Serco Group plc (SRP) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Serco Trading Statement Update Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speakers today, Mr. Rupert Soames and Mr. Angus Cockburn. Please go ahead.

Good morning, everybody. Rupert here, and it is a pleasure to sort of speak to you this morning. Thank you for coming on to the call for what is an unscheduled update -- trading update. Before we get into the Q&A, I just want to emphasize a couple of points about it. First of all, it is that the benefits of being an international company are shown here because we are -- we have seen strong performance across all of our international regions. This is not just a U.K. issue. We are doing well in Australia, and in the U.S. and in the Middle East as well. Secondly, clearly, you will note that it's not just a matter of the trading has been very strong, but cash has been strong as well which I think is helpful. More broadly, there's a paragraph about our outlook for 2021, and the very fact that we are doing an unscheduled trading update, which we don't normally like to do, is that sort of underlining the difficulties of making forecasts in this period. And as we say there, we've only just started our budget review process, and we wouldn't have a view that was different today than it was at August. But I do think that the point, on the one hand, that the demand for the services related to COVID-19, whilst ephemeral, we do believe that in the long term, it will -- the experience of government during this crisis and the Four Forces will, in fact, reinforce demand for our businesses going forward in the longer term. Many of you will have seen that Serco has been receiving what might call -- be called dog's abuse for its role in NHS Test & Trace. This is nearly all completely ill-informed. And we have been trying to find a way of getting across to investors and the wider public exactly what our role is. And I just want to emphasize that although it is part of our normal job, we do what government does. And when we go to the government and talk to them about the abuse that we're getting, they say, "Well, join the club." They get it every day. But I think it is worth us being a little bit on the front foot, explaining what we do. And also that our customer is, we believe, extremely pleased with what we have delivered on the Test & Trace contract. And with that, let's hand over to your questions.

[Operator Instructions] Our first question comes from the line of Sylvia Barker from JPMorgan.

Just a couple of questions around the profit trends, mainly related to the COVID activities, please. So first of all, obviously, you've seen an increase in expectations across all regions. It does seem that the majority of that is still COVID-related. Could you maybe just comment on kind of COVID versus underlying trends? And then secondly, into next year, we appreciate that you're still doing the budget. But I guess one thing that seems to be clearer is that you will be involved in a lot of the U.K. test and track and trace activities at least until the end of Q1. Could you maybe just talk about to what extent that is contracted. To what extent is it's just expected to run until that new tender actually kicks in.

I'll take the second part of that question. Angus, if you can take the first part about profit trends. In terms of our contracts on the U.K. track and trace side, there is a large tender out that has been published for a longer-term approach to the test centers. But that tender, which is published, says that it will start as of April of next year. And I think that we are pretty hopeful that our contracts, which are currently running, will be extended on the testing side through until -- then they already have been extended in the past. I mean in fact, we worked for 4 -- about 5 weeks without any contract at all in the beginning, so it's been a series of extensions as we have got in expansions to that. We don't, as it is today, have formal paperwork taking us through to next April, but we're pretty confident that, that will arrive. Angus?

In terms of profitability and revenue, so the COVID impact, if you look at year-to-date through September with the COVID-related net revenue, so that is the net of things like leisure and rail, which have come down, and then some of, as Rupert talked about there, the test, and track and trace, the work we've done in different parts of the world. Our year-to-date net revenue impact was GBP 210 million positive. And margin, that's something like -- I mean somewhere around 4%. So GBP 40 million to GBP 50 million of revenue a month, GBP 2 million to GBP 3 million of profit as we've gone through the second half to date.

Our next question comes from the line of Paul Sullivan from Barclays.

Yes. Just firstly for me. In terms of the sort of the non-COVID uplift that you're seeing, or the strength that you're seeing, how much of that would you categorize as one-off in terms of the volumes at CMS and at the asylum business. And again, thinking about the follow-through into next year. And in terms of the sort of defense of the track and trace contract, I'd be interested to sort of get your thoughts on how you think it should evolve as we go into sort of -- go into that sort of April retendering. I mean what's your thinking of what's working and what's not working, in your view?

