Spectris plc

I hope that you're all keeping safe and well at this time, and welcome to those on the call, but also to those of you on the webcast, to this Spectras' half-year results for 2020. I'm Andrew Heath, Chief Executive, and I'm joined today by Derek Harding, our CFO. So moving on to the agenda, I'll go through the headlines, then pass over to Derek to run through the numbers in more detail. I'll then come back to talk to you about our operational performance before closing with Outlook, then opening the session for Q&A. Our priority continues to be to protect the health and safety of our employees, and through this period, balance the needs of all stakeholders. The response and commitment of our people has been exceptional, and I would again like to publicly thank and recognize everyone for how they've responded to all that COVID-19 has presented to us. I'd also like to thank our shareholders for their understanding and support over the past months. It is greatly appreciated. In terms of performance, we had a better Q2 than we expected when we entered the quarter. Half-won results decreased by 14% on a like-for-like basis to 599 million pounds. With the commitment of our people, we moved quickly to support our customers at a lower cost. We rapidly implemented a number of short-term temporary cost measures, which, along with the benefits from our profit improvement program, delivered an 11% reduction in like-for-like overheads in the first half. As a result, The profit drop-through impact was limited to 32%, resulting in a 41% like-for-like reduction in operating profit to £44.1 million. Spectrus has performed well in the face of what has been an unprecedented time, demonstrating the resilience and quality of our business model and our cash-generative nature. Our cash conversion was very good, such that we ended the period with an even stronger balance sheet and liquidity position at the end of June. This has enabled us to reinstate payments to stakeholders, paying an additional interim dividend in lieu of the final 2019 dividend, and announcing an interim dividend for the first half of 2020. We are also restoring salaries and bringing people back to full-time working. However, we must remain vigilant, both in terms of our people's wellbeing and our forward planning. The outlook does remain uncertain, but what is clear is that we are facing a global recession with an extended recovery period. Therefore, we must now move to implement sustainable actions in the face of this new economic reality. And consequently, we've announced a restructuring program, which we expect to deliver 20 million pounds of benefits in 2021, which is on top of the 20 million pounds we delivered this year from our profit improvement program previously announced. Nevertheless, our strategic direction is unchanged, whilst the backdrop has fundamentally altered provides new opportunities for us to emerge from this crisis even stronger and more resilient. We will continue to focus on what we can control, investing in our business to deliver growth, implementing cost and improvement initiatives to drive operating margin expansion, and optimizing the portfolio to deliver long-term value to our shareholders. The first half of 2020 has presented many new challenges, but as we've previously said, we have endeavored to take a balanced approach socially responsible approach to managing our business, consistent with our culture and values. While, of course, we're working hard to deliver as strong a financial performance as possible, we're also ensuring we address the needs of all our stakeholders, protecting and supporting our people, working more closely and flexibly with our customers and suppliers, while finding ways to aid the communities within which we operate. And to address the crisis, we've managed it really in three phases, react, respond, and reset. At our training update in May, we described many of the actions we had taken in the first two phases. So I'll just provide a brief summary here. The Spectra team reacted superbly in the early days of the pandemic, protecting and supporting our people and working more closely and flexibly with our customers and suppliers. With the health, safety, and well-being of our people remaining a key priority, we moved quickly to enable working from home arrangements for all roles where possible and to protect employees still deployed at our sites, with heightened safety measures. We also enhanced our mental health support, provided practical guidance, and increased our communication in order that everyone stayed connected. These measures continue today. For our customers, we have innovated how we engage with them, so many continue to work remotely. We increased our use of digital engagements, including virtual training, online demonstrations, and also accelerated self-installation and remote support tools keep our customers operational. We've also been working more closely with our suppliers, maintaining our payment terms, and offering to provide early payment to any small business suffering hardship. In the response phase, we took swift action to protect the company while retaining capabilities and protecting jobs for as long as possible. We prioritized short-term costs and savings to support our financial performance and mitigated the impact on jobs through a range of temporary measures such as reducing discretionary costs, a headcount freeze, and asking our people to take a reduction in pay, or work a shorter week, or indeed be furloughed. With the support of our people, we were able to implement these savings quickly, despite the financial burden it placed on them. Their selflessness and commitment is very, very much appreciated. In conjunction with our profit improvement programme, this resulted in overheads in the first half being 11% lower on a like-for-like basis, and Derek will cover this in more detail shortly. To preserve cash, we also decided to withdraw the special dividend and postpone the final dividend for 2019. We also limited spend on CapEx to key projects, but maintained our investment in research and development. As I've already mentioned, our Q2 performance was better than we initially anticipated. However, it has been a challenging