Earnings Call: H2 2019

May 30, 2019

Everyone. Thank you very much for coming along this morning to Johnson Matthews for your results. For those of you who don't know me, I'm Martin Dunworthy, the Director Investor Relations here. We're going to have the usual format today. We're going to have a presentation followed by Q And A. Very pleased to welcome our CEO, Robert McLeod, and our CFO, Anna Manns this morning. But before we start, can I just that everyone turn off or turn on silent, their mobile phones and other devices were webcast today, so just to avoid interference with And without, I will hand over to, Robert? Thank you, Martin and good morning everybody and welcome to our 2018 2019 results presentation. As we've done previously, Anna and I are going to do this in three sections and I will start with the highlights. We had clear aims for the year, deliver a strong performance and progress our strategy and we delivered on these goals. These results are in line with that will strengthen our platform for growth. In the year, we grew underlying earnings per share by 10% led by clean air which performed strongly as expected. Efficient Natural Resources saw good sales growth and we delivered strong margin improvement from improved efficiency and higher PGM prices. In Health, changes we made have improved our footprint positioning ourselves for growth. And in Battery Materials, we continue to make significant progress. We have leading technology in in ELN O and are now investing in its commercialization which will deliver breakout growth over the medium term. Our return on invested capital was 16.4 percent held back by the higher levels of metal inventory we've had over the course of this year as Anna will explain. Given this strong performance and our confidence in the group's prospects, the full year dividend is up 7%. So now let me hand over to Anna to talk you through the financials, the progress we have made against our focus areas and the outlook. Thanks, Robert. Good morning, everyone. Overall, we've had a very good year. And despite challenges in some of our own markets, we're doing exactly what we said we would. At constant rates, our sales were up 10%. And underlying operating profit was up 8%. Underlying earnings per share is up 10%. And as Robert mentioned, we increased the final dividend by 7%. Firstly, looking at sales for the group. Sales were strong throughout the year, up 10%. We saw growth across all of our sectors, but particularly clean air, which grew double digit in both our light and heavy duty businesses. Operating profit was up 8 profit. This was a strong performance led by Clean Air And Efficient Natural Resources. In Health, Operating profit declined slightly as expected, and new markets was also lower. Corporate costs increased due to our investments in various group initiatives, which will help drive further efficiencies across our business. Some of these costs are included in the sectors operating profit once others sit in corporate. Overall, this was a good operating performance for the group. Progressive now to my 3 focus areas. As I go through this presentation, I'll be talking about those focus areas and to remind you what they are. Driving increasing business wide efficiency. Disciplined management of working capital and rigorous and transparent resource allocation. Overall, we've made good progress. However, progress has been impacted by the increase we've seen in precious metal working capital. Which was caused by unscheduled downtime in one of our refineries in the year. This will have a temporary impact on some aspects of our performance, including finance costs, return in invested capital, cash flow, and net debt. And I'll cover more about that later. We're delivering now as we invest for the future. The 8% growth in operating profit was achieved whilst we incurred cost as we invest to drive improvements across our business. We've invested in the rollout of a single global ERP system building our procurement function, improving our commercial capability, and in other areas, all of which will set us up for sustainable growth. Growth in our underlying business also includes both the 15,000,000 saving associated with the closure of our health plant at Riverside, and the investments that we're making to improve the efficiency of our footprint in this sector. This net cost in the year will deliver significant benefits in the future. Through driving business wide efficiency, we're seeing tangible results. And expect further benefits We've made good progress on a number of efficiency initiatives in the year. In procurement, we've continued to invest in building our procurement capability and we're on track to deliver the expected 60,000,000 of savings over 3 years. So far, we've delivered 28,000,000 and expect to deliver the remainder over the next 2 years. As I've said previously, roughly three quarters will directly benefit the P and L. Our group restructuring program that we started last year is now substantially complete generating annualized cost savings of around 25,000,000. And in health, we've optimized our manufacturing footprint by closing our Riverside plant. And expect savings of 1,000,000. This is just the start. We're continually identifying opportunities to run our business more efficiently, and this enables to reinvest, driving further growth. All of this will strengthen our platform for the future. Moving on now to the sectors in more detail, and I'll cover our performance in the year and strategic progress. Robert will give you the forward looking view and a sense of our priorities. Clean Air performed well. Delivering sales growth of 11%, driven by double digit growth in both light and heavy duty. And this was in a year when we saw a decline in global auto production. Starting with light duty. As expected, Growth was driven both by diesel and gasoline in our European business. Our diesel catalyst sales grew 22% in a market that declined 9%, driven by our expected market share gains. We achieved a 20 percentage point increase in our light duty diesel market share in Europe, which increased from 45% at the start of the year to around 65% by the end. Our gasoline business in Europe grew 18%. This was ahead of the market and largely due to a positive sales mix with more gasoline particulate filters being sold. Our Asian Night duty business grow ahead of the market production in most markets, and our Americas light duty business slightly underperformed the market. In heavy duty, we saw double digit growth, and we outperformed the truck market in Europe and the Americas, and we were in line in Asia. Our growth was driven by the Americas where we grew 19% and this reflects a strong performance in the US Class 8 and 4 to 7 truck markets. We continue to expect high levels of activity in the US Class 8 market with production peaking in the middle of the 2019 calendar year. Our European heavy duty business grew 4%. In a low growth market driven by non road. And in Asia, heavy duty, our sales were broadly flat. Clean Air's operating profit grew 13 percent with a 20 basis point increase in margin, largely due to volume leverage, particularly in Europe. Overall, this is a strong performance this year. In addition, I'm really pleased with our strategic progress. As expected, our European light duty business has driven growth in the short term, and we achieved our plan share gains in light duty diesel a significant milestone due to our technology leadership. And to support this growth, we're taking steps to expand our manufacturing footprint. In the year, we broke ground and made good progress on our new manufacturing facilities in China and in Poland. We'll be ramping up both of these plants through 2020. And we're also building a plant in India, which will cost around 50,000,000 to meet the increasing demand in that region from Bahrain 6, which comes into force in April 2020. And of course, We remain focused on maintaining a margin of around 14% through delivering planned efficiencies and optimizing our manufacturing footprint. Looking forward to 1920, we expect a year of more modest growth. Growth will be weighted to the 1st half as we realize the benefit of the annualized share gains, partly offset by reinvestment into R&D and in and the new manufacturing capacity. We anticipate that these investments for growth and efficiency will lead to a slightly lower margin than prior year. Beyond 1920, we expect sales and operating profit growth to be increasingly driven by the introduction of new and legislation both in China and in India. Looking now at efficient natural resources. Sales grew 4% driven by the growth in our refill business in Catalyst Technologies And PGM Services. Overall, Catalyst Technologies was broadly flat. We saw double digit sales growth in refill catalysts offset by lower sales from 1st fill catalysts, while licensing was flat. Refill catalysts and additives are reoccurring in nature. These sales make up the majority of our Catalyst Technologies business. And we outperformed our markets in aggregate. 