Morning, guys. It's my pleasure to welcome you to our conference call today. We will be discussing the press release that we issued earlier today, where we announced the acquisition of SYNLAB. We had an update on trading where momentum has been positive and we had a couple of comments on the next stage of our strategic evolution. We have 45 minutes in total for the call. We have a short presentation for you. We would expect to be doing about 50 minutes presentation and about 30 minutes Q&A. With that, I will now hand over to Frankie and Dominik, who will go through that presentation. Then if you could hand back to me to introduce the Q&A, that would be great. Thank you.
Okay. Thank you, Toby. Good morning, everyone. Thank you for joining this rather short notice call. I will go through the current trading. Dominik will go through, in more details, the acquisition of SYNLAB Analytics & Services, which is in line with the mega trend that the SGS Group has been focusing on in the past couple years. I will come back to talk a bit more about the evolution of the strategy of the Group for 2023. In terms of the current trading, you know that we have postponed the Investors Day of October this year to May 2021. I think it was good opportunities for me to give a quick update. As usual, we give this update during the Investors Day. Next slide, please.
As we announced this morning, the growth for July to October is negative 3.8%, we're seeing a good momentum for the month of September to October, with the decline is less than 2%. We're seeing a much better October, September compared with the first half of this year. In terms of first half, you've seen that in China, we mentioned already that we were really strong during the first half of the year, and this momentum has continued towards the second half, and we're seeing a really strong growth and a strong demand for the domestic market. This is really across all the business lines that we operate in China, but particularly in the domestic and international PPE, I would say, as well as the connectivity services in term of 5G and IoT devices.
Likewise, our food activities in China was really strong in the second half of this year, with a lot of demand for the domestic market. On the more global level, CRS and AFL, so our consumer goods and agri food and life, has performed well during the second half. Besides China, we have seen very strong growth in locations such as Vietnam, Turkey, and Taiwan. For AFL, our life sciences activities perform extremely well, and our food growth has moved back to positive territory during the second half. Most of the other business lines has improved during the second half, with the exception of oil & gas chemicals. This is really linked to the demand of the market. With the softness of the demand, we were seeing still a lot of pressure on the oil & gas sectors.
In term of adjusted operating income, it has increased during the period of July to October, implying a strong increase in our AOI margins compared to prior year. I think this improvement is mainly due to the improvement measures optimization program that we have implemented over the past couple of years, and we're seeing with the evolution of our bottom line in line with these measures, as well as the strong and rapid cost control that we have put in place in 2020, together with the situation of the COVID this year. Just to finish on the trading. Considering the COVID situation is still ongoing, particularly some of the European affiliates and countries that has put new lockdowns, it's very difficult for us to estimate what's happening in the month of November and December, as some of those effects are still not being assessed.
This is why we're still not giving an update in term of full guidance for the SGS Group. On that, I'm going to hand over to Dominik to talk to you about the acquisition that made this morning, SYNLAB A&S. Dominik?
Thank you, Frankie. Good morning. As you have seen this morning, we announced the acquisition of SYNLAB A&S. Currently, A&S is a division of SYNLAB, the leading medical diagnostic services provider in Europe. Acquisition of A&S will significantly strengthen our global network and key strategic focus areas as environment, food, life science, and oil condition monitoring. A&S is very much focused in Europe and deploys an attractive hub and spoke model. In 2019, A&S achieved revenues of EUR 202 million and an EBITDA of EUR 34 million. The organic growth of 5.8% in 2019 underpins the structural growth component of A&S, while the performance in the first half 2020, with +0.3%, was very resilient given the background of COVID. The purchase price consideration is expected to be around EUR 550 million and will be fully financed from our existing financial resources.
We expect the closing of the acquisition. One, the combination and full integration of A&S with the European SGS network will accelerate the adoption of a hub and spoke model, creating a more comprehensive range of services and generating strong operating synergies, which would lead to a positive EVA in year four of ownership, in line with our M&A strategy when it comes to strategic high-return targets with structured growth and strong synergy potential. Next slide, please. A&S is active in 11 countries in Europe and employs 2,000 FTEs. Biggest end market exposures are Germany, Netherlands, and Sweden. 60% of the service offering is in the area of environment, 20% in food, 10% in life science, and 10% in oil condition monitoring. Next slide, please. Now, what does it bring to us? Obviously, we enhance our position in the European environment, food, life science, and oil conditioning market.