period. As we look forward, it is now evident we are facing an extended recovery, and therefore we must now move to the next stage of our planning, the reset phase. We continue to believe in the long-term growth outlook of our target markets. However, it remains unclear exactly how they will perform in the near term. Having reviewed a number of scenarios, we are planning our business based on recovery that extends through 2021. As a result, this now necessitates moving from temporary to permanent reductions in our cost base and additional restructuring will take place through the rest of the year and into next. Our current profit improvement program remains in place and we fully expect to deliver 20 million pounds of benefits this year for a cost between 20 to 25 million pounds. Additionally, we are now launching a restructuring program to resize our cost base, targeting further sustainable benefits of 20 million pounds in 2021. Detailed plans are in the process of being developed, and further information on these will be provided in October. Let me now give you a flavor of where these will come from. The last few months has led to a completely different way of working, which provides a number of opportunities for us to be a lower-cost organization, such as working remotely is now possible on a much wider scale than previously thought, and our people want to be able to work more flexibly. Consequently, a number of physical facilities will be closed or reduced in size. We will also reduce discretionary costs. We've dramatically increased the use of digitalization, both in terms of how we engage with customers as well as remote working. As such, we will be able to translate much of the savings achieved over the past month into a permanent reduction in discretionary costs, such as travel and marketing and conference-like expenses. With a prolonged recovery period now expected, it is unfortunate but appropriate that we now need to resize our capacity on a sustainable basis. Given the varying outlooks for each of our operating companies, we will be implementing a targeted headcount reduction programme by business. And as ever, we will maintain our focus on asset optimization and portfolio management. Our disposal program will continue, and we will look to cease or sell marginal activities so we can focus on those areas which offer high growth and profit potential. As part of this transition, it is right that we reestablish a sense of normality, implementing sustainable changes that provide incentives for all our stakeholders. For this reason, supported by our strong cash flow generation in the first half, we are restoring salaries and returning as many people as possible to full-time working during August and September. Executive director salaries and board fees will be reinstated in October once this work has been completed for all our employees. And for our shareholders, we will pay an additional interim dividend of 43.2 pence per share in October, which is equal to the amount that would otherwise have been paid if the 2019 final dividend had been put to and approved by shareholders. And in regard to the first half of 2020, an interim dividend of 21.9 pence has been declared, and that will be paid in November. In light of the events of the last few months, we have taken the time to reflect on our strategic direction and have concluded that it is still highly relevant. The core thesis of driving growth and operating leverage, as well as optimizing the portfolio and focusing on those businesses, the growth and margin potential is as critical now as when we first set it. The strategic growth initiatives that we establish within our businesses continue to be implemented, and we will carry on investing in R&D and CapEx for key projects, ensuring we continue to deliver the leading products and services our customers desire. For example, during this period, with facility access constrained, the requirement for remote support, data analytics, and insights has become more prevalent. We are investing in providing more integrated software and services, including predictive and prognostic analytics, in order that our products evolve to meet this increasing trend. Urban Analytical is working on the increased vision of process automation solutions, for instance. HBK has launched new hardware and software products to provide more complete e-powertrain testing and optimization, including energy distribution systems testing. And Omega has launched the first phase of its Layer N product range, which is a smart sensor gateway and cloud services system, to streamline sensing, monitoring, and access to data through wireless connectivity. And we remain intent on improving our operating margin to at least previous highs. The outlook makes this longer dated, so it is even more important that we continue to concentrate on self-help initiatives to drive cost efficiency, and the application of the Spectra's business system will also be key. Our portfolio optimization program continues, both in terms of disposals, where the previously identified divestment candidates have not changed, and also on the acquisition side to increase scale and or expand our capabilities into adjacent markets. Our balance sheet strength has put us in a good position to pursue opportunities that may emerge in this new environment. And supporting this strategy is our newly launched values and revised code of business ethics. Our values underpin our behaviors. They represent what we believe and guide our actions such that our culture reflects what we want to see in Spectrus. That is ambition, accountability, and integrity. We phrase that as being true, owning it, and aiming high in everything that we do. And our code of business ethics helps us perform and do business in the right way, ensuring that we maintain strong corporate governance, especially as we shift to greater remote working. I've been delighted to see the strength of our culture come through over these past months. Our people have really stepped up as a team to support our customers, our businesses, and each other. And I'd now like to thank, sorry, I'd now like to hand over to Derek who'll run through the financials in more detail. Derek, over to you.