1st fill catalysts are one off in nature and are driven by the timing and number of new plan being commissioned. As expected, licensing income was flat as activity around new builds, especially for the technologies we license, remains subdued. We signed 5 new licenses Revenue is recognized over the period of plant construction, we won't see a material impact in the near term. In PGM Services, sales grew 10%, benefiting from higher and more volatile average precious metal prices. Slightly offset by lower sales of industrial products. Moving now to operating profit. This was up 15% and the margin improved 1.8 percentage points. We benefited from higher PGM prices, a million impact in the year. Additionally, we saw net benefits from improved efficiency due to initiatives across a number of areas including procurement and restructuring. Most of these efficiency benefits are ongoing although around to improve the safety, resilience, and efficiency of our PGM refineries. Our PGM refineries are critical ensuring that we have security of supply for clean air as well as for our external customers. And that's why we're investing around 100,000,000 over the next 3 years. This investment is already included in our CapEx guidance. So overall in the year, ENR performed well. Taking a step back and looking at our strategic progress to date, we've taken some significant actions within this business to support the delivery of our strategy. For example, a lot of work has gone on behind the scenes to simplify our product portfolio with removal of a significant number of products. This will optimize our offering to the market and improve our cost to serve our customers. We're making good progress in commercializing newly developed Sustainability Technologies. For example, we've signed a large new license in the year from 10 ethylene glycol. At the same time, we're also seeing benefits from our focus on efficiency. I've talked about the restructuring savings that we've achieved in the year and we'll continue to look for further improvement as we drive profit growth ahead of sales. Looking to 1920, We drive these as we drive these efficiencies in our business and continue to focus on higher growth segments, we expect sales growth and with operating profit growth ahead of sales growth. This guidance assumes metal prices remain at current levels. In Health, we saw sales growth of 3%. In our generics business, sales were broadly flat. Sales of Controlled APIs that's active pharmaceutical ingredients grew slightly with growth in bulk and specialty opiates. While sales of ADHD APIs were flat. Sales of non controlled APIs declined. This was largely due to lower sales of defetalide, an antiarrhythmic drug as new competitors for our customer entered the market. And we expected this. Our Innovator Performance business has performed well with sales up 14% We had increased sales from APIs where our customers are moving into late stage testing ahead of commercialization. Moving now to operating profit. As expected, this was slightly down and the margin declined by 1.3 percentage points. This was primarily driven by the change in product mix as our current portfolio moves through its natural life cycle. Additionally, we saw higher costs from our manufacturing footprint optimization as we restructure our business to support our future growth, which offset the million of savings achieved in the year from the closure of Riverside. As we execute our strategy, we've made significant progress in restructuring our assets. The closure of the Riverside plant in the US is now complete and we're ramping up our UK plant in Annan. This is in line with our focus on complex, high value, low volume APIs rather than bulk quantity manufacturing that Riverside was designed for. Over the medium term, this optimization will deliver annualized benefits of 20,000,000 and provide the efficient platform to deliver value for a global product portfolio. As you know, we've been investing in our new product pipeline across both generic and innovators. We're also on track to deliver an additional million in operating profit from our pipeline by 2025. At the end of March 2019, we've got 46 products in our generic pipeline, and we've included a slide in the appendix showing our progress in the year. Our innovator pipeline is also progressing well with 3 products in late stage development and nearing commercial launch. And finally, looking to 1920, we expect sales to be broadly stable whilst operating profit will grow double digit driven by the cost savings that we've made from the closure In new markets, we saw strong sales growth, up 17% driven by alternative powertrain, which includes battery systems, fuel cells as well as the LFP and ELN O cathode materials businesses. Alternative powertrain sales were driven by demand for nonautomotive applications within battery systems such as ebikes and growth in demand within our fuel cell business, which is now profitable. The development and commercialization of ELNO is on track and having made good progress during the year. Robert will speak more about ELNA later in the presentation. In the year, operating profit declined. Primarily due to further investments in our Battery Materials business, ELNA, and weaker profitability in medical device components. Looking forward to 1920, we expect new markets to deliver both sales and operating profit growth. Moving down the income statement. As expected, finance charges increased in the year. Primarily driven by the higher precious metal funding costs associated with the PGM refinery downtime. Next year we anticipate that the finance charges will be significantly higher. As guided, Our underlying tax rate decreased to 15.9 percent following the lowering of the US corporate tax rate and our mix of profits by country. In 1920, we expect the underlying tax rate to remain about 16%. Underlying EPS was up 10% to £228..8, benefiting from better operating profit and the lower tax charge. Our reported results were impacted by a number of 1 off items. The largest of which was a legal settlement. We recognized a charge of 17,000,000 in respect of a settlement with one customer In relation to an issue we previously highlighted in our contingent liability note, with no admission of fault. Free cash flow was an outflow of 13,000,000 due to net working capital outflow of 224,000,000 The bulk of which relates to precious metals, which I'll come to on the next slide. Whilst the working capital outflow is disappointing, The business has strong cash generation characteristics. CapEx in the year was 1,000,000, with the cash spend of 1,000,000. Disciplined management of working capital is another of my focus areas. And over the next two slides, I'll talk through our precious metal and non precious metal working capital progress. Starting with precious metal working capital. This has increased as a result of unscheduled downtime in one of our refineries in the year. Since the downtime occurred, we've worked hard to reduce the backlog. In ounces. It's a complex process that takes time. Whilst there's been an improvement since the half year, Our progress in reducing the value has been partially masked by higher PGM prices. We expect to make further progress through the course of 1920 weighted to the second half and anticipate a return to more normalized levels in 2021. Now looking at non precious metal working capital. Our continued focus on improving working capital and running the business as efficiently as possible every day has again resulted in progress in the period. Average working capital days, excluding precious metal, improved by 3. To 59. The improvement has been delivered despite specific factors this year including the preparations that we made ahead of the UK's planned withdrawal from EU. As you can see, we've had an 11 day improvement since 2016. Overall, we're pleased with progress. And we will continue to drive an underlying improvement in working capital. Moving to the balance sheet. Our net debt increased by $187,000,000 since last year to $866,000,000, reflecting the increase in precious metal working capital. Our balance sheet remains strong with net debt to EBITDA of 1.3 times. We target to net debt to EBITDA of 1.52 times, allowing us to invest in value enhancing opportunities to accelerate future growth. And in line with our disciplined capital allocation framework. And moving now to my final focus area, rigorous resource allocation. We continue to focus on ensuring spend is targeted to higher growth areas. Our annualized return on invested capital, excluding net pension assets, was 16.4% compared to 17 last year. We took the decision to remove the pension asset and related deferred tax liability from our calculation as it isn't an operating asset. And it masks the underlying performance. For transparency, we've given you return on invested capital using both our old and our new methodology. But on this slide, I'll talk through the movements on the new basis. Return on invested capital in the year was impacted by our increased precious metal working capital and higher recent metal prices. Over the near term, we will be investing and building assets for growth and therefore, you would expect a temporary reduction. However, following these near term investments, we will begin to realize returns. We've already won the business required to fill our clean air plants. And are working hard on our plans for ELNO commercialization. We have a clear path to achieve a 20% return on invested capital over the medium term. Turning to the outlook. We expect growth in operating performance at constant rates to be within our medium term guidance of mid to high single digit growth. Working capital continues to be a focus and we're targeting a further reduction in underlying average working capital days. And we expect CapEx to be up to 500,000,000 next year as we invest for future growth. For example, as we commercialize ELNO, and we complete our 2 clean air plugs in Poland and China and our smaller plant in India. I'll now hand back to Robert who will take you through our strategic progress Thank you, Anna. Johnson Matthews strategy will deliver on our vision for a cleaner, healthier world. This year we outlined a new sustainable business framework which runs through to 2025 and it's centered around the 6 UN Sustainable Development Goals where we can make the biggest impact. The changes in investments that I'm continuing to drive will create an agile and efficient business for all our stakeholders and that is what I'm going to talk you through