Earnings Call: H2 2020

Mar 2, 2021

Good morning, everyone. I appreciate you joining us virtually as we discuss our 2020 full year operating results. With me today are Jonathan Davis, our Group Finance Director and Andrew Carter, our Investor Relations Director. We'll follow our usual format today. I'll begin with a few highlights from our 2020, including a brief 3 year review of our growth acceleration program. Then Jonathan will take us through our financials in a bit more detail. I'll then return and discuss our market outlook and the factors which will drive our growth. I'll then spend a few minutes describing the exciting acceleration of our ESG agenda and we'll finish with a few words regarding our outlook for 2021. This year has simply been like no other. The COVID-nineteen pandemic has turned the world on its head and challenged resilience everywhere, whether it be a families, businesses, communities or governments. I would like to express our deepest sympathy to anyone who has been personally impacted by the crisis and the family, friends and colleagues of the Rotorik employees who have passed away. They will be sorely missed. I would also like to thank my 3,400 Rotor colleagues for their extraordinary efforts over the past year. Whether they have been working in our factories, at our customer sites, in our offices or at home where a large number are, They have embraced the changing circumstances with the utmost professionalism and dedication to our customers. Whilst this success clearly reflects individual efforts, it also reflects Rotorik's strong culture. We have a strong sense of teamwork, a hard work and can do mentality and increasingly a broad perspective and an entrepreneurial approach. All of these were very apparent throughout 2020. Our purpose, keeping the world flowing for future generations, links to our strategic objectives of accelerated growth and increased margins. In simple terms, The challenge the world faces is sustainably providing many more people with a high quality of life. Rotor can help here while striving higher sales and margins through providing innovative products and services that enable further electrification and automation, which together lift productivity and efficiency, minimize environmental impact and assure safety. Let's take a look at our highlights for 2020. Despite the extremely difficult economic environment, Our team continued to remain focused and to execute as evidenced by continued progress in operating margins, rising 100 basis points on the decline in revenues To improve our cyclical resilience through structural, cultural and portfolio improvements, we contain the downside flow through of profit on lower revenues to under 12%. Once again, we delivered strong cash conversion of 130%, yielding period ending net cash of £178,000,000 This level of cash generation continues to demonstrate our ability to easily self fund our growth acceleration program. Return on capital employed improved 10 basis points to almost 32%, a level significantly above our cost of capital. Due to restricted access to sites Globally, in the height of the pandemic, our site services business declined at a rate greater than the group beginning in the second quarter. Roadtorque Site Services ended the full year representing 19% of group revenues. Throughout the pandemic, our investments in our growth continued. We've expanded 2 operating facilities, increased our innovation and new product development efforts, added dedicated resources in emerging markets and continue to focus on driving real value for our customers. Finally, we recognize that dividends are important to our shareholders. We were pleased in September to pay the 2019 final dividend, which was previously deferred and are pleased today to announce an increased dividend for 2020. As we are now halfway through our growth acceleration program, let's take a brief look at the team's execution and results to date. In addition to the successful completion of the realignment of our business towards end market facing segments, Our growth acceleration program has now delivered £23,000,000 of profit improvement and £48,000,000 of working capital improvement. That's £23,000,000 net of higher raw material and logistics costs and £48,000,000 net of increases in tactical inventory in preparation for Brexit and to offset global logistics challenges. These impressive results are attributed to our team's continued ability to drive day to day execution whilst implementing the initiatives identified through our program. Within our commercial excellence pillar, our accelerated new product development efforts have now launched 31 new products. As our program continues, these have increasing commercial importance to rotorq. We have several particularly important products now slated to launch in 2021. And to ensure we continue to sell On overall value rather than price, I'm pleased to note in the last 18 months, we have recorded over 42,000 hours of dedicated efforts in value selling training and in the creation of our value selling resources library. Within our operational excellence pillar, We have now closed 10 factories or 33% since the onset of our program. Our sourcing program effectively offset rapidly increasing logistics and commodity costs to drive another year of net savings. Our inventory program has now yielded in net inventory of 34%. And our productivity per employee, as measured by adjusted profit per full time employee equivalent, has improved by 18% in our 1st 3 years. You'll also note our consolidation efforts have extended beyond our manufacturing sites to include our sales and back office locations as well. Moving on to our enabling pillars. I've already mentioned the implementation of our new market facing structure, so I'll highlight a few of our other accomplishments within our people agenda. We created and launched our revised purpose, vision, mission, values and our One Road Talk programs. We have also made extensive efforts to align our performance management approach with our reward systems. And we continue to conduct employee pulse surveys, which demonstrate our ability to bring the entire company along in our journey. Within our IT and core business process pillar, one of our most impressive accomplishments was in the rapid and almost seamless pivot to a work from home environment for a large portion of our workforce. We are far along in the design and programming of our new global IT platform and after a brief pause related to COVID-nineteen in 2020, we expect our first full site deployment later in 2021. We'll talk more about our growth acceleration program throughout our presentation. Now let's have Jonathan walk us through our detailed full year financial results. Good morning, everybody. In second half of twenty twenty, whilst the back Tremendous remains challenging. We saw improvements in underlying orders and revenue compared with Q2. Despite lower revenue, we continue to drive margin expansion and show strong cash generation. Order intake in the year was 12.4 Orders in Q4, whilst down year on year, showed signs of recovery. Revenue was £605,000,000 7.4% down after a stronger second half. Adjusted operating profit of £143,000,000 was 3.8 lower than 2019, but margins on an OCC basis were 90 basis points higher. On a reported basis, Adjusted operating margins were 23.6 percent compared with 22.6% last year. Adjusted earnings per share were 12.5p, a 3.1% decrease. Organic constant currency results are adjusted to restate the 2020 results at 2019 exchange rates and for the disposal in December 2019. Currency was a more significant impact in the second half, reducing revenue by £7,500,000 For the full year and operating profit by £1,900,000 At the end of 2019, we disposed of the Pittsburgh distribution business. It contributed £8,200,000 to revenue in 2019 and £0,900,000 to profit. Cash conversion was once again strong at 130%, reflecting a very good working capital performance. Return on capital employed increased 10 basis points over the last 12 months to 31.9%, building on the progress made over the last few years. In August, we declared the postponed 2019 final dividend and paid it as an interim dividend in September and said we would consider the dividend for 2020 as a whole with these full year results. Combining the 2019 interim dividend and the dividend paid in September, These represent a 6.2p total dividend paid in respect to 2019. We're proposing a full year dividend in respect to 2020 of 6.3p, a 1.6% increase at a total cost of £55,000,000 This represents 2.0x cover compared with 2.1x in 2019. This adjusted operating profit bridge highlights the impact of lower revenue together with the compensating