So if I take those. As far as the non-COVID business, it's pretty fiendishly difficult to go and untangle what is a consequence for that. By way of example, we've had quite strong in the Middle East recently because I think people have been taking advantages of offices that are closed to go and do project work, which we feel running the FM contracts and running the buildings. That's quite helpful. Now is that related to COVID or not, it's difficult to tell. In Australia, on the immigration contract there, we are getting additional revenues from some types of accommodation because -- but we're losing revenues on the other side because we're not moving people around so much. And in the U.K., the number of asylum-seekers that we're looking after has been increasing. Now that's because the people are not being processed through the system at the rate that they were, and because there are restrictions on movement. So I don't want to -- I don't think I can go down contract by contract and say, "This has got more revenues or less revenues than -- or more profit or less profit." I mean other than something like Merseyrail, while there we don't get the revenues, we do get the profits. And that's clearly been down a great deal because fewer people are traveling. The -- in terms of the tender for new test facilities to take over in the first half of next year, I mean clearly, that's going to be a competitive tender. The system already is competitive because our -- in fact, we are 1 of 4 or 5 suppliers, and we don't yet know. We don't have spec of what the government wants. But presumably, we will find that out. And in the meantime, the rate of expansion of test centers is going at pace. And I have to say that, particularly on testing, a lot of the heat and wind is about the testing end of it -- the tracing end of it. But on the testing side, it's been an absolute bloody triumph. I mean we have ourselves delivered 1.7 million tests since -- in the last 6 months. I mean that's a lot of noses and -- to take swabs of. And that's a lot of cars, a lot of people. The numbers that the U.K. is doing on the testing side is extraordinary, and higher than any other European country. And people point to Germany and say how much better it is done there. We're doing about 30% or 40% more tests per day than Germany, and about the same amount more than France. It's a huge operation, the testing side. And it is actually -- the capacity in the test sites is significantly greater than that which is in the laboratories. And it's in the laboratories where there is the issues at the moment, but that in itself has been resolved pretty quickly.

One sense I got ...

I'm not sure whether -- what we don't know whether they start using the -- one of the possibilities, I would have thought, is that they start using the test sites that they got, which there are now about 500 in the U.K., fixed and mobile, whether they would start to use those as places where people go to get vaccinations as well, I don't know.

Can I just follow up? In terms of the sort of the COVID negatives, how has that performed in sort of going through the second half? And how do we think about that as lockdowns sort of intensify and we go through the second wave?

Well, I think we've had -- if we just go talk in negatives, so major negative hits have been in the U.K. Some interesting sort of swings and roundabouts. On the one hand, the Caledonian Sleeper has been performing fantastically well. I mean its occupation on its -- they've been running sort of 80%, 90% on many nights, which is higher at this time of year than we would normally expect because people see it as a COVID-safe way of travel. On the other hand, we still haven't had any EMA support from Merseyrail. And although the volumes were beginning to increase early on in the summer. I mean clearly now with the lockdowns, they will go back down again. So we may end up losing more now in -- on Merseyrail than we were doing. Leisure centers, almost impossible. So we started reopening them, started getting various activities going in them. And now we're going to go into regional lockdowns. Frankly, really hard to tell. And I do say to you, as we said at the beginning of the statement, although we've given a really narrow -- quite narrow range, GBP 160 million, GBP 165 million, and you can say, well why isn't it a wider range? Well, that's where we think that it is at the moment. But it is really difficult to pin a number down when lots of things are moving. I'll give you another example where we've had an impact outside of there, would be aviation in the Middle East. Now clearly overflights over Baghdad, over Iraq are at an all-time low. There's hardly -- very few plane movements out of Dubai airport. And what we're seeing at the moment is that things start to unlock and stuff starts to move, and then it gets locked down again and starts to go back. So it's really quite hard to tell. But the businesses are pretty confident that there will be swings and roundabouts that will get them to the range that we have set out.

Our next question comes from the line of David Brockton from Numis.

I've just got a question around cash flow, please. That's clearly been a lot better through this current year. And you've also got the benefit of the new U.S. private placement notes. Just wondering -- I appreciate you haven't commented on FY '21, but one would have thought some benefit there in terms of lower interest charge. Anything that we're missing that should reverse? I guess that's probably one for -- more for Angus.