in the next section. You've seen our results which give you a picture of our performance. But what you can't see is what goes on behind the scenes is that every day nearly fifteen thousand people are working to solve the challenges our customers face and deliver our strategy. To do that, we're making fundamental changes across all aspects of our group, people, processes, and systems to build a more sustainable business going forward. These changes are crucial to our long term success and will enable us to strengthen our platform for growth. In a fast changing world we would not be able to deliver on our growth promise if we stayed as we were. Our people deliver our strategy and vision and the executive team and the board create the culture that drives success. As we move through different phases of our strategy, I'm building a management team with the right mix of skills, experience, and diversity to deliver on on our ambitions. Most recently, we've agreed the appointment of a new CEO for Battery Materials who has strong business leadership skills. They will join us in September. We've also changed a significant proportion of our broader senior management team those that report into the Group Management Committee. These appointments are a combination of talent development in house and recruited from outside. In addition, we're building capability across the whole of JM and are investing in their development through ongoing leadership programs and other courses as we embed a greater performance culture across the organization. To enable our people to succeed, we are changing our processes. Standard transparent processes will transform the way that we work but it will substantially reduce complexity and increase our efficiency allowing more time for our better data and improved visibility allows us to run our business more effectively and will create even more value across the group. We have a number of group wide initiatives and those are procurement program probably has the biggest impact in the short term. Alongside this, Our commercial excellence program is about capturing a fair share of the value we create for our customers. It's also about gaining a deeper understanding of our customers needs and ensuring that we have a clear view of our customer and product profitability. We do this for example through our recently established JM Sales Academy where we've trained 350 colleagues so far to focus on creating a better awareness of customer needs and where we can apply our capabilities accordingly. Our systems investments are also key to delivering the efficiency targets we've set ourselves. The rollout of a single global ERP system will underpin everything that we do. And although the pace and level of change is high, our world class science remains at the heart of our business. We will continue to invest in our science and technology to maintain our competitive advantage. But around this call, we will have a have a business that's more agile and efficient, one that will enable us to deliver for our customers. We will be able to meet their requirements through standard ways of working across all our various build out plants which enable us to scale up our business even further. The result will be a business that is better positioned to drive growth in a world that is constantly changing around us. I now have a broader senior leadership team that is committed to delivering on this promise to all of our stakeholders. Of course, we will deliver our strategy through our sectors so I want to look at the impact our changes are having on each of them. In Clean Air, we delivered exactly as planned and are on track to achieve the sustained growth and margin as we'd outlined. The growth drivers for this business are the global demand for improving air quality and the tighter emissions legislation which underpins that especially in Asia. We'll deliver our strategy through our global leadership with the best technology. Our competitive advantage in working with our customers to enable them to meet increasingly stringent legislation and through an efficient manufacturing footprint. And we have 3 priorities first to maintain our technology leadership through our research and development. In Europe, our technology leadership in light GTDs delivered our share gains this year but given market dynamics, we are now reallocating some research and development spend to gasoline to deliver future share gains. 2nd, further legislative change will be a key driver for growth in clean air particularly in China and India with the implementation of China 6 and Barrett 6 for light and heavy duty vehicles. We will capture this growth to double our Asia business over the medium term and will support our growth through our new capacity, expanding our manufacturing footprint in Europe and Asia. As we progress through the year, a key priority will be ensuring the smooth ramp up of our new manufacturing plants in Poland and China as you can see on this slide. On the left, you can see our new plants in Glavista, Poland, and on the right, our plant in Changjingang, China. Both of these plants will be highly flexible and extremely efficient which helps us drive further operational efficiencies across the sector. Our ability to operate efficiently is a key priority in cleaner and indeed across the group and this will enable us to keep margins broadly stable as planned. Almost 2 years ago, we outlined our medium term projections for clean air to 2025. As you've seen from our results, we have delivered the strong growth we projected for the 1st 2 years. And as we look forward to the next big opportunity, it is in Asia. Particularly in China where we'll see a similar transformation as we did in Europe with the Euro 6 legislation for both light and heavy duty. In China, on the light duty side, we'll see the implementation of China 6 from 2020. In the short term, we back some vehicles to be fitted with a coated filter which could double the value per vehicle to us but from 2023 when China 6 B comes into force we will see a rat significant ramp up in penetration of coated filters. Whilst in heavy duty, the implementation of China 6 is earlier than expected driven by the Chinese government's blue sky legislation, which requires early implementation in some provinces from July this year. The adoption of this legislation will ramp up over time and drive a tripling of value to us per vehicle. We'll also see this tripling of value in the India heavy duty segment from April 2020. Therefore, our projections for sustained growth which we laid out on our Capital Markets Day 2 years ago over the period from 2017 to 2025 are absolutely unchanged. But of course this depends a little bit on the level of diesel decline in Europe and battery electric vehicle penetration. Inefficient natural resources in the year we continue to make solid progress. Building on this going forward, we will focus on our technology higher growth segments and also look to improve our efficiency. The growth drive of fish and natural resources is the need for a more sustainable world one that makes the most efficient use of the world's natural critical resources. With the growth of population and increasing wealth, the demand for chemicals continues to increase. Our leading market positions in chemical catalyst technologies will benefit from these megatrends. We'll achieve our strategy through targeted investment in higher growth segments, a continued focus on efficiency and by extending our capabilities into new technologies. Those targeted investments in new technologies will start with an assessment of the potential for profitable growth. For example, we're assessing whether battery materials recycling is an opportunity for us. Given the development of the battery market, This could be a significant from the mid 2020s as there are a greater number of end of life batteries available. This closed loop offering has the potential to be a key part of our customer proposition. We feel confident in our chemistry skills, recycling and refining is part of our DNA after all. And although the metals involved ARDS PGMs, we know we have the expertise to succeed in this space. Another key focus for us will be to expand our newly developed licensed technologies as well as the mono ethylene glycol license that Anna mentioned we're also looking at waste to aviation fuel, a fabulous example of how our technology enables a more sustainable future. This is a really interesting opportunity for us. We have a license agreement with Fulcrum Bioenergy, a biofuel producer to support them in converting household waste into diesel and jet fuels. This has the potential to be significant particularly as Fulcrum looks to build more and larger plants. And we are seeing interest from customers who want to use this technology in other applications. And of course we will drive efficiency across efficient natural resources. Therefore, an important priority in the near term is continued investment in our refineries to ensure their safety and resilience. So overall I'm confident that the sector will deliver sales growth ahead of the market and operating profit growth above this In the year, Jason and his team have done a massive amount of work to improve our footprint, build the team and increase our efficiency. The business is now better structured to deliver the breakout growth we've outlined. The main growth driver for health is increased health care costs which are driving more targeted and potent APIs. And our strategy is all about enhancing the performance of our existing business, expanding our new product pipeline and building capabilities to better support our customers The team will now leverage the work we've done on optimizing our footprint They will get an immediate operating cost benefit next year from