effect of pricemix, Direct costs and overhead savings. Price mix reflects the 13% reduction in fluid power actuator sales. These are our highest material cost products and sales fell the most. Of the other product types, electric actuators and instruments were the most resilient And these are the highest margin products. Price mix also picks up the benefits of our strategic sourcing initiatives, but was increasingly impacted by higher logistics and commodity costs as the year progressed. In both direct costs and overheads, the largest contributor to the Savings were lower people costs. Total headcount reduced 9% over the year with reductions from footprint optimization and sales back office Consolidation within GAAP, lower numbers of temporary workers and other reductions reflecting lower volumes and natural attrition without replacement. Lower share scheme and bonus costs also reduced the overall people costs, which in total contributed the largest element of the net £25,000,000 reduction in costs. The 2nd largest contributor was reduced travel expenses, and this is also the largest element of the reductions which might be considered temporary. In total, we would expect around a third of the €25,000,000 cost reductions to reverse in time. Temporary costs also included the additional cleaning, PPE and other COVID-nineteen related costs. As we said at the half year, all receipts from furlough in the U. K. Were repaid midyear, but this is not possible in all countries. These savings included in 2020 are not material. In total, gross margin is now 47.0 percent, a 40 basis point improvement or 10 basis point improvement on an OCC basis. Flow through at gross profit was 46 on an OCC basis, reflecting the fact that all costs within cost of sales flexed very nearly in line with revenue. Adjusted operating margin is 100 basis points higher at 23.6%, a flow through at this level of just 12%. We started the year with net cash of £106,000,000 and this grew to £178,000,000 in the year, a cash conversion of 130%. Working capital and cash flow was a £19,000,000 inflow with inventory and receivables the largest positives. Net working capital as a percentage of sales fell from 24.2% to 23.2% during the year. Inventory at balance sheet exchange rates fell £12,000,000 to 10.2 percent of revenue. This is despite stockholding increases to mitigate the risk of Brexit and disruption in the broader logistics market. Whilst Brexit risks have now diminished, global logistics flows are still disrupted. Trade receivables reduced down £17,000,000 in the year and reported as days sales outstanding improved by one day compared with last year end to 56 days. CapEx was £25,000,000 as we continued to invest in various IT and facility optimization programs, including the expansion of the Rochester factory in the U. S. The combination of these two factors mean 2020 is likely to be the peak CapEx investment year for GAAP. The dividend payment of £34,000,000 was the delayed 2019 final dividend with the normal interim dividend being rolled up into the 6.3p to paid in May. The £6,000,000 restructuring costs in the year are largely connected with headcount reductions. This includes changes to the sales organization as the new market facing structure was rolled out in the Americas in Q1 And then later in the year, the changes to the sales back office. This also drove the largest benefit in the year of £3,000,000 Footprint optimization savings in year were from the carry forward benefits from 2019, plus 2 smaller factories which closed during 2020, reducing the total number of factories from 30 at the start of the program to 20. Procurement focus this year was Firstly, on managing the supply chain through COVID-nineteen. The GBP 2,300,000 net saving was a creditable outcome in a challenging year. Similarly, the continuous improvement and lean team run over 300 lean events, but some of the efficiencies were eroded by running factories at less than full output levels due to COVID-nineteen. The new product development benefit captured here, which increased by 40% to £2,100,000 Represents the incremental profit from new products launched in the last 3 years. With total benefits of £11,200,000 in the year, Cumulative benefits are now £23,000,000 in the 1st 3 years of the growth acceleration program compared with the £17,000,000 of cumulative restructuring costs. Cash benefits are £5,000,000 in the year and totaled £20,000,000 over 3 years, together with The £48,000,000 reduction in working capital since December 2017, this exceeds the £24,000,000 cash spent to date on investment in Facilities and IT. Turning to 2021, let me comment on some key points. Currency was a £1,900,000 adverse impact to profit in 2020. With recent strengthening of sterling, Currency may be a larger factor in 2021. If current rates of €1.40 for the U. S. Dollar and €1.15 for the euro were to apply for the rest of the year, This would be a circa 4% headwind to revenue and profits. The various GAAP initiatives will continue to drive benefits in 2021. Organization chain delivered lower benefits after a very active 2020. Footprint optimization will also deliver lower benefits It's due in part to the timing of planned activities towards the end of 2021. For procurement, the logistics and commodity cost headwinds are continuing into 20 21, but there will be more focus on driving cost reductions than managing supply chain challenges. New product development continues to gain momentum With the teams now established and new process embedded, so benefits will be higher in 2021. Continuous improvement in lean initiatives are expected to track at similar levels to the past year. In terms of restructuring costs, we anticipate these being lower at £4,000,000 to £5,000,000 in 2021 and largely related to footprint optimization initiatives. Other factors affecting 2021 will include the reversal of the majority of temporary savings in 2020 the impact of the pay increases, which were brought forward to January in 2021 when no increases were rewarded in 2020 and an increase in IT spend as we build up to the start of the new ERP rollout. Forecast CapEx at circa £25,000,000 is Expected to be at a similar level overall to 2020. There will be a shift to ERP development costs in 2021 as we build up 1st implementation later in the year. Other investments include the equipping of the completed Rochester facility and expansion of the Bath factory. Finally, tax rates continued to move lower, albeit only 10 basis points in 2020 on the adjusted basis. The geographic mix of profits has the largest influence on this. Corporate tax rates have generally reduced over recent years, but this could reverse in response to the pandemic. Now turning to the operational review. Revenue was 9.7% lower, but the 3 divisions fared quite differently. Water and Power performed best with revenue at 1.9%. This was offset by an 11.5% decline in oil and gas and a 16.2% decline in CPI. Compared with the first half, growth in Water and Power slowed, But both oil and gas and CPI improved. Within oil and gas, downstream was the most resilient, increasing slightly as a percentage of group revenue, Whilst upstream and midstream both fell, but as a percentage of group revenue, the changes were very small. From a regional perspective and on an OCC basis, Asia Pacific was the most resilient after an improved second half, with revenue only 1% lower for the year as a whole. EMEA was next, 7% lower with the largest decline in CPI and growth in Water and Power. The Americas was the hardest hit region, down 17%, with the sharpest decline in oil and gas, followed closely by CPI. Across all regions and end markets, gaining access to customers' sites to carry out service activity was challenging and remains so now in some locations. Site service sales therefore fell slightly faster than the group average and represent 19% of revenue this year. Turning now to the divisions. Total oil and gas revenue was 10.1% lower than last year on an OCC basis or 11.5% as reported. Revenue was lower in each region and in each of the 3 market segments of oil and gas. In EMEA, sales were modestly down. The decline in the Middle East was offset by growth in Eastern Europe with all parts oil and gas lower by similar values. Asia Pacific was lower by a similar percentage to EMEA in total, but here downstream grew whilst upstream and midstream declined. This was an improvement in Asia Pacific compared with the first half. 2nd half sales exceeding those in the second half of twenty nineteen. In the Americas, we entered 2020 with slowing activity levels and COVID-nineteen exaggerated this, making it the hardest hit region. Midstream was the most resilient part of oil and gas