Cohort plc Results Webinar 13 December 2024

Hello, I'm Andy Thomas, Chief Executive at Cohort PLC, and I'm here with Simon Walther, Cohort's Finance Director, to take you through our results for the six-month period ended 31st of October this year. I'm going to start by giving you the highlights. Simon will provide more detail, including a divisional breakdown, then I will return with some comments about the demand picture and our future prospects. I'll take you through the run-off of the order book. As Andy has said, there'll be an opportunity for questions at the end. But first of all, I wanted to provide a reminder or an introduction for those who don't know of who we are and how it is that we aim to create value for shareholders. If we could have the next slide, Andy, thank you. Cohort is a group of six businesses, soon to be seven, providing technology-based defense products and services to the UK and to its allies around the world. Our business model aims to maximize the autonomy and independence of our businesses, consistent with good financial and regulatory governance. That means decisions are taken quickly and close to the customer, maximizing agility and innovation. At the same time, it allows us to support our businesses with the strong balance sheet and market reach of the group. We have no layer of coordination overhead between our small but experienced headquarters team and the operational management, giving us a real cost advantage compared to our large defense prime contractor competitors. We have a strong record of growth, both organically and by acquisition, since our IPO in 2006. A few weeks ago, we announced the acquisition of our seventh business, EM Solutions, which we expect to push that growth on to the next stage. Organic growth has accelerated since 2022, when the Russian invasion of Ukraine really startled NATO Europe into a step change in defense spending. Tensions in the Indo-Pacific and also in the Middle East are contributing as well to a growth in spending in our key markets. One result of that is that we have a strong pipeline of opportunities. We find ourselves following up on many sales prospects, frequently bidding for contracts in the UK and around the world. The evidence of that is our growing order book, as you'll see it hit a new record at the end of the first half, and it's about to be boosted significantly again when the EM Solutions acquisition completes. Now that acquisition was funded using a combination of our existing cash resources, bank debt, and also support from our investors in the form of a 40 million pound placing. The result is that we've maintained a very strong balance sheet with low gearing, giving our customers confidence and allowing us to invest in product development, capacity building, and potentially further acquisitions when this transaction completes. The final thing I should mention is our progressive dividend policy. We've grown the dividend every year since our IPO in 2006. Of course, that's valuable income for our shareholders, but just as importantly, it's a signal that we're not just developing interesting technology, but we're also a successful and cash generative business.

So that's the theory. Now the question of how well has this worked in practice over the last half year? The summary is that it's been a good first half, much better than last year. Here are the numbers. Revenue and profit were both up strongly. Revenue grew by 25%, adjusted operating profit was up 69%. Adjusted EPS grew even more strongly because of some movements under the bonnet of that measure, almost doubling to 20 pence per share. It was another good period for new orders, which of course are the best leading indicator for future growth. Order intake of 139 million pounds significantly exceeded the revenue we recognized, so the total order book had grown to over 540 million pounds at the year-end. That order book covers more than 99% of the consensus forecast of our revenue for the year, so in effect there is no further need for infill revenue in the second half. The order book will be generating solid revenue for us well into the 2030s. Finally, our operating cash flow was very strong, significantly exceeding profit and helping us to push our positive net cash position up to nearly 38 million pounds. And of course, once again, all of this is pre-replacing of the acquisition. Against that positive background, the board has declared an interim dividend of 5.25 pence per share, once again representing an increase of more than 10% on last year's interim dividend.

Simon will give a more detailed breakdown of the performance of our divisions, but this slide shows some of the operational highlights of the first half year. Both divisions generated increased revenue and profit in the period. Within Communications and Intelligence, MCL Mobile Communications has been intensely busy dealing with urgent operational requirements from the UK Ministry of Defense, so it's been an interesting start for Cla King, their new managing director, who began her role at the beginning of the year. Mass has performed steadily, showing solid growth. At EID, performance has not been stellar, but the big news was the strong order intake at the beginning of the year, and we expect that to feed through into revenue and profit in the second half. In the Sensors and Effectors division, SEA has seen good progress on its largest project, which is the Anilia missile defense system for the Royal Navy. The critical design review is coming up in March, and that's a very important milestone in the program, marking the approval of the design and the move towards production. Elac also has seen good progress on its most important project, which is the Italian submarine sonar. Some of the most important and complex items in this large project are now in production, and in this month we're going to see the first factory acceptance test of some of the actual deliverables. Finally, Chess had a rather slow start to the year with some production issues affecting deliveries, but we're expecting a strong acceleration in the second half. Now, with such strong order cover already in place, what's going to be important in the second half for our businesses, much more than order intake, is delivery. Nevertheless, the opportunity pipeline is still very strong, and we are expecting to receive more significant orders in the second half. I'll say a little bit more about the opportunity pipeline later, but for now, let me hand over to Simon to take you through those financial results in a bit more detail.