We especially increase our market share in Germany and Benelux, and it enables us to enter. As 37% of A&S revenue is Germany, 25% is Netherlands. In these two markets, we clearly increase our market share, and further 25% is Nordics. The vast majority is Sweden, where we build basically a good market share. We will accelerate the adoption of our hub and spoke model and facilitate the optimization of the existing laboratory network, which will drive strong synergy potential. Finally, it will open up new multi-country service opportunities with key accounts which we have globally. With this, I hand back to Frankie.
Thank you, Dominik. Can you move to the next slide, please? I think there was one slide delayed. This is the network that Dominik was referring to with the different positions of the laboratories of the SGS Group versus the laboratories of SYNLAB A&S divisions, and with the complementary of the two network that we've seen on these slides. Sorry about this. Next slide, please. Before the current session, so let me just give you a few words on the new 2021/23 plan. As you know, the current plans that we set in place in 2015 will be completed by end of this year. The team has certainly been very active in the past many months to work on this new 2023 plan, and with the objective of implementing that across the network starting January 1st, 2021.
A full presentation of this plan will be given to all of you that participate to the Investors Day in May, in Spain, 2021. As I already did highlight, we have worked on focusing the organization towards the mega-trend for the TIC sectors that will influence the way we're looking at the evolution of the market drivers in the long- term. I believe that the SYNLAB A&S divisions acquisitions is a good example of this focus, where the mega-trend in terms of environmental, food, and life sciences are there, and we have made the move to strengthen our positions across Europe. Some of the other mega-trends that we'll be focusing on is, again, health, nutritions, connectivity, natural resources, and already mentioned environmental and sustainabilities are some of the key aspects that we believe they were strong drivers for the future.
In term of the organizations, you know that SGS Group has the matrix organizations, that it is a strength for the company that we'll be keep leveraging. I have simplified the business structures from eight divisions down to five, and this with the objective to be more focused on the market approach and to bring more agility in the development of the organizations. All that will be presented to you in May 2021 in the Investors Day in Spain, and will be implemented across the network starting in January. Just to conclude on my side is, we will continue to evolve the SGS organizations. It's also important for us to redefine little bit our purpose of the company towards society. This is why we focus a lot to our value to society.
We have also developed an Ambition 2030 Plan, which with the stepping stone toward 2023, and we're also creating a brand purpose of enabling a better, safer, more interconnected world, which will be at the core of a lot of things we'll be undertaking in the coming years. On that, Toby, I'll hand it back to you for the Q&A.
Thank you very much, Frankie. There's a number of people sort of stacked up in the queue line, and there's a couple of things to say. The first is, could you limit your questions to two? With that, I'll hand it back to the operator. I think, Paul Sullivan, you're first on the line.
The first question comes from Paul Sullivan from Barclays. Please go ahead.
Good morning, everyone. First on the acquisition, can you quantify the synergies and also tell us what you think a consolidating market means for pricing longer-term? Secondly, on current trading, can you just maybe quantify or elaborate on what you mean by significant margin improvement? In terms of your caution about lockdowns, what % of the business do you think is exposed to the type of restrictions that are being imposed today? Clearly, it's less severe than we saw previously. Do you think it's enough to erase the margin improvement you've seen July to October? Thank you.
There's four or five in there hidden away. Frankie, if you want to work your way through those. Please, you can always come back at the end of the call, guys. If you keep it to two going forward, that'd be good. Thank you.
I can go through the lockdown questions. Dominik, you want to take on the first one in term of the acquisitions synergy and so on?
The synergy potential, which we assess, is CHF 15 million-CHF 20 million on the cost side to be fully realized within three years. In terms of what do we mean with the strong margin increase, you have seen July to October is down -3.8% organically, but earnings are growing, I would say nicely mid-single-digits. That implies a rather strong margin increase so far this year. This is obviously driven by the fact that we, to be fair, like in the first half, have the full potential captured of our structural cost optimization program of the CHF 90 million, of the additional measures which we have taken, but also some other restructuring measures related to basically stopping some value-destroying activities. Who's driving the margin and also good bad debt collection.
For going more into Q4, just want to remind you that last year, the structural cost optimization program, the savings started to kick in October. There is a bit of base effect. Overall, we are very pleased with the margin progress in this period.
Yeah. Paul, maybe just on the lockdown. I think the severity of the lockdown is, for the time being at least, different than what we've seen in the spring, where there's still activities. You look at across Europe, most of the countries has not put a full lockdown, but this is really for the short-term. What will happen if the number of infections doesn't change, whether government would put additional measures or not, it is still really. There will be some impact, for example, for some of the statutory inspection activities for automotive that we have in Spain and in France. We see already some delay of those rescheduling of some of those controls. Whether there will be a catch-up effect in December like we had in the first half of this year, is still unknown.