in the Americas and downstream the weakest. Adjusted operating profit The division as a whole was 10.1% lower than the prior year, but margin increased 40 basis points to 23.3%. Fluid power actuators are most commonly used in the oil and gas industry, so the positive product mix impact we saw at a group level also benefited oil and gas. Similarly, the benefit of reduced people costs and discretionary spend, together with the temporary cost savings, more than offset the impact of lower revenue, leading to higher margins. The essential service nature of water and power customers helped the division report revenue growth of 1.9% or 4.0 percent on an OCC basis as disruption seen by these customers was less than in the other divisions. All three regions delivered growth. Asia Pacific saw strong growth in water, particularly in China. Activity in India, including that related The National Rural Drinking Water Program was impacted by COVID-nineteen and sales were lower. Power sales declined fractionally in Asia Pacific. In the Americas, revenue from water was in line with 2019. Power was ahead benefiting from the power station refurbishment projects we won in the first In EMEA, both water and power grew and the region had the strongest growth overall after a positive second half. Adjusted operating profit climbed 5.7 percent benefiting from the higher revenue with margins 70 basis points higher at 29.8%. Despite a slightly adverse price mix impact in the year, this was, as we saw at a group level, more than offset by reductions in people costs and savings in many areas of discretionary spend, some of which are temporary. CPI suffered the largest overall in revenue with a 16.2% reduction or 12.4% on an OTC basis. The drop off in Q2 was Most severely in CPI with improvements in Q3 and Q4, meaning the second half was stronger. This pattern was seen in all divisions. This division typically works on a shorter delay between order receipt and delivery than the other divisions. Asia Pacific saw revenue growth in the second half compared with last year. And for the year as a whole, sales were the same as the prior year. This was despite a large petrochemical project in 2019 not repeating in 2020. EMEA sales declined led by Western Europe, which included a large HVAC project in the prior year, not repeating this year. The Middle East saw modest growth. We entered the year with industrial production in the U. S. Slowing and COVID-nineteen added to this, resulting in the Americas reporting the largest decline in revenue. This was in part due to mining activity in 2019, which was not repeated. Adjusted operating profit was 8.2% lower, But margins improved 210 basis points to 24.9%. Price mix was a significant positive, with the volume largest in the lowest margin products and sales flat in the highest margin products. This together with cost actions Commented on already resulted in the improved margin despite lower revenue. So in summary, despite the reduction in revenue arising from The slowdown triggered by COVID-nineteen, the incremental benefits of the growth acceleration program in the year together with targeted actions to manage costs Whilst navigating the practical challenges of the pandemic have generated a 100 basis point margin expansion and a strong cash performance. Some of the savings are temporary and will reverse, but the 12% flow through demonstrates the improved resilience of the business. I'll now hand back to Kevin. Thank you, Jonathan. Before I dive into our market environment and drivers of our growth, let me say a few words about our current views regarding the coronavirus. I'll first reiterate that the safety and well-being of our employees, our customers and their families remains the highest priority for our leadership team as we continue to navigate through this period of concern and uncertainty. We remain diligent and focused on the well-being of our staff and of our visitors and we also remain 100% focused on providing our customers with the best possible service levels throughout this period. We are still experiencing some intermittent COVID related disruptions to our operations. However, As we've reconfigured our factories to work in smaller cells or bubbles as we call them, to date, the overall impacts of these disruptions have been very well managed by our local operating teams. Turning to the environment for our 3 market facing divisions. Within our Oil and Gas division, after a year of volatility throughout 2020, we've seen oil prices once again increasing to near or slightly above incentive levels, largely due to supply side discipline coupled with a steadily increasing demand. Current CapEx forecast for the oil and gas sector remains somewhat muted at lowtomidsingledigit year on year increases. Having said this, I'll remind you our business is disproportionately driven by OpEx rather than CapEx. We believe The extended period of lower investment in the broader oil and gas infrastructure over recent years could result in an upside surprise, but it's too early to say. The Midstream and Downstream segments, which represent 75% of divisional sales, have, as expected, held up better than the upstream. Notable weakness remains in the North American upstream business where Roadtorq has limited exposure. Oil and gas accounted for 48 percent of group revenue, down from the prior year's 49% of group revenue. This is a combined result of the decline in oil and gas and the growth experienced in our water and power platforms. While our site services business experienced site access related disruptions beginning in the Q2 of 2020, we saw a sequential increase in our business in Q3 and again in Q4. Our Site Services business launched several critical programs in the year, emphasizing the total cost of ownership over the lifetime of acquired assets and our role in downtime prevention. Our customers have set themselves challenging environmental targets, which they will strive to achieve regardless of economic circumstances. We believe that electrification has an important role to play in the reduction of our customers' emissions across their processes and that we are well placed to assist them on this journey. Within our Water and Power business, in our developing markets, We continue to see positive momentum in the build out of water and power infrastructure. We've already been successful in China and there are real signs that India will play some catch up in 2021. In our developed markets, Our growth is coming from water network upgrades and digitization. We believe new environmental regulations coupled with infrastructure stimulus programs will drive increased spending in 2021 beyond. We expect our power sector refurbishment work to continue throughout 2021. Within our Chemical Process and Industrial segments, we are experiencing increasing demand in our chemical related end markets as demand strengthens for autos and general industrial applications. We see good long term demand patterns for our mining and cement applications where companies are now moving forward with smaller to midsize operational improvement projects. We also like what we are seeing in our specialty HVAC markets. We expect maintenance, repair and overhaul spend to gradually improve throughout the year, beginning more earnestly in the second quarter. The momentum for longer term sustainability continues to drive demand for cleaner processes and reduced energy consumption. Our applications in cleaner energy are accelerating such as our role in waste to energy applications, hydrogen systems, including electrolyzers and battery production. I'll note we've added a slide to the appendix, which details the efforts in 2020 relative to our growth acceleration program. While the margin trajectory is clearly more visible at this stage in our program, I want to take a moment to discuss the items we've been working on and investing in that drive growth. Let me once again remind you of our ambitions within our program to deliver mid-20s operating margins and sustainable mid to high single digit revenue growth over time. In addition to the general global macro trends, such as population growth, growth of the middle class, infrastructure investment and modernization and water scarcity to name a few. Rotorik, as the world's leading provider of electric actuation, benefits from the drive for automation Industry wide electrification as companies migrate from fluid power actuation platforms to electric powered controls with dramatically reduced energy consumption and emissions profiles. Further, our onboard smart diagnostics and network systems enable preventative and predictive maintenance, allowing our customers to avoid costly unplanned downtime. As you