these changes but the long term benefit is that we now have production assets matched to our plans. Having built the team, we can now fully focus on our new product pipeline across both generic and innovators. Delivering our pipeline depends on our customer's time frames, our delivery, and the time it takes to get regulatory approval and launch. But in generics, our goal is an additional £100,000,000 in operating profit by 2025. In innovators, We do see significant potential in this business due to the nature of these APIs which can be more complicated requiring deeper expertise and advanced technology capabilities which play to our strengths. Our innovative pipeline is progressing well with 3 products in late stage development are nearing commercial launch and this year we announced a strategic partnership for the manufacturer of a high potent API used in the production to better support our customers. For example, we're building our capability in particle technology and we're also globalizing our development capabilities through our work with solid form sciences in Cambridge. This year has seen a lot of change in our health business. I'm pleased with the progress that has been made and I'm confident this will drive breakout growth in the medium term. In battery materials, we've made good progress in the development and commercialization of our portfolio of leading ultra high energy density cathode battery materials which we call ELNO. Our materials are next generation. They're designed to perform ahead of new products such as NMC 811 and will suit a range of electric vehicle applications. In particular, ILNO has high performance capabilities enabling greater adoption of long range battery electric vehicles with longer cycle life higher safety and higher energy density. The growth drivers for this business are all about improved air quality and increase battery electric vehicle penetration which requires new technologies. To deliver our strategy, we will maintain our technology leadership an area of the market where we can add value and we will commercialize and scale up this business. To do that, Our priorities are to start construction on our commercial plant and identify the opportunities for scale up. Our commercial plants in Conan Poland is close to major customers in the battery electric vehicle supply chain. At the time that we announced our plant location, We also secured our first supplier agreement with Namaskar Lithium for raw materials. In his long term and sustainable relationship and an important step in the road commercialization. Building our first 10,000 ton plant is the quickest route to market and preserves and we are currently undertaking the preparatory work. The FEED, the front end engineering design, work should be completed this summer. We're ordering the long lead time items. We have submitted our environmental impacts assessment and we started some initial work on clearing the site. Of course this isn't isn't an exhaustive list we've made really good progress so far. The site also gives us the potential to expand our and capacity to up to 100,000 tons per year well beyond the capacity of our first 10,000 ton commercial plant. As you know, Elon O has a range of battery materials all sharing the same high performance attributes. In addition to these performance characteristics, our customers are increasingly looking for customized solutions to their problems and this plays right to our strengths. Over the last year, we've been working hard to tailor Elono to meet specific customer requirements. Our ability to customize is a key differentiator puts us at the leading edge of technology. As we work through the various stages of testing, we receive constant feedback from our customers and I'm pleased to say that this feedback remains positive and it's great to hear that we're adding value with which goes back to the core of our strategy. We help our customers solve complex problems. You can see some quotes on the left hand side which shows that our customers value our willingness and ability to customize and our commitment to having the best technology. As we move to full scale commercialization, we'll continue to work through customer qualification. We've moved from lab scale to our pilot plant which is now complete and our customers are now looking to test Illinois in their own applications to assess how our material performs against their specific requirements. To support this we are building 3 best in class customer application centers, 2 in the UK and 1 in Japan with a plan for further expansion. The first UK center will be completed in 2019 and the remaining 2 in 2020. These centers will include a range of facilities from laboratories to demonstration cell manufacturing capability and are critical to delivering the tailored solutions our customers are asking for. In the last year, we have achieved some major milestones as we position ourselves for success in the global electric vehicle market. So to conclude, we've delivered a strong performance this year. It's in line with our expectations and we've done it while making fundamental changes across almost every aspect of our business. We're investing to strengthen the platform for the future which will enable us to successfully execute on I'm confident that we will deliver and these results and those over the past couple of years provide you with clear evidence that we can and are. And if I don't see you beforehand, I look forward to updating you all on our Capital Markets Day in September. So that concludes our presentation. Thank you for listening. And with that, we'll pause and take any questions you may have. Okay. Who wants to go first? Should we go? Let's look at there. Thank you. Good morning, Sebastian Bray of Berenberg Bank. I would have three questions, please. The first is on corporate costs. What is the expected development for 2020? Is do some of the one off items recorded in that line potentially fall away or is it a roughly flattish development that we should look for? The second is on the health portfolio. Why is it that there is no top line growth predicted for next year? There's quite an ambitious operating profit targets even against the backdrop of improving margins to 25. Is the pipeline very heavily backend loaded, or how should we think about this? And a final question on long term CapEx, Could you give us an idea of how much of the $500,000,000 is dedicated towards ELA related activities And if how to put this, if the Chinese and Polish facilities are effectively done after 2020? Okay. But why don't Anna, why don't you take the corporate cost ones? And do you want to take the CapEx 1 as well? And then I'll come back to the health Yeah. So corporate costs specifically what is in corporate? I think because don't confuse it with investment in group initiatives because some of that investment sits in our sectors. Corporate costs has grown in the year. And we would expect some further growth, but not at the same level as I look forward. Looking at CapEx, you asked how much of that is an ELL. No. I'm not going to tell you that number exactly, but what I would say, and I would have told you already if I was going to, is that, cleaner and ELNO together are well more than half of it. So I would think about it that way. And in terms of the clean air plants, Poland and China should be substantially complete this year. We'll still have, spend in India looking beyond that. And on the health, pipeline. I wouldn't get too worked up about the sort of sales number for next year because of course it all depends upon the mix of the overall portfolio. The new pipeline is coming through. We did talk about there's a few delays in a couple of projects, but you know, there's sort of the ramp up to the 1,000,000 we've talked about some time, we're still positive about and confident about, but it's all about the mix of the overall portfolio of product some come to the end of their lives and so drop off a bit the sales time and then some come through and it's a whole mix issue rather than anything else that we're concerned about. So I wouldn't get too worked up a bit. Thank you. Okay. Next question. Should we go to Andrew, you put your hand up quickly? Yes, thanks, Andrew. John. I just appreciate, an update on some of the timings of legislation. So start on euro 6 in light duty in China. I think you'd said in November, you might get some pull forward. Just wonder where we are with that. And then also you said April 2020 for India on trucks. Can you just remind me of China on the phasing? So when and broadly, when you talk about the doubling and then the tripling, So the timeframe you're thinking about, you know, roughly. So thank you. And then I had a second question for Anna, on the interest costs. Can you can you just remind me how that works? I know that's is that all leasing costs? And then is that just tied to palladium prices primarily? Is that the problem? Okay, Andrew. So we John, are you happy to take those to start with? Yep. So on, on the China 6 legislation, that has been kind of moving around, mostly moving forward. So the Blue Sky initiative was announced in the 13 provinces in China. So on light duty, what that means is that from July of 2019, they're introducing NS6 B, as they call it, but there's no particle number specification and there's no real world driving. So even though it's the they're calling it the 2nd standard, they've excluded on the pull forward, the particle number spec which drives filter fitment and the real world driving, you know, which isn't more challenging, you know, target there too. So on the light duty side of things, that's not going to have a huge impact in our sales. The real impact in China on the first legislation is in heavy duty. And for the Blue Sky initiative there, that was pulled forward to July 19. And now that's been limited to most of the city city type vehicles, sanitation vehicles, buses, postal service vehicles and things like that. So there's a limit to that, but actually, that's a little bit of an upside compared to what we had in our plan. So we should see a benefit starting in 'nineteen, 'twenty in China from that legislation. The real doubling of our light duty business and tripling is when the 6 B legislation comes in And that's when we really get to those levels and that's not until 2023. So, in China, just to finish that story, the translation through there is that more provinces will start adding, the 6 B legislation without real world driving in January of 2020. And then the full six B comes in in July of 2023. Okay. So and then in India, it's the same kind of a thing. They have they have what they call a kind of a 1st stage and a second stage of the legislation. 