Whether some of them will be split over into the first half of next year is difficult to say. I would say severity seems to be different. There's less countries, the last time was really worldwide. This one is more Europe for the time being, but difficult to say in term of the full impact, so to be assessed.
That's great.
Thank you.
Thank you very much.
Thank you, Paul, and thank you, Frankie and Dominik. The next is Ed Stanley from Morgan Stanley. If you'd like to ask your two questions, please go ahead.
Thank you for taking my questions. You talked very positively about domestic China, and I'm wondering whether post-COVID, you expect to see a step change here and that domestic China can grow faster and be a larger portion of your group, or whether this is actually a one-off to do with PPE testing and actually domestic China will rebalance back to its more normal portion of the group. The second question, sort of follow up on the M&A point. This is a larger deal than we've seen in the testing space for some time. Should we expect other deals of this kind of size, or are we more likely to go back to a smaller bolt-on, kind of M&A outlook from here? Thank you.
Hi, Ed. I'll go for the China questions, and Dominik, you can talk about Germany. Okay. You know what? For the China domestic market, we've been telling the market for quite some years now that the portion of the domestic market in the total portfolio of our operation is still growing. I think last year we already flagged that it has gone up to above 50, I think we said 55%. This will be evolving together with the opening of the Chinese market. There is still a guide rope, but it's happening. There will certainly be some effect with the increase of the COVID-related activities like PPEs. You also look at the other activities like the semiconductor industries, the wireless IoT industries. There are other activities, the food sector dimension.
There are other activities, it's more linked to the natural evolution of the Chinese market, partly because it's growing, partly because it's opening up. I would say one would probably compensate for the others. To which extent, I don't know. We are still quite positive, I'm still quite positive about the evolution of the Chinese market post-COVID. Dominik, you want to tackle the M&A?
Thank you, Frankie. Hi, Ed. If you think about it, and you're right, obviously, it's one of larger transactions and especially for SGS. It's completely in line how we also presented it, I think it was exactly one year ago, in China during the investor days that we said we are very open also for, let's say, more sizable transactions, which really are a step change for a certain business unit and moves the needle. Whether we see more and at what time on the size, it is always a bit difficult to say, because it depends also a lot on the actionability of assets, and whether the actionable assets really fit into our strategy, and whether we have the right value proposition. Definitely, we're looking in the market.
We're looking especially area of food, life, environment, cosmetics, couple of also other areas, but more smaller bolt-on. I would argue it's not that you have now so often, a possibility like this opportunity in terms of size, I would not say it's just now only CHF 5 million-CHF 10 million acquisitions. I can imagine in the past, which I just mentioned as focus area, there may be also opportunities who are very nice bolt-ons, where the purchase price consideration is maybe more in the CHF 50 million-CHF 150 million.
Okay. Thank you very much, Dominik. The next person we have on the call is Silvia Barker from JPMorgan. Go ahead, Silvia, please.
Yes, thank you. Hi, good morning, everyone. Maybe just from the acquisition, can you talk about how that came about? Was it a competitive process? Are there any earn-outs? How is it structured? Secondly, on the new divisional organization, could you talk about any savings related to that and also any restructuring and, cheating a little bit, but just in terms of restructuring related to the acquisition, maybe if you can just mention that as well as a mini third question. Thank you.
This was a competitive process. Basically, SYNLAB decided to spin off the A&S division. There was a competitive process, where we were engaged and finally could basically win this process. In terms of synergies, obviously there are a couple of areas where we see strong synergy potential. The A&S division is especially in Germany and Switzerland, very much integrated into SYNLAB. There is a carve-out necessary. Obviously, if we're carving out this unit and take it into our network and our, let's say backbone, we see quite strong synergy potential. There's obviously opportunities in the overhead and general and administration. As I mentioned before, if you look to the hub and spoke model, which we feel is a very attractive model, it will help us and it will also help us to consolidate both our networks.
These are the main levers to achieve these synergies within the next three years.
For the second part of the question, Silvia, the reorganization of the group for next year is more really about market approach and growth, agility, digital, M&A, focus, better capital allocations towards the mega trend, really more than restructuring. I think in the past few years we've done a lot of optimization of the network. The latest one was done in the second half of 2019. I believe I mentioned to the market that, I believe we are where we need to be in terms of the delivery engines. We have those programs of workout services. We have those programs of lean system that we will continue to deploy, and they are continuous improvement processes.