can see from this slide, our starting point for driving growth is a focused effort on becoming easier to do business with through improving and localizing our supply chains, improving our on time deliveries, reducing our turnaround times and improving our customer communications. Looking next at our end market alignment, the reorientation of our sales towards end markets provides a far deeper understanding of these markets. This understanding means we can focus our efforts. This also fosters a deeper understanding of our customers' needs and how they create value. This, in turn, leads to improved value propositions and new product development efforts, which ensure our products have the features and benefits our customers most value and are willing to pay for. We've seen a great improvement in the sharing of opportunities and winning value propositions between geographies within the market facing segments. Moving on to Rotorx Site Services, our aftermarket platform. We continue to launch new programs in 2020 despite facing site access restrictions. We launched our lifetime management program, our reliability service program and our intelligent asset management platform known as I'm Our Lifetime Management program is a comprehensive life cycle management program that covers a suite of services. It assists customers in understanding and managing the inherent risk that aging equipment brings to their plant and operational goals and creates customized service solutions allowing the maximum life from an asset until the client is ready for an upgrade to the next generation of Rotorque actuator. In fact, despite the issues we face with site access, we had the highest year on year growth in actuators under maintenance contracts in the last 5 years. Our Intelligent Asset Management program Known as IAM is a cloud based industrial IoT asset management system for intelligent actuators and the flow control equipment they operate. It helps customers reduce unplanned downtime by using analytics based on data taken from intelligent actuators and near adjacent equipment to create a more comprehensive maintenance plan. Our system provides advanced condition monitoring for easy and accurate reporting of the condition of valves and flow control assets and anomaly detection enabling proactive maintenance. I'm can improve long term operational stability of all assets on a customer site. We continue to invest in our service infrastructure, establishing a new regional service center in the U. S, which while only a few months old is already at over 85% capacity. Once we've fully proven this model, we will expand this to several other already identified locations throughout the world. We've separated our aftermarket sales and delivery teams to ensure our aftermarket sales teams are more closely aligned to our market segment selling organization. This brings forward the lifetime total cost of ownership analytics into our front end selling, specification and bidding processes, while ensuring a higher attachment rate for our aftermarket parts and field services. This also allows our service delivery organization to focus on service delivery excellence. Looking next at our highest growth regions. In the last 2 years, we've added additional resources in sales, customer service, Business development, strategy and road torque site services largely in Asia, Latin America and the Middle East. We are actively localizing additional production in these regions to further reduce lead times, reduce our logistical and environmental impacts and to take full advantage of indigenous preferences where required. Next is the acceleration of our innovation and new product development efforts. This is through revised and enhanced processes and adding of additional engineering and program management capabilities. This has led to an increase in the numbers of new products launched and in the size of the opportunities we are now pursuing. Many of our recent launches broaden our electric and digital offerings and by design drive a greater amount of incremental revenues rather than replacement revenues. One example of an exciting new product is our patented battery backup electric actuator. Our patented design allows Rotorque to be the 1st to the market with an explosion proof battery technology to support customers in applications such as remote skids, blow down valves and wellhead choke valves. This development allows for the use of an electric actuator in applications previously reserved for traditional fluid power technologies. This also plays into one of the primary ESG themes we are seeing across the industry. Not only is our product competitive from an overall value perspective, it also reduces our customers' environmental footprint through the elimination of emissions and can also, if the customer chooses, be powered through remote solar panels. Lastly, as we evaluate a broader opportunity set now envisioned by dedicated geographic market segment teams, We are finding new and emerging adjacencies we are well positioned for. These include rapidly growing applications in biofuels, waste to energy, hydrogen production, transportation, storage and utilization and carbon capture usage and storage. While we recognize each of these markets are at various stages of development, these new markets and applications will feature electric networked actuation systems And as the market leader, we are winning a high percentage of bids in these areas. We are confident these actions will aid Rotorik in returning to the mid to high single digit revenue growth we have enjoyed over the long term. Now let's shift gears and talk about our continued momentum On our ESG agenda, we'll start by reviewing our performance across some of our key metrics last year. In keeping with our purpose, we are fully committed to reducing our environmental impact. Our focus on driving lean and efficient operations continues to be an integral part of our growth acceleration program. We operate an assembly only philosophy at most of our business units, meaning that most of our energy use is on lighting, heating, cooling and IT systems. We made good progress during the year. Rotorx carbon emissions were 18% lower in 2020, gaining momentum from last year's double digit reduction. We reduced our electricity consumption by 8% and our water usage by 5%. Over 50% of employees now own company stock and I'm also pleased to say 23% of our senior roles are occupied by women. Our 4th quarter poll surveys continue to show progress with an overall global engagement score a 7.1 out of 10, representing a high level of engagement despite the backdrop of operating in a global pandemic. Our pace of change score came in at 6.6, a slight increase from prior year score of 6.3. Given the number of initiatives we are driving at Roadtorq, we feel this is right about where we would like to be. Turning to Slide 20. In 2020, in alignment with our purpose and recognizing its potential to create superior and sustainable value for our stakeholders, We sharpened our focus on our ESG agenda. We formed an ESG subcommittee within our PLC Board and hired our 1st Head of ESG and Sustainability to further accelerate our momentum. We undertook involving our senior leadership team and a cross section of our external stakeholders. This important work helped us confirm the key issues we should be focusing on, where we could really drive change and add value, including the sustainable development goals we are best placed to support. The sustainability topics we found to be most important are, in many cases, those we are already focused on. We have a strong track record of driving efficiencies in the way we operate. We work hard to support our customers' environmental performance and we look after our people and the communities we operate in. The latter was particularly evident throughout the COVID-nineteen pandemic. Let's take a brief look at our sustainability framework. You'll see that our purpose and our sustainability vision are 1 and the same, keeping the world flowing for future generations. Our framework will help structure our activity and guide our focus going forward. It is based on 3 pillars: operating responsibly, enabling a sustainable future and making a positive social impact. We've set out our ambitions in key areas of focus within each of these pillars. We recognize our opportunity to help drive the transition to a cleaner, more sustainable future. And we will continue to seek out opportunities in energy, water, power and industrial markets to support a green economy and at the same time, our own business growth. Our entire ESG agenda is underpinned by our commitment to enhanced measurement, reporting and disclosure and as