Thank you very much, Simon. In this section, I'm going to talk about the outlook and about the factors driving demand for our products and services. I'll show you how the existing order book runs off over the rest of the year and beyond, I'll say a word or two about the EM Solutions acquisition, and then I'll round off with a summary. The two main driving forces for demand in defense equipment remain very much in place: the continuing conflict in Ukraine and the influence of growing Chinese assertiveness from the Indian Ocean to Australasia. Adding to that mix now is the widening instability and conflict in the Middle East. I'll start with the impact of these factors on our export markets. The conflict in Central Europe has driven demand directly as NATO countries seek to help Ukraine resist the Russian invasion, and it's also made those countries think again about the balance of their defense forces and equipment. Many of the lessons they've learned and the conclusions they've drawn are relevant to us. The increasing importance of electronic warfare, the need to counter drones of all kinds, the need for accurate and timely battlefield intelligence have all had a positive effect for us on both orders and prospects. The conflicts in the Middle East don't have the same direct impact as the other factors, but they are symptomatic of the wider tensions in the region, primarily between Iran and Saudi Arabia and its allies, and that's likely to drive further regional defense spending in what remains an important market for us. In Asia, Chinese assertiveness has not yet manifested itself in outright warfare, but the clear threat is there, and they have instigated violent episodes around the South China Sea. That behavior has had a very strong effect on defense policy and defense spending right across the Indo-Pacific region. One very visible result has been the creation of the tripartite AUKUS alliance between the UK, the US, and Australia, and we fully expect to contribute to the new AUKUS submarines in due course. Our new close relationship with Australia through the acquisition of EM Solutions can only help with that. There are also many opportunities in what's termed Pillar Two of AUKUS, which is focused on new technologies, including for instance underwater detection and countering hypersonic missiles, both of which are very relevant to our capabilities. Chinese aggression and investment in its defense forces has had an impact on order intake and opportunities elsewhere in the region, for instance in Thailand, Indonesia, and the Philippines. Japan remains committed to a doubling of its national security spending as a share of GDP by 2027, and it's also joined the Anglo-Italian Next Generation Combat Aircraft project, which bodes well for the opening up of a market that has historically been dominated by the United States. In our domestic markets, we've seen similar effects. The UK's defense review is ongoing and we expect to see its conclusions in 2025, but the government has already committed to increasing defense spending to 2.5% of GDP. In Germany, we can see the impact of the step change in defense spending that's taking place. Our German business is already supplying specialist hydroacoustic equipment for new German surface ships and submarines, and we're optimistic that we will be able to take on a more prominent role with the German Navy in the coming months. Finally, in Portugal, we've seen some long-awaited orders coming in, and we're optimistic that there are more to come.

If we can move on to the next slide, Andy. I wanted to emphasize that we are investing to respond to those changes in demand pattern. We're increasing capacity at both Chess and SEA by expanding and reorganizing our facilities there, and Elac will be moving into a brand new custom-built facility next autumn. You may remember if you were on one of these calls at this time last year, this picture that Simon showed taken last year in a snowy Kiel showing a large hole in the ground which was the beginning of that work. The work has moved on rather significantly since then. Andy, if we could have the next slide. Yeah, as you can see, construction has come a long way. You can see the main office building on the left and on the right the test tank building, and that sits on top of what was that very large hole, and that's where the new digital sonars will be tested. Elac is on course to be ready to move into that new facility next autumn. Now, not withstanding those investments, our overheads will not increase in proportion to our growing revenue, and so we expect to see further margin improvements in the years ahead, driven by that operational gearing as well as other factors. So if we can move on to the next slide, Andy. I mentioned that we continue to see some good opportunities, and I wanted to share a few of them with you. At Elac, we're expecting to receive an order for the sonar suite for the fourth of the four new Italian submarines being built early next year. We already have orders for the first three, and together with some other changes, this will bring the total contract value to around 100 million euros. Elac is trading that contract very cautiously at the moment, but as we get closer to delivery, we hope to be able to release some of the risk contingencies, and the addition of the fourth boat will naturally give another boost to the overall contract margin. Elac is also in discussions with the German Navy about upgrades to anti-submarine sonars on some of its surface ships, and that would be an important step forward with its domestic customer. Most of Elac's recent larger orders have been for export customers. Elac is also focusing on several major submarine programs in Europe, Canada, and Asia. EID, having won some large orders early in the year, is in discussion with the Portuguese Navy to provide communications for its new fleet of offshore patrol vessels. EID also sees some promising naval export opportunities through a growing partnership with the Dutch shipyard Damen. Following its initial success in Asia, SEA has multiple opportunities to provide its CRS sonar system to export customers. It's also in discussions with BAE Systems and others about contributing to the next generation of the UK and Australia's nuclear submarines. SEA's also in discussions with several customers about its Ancilia decoy launch system, and it's recently announced a partnership with the Danish company Terma to offer a complete anti-missile system for naval ships.