The organizations, the vision is really about growth, about better allocations of capital towards what we believe is the right market in the long-term, more than another restructuring or reorganization, so I would say.
Okay, thanks very much.
Thank you very much. The next on the call is George Gregory from Exane BNP. Go ahead, George, please.
Thanks, Toby. Good morning, Frankie. Good morning, Dominik. Just firstly, Frankie, you mentioned that China in particular benefited from PPE sales. I wondered if you could give us any color on the benefit that you saw from PPE and whether or not that had any particular impact on the margin. Secondly, on the margin, you mentioned, Dominik, that, Frankie, the uplift was principally due to optimization measures carrying through. Just wanted to check if there was any notable movement in provisions over that July to October period, please. Thanks
Good morning, George. Toby, you need to wait. I don't think we give the numbers of specific activities that we do pro gram for PPE or so on, correct?
Correct. No, we haven't yet.
I would say it is sizable in the sense that it makes a major changes in our total portfolio. It's a good evolution. Certainly you see that the demand for those PPE testing is very high. I think the peak was really towards the end of the first half, beginning of the second half, the quantity of the partner request has stabilized. We still see a steady flow. I would say toward the beginning of the year, we were looking more for hygienic mask and now we're more looking at the more sophisticated FFP2 and the N95 mask. The market is shifting little bit, we still see a good demand. I don't believe we provide the exact amount of what we do per category of products. Dominik, you want to answer the-
To the second question, there are no changes in provisions. However, and this I said when I talked about the leverage, there was good bad debt collection. Of course, if you collect better than the prior, it has a positive impact on the margin, but it was not the main driver. The main driver was the operational leverage, so to say, as the underlying cost base was going down.
Thank you.
Thank you very much. On the PPE testing, I think as we put in the statement, it's clear that we've got the leading market share in terms of volumes and it's clearly supportive for our softlines business within consumer. Obviously we don't disclose the overall. Could I also say at this point that, for members of the media, this is an investor and analyst call, and the media can follow up with Daniel Rüfenacht, whose contact details are at the bottom of the press release, and that should happen after this call or separately from this call. Next, from Goldman Sachs, it's Suhasini. Please go ahead.
Hi, good morning, everyone. Just a couple from me, please. You mentioned earlier that for the minus 3.8% decline July to October, your profit were up mid-single -digit. To clarify, was that on a constant currency basis or on a reported basis, please? What's the FX impact so far in Q3?
This is organic decline. It's organic is in constant currency.
The profits were up mid-single-digit, organic and constant currency basis?
Yeah.
Sorry, what did?
Oh, okay.
In constant currency. I talked about constant currency.
In constant currency basis. Got it.
Yeah.
Got it. The FX impact I'll follow with Toby later. If you think about the level of cost optimization measures, how should we think about normalized levels of margins once the economy normalizes post-COVID world? Are we looking at the same 18%+ margin target that you had for 2020 before COVID hit?
First of all, we had not a 18%+ target. Our margin target was 17%. The margin target was once reduced, I think, to 17%. I think this must have been in autumn 2018, and we implemented the cost optimization in mid-2019 and said we are very comfortable to come to 17%+ at the end of 2020. If you think about this, we finished 2019 with 16.1%. We can argue in the 16.1% was already CHF 15 million of the cost optimization program already considered because this was the impact of Q4 last year and the remaining CHF 75 million incremental coming in this year. Therefore, we felt very comfortable because if we would have, let's say, even lower single digit growth, we definitely would have surpassed the 17%, just if you do the math.
This has in general not changed, but obviously COVID happened and revenues are down. I would argue what you would see is if you come back, whenever it will be, to 2019 revenue levels on an LCN basis, our margin should be significantly higher as in 2019 we didn't have yet the full benefit of the cost save.
Okay. Thank you very much.
I hope that helps.
Yeah. Thank you.
Please, anyone do follow up with me later if any of these details can't be heard or aren't clear, and I can clear that up. The next we have J.P. from Vontobel. Please go ahead with your questions.
Thanks, Toby. Good morning to everybody. The first one is on M&A again, to have a kind of an assessment from your side. What is probably your, not a target, but what is your net debt to EBITDA goal, knowing that you're spending now more than half a billion in acquisition, share buyback, and then you will have the dividends as well. We're very much interested in that. The second one is as well the peculiar situation with your board. With von Finck reducing the stake to zero, and they're still on the board, and you're having now a massive strategic review. How do you see that in that situation?