I mentioned previously, aligned incentives and decision making processes. You'll see that we've aligned our sustainability framework to the United Nations' Sustainable Development Goals, the SDGs, which we believe are most important. We've identified 5 main SDGs we have the greatest potential to support the transition to a better and more sustainable future. We will target SDG 6, Clean Water and Sanitation SDG 7, Affordable and Clean Energy SDG 9, Industry Innovation and Infrastructure SDG 12, responsible consumption and production and SDG 13 climate action. We have also decided to target 2 additional SDGs, SDG V, Gender Equality and SDG VIII, Decent Work and Economic Growth to help drive progress on these issues. Roadtorque has long championed these as shown by our initiatives and progress in recent years. What really became apparent over the last year It is the incredible opportunity Roadtorq has to make a difference, particularly regarding facilitating a more sustainable future through enabling the shift to cleaner and more renewable energy and helping our customers improve their environmental footprint along the way. I'll close out by some of these upgrade and conversion programs. Our innovation and NPD efforts are accelerating and we've made real progress on our ESG agenda. Now turning to our outlook. Whilst the outlook for our end markets COVID-nineteen related uncertainty remains. Our production facilities are currently operating largely as normal. We have a solid order book and the considerable flexibility provided by our strong balance sheet. Our investments in IT systems, Targeted geographies, innovation and new product development and aftermarket activities are progressing well and yielding benefits. We continue to strengthen our business and are well placed to benefit from recovering demand. We remain committed to sustainable mid to high single digit revenue growth and mid-20s adjusted operating margins over time. With this, Jonathan and I would be delighted to take any questions you may have. Our first question is from Andrew Douglas of Jefferies. Your line is now open. Please go ahead. Good morning, gents. I hope you're both well. A few quick questions for me, please. Can you just give us a little bit of a feel for the second half in Water and Power? It looks like organic growth there was kind of flattish after a strong first half. I'm just double checking there's no nothing untoward in that one. Secondly, we've had a clearly a cold snap in Texas. I was just wondering if that's a threat or an opportunity for you guys. I'm working on this assumption it's an opportunity, but just wanted to double check. And then thirdly, there's not a huge amount on the outlook for M and A. You're going to be start on £200,000,000 of cash plus At the end of the year, what's the outlook for M and A? And if there's nothing coming, I appreciate you've got lots on in terms of your focuses elsewhere. Do we then start to think about share buybacks or would you prefer to keep the war chest for future M and A? Thank you. Good morning, Andy. Let me deal with your Water and Power question first. Are you talking orders or revenue, firstly? Revenue. I think it was plus 4% for the full year, plus 7% for the first half. Yes. So in terms of revenue, H2 was slightly ahead of H2 Last year on an OCC basis. I think on a reported basis, it would be slightly down, but the Pittsburgh exposure and the middle currency gets in the way of Seeing the real answer. So it's low single digits better than H2 2019. Okay. Thank you. Andy, let me address a couple of the other questions there. First of all, on the Houston, Texas, I'll give you a couple of frames of reference on how we look at it. On the one hand, it further supports an impact on the supply side, which again helps elevate Oil price is above those incentive levels and it effectively took off about 4,000,000 barrels per day of production and about 7,000,000 barrels Per day of refining capacity came out of the system, so that shock kind of did help elevate the price of a barrel of oil for a period of time. We think that net net provides an opportunity for us. There's a lot of the equipment, both in the short term and the long term, a lot of the equipment needs to be repaired in that marketplace. So, we expect to see an uptick in terms of field services and going out and assessing and repairing some of that equipment Let's delve during that. And then I think on the longer term aspect, but I think one of the things that did bring into focus Was Texas was the leading state in the U. S. In alternative energy, and I'm not sure many people appreciate that, but while it is the capital of the hydrocarbon Infrastructure in the world. It also happens to lead the U. S. In terms of alternative energy. And the recognition that a lot of those Alternative energy sources failed during this time period, I think brought into focus that there is an appropriate mix that will be required as we go forward. So, I think that's all helpful for us long time. I think that in relative to the M and A, Obviously, we have desires and ambitions to do M and A. Our pipeline is good and continues to grow. We continue to develop relationships with owners and managers on a proprietary basis, as we feel that the current gap between kind of sellers and buyers expectations that we've talked about before It's still there and hasn't dissipated like it has in previous cycles. In fact, valuations continue to decline, Aided by rapidly increasing presence of SPAC. So we think there's a lot of money on the sidelines, very few high quality assets coming to market in the near term, which again creates pressure for us in terms of maintaining a level of discipline in our pursuit of M and A. So what that results in us focusing much more on proprietary deals. We're going to continue our push there. But we do recognize Our obligation is to return excess capital to our shareholders, and we'll continue to evaluate that as we go throughout the year. Super. And then one quick follow-up. On the energy product side, you've got lots of new products coming through in 'twenty Is that more of a focus on the new energy opportunities, the hydrogen? Or is that a kind of an evolution of the kind of current product set just to keep you kind of growth momentum going? Yes. So, it's both. It's a lot of our iterations of the existing product portfolio as well as some additional adjacent product that we've been launching. And if you remember, we've started accelerating our investment in NPD and the processes And the number and while the quality, I would say, in the pipeline are bigger and more incrementally focused New product development initiatives, we've really ramped that up over the last 2 years and what you'll start seeing now is the acceleration of new product launches over the coming years. So, more new products launched that are more meaningful in the overall revenue, but More importantly, more meaningful in the amount of incremental revenue versus replacement revenue that they drive. That's really kind. Thank you very much. Our next question is from Mark Davies Can I come back to growth? It's another really strong year in terms of operational delivery on margins and cash and all that good stuff. But as you say, there's still more to prove on the growth side. Yes. As you look at the structure of the business today, do you think all three business divisions are capable of Similar levels of growth over the next few years, particularly within oil and gas. Do you think it's realistic to see longer term growth potential in So the upstream piece of that, given the challenges there. And I guess as part of that, you've talked a number of times about the opportunity for growth in the electrical actuation market As the transition that carries on, but obviously you still have quite significant exposure to the Fluid Power piece of it. I guess the converse of Andy's question, are there any business lines that you think you need to get out of in order to drive the overall revenue growth to the levels you need to achieve your targets? No, I don't think. I think we do a pretty robust portfolio review every year I'll present that to our Board mid year as part of our long term strategic planning exercise. And I think at this point, we've Exited the businesses that we feel we need to exit. Having a portfolio still in the Fluid Power is important for a couple of aspects. The first is Many of the large programs that we participate in have a combination that is that they still desire use of Fluid power actuation for emergency shutdown applications and electric for the process control side of their application. So if you're building a new reserve, for example, You will have