1st stage comes in in April 2020. And that's for everything. That's for gasoline, diesel, heavy duty, non road and motorcycles, okay. So it affects the whole product mix. And, you know, so in there, again, the 1st stage of this legislation doesn't include any particle number specification. So there's very little filter fitment on light duty. And then on the, when the stage 2 comes into 2023, That's when you add the particle number standard and the real world driving. And that's going to begin to, to put filters on light duty gasoline vehicles and will be the full system on heavy duty. So sorry, that's a little bit of a complex story, but there's a lot going on there. Know some of you like data, hopefully that was enough data for you. She can get more data if you want. There is actually a chart on slide 34 of the presentation which gives some of that legislation map and does tie in with those dates that John talked about key thing to understand is that real world driving and the sort of tighter regulation of multiple number of things is the in the sort of beads sort of the 6 beads is when that changes that drives the principal change, but some people are pulling forward. And whereas in the U S, we tend to have a pre buy of old technology. If you remember that happened in 2010 when we went to, it was US 2010 regulations not very imaginatively named. And they will pull forward old technology and China happens the other way around. They tend to want to try and pull forward new technology. Because they're particularly worried about resale value of the vehicle. So it's a slightly different dynamics. You do get some of that pull forward, but as John said, it's particularly going to come through as we get closer to 23. And on our interest costs. Interest costs. So we will be running with higher precious metal because of the backlogs that we're working down. Through a chunk of the fiscal year, and we've got to fund that matter. And we do that through leases. And so that hits the interest line. So so that's really what's going on. So it's a factor of higher ounces and higher prices. Okay. Can we just pass this phone to someone at the time? So, another question, for John, actually on the margin outlook in Clean Air, can you just run through some of the pluses and minuses in terms of the dynamic over the next 12 months, please, as you see them. And the second question is, on the E and R division, the first fill catalyst drop of 30 odd million in the year. Can you give us some quantum of what is left in the full year sales figure in terms of 1st fill catalyst because it continually seems to go south. So one of those much left. Thank you. John, do you want to answer the first one? Yep. So on the on the pluses on margin, we're consolidating our position in Europe on the on the share gains and diesel. So that'll be continuing throughout the year. But the real plus is going to be the increases in our sales value of the beginnings of what's happening in, in China. You know, so that's pretty much the 2 positives, I guess, that are going to come from that. And then in, you know, on the things that are drawing down. I think Anna alluded to all those in her talk. We have our increased R and D investment, which is adding more investment on the gasoline side. We have the beginnings of some of the systems that are coming out where clean air is one of the early adopters of those. So some of that stuff in terms of depreciation starting to hit our P and L. And then we have 2 new big plants coming on stream. So we have all the startup costs from the new plants. And I think with, so long term guidance, no change, right about 4%. We said that, not for 14%. And so no change there at all. And I think there's always a little bit of loss ratios. The big movement is of course that the new plants that come on stream and and some of the benefiting John talked about the ERP system. Until you we've got 1 plant, 2 plants, 3 plants, the benefits come as you as you start to roll out of multiple plants. You end up with a sort of depreciation in a way coming early the benefits coming a little bit later. So you'll see the benefits coming through, but in the short run, you've got the sort of a cost coming into the and the same is true with the new plant. And on efficient natural resources, I mean, the first four numbers came down quite a bit, as you said, it's principally due to a pretty large order, one very large order last year, but it's driven by licensing in many ways and so as we've got relatively steady licenses depending on when those parts come on stream, we'll then have new first fills accordingly. But we don't tend to split out the amount of first fills, the amount of refill Although as Ana said, the bulk of those sales in the Catalyst Technologies businesses are on refills. Yes, huge bulk. Okay. Right. Should we just since the mics just in front of them will come, don't worry guys, we'll come back to you or come to you. 3 questions, please. The first one on, North American Class 8 trucks. I can see that trade, net order seems to be approaching trough levels. And I was wondering when would you expect this to, to filter through your P and L and also maybe what is baked into your guidance for next year. Second question on, Clean Air in Asia. I was wondering if there is any development against Asian competitors. And finally, on battery materials, what's the current market dynamic in LFP? It seems that the switch to NMC in Chinese E Buses is sort of halting, and I'm just wondering if you're seeing any sort of renewed interest in that technology? Last we start with the Clean Air ones first. I mean, John, I mean, I think Class 8, I think we said we expect it to carry on through the summer of this year. Class 8 will carry on through the summer. I mean, the extension now is filling some of the backfill that some of the orders that have been building up. We expect it to start to tail off this summer, but that's been an extension of what the normal and it's called a normal cycle, but And that's what's embedded in our plans and everything that we the projections and guidance that we've been giving is based on that. And I think the second question. And the second question was about Asia. Any competitive dynamics changed? No, not really. I mean, the it hasn't changed and we've won the business that we expected to win and was in our strategic plan and the guidance that we had. So everything's on track where we expected it to be when we went to when we talked to you at the Capital Markets Day, what was it 2 years ago in Asia? On the LFP dynamic, yeah look it's the business has been we had a tough time in the last year sale on LFP. There are areas and opportunities for us to continue to have LFP growth. But it's not going to be a large part of the business. It's all still relatively small, very, very, very contained, but our plant in China is, we've got commitments from our customer there. And we're continuing to fill to use the plant in Canada that we have for other technologies. And there are some really interesting opportunities for us out there, but it's never going to be a large part of the business and I wouldn't expect to see a sudden massive growth in that portfolio. Should we go, why don't we go to the back? We've got a couple sitting next to it. So where's the mic going to come from? It's going to come from, I think it's coming from My right, you are left. Hi. It's Adam Collins from Liberum. I had three questions as well. First one is on R and D. Forgive me if if you talked about that, but, what's the sort of direction of travel in terms of R and D spending? Will it increase from 5%? Could you talk a little bit about the capitalized R and D component? 