Dominik, you want to tackle the first follow-up question? I'll tackle the second.
Yeah. Okay, let's start with the first question. If we looked at, of course, our balance sheet is so far very unleveraged. Of course, it will get now a bit more leverage given the purchase price consideration of the acquisition of A&S. We don't have a specific leverage target, but I can assure you that management and board wants to have always a strong balance sheet with a strong investment-grade rating, and is very committed to the dividend policy. That would mean that obviously there is still room for both on acquisitions as the leverage so far is very low. It increases now a little bit, but not massively with the acquisition of today.
Okay. J.P., if I go to the second question. The strategic review for the 2023 has been going on for quite some month now. We started almost a year ago. It takes time. There's a lot of things to be done. We need to be right. That Mr. von Finck and the Board was involved into this discussion, this vision, this review. The fact that his shareholding is at zero, what would come next to the organization report is not for me to comment, it's more for the chairman. I would say it's business as usual for us at management level, where the board was involved into this strategy. When we started this venture, the von Finck holding was higher than what they have now. I'll see what happens next at the next board meeting. Next AGM is not for me to comment.
Thank you, Frankie. Next, we have Will Kirkness from Jefferies. Will, would you like to go ahead, please?
Thanks. Yeah, a couple, please. Just firstly on the deal, and the comment about EVA-positive, I appreciate there's lots of puts and takes on that. I just wondered if, and particularly how you think about growth, whether the FY 2019 level of growth is right for sort of the next three or four years, and perhaps the rate of depreciation in that business. Secondly, just on the underlying group, if we see a slight change in perhaps U.S. strategy to China, do you think that makes a difference or do you feel that trends are fairly well-entrenched anyway? Thanks very much.
Maybe I take the first one. We believe this business will grow mid-single-digits. That's what we're thinking in terms of growth. As I mentioned, it's very resilient. It was even slightly up during the COVID time in the first half this year compared to prior year. The depreciation is around 4% of revenues.
Okay. Thank you very much, Dominik.
You want me to comment on the second part, Toby?
Yes, please. Go ahead.
On the China. I think the position of the U.S. towards China, depending on which direction it goes, if it becomes more flexible with the new administrations, I believe that the activity of the international trade would have a positive momentum towards what we've seen in the last three years. I would say also that a lot of the other countries and GHC government has understood the risk of a too focused approach to China only. The delocalization, the diversification away from China would carry on to some extent, but I believe that there will be less pressure from the U.S. side. The evolution of the more simple product toward the other location like Turkey, Vietnam, and so on, will carry on.
Okay. Thanks very much.
Thank you, Frankie. Next, we have Neil Tyler from Redburn. Neil, would you like to go ahead, please?
Yeah, good morning. Thank you. Two left from me, please. Firstly, on the trading update, and another question on the margin. You talked about additional cost measures over and above the CHF 90 million. Can you just confirm whether or not those additional measures are permanent or temporary in nature? Whether we should be assuming those remain through next year. Secondly, on the deal, can you give us some idea of the % of revenues, at the acquired company that already overlap in terms of geography and market with your own? I guess, am I supposed to be thinking about this as an acquisition that fills a hole or one where revenue synergies and sort of complementary offerings are a significant strategic imperative? Thank you.
Dominik, why don't I take the first part and you take the second part?
Sure.
For the first part, in fact, when I talk about additional cost measures, in 2020, it's really to reflect little bit the current circumstances with the COVID. I think we flagged during the first half result that there are market- sectors where we don't see a strong momentum coming back in the next two, three years. For example, the aviation industry and so on. These are really the sectors in which we have taken additional measures because we don't believe that it is right for us to keep the resources or the asset in place while the market will not be back. These are more related to the current situations.
If those market comes back in two, three years, we'll certainly reinvest, but the saving would be there if the market situation do not change, because we have just adapted a little bit our network to the market conditions that we're facing today and in the near future.
Regarding the second question, we definitely see some synergy potential also on the revenue side. Our investment case, we try also to focus on the cost synergies because they are easier to achieve, obviously. If we look to the model, first of all, in the Nordics, we are very small, so there is an overlap. If you look to the model, they are with the hub and spoke model much more, in terms volume model, volume delivery. I would say also maybe more volume basic tests, while we have in the developed end markets, more sophisticated tests. I would say there is less overlap, but here and there are definitely some overlap. I think maybe, Frankie, Peter is with you. Maybe Peter can add a bit more color as he runs EHS.