both resin and new refiners still. And having both That being said, we are helping assist the migration to much more use of electric over the fluid power. But I think it's still quite important. I think we look at as many as 30% of our orders having a blend of electric and pneumatic and hydraulic on those large programs. So, it's still important for us to have, but continues to be important for us to improve the operations Within that, which we've been doing for a couple of years now, we've had a focused improvement on our operations, primarily in our Luca facility that drives our RFS business. Great. Thanks. And the relative growth potential of the 3 divisions? Yes. Absolutely. What I mean, We see the growth opportunities in all three. You mentioned upstream, obviously, the biggest thing that will drive growth in upstream Will be the need to control it, but by electrification there. In water, it's really about, again, As you're building new water infrastructure, you're building it with current technology actuation, meaning electric actuation and network systems. And then as you're Refirming kind of the established infrastructure in the U. S. And Europe, you are again Refurnishing that with electric versus manual to have remote control of your water network, right. So again, Strong dynamics in both of those segments. And then again, within the CPI, the fact is on most manufacturing lines, you will Not build a new manufacturing center today predicated on pneumatic actuation. If you're building a new Assembly line today, it will largely be based on electric actuation, right? Not only new, but we will continue to convert the existing Pneumatic actuation systems that are out there. So we feel that there's really growth to be had in all three of our segments going forward. Great. Thank you very much. Our next question is from Max Yates of Credit Suisse. Your line is now open. Go ahead. Thank you. I've just got 2 questions. So one may be A little bit shorter term. Could you give us a feel for the order book going into 2021? You mentioned that It's healthy. Should we assume that it's in line with levels of last year or is it Still below where we were 12 months ago. That was my first question. I think if you obviously, The difference between orders and revenue in 2020 was a £15,000,000 reduction to the order book. I think if you track back that puts us at pretty similar level to where we were at the end of 2018, if you do the math. Currency is a bit of a bit of noise in that sort of a reconciliation, but it's not significant. Okay. So if you then look at the revenue that we drove from that in 2019, you can really see that revenue in any given year is not about the opening order book, it's about the orders In that particular year, we still don't have a significant proportion of our Revenue in the year that's determined by the order book at the start of the year. And I think it goes along with what we've been Communicating is that those large programs that may overhang from 1 year to another, they really haven't been meaningfully present for the last 18 months, right? So, this is Much more of the operations spend, the OpEx rather than the CapEx that we've been seeing now for some period of time. Sure. Okay. And could you also I mean, when you talk about the electric Actuators opportunity, could you give us a sense for how much of your sales today are electric Q8 as I mean how quickly perhaps that has increased as a proportion just to understand sort of how fast this has been growing and maybe any feel for Where this could be in 3 to 5 years based on the quotations and rates of conversion that you're doing? Well, yes, that was the old divisional structure and it's the one that we've stopped reporting in. So I'm not sure I've actually got an electric actuator revenue number That we want to share going forward. First of all, we have said through the presentation is that obviously Fluid Systems is the product line in the division The fluid power actuated is the one that declined the most in the year. So it's certainly fair to say During 2020, the electric sales have not declined as fast as the group as a whole. I think that move to electrification and our kind of launch of new products to support it It's something that's for the reasons Kevin highlighted earlier, is only likely to continue and potentially accelerate. Okay. And maybe just a final question. When you think about Your mid- to high single digit growth target, have you sort of built this up via what you think your end markets will grow at? And then how much sort of Rotor can grow sort of on top of that with new products, market share, etcetera? Or I'd just love to understand a bit more color around sort of how you built up to that mid- to high single digit growth number. I think that is One of the ways in which we come at it is that we've looked at supporting that mid to high single digit growth number in a variety of different ways, but certainly From markets up, electrification, digitalization, all of the trends that we're talking about in terms of how those play out for actuation And I'll pass the thought process in supporting that assertion for our business over the medium term. Okay. Thank you. Our next question is from Jonathan Hurn of Just a few questions from me, please. Firstly, Just in terms of the mix in 2020, obviously, you saw a favorable mix from electric versus gneumatic. How do we think about that going into 2021? Do you that mix will still be positive? Or do you think it will unwind maybe more in sort of H2 than H1? Just your thoughts there firstly would be helpful. Thanks. I think, as I said, the area where fluid system products, fluid power actuators have been utilized most Significantly, it's in the Oil and Gas division. And that is the division that in some ways saw the decline in Q2 slower And potentially therefore a slightly later cycle and we'll see the return to growth slightly slower in 2021. Having said that, as that comes back, I'm sure we will see a mix headwind from fluid systems sales picking up. That's quite likely. I think the other aspect of mix is probably around service. So we highlighted the fact that the Rotor Services through obvious site access issues really through 2020 declined slightly more than the group So went from 20% of group revenue down to 19%. That has a degree of Positive mix impact as that business returns as site access improves hopefully through 2021. That is The pace of that return and that pickup, of course, is one of the uncertainties that we're facing as we look forward. And just to clarify, in terms of that sort of fluid systems bounce back, is that more of a sort of an H2 type, Norman, would you think? Really hard to say, Jonathan. Yes, potentially. I think it's a business that's much more related The large project rebound, to be clear. Sure. Sure. Second question was just on Power. Just wondering if you could just give us a little bit more color on that just in terms of where you are on the renewables within in that Power? I mean And have you seen some quite decent growth coming through in that, Richem? I think, obviously, the The only item we're really calling out on power has been around refurbishment activity and refurbishment projects, which clearly is not renewables. I think we have seen interesting opportunities in a number of areas. And I think we've talked about The further opportunities through kind of energy transition areas such as hydrogen, carbon capture and storage and those sorts of areas. And we've been very successful in a number of niches within that, but clearly in terms of scale of those relative to the Power as a whole, they're relatively small at this point in time, but promising as we look forward. Obviously, Some areas of power are more actuator intensive than others. Solar PV is not particularly actuator intensive. Windmills, wind turbines also less so. But the focus on those bits where actuation is required is yielding positive momentum. Okay. Great. Very helpful. Maybe just one final one. I don't know if this is that easy to clarify. But just if you look at your sales right now, How much of it is currently generated directly from automation and digitalization? Just a sort of rough percentage there would be helpful, please. Well, I could argue 100% is driven by automation, Jonathan, in some ways on the That's what an actuator is doing. Sure. So I don't I'm not sure I can really split it in any more meaningful way at all, I'm afraid. Our next question is from Dominic Conde of Numis. Your line is now open. Please go ahead. Good morning, gents. Just a quick question on manufacturing footprint, if I may. You removed a third of your sites over the last 3 years. I think it's Jonathan