Our business MCL sees several large potential prospects from urgent operational requirements. Mass is in discussions for a new iteration of its long-term contract to design and run large-scale military exercises. Chess sees considerable short-term opportunities for its optical tracking system for countering drones. It has a very successful partnership with Rheinmetall and is building other partnerships too. In the slightly longer term, Chess's combined radar and optical tracker for naval users is creating a lot of interest in the market. With the acquisition of EM Solutions likely to complete in the near future, we'll be looking to investigate new opportunities with them as well. We already know that they have a promising list of opportunities in Australia, Europe, and East Asia. Now, I should say that all of these things I've talked about are prospects rather than orders, so it's by no means certain that we're going to win them all, and also uncertain is the value of each and the timing. So what I'm trying to do here, rather than give you a precise and accurate picture of our future revenue, is to paint a picture of the pattern of strong demand and opportunity for the group that we see emerging from the geopolitical factors that I talked about a few minutes ago. So I've talked in broad terms about markets and opportunities, and this slide now shows the tangible results of the demand picture that I've described. At over 540 million pounds, Cohort's period-end order book is stronger than it has ever been before. It includes a very substantial element that will feed directly into revenue this year and next, but it also includes over 280 million pounds of order cover for 2026, 2027, and beyond, guaranteeing a solid flow of revenue well into the next decade. The larger part of our order book continues to sit with the Sensors and Effectors division, unsurprisingly because of their range of attractive products for very long-term maritime programs. In Communications and Intelligence, MCL tends to operate naturally on a short-term order book, so its contribution to the total is quite modest. Mass's order book is substantial, but only increases significantly in years when its large long-term service contracts are renewed. EID's order book has strengthened considerably in the last half year, and there are still some good opportunities with its domestic and export customers to come. The picture you can see here of the Communications and Intelligence division's order book will be significantly enhanced when EM Solutions joins the group, because it'll become part of that division and it will bring with it a large order book as well as that strong opportunity pipeline.

If we could have the next slide, Andy. Now here you can see the first column of the run-off in that chart that I've just shown in numbers, together with a comparison against the same position last year. The growth in the total order book from October last year to this is from 354 million to 541 million, that's over a 50% increase, and that's a really strong indicator of the potential for future revenue growth. The two shaded columns show the revenue that's already on order for the second half year compared to the same position in 2022, and you can see that both divisions have got a significantly better underpinning than was the case last year. There was an improvement of about 15% in Sensors and Effectors, but it's especially dramatic in Communications and Intelligence where the order cover for the second half has grown by more than 70%. Overall, more than 99% of the consensus revenue forecast for the year is now either delivered in the first half or on order for the second half. If we come to the next slide, Andy. So everything I've talked about so far refers to the existing group of six businesses reporting through our two divisions, but we fully expect to see an important contribution in the second half from the exciting acquisition that we announced last month of EM Solutions. It's a very significant transaction for us. It'll have a big impact on our product range, on our technological capability, on our geographical footprint, and not least on our financial performance. Based in Brisbane in Australia, EM Solutions offers highly capable satellite communications terminals primarily for naval surface ships, and that is a challenging technology to develop because the terminals need to stay locked onto satellites as a ship moves potentially in heavy seas, quite violently. These products are fully complementary to the group's existing offerings, they even interface directly to products that are offered by EID and SEA. Demand for satellite communications is growing, particularly for advanced navies like those in Australia and the NATO countries, and it's likely that that growth is going to be accelerated with the increasing use of uncrewed vessels that need long-range digital communications to control them and to feedback the information they gather. This acquisition is going to be the first time that we've been involved in the important area of defense space technology, and so bringing EM Solutions into the group is going to give us access to an important new stream of revenue growth over time. The balance of our output as a group has already moved more and more towards the maritime market, and this acquisition will add another important family of naval systems products to the portfolio, enabling us to offer packages of systems to shipbuilders and integrators. Very importantly, bringing EM Solutions into the group will have geography-based advantages in both directions. Our position as a domestic supplier in three NATO nations and our strong export relationships will help them in markets that have become very important to them. For the existing group, having a footprint in Australia and being part of the sovereign Australian defense industry will greatly enhance our access to that important customer. We're optimistic that transaction could complete as early as the end of this month. We're working on that now. If it doesn't, then it won't be long after. Simon and I visited Australia at the end of November to meet with the management and the employees of EM Solutions and also for talks with the Navy and with the Australian defense procurement agency, and those were very successful. We're looking forward to bringing this great new member of the group into Cohort, because it'll have a really big effect.