David. Yes -- no, we were absolutely delighted to get the private placement away. And given the current market, and the challenge to the sector is it's a great mark in terms of where we've come from since 2014. Now that gives us about GBP 150 million of extra long-term debt. We've got about GBP 90 million to GBP 100 million that actually falls due and will be repaid next year. So given the fact the maturities are late first half next year, we'll be carrying a bit of extra cash for the next few months and paying interest until the half year. So we'll get the interest benefit through the second half. So I wouldn't make a -- it might be slightly better. But it's -- the bigger impact will be in '22, when you'll get the full year benefit. And the good news is it's 200 basis -- that private placement was 200 basis points cheaper than the average of the private placements previously. Liquidity-wise, we're now very, very strong. We've got GBP 500 million of liquidity headroom. And that positions us well as we go into next year.

Our next question comes from the line of Kean Marden from Jefferies.

Just got a quick and easy one for me. Is the entire improvement in free cash flow driven by the working capital line? And within that, is that really all FEMA? It seems quite a big number for an individual contract.

Okay. I'll take this one again. In terms of the free cash flow, the GBP 40 million -- you've got the profit upgrade of -- if you take GBP 142.5 million to GBP 162.5 million as being the midpoint, so you've got GBP 20 million of that which turns to cash. We also have -- we were looking to repay all government support during the third and fourth quarters. We will be repaying all our U.K. government support in the next 2, 3 weeks. The only government support we can't repay is the U.S. tax deferrals. So instead of repaying GBP 50 million, we'll probably be repaying GBP 40 million gross across the world. So there's GBP 10 million in there. And then the balance is catching up with FEMA. So that's your mix, Kean, in terms of the GBP 40 million improvement in terms of free cash flow.

Your next question comes from the line of Joe Brent from Liberum.

Three questions, if I may. Just firstly, on earnings. I understand you're not keen on giving guidance for FY '21. But is it really fair for us to assume that every country is better in FY '20, but there's no change at all to any country in FY '21? And then secondly on cash, clearly, there's a GBP 50 million or so beat in FY '20. Presumably -- are we right to assume that this flows through the start position is better in '21, and therefore, the end position is also better to the same extent? And thirdly, you've talked a bit about contact tracing. You haven't, I don't think, talked about vaccinations more -- which is more positive. Do you still expect to be involved in that? And what is the likely time frame and quantum relating to possible vaccinations?

I'll take -- Angus, if I take the first and third of those. Look, in terms of are we saying that no region has increased its outlook for '21, so the answer is, Joe, we're just doing our budgeting. We're in the middle of that process at the moment. So the answer is we don't know. And we're certainly not taking their words for what they might be thinking for '21. And it's same every year. We go and do our budgets about this time of year, and then it will go and be looked at by the Board in, first of all, in November and then in December. So I can't really help you on that. What we've said -- what we're saying is what we said on the 10th, as it were, and we're not going to give a breakdown on that. In terms of the vaccinations, we are in discussions with some folk around the place, of start, how we might help. But actually, I think that -- I would say -- I mean the government is well ahead on the vaccination strategy. There's a whole group organized to do it. You'll remember that they go and do millions of flu shots every year. And that -- they may need some infrastructure to help. But I don't see this as being a huge opportunity for Serco. But I -- what I think will be the case is that whatever vaccination comes along, it's not all suddenly going to happen in a rush. There's going to be large parts of population who are going to be unvaccinated for a long period of time. And my own view is that the requirement for continued testing will go on for some time, whether it is done through drive-through and mobile testing or more in the workplace, who knows. It will depend, in part, on what happens on the Moonshot program. Angus, do you want to take the issue on the flow-through?

Yes. So the fifth -- the change in guidance from GBP 200 million to GBP 100 million to GBP 150 million for net debt, our usual bond door, that will flow through into the starting point for next year. It will be an absolute better. But don't expect free cash flow to keep getting better. Next year, we'll have the America's tax, that GBP 10 million to repay that we can't repay early this year. And as Rupert said, we've not done the budget yet. But we're in a position now ex the OCPs when the free cash flow is a lot stronger. And that -- you see that this year, but it's not going to continue to improve at that stratospheric rate.

Can I just follow up on vaccinations question more out of general interest, but interested in your insights because you're closer at it than we are. And we're already -- some good news, well that sounds like we might not be getting it today. You're saying that most of the population won't be vaccinated for a long time. Do you have any sort of insights as to those things?