hinted at Actions planned for later this year. I wonder if you just might give us a little bit more color on those existing plans. And also what you see now as the ultimate end game over the next 2 or 3 years for the footprint itself? Tom, for obvious reasons, we really can't comment Publicly on our plan to reduce facilities, I think we've always said externally that our goal would be to get down to somewhere into the mid to high teens as an endpoint. So while there's some additional work to be done, It will continue in this year and next, I guess, would be all I want to say publicly about our footprint plans. Perhaps just in another way then, I think on the graphic, I can't say it right now, but there was an arrow pointing down this year to signify that clearly It will be later on in the year, so you won't get a material benefit this year. Would we expect to see that arrow then pointing up in 2022? Is that a fair way to look at it? In terms of the activities in 2020, certainly the sorry, in 2021, Certainly, more of the benefits of that will fall in 2022. I think you also have to bear in mind that 2020 benefited from carry forward from That we did in 2019, so there's always a as we parcel this up into artificial financial years, it doesn't reflect The sort of 12 month benefit that we see from each of the changes that we made. And just one quick follow-up, if I may. In terms of site services, you've talked about this notion of Penta demand, which I think seems logical given how quickly it fell off last year, is there any issue around capacity there To fulfill that way, if it bounces back quite strongly, could there be a bottleneck issues or do you think you've got plenty of capacity to deal with that? No, I think when we think about our headcount changes over the last year, we've been very careful to protect Those experienced site service engineers, so that we maintain them. So we accepted a lower level of productivity and utilization Throughout last year, knowing that when this comes back, we need to have the capacity. So, I think we feel fairly good about our existing capacity. And throughout last year, we continued to add those resources in emerging markets that we think will have a natural level of growth in that. So I think we feel pretty good about it. Our next question is from Edward Maravanyika of Citi. Your line is now open. Please go ahead. Thank you very much. Good morning, Kevin. Good morning, Jonathan. Hi, guys. I just had two questions. Firstly, just given the much better than expected margin performance, Would you think of revising upward your longer term margin target? Or what would you still need to see before you consider doing that? And then secondly, what percentage of sites can you access as of today in the context of RSS Compared to say 2019? Yes. Let me ask for the first one, margin performance. So, I think we've continued to say mid-20s operating margin because part of what we're recognizing in that is our ambition to bring forward M and A. And we recognize that it will be difficult to find accretive M and A targets. So, By saying mid-20s, we have in mind that we will continue to acquire some companies that may not be at that margin level that will have work to do to get them to that margin level, right? So while if Roadcorp was to not do any acquisitions, would you be able to Model the flow through and say you'll be able to beat that mid-20s probably, but we're very mindful of the ability to bring in acquisitions and take time to get them up to those Margin levels as well. So hopefully that gives you a sense of that. And then relative to site access, I will say While we hit the peak of limited access in Q2 and this was when everyone locked down their sites and said we will have nobody come on-site at all, We began to understand kind of midway Q3 how to come out of site. So how to have our operators tested, what PPE we needed to wear, How to properly distance when we're at a customer site. And so we had a good double digit increase in Q3 and then again a double digit increase in Q4. So, I don't know that I have a percentage of sites. I just know that there is good momentum in us regaining access to sites, coupled with momentum in, Again, the release of these upgrades, conversions type of programs that we're seeing that our site service is really well known for. Okay, clear. Thanks very much. Our next question is From Andrew Douglas of Jefferies. Your line is now open. Please go ahead. Hi there. I was just wondering if you can give us a feel, and this is reasonably broad question. On the competitive landscape, it would appear from first glance that you're winning a lot of market share given the performance of your peers. Was just wondering if you could make any comments on that, just kind of how you see RoadTalk positioned, I guess, in the future Relative to what peers are doing, be it the small ones or the larger ones, just how they're faring? And then secondly, just with regards to ESG, Clearly, lots of stuff in the slide with regards to kind of what you're doing. Is it fair to say that you're changing the way that you sell? Or is it fair to say that the customers, Their requirements are changing. I'm working on a company that there's quite a few customers that make our old school oil and gas who don't really care much for ESG, Maybe some more a bit more forward thinking, who do you care? I was just wondering where we are in that kind of evolution. I think the one question answers the other. Let me do it this way. In that we've been changing the way we sell with that 42,000 hours that we've done value selling. We're Selling very differently on overall lifetime cost of ownership and showing that, yes, while we are the highest priced premium priced And premium positioned product in the marketplace that over that course of life and we can measure in 5 years, we can measure in 10 years, we can measure in 5th, We can demonstrate to our customers that you do have a lower total cost of ownership using Roadtorq over some of the competitors. We frankly chose not to participate in the, for lack of a better word, the pricing battles that were apparent In a couple of our large publicly traded competitors that have noted that pricing has climbed tremendously in the market, we frankly chose not to participate in that. And in fact, I've been able to feel really good about understanding the premium price position that we could command And still continue to win those orders, right? So we've done a lot of work around that and we feel good about that. I think it's not ESG changing the way we sell. It's really about we're changing the way we sell, including ESG In terms of the lower emissions and lower energy costs and all of the above, right? And again, the energy costs are quite significant when you're comparing, say, and not just an oil and gas application, but if you were comparing A pneumatic actuator on a biopharma line, for example. You're talking about some of the case studies we've done Talk about energy usage that are in the $600,000 $700,000 $800 a year range versus you replace that with a Digital electric actuator and you're taking that down to $20 a year range, right? So, you can imagine that those paybacks, Now that we understand them really well, are really easy to sell on to not only sell on the ESG, the reduction in emissions, But in the overall energy efficiency, and we've got some really great case studies that help us in that. And I think Relative to the commentary about old school oil and gas, I view that as, look, the European oil majors have already Been on the ESG bandwagon for some time. And one of the first legs, if you will, of their current conversion is about Dramatically reducing the environmental impact of their existing extraction and production operations. Again, that You can't make a statement like that without immediately going to reduce emissions, therefore, using electric actuators instead of pneumatic, right? That's exactly. And what you have in North America, although slightly behind, as you have a lot of the if you think about the shale, As you have a lot of the independents that were not as well capitalized coming into the downturn, had a lot of debt being acquired by some of the majors, That is really, really good dynamic for us, right, because what you have is those majors who have stated ESG and sustainability goals, They have operating efficiencies. They have processes. They have playbooks in terms of better ESG related extraction and production methodologies. And all that plays really, really well into our ESG themes that we're pushing to drive growth. So we like those dynamics and we do think That there is a positive trend with the consolidation in North