Okay, so if I can have the final slide, Andy. I would just like to give you a summary and say a little about the outlook. The summary is it's been a very pleasing period in terms of performance that sets us up very well for the year as a whole. We're not going to rest on our laurels, we're already onto the next thing, but we are very pleased to have grown once again the size and strength of the group in this period. One consequence of that is that we've been able to increase our interim dividend once more by 10%. The acquisition of EM Solutions will take Cohort to the next stage of its development. It will be a good deal financially, materially accretive to adjusted EPS in the first full year of ownership, and it will broaden our product range, our technical capacity, and our geographical footprint in a very beneficial way as I've described. We're very grateful for the support that we received from investors in the placing, and that's enabled us to do this acquisition without weakening our balance sheet, giving us the flexibility to invest in facilities, in product development, and if more good ones emerge, in future value-adding acquisitions. Finally, and perhaps most importantly, we've achieved another record order book and we see an excellent pipeline of further opportunities ahead. Achieving order intake materially higher than revenue, which we've done again, is a strong leading indicator of future growth. It clearly shows that there is strong demand, that our products are competitive in what is still a market of very capable players. So it's an optimistic picture looking forward. That's what I had to say. Thank you very much for your attention, and we're now very happy to try and answer your questions, which Andy is going to tell us about.

EM Solutions... a few around the acquisition. Can you be a bit more specific as to which customer groups you expect Cohort to do more business with once you have EMS as part of your group offering?

Yeah, absolutely. So, we currently have three NATO nations as our domestic customers: the UK, Germany, and Portugal. EM Solutions is already delivering into Portugal, but we'll be able to smooth that process by providing local support through our subsidiary EID. EM Solutions has made some initial sales into Germany, but very much at the beginning of that opportunity. Having a local base there is bound to provide benefits in terms of being able to provide potentially local manufacturing, certainly local support, to make sure that the product can be supported well. EM Solutions has not yet sold into the Royal Navy. Of course, we have our largest domestic presence in the United Kingdom, and the Royal Navy is just coming to a phase when it's considering replacing its existing satellite communications terminals. It's had some preliminary discussions with EM Solutions about that. Having this strong domestic position is bound to be a big boost to their prospects with the Royal Navy, which is a very substantial potential market indeed. So I'd really emphasize that one. Of course, it's not a guarantee, but being able to provide local manufacturing, local support, is very much in line with the UK's social value criteria for making defense procurement, as well as it being the best product that there is on the market too. And we've got wider export relationships in many countries around the world which are complementary with those of EM Solutions.

Very clear, thank you. And you've made reference to the trips that you and Simon have already made to Brisbane. We have a question: it's a long way away, there's not only a division now of the group but a receptive client base. How often do you think the two of you might be either together or individually going out to Australia in 2025?

Well, yeah, I mean of course culturally Australia is not too far away at all, and in terms of its approach to defense and its relationship with the United Kingdom, it's a very close partner as a member of the AUKUS tripartite agreement. However, I would be prepared to accept that operating a business in Brisbane has some differences with operating a business in Surrey, so we'll certainly give you that. The direct answer to your question is that Simon and I plan to be visiting four times in 2025, so we'll be having face-to-face meetings with the senior management there at least that many times. In fact, they'll be coming over to see us in January as well. But because we realistically can't provide them with the same level of mentoring and support directly that we're able to do with our UK managing directors, we're looking to appoint two experienced Australia-based non-executive directors on the board of EM Solutions as well. We've identified one of those and we're just in the process of finding the other. They will be able to both provide that local support as experienced industrialists in the defense sector to the management over there, and at the same time act as an early warning system of anything that might need us to divert more attention towards that business as well. So I hope that answers your question.