19,000,000 last year. It's not not a big number. But where was that? And will capitalized R and D developed to over time. On, on U. S. Truck, I think you're being sensible in predicting a decline from midyear. Historically, that's been, quite a cyclical business where there have been volume declines. They've been sometimes quite significant. And I have a sort of slight concern that the US business doesn't have a light duty opportunity like we see perhaps from Royston to fall back on. So in the event that we do see a significant volume decline, what would be the contingency planning there to what extent are there offsets? And then just finally on precious metals refining, It strikes me that industry is pretty tight today. We've seen some decommissions in Europe from BASF and Vale The other 2 main players in that area have had outages in the last year, yourself and pneumacore. So it looks to me like market conditions are pretty benign there. Would you would you concur? Good questions, Adam. Let me just make sure that we can have the mic so that Jane can answer the last questions, so, that we've got like here. So we'll come back to you, Jennie, in a second. On the first one on R and D, look, we've invested last year around about GBP 200,000,000 in R and D. What's exactly 290. I expect it will grow a little bit year, but it will be within the range of 5.5% of sales, which is where we've guided for some time and it will continue to grow at that sort of level. But this year, the year we're now in. I suspect it will grow a little bit ahead of that, driven partly by the increased investment that John has talked about in gasoline. But partly around an EINO as well, where I think we'll see a little bit more investment. On the capitalized development side, the largest part of capitalized development, I think, is in health, as we develop the pipeline and that's gone up over the last year and of course again, that's about of investment on that pipeline ahead of and we're we're putting some we're capitalizing some of the LNodes development too. On the US truck cycle, John, I mean, we're used to truck cycle is alive and well and been there for decades. We're quite experienced in that and we I guess, have a lot more flexibility in North America to scale up our business and scale down our business depending on what the demand is on the plants. So we've got 3 manufacturing facilities there. And we're quite experienced in being able to use those efficiencies to be able to move the footprint around to to optimize that. So I don't think this is going to be I don't I don't disagree with everything that you said. But I think we've got quite a lot of experience there. And remember, of course, about 75% of our costs are variable. So there's you never see great operational leverage on the upside, but on the other hand, you don't see much operational deleverage on the downside either. Now, I've given you a bit of time to think, Jane, and I'm sure you didn't need it, but, over to you, Jane. No. Is it working now? Yes. Yeah. Okay. So thanks for the question. So with respect to refining the question, what is the market denying? I mean, I don't described markets has been 9 really, but it's true that we've been very busy in our refinery and our refinery has a very important strategic position for JM because we're making sure that we've got that secure availability of PGMs for the GM group because that's our fundamental purpose of having refining activity. One of the reasons it's taken time to work off our backlogs is because we're optimized the whole time in demand and also our supplies. So we're full and we're busy all the time. It's also true of course the palladium market is seeing quite a bit of change this year with increasing prices. So we have managed to also increase our returns in the business and that's been a positive dynamic for us. So it's been an interesting year with respect to the markets. I'm sure it will continue to be very volatile. Going forward, but an interesting period. I can't say I don't know who asked the question I couldn't see there. Thank you very much. So an interesting period for us, but it just underlines importance of having a refining business for JM. Hi. Mark Elliot and Bessek, just a quick couple of questions. I noticed rare earths are being dragged into sort of trade dispute at the moment. And I think back in 2011, it was somewhat problematic for the auto cap business because you used a bit of it. Is that something you're preparing for? Are you able to pass on sort of costs that may come through or may not come through or is there any sort of working capital that needs to be considered on that side. Also just a little bit about raw material sourcing, I think you Mick Core signed up a deal with Glencore the other day on Cobalt. You've got the deal with Nevesca. Are there any cost implications? Because Nevesca, I think, is struggling a little bit at the moment, with financing and so forth. Is there any implication if they sort of don't get through? And, lastly, on eLNO, I was just curious to know 811 struggles a little bit with charge rates. It has high energy density. Does ELN O have quite a good charge rate characteristics, give it a further advantage. I thought for a minute you were going to have two questions and everybody else has had 3. So it feels like were going to miss out on your 3rd question, but you threw 1 in there at the end, well done. So just very briefly on ELNO note, the answer is yes. It does have good charge characteristics and that's one of the things that our customers like about it and not just its energy density and its safety, but it's some of the other characteristics it has as well. And of course, they're looking at a whole suite of characteristics, not just one, it's not just about energy density or whatever metric, and so there's a wide range of things they look at of which charging and capabilities is 1. And so that's good for E and I know, which is one of the things the customers like. And of course, one of the things we talked about as well is that customization piece because every customer is different, every customer wants something separate. And so the ability to customize our product and give each individual customer what they particularly want is something that we think we can differentiate. And E and L now enables us to do that. You talked about raw material sourcing, and you want to ask that one, Ada? Yes, sure. You've been involved in the sourcing group? I think we're in good place on sourcing. So we've got, we've moved into the Neulidium secure the lithium contract. I think we are quite confident we can see a route through that. In terms of the other metals, right now, we'll buy big quantities of nickel anyway. So we're well sorted around that, and we have done for very many Kate's in James Business. So that's not a new thing for us. Cobalt are levels of acquisition of Cobalt are relatively low. But we're building all of the relationships at the moment. We don't want to move into long term sourcing agreements too early. You need to have the volumes there to secure the best deal. The point that we actually have a group that are looking at and thinking about sourcing and the tactics around that I think is important thing you should just be aware of that we are monitoring and managing that and how we think about that going forward. And last but not least was the rare earth question and yes, you're right. I mean, in 2011, we did have quite a big impact. And when the prices went up enormously, we always managed to access the rare earths we needed, and I don't think there's any difference this time. Although we've learned the lessons from that. So we've now got within the sort of our arrangements. We've got multiple sourcing options, multiple sourcing routes, as well as if prices go up, we've got a price escalator in our contracts. So from a point of view of sourcing, we're quite content at the moment And if the prices were to spike up again like they did previously, we've got a mechanism in the contracts to manage that risk going forward. Did you add anything else, John? No, no. I think we're in pretty good shape on the tariff side. Our rare earth usage, as our total global spend, in North America is relatively small. And as Robert said, we've got, multiple options on some raw materials which gives us, you know, change out ability if, if one is a China sourced, material, and we have supply chain options. To be able to work around that from a so that on the tariff side, we're in pretty good shape. Okay. I saw some hand over here. So the mics sorry, we'll come back, we'll give the time. Why don't we get over here? And then we'll go in the mic over over there. Yeah, hi, Japen from JP Morgan. A few questions, on U. S. Truck you said you expected to sort of peak at the middle of this year. So for full year, 1920, can that business see sales growth? That's number 1. Number 2 question was to Anna, maybe on CapEx, is there a way to think about $500,000,000 of $2500,000,000 this year in terms of how much of that may be phasing related one offs or in other words, what I'm trying to get to is looking beyond this year. Is that sort of run rate number or is that sort of, you know, just it impacted by some phasing of CapEx in different projects? And the last question is on the guidance for this year in terms of EBIT growth. We've said, you're comfortable with mid to high single digit in terms of the range that you have forecasted for the full year. When I look at the 2nd half constant currency EBIT growth, it was 5%. And when second half sort of already incorporates bulk of the share gains in diesel, etcetera. So is there a reason to believe we see a big uplift from that run rate going into this year or is sort of 5% the right number to think about for 'nineteen, 'twenty Okay. Thank you for your questions. So John, do you want to talk about U. S. Truck phasing for this year? U. S. Truck. I mean, we had a full year of, Class 8 strong sales last year. And we're going to have a better part of the half year this year. So and I think there's a growth in that class 8 story for 'nineteen, 'twenty. But it's not going to fall off a cliff. 