Well, there's an article in the FT, they get interviewed -- the lady who's responsible for the vaccinations authority. So they will do it in a tiered basis. And young, fit men like you will be at the back of the queue, Joe, I suspect. Fit as a butcher's dog. And if you want to get to the front of the queue, you'll need more chips and look older.

I'll do what I can.

And so you need to put some work into that.

Will do.

But I think that -- so I think they're going to start with the most vulnerable parts of the community, people like me, and end up with people like you. And there's -- probably be quite a long gap between them.

Our next question comes from the line of Allen Wells was from Exane.

Just one for me. Most of mine have been answered already. Can we have a follow back from the 2021 comments? I mean versus where we were at the half year where you obviously flagged levels of uncertainty around the testing program, track and trace volumes and just the core business. I mean to me, it feels like if we've got visibility on the test and trace through Q1 to Q1 next year. You're alluding to the fact that -- slightly, that, that may carry on for further as well. The core business seems to be doing better in most cases as well. I mean would it be right to be thinking at least as we stand here today versus where we were at the half year, you must be feeling a bit better about next year than maybe we did when we posted expectations then? Or am I missing something here?

Well, I think you're missing something is that we're not saying. And look, to be clear, the government -- the way the government contracts works, they have the right to flex the numbers up or down on very short notice, and that's as it should be. So whilst we may have the -- we may have frameworks or whatever, within those frameworks there. So in terms of the number of traces that we are providing. We started off at 10,500, then it went down to 6,000. It is now down to 5,000 because they find that they needed only few of them they thought they would need. Now whether come November, December, they need fewer or they need more, God knows. And then how that runs through into the new year, it is really hard to tell. So it's not a matter of just the contracts being extended. And in best case, we're only talking into the first few months of next year. It's the volume at which they've been done. And I think what we're broadly saying is that we haven't done our budgets. We -- it is really difficult to tell what volume that will flow through into next year and whether the countervailing negatives like Merseyrail having only 20% patronage on the railways, whether those will continue as well. I mean if you want to say, "Well, clearly, if they've got to end of September and they're feeling -- and they're trading well, does that bode well for the first quarter of next year?" I mean I'm not going to get drawn on that. You can draw your own conclusions, but I'm not going to get drawn because we simply haven't done the work to justify it. I would make one other general point about the tracing side. So if you think about our test and our tracing side. The testing is -- got masses of capacity. I think that the volume of tests going through will, if anything, increase. But that won't lead to more revenue because it's essentially a fixed cost, whether you have the site open or you don't. But when we -- but the -- and if anybody wants a teaching on how the tracing system works, very happy to give you that off-line, or if any of your investors want to know how it's working, very happy to do that. But as a general rule, as outbreaks become bigger, tracing becomes harder because you've got so much volume. And the volumes that we saw transferred into the system last week, if you go and look at the NHS stats, there was a pickup in -- from some of the quite lost records. But we're now talking about -- we're talking about 260,000 tests a day. And it used to be down at 2% or 3% testing positive. It's now up to 6% testing positive. So the system, the tracing system is going to, I think, find it quite hard over the next few months, if we get a wider outbreak. It works best -- the tracing system works best at relatively low level when you are tackling local infections.

Our next question comes from the line of Rory McKenzie from UBS.

It's Rory here. You're delivering a really healthy drop-through on the revenue growth. So I wanted to ask. One, how are the central functions holding up given all the expansion you're managing. Do you ever think you need to add more overhead ever again after your efforts in the past? And secondly, actually, how are your employees doing? How is productivity, absence, sickness, churn tracked through this crisis?