It does, very clear, thank you. And in the context of future M&A, we have a question. Well, firstly a statement which I'm sure you'd agree: you seem very pleased with the transaction and the perfect fit within the Cohort group. Would it be reasonable to assume that further opportunities of this scale, which I think was around a 70-75 million pound enterprise value, are not going to be available too often, and that therefore smaller bolt-on transactions are more likely to be seen in the next year or two?

Well, I acknowledge that we're pleased with the transaction. However, I would also say that the interesting bit comes now. Nice as it is to get pats on the back now, we've got to make it really work within the group, so I can tell you that's very strongly our emphasis from here on in. In terms of future transactions, we're happy to do additional businesses that we can add to the group as we have with EM Solutions, and we're also very happy to do bolt-on acquisitions as we did with the business which we integrated into MCL Communications at the beginning of this financial year. But every time we do an acquisition, we sort of get a flood of people writing to us saying 'How about this one?' and this time has been no exception. But we are, I would say, a cautious and careful acquirer. We've been around since 2006 and we've not done that many. We'll be looking out for something that really meets our criteria, something that will enhance our growth, offer some real kind of sustainable competitive advantage, as well as operating in the right sort of market sector and being the right sort of culture as well.

Okay, thank you. And then perhaps last one on EM, or more specifically the group that they came from. Did you look at or have any interest in buying the whole of Electro Optic Systems rather than just the EM Solutions unit?

Well, it's had an interesting time, EOS on the Australian Securities Exchange over recent years. But they've adopted a new strategy. They want to focus on their remote weapon station business. They decided that EM Solutions was no longer part of that strategy going forward, and they made a decision to sell it. That works well with us. I think looking at the wider business, which has got a good strategy to go off on its own, it's led by a relatively new chief executive. I mean, it would be complementary to us in some ways, but I wouldn't want to go into a personal view of the merits and demerits of an acquisition like this. Plainly, that's not what they wanted to do, and obviously a deal is best struck between a willing buyer and a willing seller.

Yes, and that actually I think neatly answers another question someone was interested in: why the vendor took cash rather than shares in Cohort. But it sounds like they will be going their own way anyway.

Uh, well, very much so. I mean, it would have been slightly strange to take shares in Cohort having made a strategic decision that they no longer wanted to be involved in the satcom terminal area.

Yeah, right. Coming much nearer to home, in fact home. We have a question on your penetration with the Royal Navy. Maritime is a strong area for the group. Do you feel that the Royal Navy offers more opportunity from a lower base compared to your success with overseas navies?

The Royal Navy is a very important customer to us. In particular, the provision of the Anilia ship defense system, which is absolutely vital to the future of the Royal Navy's surface ship fleet. The award of that to our business SEA is a terrific vote of confidence both in SEA and in the group more widely. We have a very good relationship with the Navy. We had the First Sea Lord in fact as a dinner guest who spoke at a private dinner for the Cohort board and some of the senior management recently, so that's a vitally important relationship with us and we see it growing into the future. Both in terms of providing additional Anilia, we also provide the electro-optic systems for the new Type 26 frigate. We've been working with the Navy on various sonar projects, including with the crate lightweight sonar. We support torpedo launch systems, decoy launch systems on many of the Royal Navy ships. We support sonar systems on many of the Royal Navy ships. So it's an immensely important partner for us, but that doesn't stop us working with many export navies as well. We see plenty of opportunities for each. Our relationship with the Royal Navy in fact provides a big boost for us with those overseas navies because it's such an important reference customer.

Very reassuring. And staying in the UK and the Strategic Defense Review, we have a question perhaps one for you. Have you noticed any slowdown in tenders being requested as the review gets nearer to its completion date?

So yeah, and in terms of the Strategic Review, you're already in a strong position. Many of your contracts, as you've explained, are for multi-year delivery, so it would be a surprise to see a dramatic change in direction that affects you immediately anyway.

I think that's right. I mean, we don't yet know what's going to come out of the review, but I'm sure it's just about a change of emphasis rather than a change of direction. It's not as if we're suddenly going to stop focusing on Russia and China. So I think, whatever comes out of it, and that's not clear yet, we will be in a good position to respond to that.