1st October, anything like that, it's a normal cycle. And of course, you've got to work through the sort of backlogs and stuff like that, truck orders. And as I said, as we've said already, we can adjust our cost base very, very quickly. But from a top line point of view, there's nothing else we can do about it, obviously. But from a bottom line point of view, we're pretty well, immune but pretty dampened to that volatility. Here, and I'm not sure you're going to give it, but I'll have. So on CapEx, maybe the way to think about Chetan is that you've got 1,000,000. We're investing in plants in Clean Air. The 2 big ones China and Poland will be substantively complete this year. So yes, there'll be continued spend around India next year. If you look at ELNO, we are breaking ground this year. So the spend on the commercial plant, not the demo plants or the application centers, which will be weighted to this year, the spend on the commercial part will be continuing through next year. So those are the sort of really big chunky bits, and we talked about the needing to reinvest in, the refineries to ensure their resilience. That will start this year and continue be weighted towards next year. So I would suspect that we continue to see higher CapEx growth. Will it be as high? It's sort of a little bit depends on the phasing. We were quite careful in our wording of up to 500 in that these are really big and complex projects that go over the year end. Based on the build schedule that we have today, which will almost certainly change as we continue to build these projects because it always does. The exact phasing of which year some of this sits in will become clearer as we move through. But these are this is would kind of argue a good news because John's parts, this business is a 30% return on capital business. There's absolutely no reason why this won't be accretive to the group and deliver great ROIC. And of course, the investments in EL And O in particular, Those are the 2 big investments, will all be about the long term growth of the company and it's about making sure we get at the right return rate. And on EBIT? EBIT. Will it be 5%? I'm not going to answer that question explicitly, but what I'd say is you know, there is a consensus out there, and we have not guided in a way to change consensus because we're broadly happy with it. So get over to this side of the room now. Thank you. Hi. It's Nicola Tang from Exane BNP Paribas. I had two questions. First on clean air. Thanks, for laying out, your views on regulatory, the regulatory, drivers. You talk a little bit about your assumptions, on the underlying market, particularly in light duty across the globe, how have things been tracking so far? Because the data doesn't necessarily look that great. And on the so my second question in battery materials or in ELNO, Robert, you hinted that you're doing preparatory work on, you know, stages beyond the, current investment. Could you talk a little bit, you know, in terms of what options you're exploring, there? And does the warning from Umicore on, a delay in demand for cathode materials concern you at all? Okay. John, do you want to talk a little bit about the underlying market? What you're seeing so far? So so I just think in general, I I would agree that that we have kind of a global outlook of couple of percent growth in Asia, much of that growth in China in particular is is electric vehicles. So but the the point of our business is that our growth is coming from legislation. So, you know, I I don't wanna say that, you know, if car sales, you know, are 0 growth for the rest of the lifetime that, our business is going to fall apart. But, with very little growth in, in, the market, our sales are going to grow. And I think that, that has been our story that the growth that built into our plans is from legislation growth, and that's where the growth is coming from in our business. Okay. And on the LNO, I mean, I'm not obviously going to talk about Umicore's announcement, that's their announcement. I mean, but it didn't change anything to do with our plans and our thinking. I think it's very much we need to be the best technology and the technology leadership end of the market where the market is looking at and you look at all the data, it would guess when you get into the middle of the decade, sorry, not in the middle of the next decade, that's when the demand for ultra high energy density material is really going to grow and that's where our opportunity is that's where we play at that high end of the market and the customized solutions. So nothing's particularly changed. We need to make sure we scale up at the right pace with the right pace of the market I'm not really going to go into the details of our scale up strategy at this stage. I think that's probably something we talk a little bit more about maybe at the Capital Markets Day. Rather than the results day to day. But you know, that's all I would say is we're thinking about it. We've got the plant. We're developing our plans. About how we would scale up this business and move away from the sort of development phase of the business, which is where we were for the last couple of years, into very much the sort of commercialization and scale up of the business. Are you going just to pass Yes. Thank you, Charlie Webb, Morgan Stanley. Just maybe a few on new markets. So just flipping on Hila No, When do you think you'll move to a sampling? Is that a 2019 event, or do you see that being a bit later? Because I think that you're that's still ahead of you. Secondly, on the CapEx for Illinois that you kind of originally guided to, is that still unchanged in the near medium term, or has that increased? And then on fuel cells, you obviously saw significant growth there. Could you perhaps tell us what the backlog looks for you in that business today versus last year, or at least give a kind of idea of that of that change. That'd be very helpful. And then just a couple of others, really quick ones. On restructuring costs, what should we expect as as we look into next year versus the the 30 million that we had in in FY 'nineteen, and then just on working capital, given the kind of continued improvement, if we kind of strike at current pricing, would you expect an inflow in 'twenty, or is it still expected to be an outflow? Okay. Anna, I'll ask you to answer the next 2, the second 2. You've got five questions in there, but I'll look the E. L. I know it's sort of one new markets as 1. So look, a sampling, I wouldn't get to it's sometimes not very black and white with customers where you're going from you know A to B to C but we're really pleased with the progress we're making. We're moving in very much into the next stage of testing with them with the customers and that's one of the reasons why we're make building our application centers because that will give us the capability ourselves to do the testing and validation work which they often will then rely on because they trust our data. So the progress we're making is absolutely in line with what we expected Was it a sample or not? It's quite hard to judge different customers have different terminologies, but are we making the progress we expected to make? Yes, we are. On the CapEx question with EL00, the guidance we said was really we talked about the the demo plan and the commercial we didn't talk about the application centers, which clearly are, I mean, much, much smaller numbers, but so there's a bit more that's right. We didn't talk about numbers for that. We talked about numbers for the commercial plant. Look, until we finish the whole front end engineering design, we don't know exactly what expend is going to be that's what you do with the design and so when that work is finished, we'll be able to articulate it more but the overall spend we talked, we didn't talk about demo, we didn't talk about the application senders will be a bit larger than we talked about before. And on field sales, I'll keep going and then field sales, look, it's a tiny part of the business at the moment, but it is a profitable part of the business and for those of you who've been around for a while full of GM for many years, you'll remember we used to spend 10,000,000 of losses of about £10,000,000 a year from this business it's now profitable, not big numbers but at least in the right going in the right direction and with what's going on with the whole need for the hydrogen economy to grow, and the opportunity for fuel cells, we are going to invest more in the fuel cell business over the next few years. Initially, probably for demand in China but then for opportunities in Europe too. The backlog is is much of our sales for this year are secured or at very much, very much on track, but I don't think you're going to suddenly see it becoming meaningful for the whole group at this stage I think the longer term opportunity for fuel cells is absolutely quite exciting actually and the level of investment required for fuel cells versus the lever for our business versus batteries is quite different. So it's a really exciting adjunct to the, the whole 0 emission vehicle opportunity for us. Restructuring and working capital. I'm not going to be that helpful, I'm afraid. So we guide so you're after what sits below operating underlying operating profit. And there, were we to foresee anything, we would have explained it and announced it. At this point, I don't foresee anything, but as we've had a legal settlement this year, there may be things that come up through the course of the year and if and when they do we will share those with you. With respect to cash flow, again, We don't guide on cash flow, but we do talk through the pieces. We will expect to see working capital return to a more normalized level on metal. So You should see that benefit through the year, but of course, there will be cash outflow associated with that CapEx cost. I'll let you work it through. With all the restructurings, I mean, the book goes outside of underlying is of course the major restructurings. We're always doing things in the business all the time, but they're all above the line because just normal activities is only the sort of bigger ones that we we would talk about outside of underline. And I'll reiterate exactly what Anna said. We would have talked about it if there was one planned. How we doing? Martin hasn't asked one yet. So should we go into the front, Martin? And then, Adam, I think you are. I want to should you get another 3 No, I'm not sure. You only get 1 when you're going for a second time round. Thanks. Martin, Emma's HSBC. I guess, Rhana, just on these procurement savings of 26,000,000 in the year, which