Well, I'm really glad that you asked me that question because you may remember our famous Viewpoint score graph, which is the engagement score, which I said at the last year, I want -- I'd be happy if it was my epitaph on the gravestone in terms of -- because it has gone from some incredibly low level, sort of low 60s up to 71 last year. We've just closed the latest Viewpoint survey. We've had about 30,000 responses to it. 30,000 people responded and 64,000 questions, comments that people made on it. And guess what? The Viewpoint score in the middle of the crisis, and this was taken up to the third week of September, has gone up again 2 points across the business that now has 55,000, 60,000 employees. So I am really, really chuffed about that. But they have had a -- our frontline employees, in particular, have had a -- they've been having to turn up in prisons and at hospitals, and there have been outbreaks. We've had 7 of our colleagues have actually died. And the -- it's been rough. And I went down to Bath where one of our colleagues died back in June. And it was pretty tough for the team leaders to say to people, "Look, it's very, very sad, but you've got to be here at 9:00 in the morning to do the cleaning because it's your duty." And so they -- I think they have done -- I know they have done really well. There are -- there is at the moment a COVID outbreak at Lowdham Grange prison, which is really difficult for staff and for the prisoners there. These are difficult institutions to run. But on the whole, I think that the staff are doing well. In terms of the central systems, it is -- a lot of it based around the IT, that's all working well. I think that we are all nervous about bad guys attacking -- the volume of ransom attacks going on in the marketplace seems to be increasing. So we have made a big investment in the security of our systems, but nobody is immune. But we're spending quite a lot more on that at the moment. And -- but we've got some very large hefty SAP systems and recruitment systems. We said right at the beginning of the crisis that we were, if anything, going to accelerate our rate of investment into our core system's productivity. We have a project called Project Greenfinch which we will be spending about GBP 5 million on just improving the quality of our recruitment systems and the like. We are, as everybody, addicted to Teams. And they have held up pretty well. And I do say, will they ever go up again? Well, they will, on a marginal basis because every time we get a new employee, we buy them a new license. But we have been able to scale those in a way because we run a centralized system, not decentralized system. We've been able to scale the IT in a way that has, I think been -- as a percentage of our revenues, it's continued to drop which is the mark of it. If that answers your question [ on ]?

Yes. Great. I know you're managing a lot to deliver this, so I really appreciate the background.

Your next question comes from the line of Ed Steele from Citi.

It's Ed from Citi. Two questions, please. Away from COVID-19, could you give us an update on your bidding activities, please? I remember at the first half you said that about 3/4 of your pipeline was in defense, the U.K. and U.S. being particularly active in terms of forthcoming outcomes. Could you give us a rundown of the decision awards that could be most proximate, please? And then second question, so you've highlighted GBP 0.5 billion or more of liquidity. You've got about under GBP 100 million of obligations next year to repay debt. You're in the FT a few weeks ago, Rupert, talking about consolidation in the sector. Could you give us your current thoughts about how that could happen, what your thoughts are about how big a deal you could do, et cetera, please?

Ed, if I may take the second part of that question. I am delighted that you are admiring of our newfound, new really reinforced liquidity. And as I say, it's 7-, 8-, 10- and 12-year debt. So it sets us up well. I'm not going to speculate on whether we -- what particular things might happen because who knows? And there's a lot of corporate activity out there. And we don't have a little list in our black books of people we keep. Because at the end of the day, it's got to be a willing buyer, willing seller. My suspicion is that the ability of companies in our sector to raise additional money or even renew and refinance debt is going to be quite constrained. And there's going to be a few happily like us where we managed to do it. But it's not a bustingly popular marketplace as far as debt is concerned, and that may throw up opportunities. So as to size, well, I keep saying to our people, the acquisition of a small contract to go and fill in, in our environmental services is -- merits as much of attention as a medium-sized business in Australia. Or if there was a really big opportunity, we'd have a look at that. I don't think that we feel constrained by it or other -- the thing that we feel constrained about is value and common sense. And if stuff makes sense, we'll do it. And if it doesn't, we won't. And we're -- I think we're in a happy position is that we're not really -- I mean, within reason, constrained. We could do a very big deal if one was available. But equally, we're prepared not to and do very small deals. So we remain, as always, Ed, basically with a red light at -- on our door with welcome [ pic tags ] on the mat, should anybody wish to come and knock on our door and invite -- and would come and sit on our couch and have a -- to have a discussion. That's what we do. But whether they are big, thin, fat or look like Joe, we don't know, and I don't think that we should prejudge that. Sorry, there was another part of your question...

The patient -- I'll take the pipeline question, Rupert.

You will take the pipeline, yes.

The pipeline at the half year in terms of the large bids was GBP 4.1 billion. If you take the total pipeline, including the small bids, it was GBP 5.9 billion. That pipeline is pretty static. We've had ins and outs but they've not been big. We've got more activity coming in the fourth quarter. And we'd expect somewhere between 1/3 and 1/2 of the big-sized pipeline to have results during the fourth quarter. So there's not been a lot currently. What we've added to it, the U.S. Patent Cooperation bids out there in the U.S. Similarly, the program offers for knowledge-based service, but the military is also another one that we've added into the pipeline. Geographically, still similar, U.K. and North America, the strongest elements of it.