Good. Simon, I think probably quick and easy one for you. Impressive visual progress of the construction work at Kiel for Elac Sonar. Can you confirm that it has been built on budget and on track for timing?

Good, thank you. Question on order size. There was a noticeable trend through financial year 23 into 24 that orders were getting larger. So we have a question whether that is still the case for you.

Yeah, that's an interesting one. We did have one very large order last year which kind of distorted things in the form of Anilia. I would say that, you know, possibly our second largest program, the Italian submarine sonar, has been growing gradually as we've had contract amendments and that's now approaching 100 million euros in value. And when we look at the opportunities that are in front of us, we see several which are well over 10 million euros, tens of millions of euros. So I think it's true to say we're seeing more of those large opportunities. But in terms of the statistics, I'm going to turn to Simon. I mean, we do produce a good statistical analysis of these at the end of the year. I simply haven't done one at the end of the half year, so I'm not able to give you more than a sort of anecdotal answer. But Simon, can you say any more than that?

Exactly, exactly, sir. Long may you remain busy reviewing. And moving on from that extremely nice Anilia order, we have a question. Without obviously being commercially sensitive, has the level of international interest so far in Anilia been what you might have expected or hoped for?

There's been plenty of conversation on this, and we've recently announced a partnership with the Danish company Terma to provide a complete anti-ship missile protection system. So in terms of the Danish company, certainly the Danish Navy we see as a good prospect for that, and they also have a large number of ships fitted with their system around the world which would be good candidates for upgrades as well. So yeah, we're seeing some movement in that. I think the critical design review is key. We've been very much focused on Anilia, delivering for the Royal Navy. That's absolutely key. So we've got the critical design review coming up in the spring next year, and I think after that, that's the point at which we're going to be looking very actively at contracting some of these prospects.

Understood, thank you. Right, just time for a couple more questions. Oh, another geographical one perhaps for you, Andy. Could you share your thoughts about how the situation in Syria might play out and what the implications for the use of Cohort services or offerings may be?

Well, I wouldn't say that I'm filled with optimism about the future of Syria. I think the quickest and most discreet way to answer the question is probably not to veer off into speculation about what might happen. But if you want a word on the impact for us, it is that it is likely to increase the instability in that region as a whole, involving not just the players that I mentioned, Saudi Arabia and Iran, but also plainly Israel and very plainly Turkey. So I think again, it's likely to bring home to many of the countries in that region the need for security and the need for high-quality defense equipment in order to deter aggression from their neighbors.

Yeah, I'm afraid you may be right, but wise words. And then last one. I'm not sure there's a yes or no answer to this, but do the two of you feel that there is tangible evidence to support the move that you've made to have two divisions in the group? And the question is, can you see benefits from sharing technology or combined offerings that has made the formation of the two groups and closer bonds successful in your eyes over the last 18 months or whatever it's been?

Okay, well the question was for the two of us, so I'll let Simon answer for his own views on it. What I would say is this: I think the adoption of the two divisions for reporting has made telling the story a lot easier. So it's much easier for us to come here and show you the difference in performance between the two groups, how they're developing, what the opportunities they see are, what the different characteristics are, than it is to talk through six soon to be seven discrete profit centers. As far as cooperation between the businesses is concerned, that is certainly not limited to the groups. Although there are some good reasons why the businesses do have something in common within those groups. For example, we've got Chess working very closely with SEA on delivery of Anilia for one example, but we've also got EID working very closely with Elac in Portugal, which is a market that Elac is hoping to develop. All six, soon to be seven, managing directors of the businesses gather quarterly to talk about what they're doing, exchange ideas. We have various cross-group forums that are not limited at all to within those divisions. They all work across the entire group. So it hasn't limited the scope for cooperation between group members at all. Simon, I think you would add to that.

Yeah, well said. And it does seem to be working very well. So I think we've covered everything. I'd like to thank the audience for their attention and their questions. The viewers will receive a feedback form. If you can spare one minute, the company's always very interested in what you think about the presentation and the state of the business, so we'd be very grateful to get those replies. As I mentioned earlier, this presentation has been recorded, so you will be able to watch it again shortly. And as always, there is an insightful Equity Development research note from Mike Jeremy that covers the recent results and EMS and has all the forecasts that the management is not allowed to make to keep you informed about prospects for the group. Last but not least, thank you Andy and Simon for your time. Congratulations on a very successful year for the group and for its shareholders, and we wish you that success to continue for quite a while longer.