold something for 7 months, and now for 9 months, there's 2 months benefit coming at the end in. Since we started to see longer contract terms end of autumn last year, it's now into Q2, the time where we see the benefits. And it's not only that end of autumn, we saw it longer term we're selling since then in channel longer term. So we see, in the forward order book, actually, the benefits of longer term for the next, let's call it 9 months. And this is the important driver of revenue acceleration in the second half. Besides this, our sales activity levels, they are kind of solid in the first quarter, but they clearly picked up in the 2nd quarter and into July. So we have strong sales momentum. And this is not only related to new senders, which are obviously empty, and this is maybe also easier to sell. We see this also in our mature business. So this thrives the revenues in that respect. These are the key components. Then on top of it, in general, if you if you want to have switched H1H2 overhead costs in the second half, Increenna will always lower than the first half for various reasons. 1 is, for example, we have now the summer months. So marketing spend in the summer months is materially lower than usually, given vacation times, but there are also other reasons why overhead costs are in the second half lower. So this combination comes to this kind of market expectations. Hi, Sandinoff from Stifel. Just a couple from me. On net growth CapEx, you said 2:30 may be higher or lower. Could you just sort of say whether you think one way or the other? And then looking forward, is are you growing as quickly as you would like? And is the limitation capital or access to property in the right locations? Thanks. Okay. First, I mean, just the reason I was saying this is that we update with what we know. So the 6.7000000 Square Feet, 200 and whatever is 34,000,000. That is what we can see at this time, and we're getting closer to the end of the year. But there may be more, and there could be a few of the even the ones we know could drop out at some point, but there may be a few more. So it's not a finish isn't an end number yet. Second question, I'll I'll be growing quickly enough and what's stopping Well, I I'll answer the second part of that. It's all about funding suitable investments. So Yes. Our plan is to build the platforms in each country because that's where the value is. But you've got to retain a very disciplined approach to investment. Otherwise, you if you've set out that goal and then you you you go and try and do it, you can, you know, you it's our business is all about timing. If you get the timing wrong, you you have a high probability of losing money. So if you look at somewhere like Brazil, which is a basket case, and it's, you know, it's one of our top recession countries. Is turning around, thankfully, now. But at the same time, we've grown that by about 50% all with low risk partnering deals, blah, blah, But, yep, it's sort of that's hopefully hopefully will end up being good timing. You know, in our businesses, the cheaper you can buy the more money you're likely to make. And if you look at our high performing centers, you know, you need good execution, but you also need a very good deal on your property. Good deal on your property. The likelihood of success will be much higher. So, we have, you know, if you look at what we're doing, we've become a lot more disciplined. We've been greatly added to the resource in that area in Investment Management. More disciplined than we ever were before. And I think you will see that the growth we've added in the last of years will be the best growth we've ever done because we're getting better deals, many with less capital, which will give us better return. So if you're measuring things not on a margin basis, but return on capital, These should be good. All things being equal. So if we can find more of these very compelling things to do, we will do them. And we like the market as we see it in the future. You know, basically, economy starts to come off hard. Any country slope down, waits, go to the bottom, grow on the bottom, and on the way out the other side. But you must get the timing right. You hit it wrong. Is is bad. Okay. And there's all sorts of things in this making sure you've got a variety of termination dates and you're not all You don't want anything lumpy. You don't want customers that are lumpy. You don't want your obligations that are lumpy. It's all about making sure that you've got very good blend on the average so that you can flex. That's what we're using at the moment in the UK. And there's lots going on in the UK, but it's the pieces are pretty much aligned well for us to do what we have to do. Okay. And same was the case in Brazil, by the way. So we had to restructure it and we come back. We grow it, and you end up with a much better business. Thanks. Thank you. That seems to be all the questions. Thank you all very much for coming and, we appreciate your attention this morning. Thank you. Thank you very much.