is a useful figure. Are we just remind me, are we normally, or are you at the end of that procurement sort of process now and how easy has it been to achieve those versus how the company function before And secondly, in the press release, which I haven't got in front of me, I saw something about IT systems and SAP, which sent a charter of, sort of pass recollections of how companies have come a little bit unstuck on implementing SAP. Again, can you say what you're aiming to do there and how far advanced that that is. Thanks. So we guided to there being an opportunity of 1,000,000 in procurement savings. We've delivered 1,000,000 to date of which about 7 is in is in CapEx, the majority of the rest hitting the P and L. Look, we've gone from purchasing at a site level to purchasing globally, and That touches a vast number of our fifteen thousand people. They've all got to work differently. So I'm hugely pleased with the progress that we've made to liberate these savings. I would say we're relatively early in our procurement journey. There is more opportunity here yet and there will be yet further opportunity once we've got the group on SAP wall to wall because today, just to give you an example, I've got 44 ledger systems and multiple instances of those. So if I want to know how much we're procuring, for example, methanol, no idea in that each system calls it something different and the only way to get at that data is to suck the data out of those systems and aggregate it. Which is how we're delivering these procurement savings. Once we've got a single global way of doing things, we will have real time data and we'll be able to go faster. So this is the beginning of a journey, and it's going to be consistent improvement year on year. In terms of SAP, it's right to send a shutter. It should send a shutter. I'm appropriately paranoid. We've got our first site live there. We've got clean air in Royston Live on our single global instance. Royston is a big and complex site the number of users on that site is over a 1000. And we've been successful in that first go live. We've got 8 more go lives coming in the next 12 to 18 months, and we're well on track. So I think we've already done, in some ways, our hardest site. Which maybe wasn't the most sensible place to start, but it, you know, we're in good shape. So now we just roll out from there. So we remain appropriate paranoid, but therefore you shouldn't be. And the good news is that we're doing it on a site by site basis, so there's no bang or anything like that and there are other companies being done a big bang and of course that's a very, wary place to be. So and as you've done the first one, the first one's the hardest you can because then because people didn't know what they were looking, it didn't practice really on what it was they were going to use. So the next sites, everybody can come to Royce and actually see it and live with the people and talk to people about what happened. So it doesn't make it easy but we should be getting quicker and quicker about her and then we should be able to roll out the ledger across the overall organization. Look, it's something that nobody really wants to do. But actually well, it's it's a lot of hard work for an awful lot of people. It touches virtually the whole organization. And so it's a big change for the organization and a lot of effort going in to do that, but the benefits will be that come from it will really important that we drive those through and we will do. Do you want to get have you got a mic, Adam? So we go over here since there's a mic just nearby and then we'll come back to you. Sorry, Adam. No, sorry. This is working. Tom Wrigglesworth at Citi. So just one question on your calling out increasing R and D on gasoline. You know, is there something you're seeing in the outlook for gasoline that that Jay Matt's particularly well positioned solve or a new a new hurdle, a new challenge there that that's leading to that R and D. If you could elaborate, that'd be helpful. Thank you. Sure. John, do you want to give a bit of color there? I think there's always new challenges, especially if you're a technology person, that's how they live but I, I, I think, you know, our focus on gasoline is that, you know, I guess we strive to be number 1 in everything. And right now, we, we, we feel that our gasoline is on par with our competitors, and, and we want to be clearly the leader. And when we put our mind to doing that, I think we've demonstrated that we succeed pretty much all the time. So that's what we're trying to do. And obviously, it's all And as the market, the market is shifting with diesel to gasoline more towards gasoline. So, I mean, it just makes sense that we shift some of our R and D. Okay. Adam? Yes. Hello, question in relation to the leadership changes in the business. It's been a couple of things going on in the last year that I'd be interested in your views on. The first one is, of course, on the the appointment of the CEO for battery materials and the standing down of their CTO role. And then on the business development director side you've had, a couple of trenches in as many years. It strikes me the first one maybe is something to do. With the transition from research to commercialization in Badger Materials. But the second one sort of speaks to some dissatisfaction around the business development function. I wondered what your take was on on what's happened here, and the rationale. So my look on the on the battery materials 1, you know, a year ago we made I made the decision that we needed to move from technology development into business scale so we wanted to bring in somebody into the organization who was a business leader and as I said already they'll join in September. I'll announce who they are at the moment but they'll come in September. And so the previous incumbent Alan, as you know, was going to go back to CTO. He decided he wanted to go and wanted to go work in a bigger organization as CTO, disappointed losing, but the right thing for our business is to to drive the battery materials successfully going forward and we are of course going to replace that CTO role and we're well advanced in the process of doing that. On the other role, look, not every role works perfectly every time and maybe it does a new organization. But some of you win, some of you don't win. It's a bit it's better to just sort of get the right people at the right time and then move on and make and get the right team in I'm very happy with the team we have now, but it's now a question of continuing to move forward from here. Oh, I'll talk for a minute. We were done, but not quite yet. One more question over here. Thank you. Yeah, Charlie from Morgan Stanley. Just a quick couple on the last two questions last time, so you're good. I get your 3rd. On cleaner, just thinking about diesel market share, do you think you can push on from 65% you have today, further and continue to grow share in that market over time, or do you think that's kind of done for now? That's really the only one. Don't worry. I'm not putting pressure on only 3. If you had another one, please do ask. So, John, I know what you're going to say, but go on. I've consolidated our position for now. You know, we we're working on some of the Euro 7 stuff. There are still diesel bids that are in that are in Euro 7. I know the skeptics are saying diesel is going to die, but car companies are still offering a request for quotes for new business. And we'll see. I'm not going to commit to say we can go beyond 65%, because I don't think that's a long term sustainable position. But we're going to hold on to it as long as we can. I think the OEMs are very powerful. Procurement functions and whilst it's a technology buy, there is still that sort of they don't want to be reliant on sort of one company only So they always do try to make sure that they have multiple sources, particularly on the light duty side, heavy duty side, you can be more it's more often that you can be sold supplier. So John's got 65. I mean, the challenge initially is to keep it for as long as we can. And the numbers that we presented back 2 years ago assume that that would decline back down to a more normalized level. So we can keep that to 65 for longer. That would be upside to where we are in our current plan. Great. So my opinion, god, if you just sneaks up just as I was about to say, call time. But Yeah. It's the last question. Probably slightly unfair. I was just going to ask about how, how you're getting on with the new chairman given his, And I'm sure he's watching this somewhere, given his extensive, given his extensive experience in the chemical industry and with investors, do you feel he's brought a sort of new approach or a new dynamism to the board? Get it. Would you expect me to say? Of course, we're getting on there. But, genuinely, we are getting on very well, and look, he's got tremendous experience and very relevant experience. We were what we wanted was somebody, as chairman who deeply understood the chemical industry, and Deepgram had an affinity to it. And I think all those of you who have met him would really deeply understand that he does and he brings that experience to bear to help us to challenge us to move us forward. And absolutely that's what he's doing. Look, he's only been Chairman now for not even a year. So you'll start to see some of that coming through I'm sure in the future. But we were pushing for quite well anyway, but this is just another little bit of a gentle nudge and support, which I think is a good thing. Great. Thank you very much. We're obviously, thank you for your time. Very nice to see you all and we've got our Capital Markets Day in the middle of September. And you'll get more invitations about that sometime soon. Thanks very much, everybody.