American Shell, as an example. Okay. Thank you. Our next question is from Andrew Wilson of JPMorgan. Your line is now open. Please go ahead. Hi, good morning. A couple from me. Just following up on from the site services conversation, Just trying to think how the sort of last 12 months have made you think about that as a franchise in the areas which you want to invest And the feedback you've been getting from customers in terms of either the value of site services potentially accelerating some of the growth that you've seen there in terms of adoption rates. Just Given the restrictions around being able to get on-site, how's that sort of on the connectivity side of it, sort of remote access and all that kind of thing? How has it changed the way you've thought about where you want to invest in that business? Or has it just been a case of kind of reconfirming the model that you have and you've been investing in? Yes, I don't think it's changed. I think it's just reconfirming our investment thesis inside services. As we've noted in the presentation, Despite access issues, the fact that we had the single largest growth in new actuators under contract In the last 5 years, it's just really telling. And that goes with when we launched our lifetime management program, our reliability services, It's all about going on tight, helping our customers assess their actuation platforms And talking about how we can, on one hand, maintain them to maximize their useful life and on the other hand, Show them definitive value propositions to upgrade them in the near term, right? So we're able to do both. And I think that's, Again, getting really sticky with that customer base. We're enjoying that. I think the other key element to that for us is that we have, again, done a good analysis of concentration of actuators around the world, if you will, and ensure that we have the right service centers close to those bigger concentration areas. We've added a new service center in the Americas this year, as I noted in the prepared remarks. And within 3 months, it was up to 85% capacity already. We expect that certainly in the very near term to hit over 100% capacity. And it just gives you a sense of that pent up demand for services that we're seeing. Thanks. And same question is probably on for Jonathan. But thinking about the margins are forward and kind of Ed's question around sort of what's achievable versus I guess, the question is probably what's desirable. And given the degree to Which talking about some of the opportunities for growth and thinking about the returns profile the business has, it seems to me that There's probably a big opportunity for you almost to throw kind of as much investment in these opportunities as possible given the likely returns that you can see from that. So Kind of going forward, is one of the headwinds to these margins not being even higher than that kind of mid-20s? Is it just that There is just an awful lot of investment opportunity which you want to take advantage of. Yes, there certainly are. And I guess We've talked about that over the 1st 3 years of the growth acceleration program happening in terms of the enablers, be that new product development, IT systems, common processes, all those sorts of elements, those are certainly areas where we have been investing now for a number of years to Line things up with those ultimately to drive additional growth. I think as we go into 'twenty one, there's certainly some uptick in some of those investments as we mentioned earlier in terms of Resources and licenses and all the things that come with it. But yes, I think that's That's always been a conscious decision to take some short term costs to benefit the medium term performance. Yes. I guess my thinking is, it's almost a framework where after obviously seeing the margins improve pretty significantly in the last 3 years in a pretty mixed backdrop, It's almost, again, given the returns profile, there seems to be a sort of a tilt towards almost a focus on absolute EBIT and not Obsessing to the degree that maybe we do as analysts on the margins is actually going to be the kind of greater value creation opportunity. Well, I think our mid-20s margin aspirations gives us some latitude to take those decisions certainly. And whilst we've Kevin mentioned earlier in terms of the way in which we think about selling, we're not compromising on the sales price. I think We are looking to balance investment versus profit generation. And this isn't This isn't an effort to drive short term gains only. This is about setting the business up to be much, much stronger in the medium term and That remains the thought process. And I think you'll see that even in a year of COVID that our spending on engineering and new product development, Frankly, it was flat, right? So we didn't cut. We continue to spend because we're not going to mortgage our future, right? So we managed The P and L, yet maintain levels of investment in those key programs that we desire to. That's very clear. Thank you, guys. Our final question today is from Julian Weddington of Peel Hunt. Your line is now open. Please go ahead. Hello, good morning. Just wanted to ask the first question, Pete, just on the organic growth. Talking a lot about site services, Have you got a view on where you think that business might get to in sort of FY 'twenty one relative to FY 'nineteen in Revenues, I appreciate quite early in the year, but just wondering if there could be a catch up pent up demand Well, our sales were a bit far than expected? I think it's Yes. In a point in time when we're not giving guidance on the top line as a whole, that's quite a tricky one, Joanne. But I guess You'll have understood from the conversation that we think it was that part of the business was more effective through site access issues in 2020 than the business as a whole, But it's been improving sequentially through the second half. Therefore, I guess, we would anticipate it increasing to Maybe more like 20% as it was in 2019 of total group sales or maybe even a little better. I think that's really as Precise as we can probably be this early in the year. Okay. That's really helpful. And then Just looking a little bit further out on the divisional split and the sales split for the group, How would you kind of expect that sales split to evolve over time? I mean, the oil and gas number 10,040 9 Percent Sales of 48 percent of sales, how do you think that divisional split might look like over the next couple of years? Yes. I guess we see The disproportionate level of opportunities in chemical process and industrial in some sense is in that, that was The newly formed as part of the end market reorientation of the business, that was an area that probably had received less focus historically than Oil and Gas, Water and Power. So in terms of growth rates, we might expect that with the additional focus to grow perhaps Little faster. I think it's more a question of that growing faster than the opportunities in oil and gas diminishing. I think In the next sort of 5 to 10 years, there are still plenty of opportunities within oil and gas from the work we've done on energy transition and all those sorts of things. Certainly suggests, supports that view. So I think it's that's possibly the way in which The relative spike that the divisions might change over time. And within Water and Power, I think There's possibly a shift within that division from the type of spend in water as we've talked earlier in terms of investment in Making and analytics in the water industry creating a sort of a more of a smart water infrastructure in the developing world Whilst we're still building activity in power, the days of being a large Look of our power sales on new coal fired power stations sort of disappeared, I don't know, maybe 10 years ago. Okay. That's very helpful. And then just final one for me. Just on It would bring to the portfolio from an adjacency perspective and many other dimensions. I think The challenge at this point in time is still around seller's pricing expectations. And The discipline we Bill, in the process, is not going to change. So it's really about continuing to focus on those. And The proprietary conversations we are having are a far better way for us to be looking at deploying our M and A spends Participating in auctions. Auctions are always going to drive the price higher, aren't they? We have no questions remaining, so I'll hand back to our host. Well, thank you everyone for joining us Today, I know that the prepared remarks were a bit longer than usual, but I think we really wanted to get out some of the exciting things happening to drive our growth in our Thank you again for joining us and stay safe.