Got it. If I could just follow up on the first question, Rupert. You talked about people wanting to come and sit in your couch, I get it. We are starting to see hostile bids elsewhere in the sector -- not the outsourcing space, but in adjacent markets. That's just not in your makeup?

Well, I've never done one of those before. I don't know. I don't think, by nature, that we are hostile type of people. But if provoked enough, who knows? I simply don't know. I don't know how to answer that question. I mean Angus is the hostile one, of course. And -- but I don't know. It -- clearly, hostiles are a difficult process to do and not one that we would naturally incline towards, unless thoroughly provoked.

Your next question comes from the line of Christopher Bamberry from Peel Hunt.

Rupert and Angus, a couple of questions, if I may. With regard to a decision about the dividend, what are the key considerations regarding reinstatements and the considerations about the quantum or payout ratio once the dividend is reinstated? And secondly, are your expectations regarding the OCPs unchanged from that time of the interims?

Well, if I -- I'll just say about the dividend. We -- the whole thing about this, I suppose, you really don't want to prejudge anything. I mean the situation today is different from what it was in August and, no doubt, it will be different in December. But we have -- we stated what our intent was for dividends when we declared the final dividend for 2019, which we subsequently withdrew. But that would give you an idea what, in normal times, we had in mind. We won't be in normal times and nor times in December will be different to October. And one of the things I've learned about this crisis is do not go and take decisions before you have to because the situation in December could be very different. What I do say is just look at our liquidity and our cash flow, and you would be saying that we will certainly be in an even better position in terms of dividends in December than we were -- would have been in March, April earlier this year. But there may be other considerations, which the Board may want to take account of. So I'm basically saying we will take that decision when we need to. We're not going to lay down the rules. If you want to look at the rules that we were thinking of precrisis, they were set out in our results in -- that we published last March because that went into some detail about the coverage that we had.

And in terms of OCPs, nothing's changed. The good news is that they really are now at a very small number. And you can see that with the free cash flow conversion improving.

Your last question comes from the line of Stephen Rawlinson from Applied Value.

Stephen? I think that's you.

Hello?

I think that's you. You'll be -- the fickle finger of fate has pointed at you, mate. But how can I help?

I think most of my questions are answered, but what I wanted to understand a little bit better, and if you could just give us some comfort on -- you've had a massive onboarding exercise, 9,000 people and so on, you've mentioned in the [ text ] there. I just think that -- is it possible to give some feeling of comfort in and around the lack of residual risk on that should the contracts go away or diminish in size and scale. And this probably affects both employees and property.

Very interesting question, really. Just to take the property one. Well, of course, a lot of these employees are working from home. Of the 9,000, about 4,000 are testing. So they are sitting -- they don't -- their office is a car park. And so we've not got big property liabilities around that. And for the tracing, most of the people are working from home. So I don't think that -- but you're right, in this call center business, one of the great issues was always around residual property reliability. We don't think we get that. The other thing I would point out is that very deliberately under the tracing contract and as part of government strategy, industrial strategy, we have spread subcontractors, a lot of that SMEs. And it's part -- one of the things that the government asked us to do. So it's only a proportion of -- that's why we say, employed directly and indirectly. It's only a proportion of the tracers who are directly employed by us. A lot of them are working in subbies. However, across the world, we have onboarded a great deal of people, and we've onboarded them on contracts that are appropriate to the sort of work so that we can flex up and flex down as we need. But the other thing about risk -- the risk when you take on that many people that fast, of course, is a lot of them have to go and be checked and have credentials checked and all that sort of stuff. But one of the points about our shared services system is we do have a capacity to do that, albeit, we may run a few weeks behind. But I -- we're doing our best. But I -- it's fair to say, to go and take on 9,000 people, there may be the odd bad egg. Not to mention quite a few journalists amongst them.

We have no further question at this time. Please go ahead.

Well, thank you all very much, indeed, and -- for your intelligent questions and for reading our statement so intently. We will be off. Bye-bye, everybody.

Ladies and gentlemen, that does conclude your conference for today. Thank you for participating. You may now all disconnect. Thank you.