Sure. Sorry, I'm going to put Peter with us. Peter is the head of our global EHS activities and is quite instrumental behind this deal. Maybe Peter, you can say a bit more about the synergies that we see with this deal.
Sure. I want to make it clear that one, we have a geographic gap, as Dominik said, in Scandinavia, which is being filled here, which is fantastic. For the rest of Europe, this is more of a situation where we're looking at high volume business associated with contaminated land, associated with municipal water, which is an area that we have never really tackled at the SGS Group. You really need this hub and spoke model to make it successful. You're looking at high volume testing, as Dominik said. You're looking at markets in France, Spain, Italy, which can feed into that hub and spoke model and then generate the profits in the Netherlands, which is the biggest hub. It's a new market effectively for us. We play on the more sophisticated industrial end.
This is looking at municipal water consultants, contaminated land. There's 300,000 contaminated land sites left to remediate in Europe. There's plenty of work for us, in the future. Thank you.
And I think-
Thanks so much. Very helpful.
Yeah. Just to complement on what Peter says, we'll also be using our existing network of SGS Group in terms of sales and in terms of customers approach on that.
Thank you, Frankie. Thank you, Peter. The next questions come from Julien Puech from Societe Generale.
Good morning. Thank you for taking my question. My first question is on China. China delivered organic growth mainly thanks to the domestic market. Could you give us a bit of color on the trends you've seen on the non-domestic market? Secondly, on CBE, there was a strong pickup in certification, could you quantify the catch-up effect you've seen in certification since July? Thank you.
Hi, Julien. I can go for the China one.
I know you take the other one, yeah.
Yeah, the non-domestic market is still growing. It's just that it's not growing as fast as the other domestic market. In fact, we also see in terms of the non-domestic market, we see momentum in the E&E product. We see momentum into hardwood product. The softline product is certainly softer, but is compensated by the PPE activities. A lot of those PPEs goes to the overseas market as well. I would say it's not the situation where the domestic market is growing and while the international market is dropping. I would say it's the mix of the two, but with the clear strength on the domestic market versus the international one.
Regarding your second question, if you look to the recent month, basically as of start of Q3, growth accelerated and now it's, yeah, high single digit in the certification part. I want to outline this. It's the certification part who's picking up, as we mentioned, during the, yeah, trading updates in the first half. A lot of this project were postponed by the clients. I think we were pretty successful with remote audits as well. We have seen basically, yeah, after the summer break, so to say, also that activities re-accelerated and now it has, yeah, recently high single digit growth in the certification part. The business enhancement part, where we talk more about technical consultancy, where we talk about training and so on, these activities are still on a lower level. The certification part is nicely picking up.
Okay, thank you.
Thank you. The final questions we have are from Daniel Bürki from ZKB. Please go ahead, Daniel.
Yeah, thank you. I have a question on your oil business. You said it's going worse than in the first half. Could you elaborate a little bit? What would it take for this business to improve, obviously the oil price, but also other factors? Thank you.
If you look to the first half, Daniel, in the first half, the revenue in our oil gas chemical business was down organically 6.9% or 7%. What I would say is a pretty good decline rate given the market circumstances, at the time. It was not only COVID, it was also the low oil price in general. There were no movements of vessels. This was, let's call it only down around 10% the first half was also a function of having quite a good start into this year, before COVID happened. As we said to the half year numbers, we're not expecting they are better decline rate, so to say, in the second half, and this is basically true now.
It didn't bend now much worse, but it weakened a couple of % more given the overall environment but also given the fact that a lot is driven by quite some reductions in the upstream business, which is not surprising.
Thank you.
Thank you. With that, we come to the end of the Q&A. I would like to highlight that clearly I'm around today, so if you have any additional questions, please email or call, and again, if there's any members of the media who would like to follow up, please give Daniel Rüfenacht or contact Daniel Rüfenacht, his contact details are on the press release. With that, Frankie, I'll hand it back to you to close, please.
Yes. First, thank you. Thanks for attending the call. As I said, this is the one step more toward our strategic evolutions with acquisitions, our SYNLAB A&S divisions. We see the clear vision in terms of the mega trends of the TIC sectors. We're focused with organizations to go toward that. The simplification of the organizations, the additional agility, the market focus will be put in place, will be all explained to all of you during the Investor Days of May 2021, and I look forward to seeing you there. Before that, we will have certainly meeting you all for the full year result in a couple of months. That's it. Thanks.
Thank you, guys. With that, we can close. Thank you.