Thank you, Andrew. And good morning, everyone. Andrew's covered some of the metrics already, but for completeness, my first slide is a summary of the key performance indicators for the period. Sales decreased by 21.1% to £599 million. 9% of this decline related to disposals primarily the disposal of BTG, leaving 13.7% decrease on a like-for-like basis. Adjusted operating profit decreased by 47.2% to 44.1 million, 41% down on a like-for-like basis. And these movements clearly impacted the adjusted operating margin, which was down 360 basis points to 7.4%, with like-for-like adjusted operating margins down 340 basis points compared to the first half of 2019. Clearly, a challenging set of numbers as we faced into COVID for the first half. However, we are pleased to have limited the like-for-like profit decline to only 32% of the sales decline as a result of solid cost actions through the period. Adjusted profit before tax was 40.4 million, down 47.7%. Our tax rate came in at 22%, which is slightly higher than the guidance given at the start of the year, due to a slight change in our mix of anticipated profit, and adjusted earnings per share decreased by 48.1% to 27.2 pence, reflecting the decrease in adjusted profit before tax, which we note above. Supported by our strong cash flow in the first half, the Board has reflected on the decisions regarding the final dividend, as Andrew mentioned, and we announced this morning that an additional interim dividend of the same amount will be paid in October. And with regard to the first half of 2020, the interim dividend of 21.9 pence is proposed, and this will be paid in November of this year. This is the same amount of interim dividend as paid last year, and you should read nothing specific into the amount chosen. We will determine the final dividend for FY20 in February next year as part of our year-end process, based upon all the information available to us at that time. Notwithstanding, there is no change to our progressive dividend policy, which is based on affordability and sustainability. The adjusted cash conversion was 201% compared to 89% last year, and it demonstrates the cash-generative nature of the group. And at June 30th, the group had a net cash position of £94.3 million. Finally, on this slide, the return on gross capital employed fell from 13.4% to 11.3%, primarily due to the lower profits in the period discussed above. My next slide provides a graphical view of the main P&L movements in the first half. Sales are shown across the top with adjusted operating profits at the bottom. First of all, I've adjusted 2019 to remove the sales and operating profit relating to disposals, primarily BTG, to provide an organic baseline. Favorable foreign exchange movements contributed 5.1 million of sales and 1 million of operating profit. And like-for-like organic sales decreased by 94.3 million, which dropped through to lower gross profit of 63.2 million. And then finally, overheads were down by 32.8 million, with savings generated from the Profit Improvement Programme and temporary measures taken in response to COVID-19, which I'll now expand further with my next slide. I've added a new slide this time to help explain the moving parts within our cost post. On the left, you can see the prior year reported overheads of 335.5 million, And I've then removed the overhead associated with disposals of $28 million. Foreign exchange increased our costs by $1.7 million. At the end of last year, we guided that the 2019 profit improvement actions would contribute a further $10 million of cost reduction in 2020 as they annualized. And you can see that $9.2 million of this came through in the first half. Additional PIP actions underway in 2020 have also contributed 1.8 million of savings in the first half. And if you recall, we anticipated that these actions would contribute 10 million in total during 2020. And then next you can see 21.8 million of other cost saves. This includes several temporary savings, such as a 12 million travel saving in the first half, as well as 6.7 million of income from government support schemes outside of the UK. we have chosen not to benefit from any of the COVID-19 related programmes within the UK. As we look into the second half of 2020, removal of disposed businesses will account for a further 24 million reduction in H2 compared to the prior year. We expect to deliver on the remaining 9 million from the PIT programme plus an additional 10 million of temporary savings. So this would give us around 50 million of savings in 2020 compared to 2019 on a like-for-like basis, of which 30 we consider temporary in nature. And as we said earlier, we are launching a restructuring program to switch 20 million of these temporary savings into sustainable benefits. Detailed plans are being developed. Further information will be provided in October. Our next slide looks at how we've generated cash in the year and illustrates what we have then done with that cash. Starting by adding back the $31 million of depreciation and amortization charged to the adjusted operating profit brings you to the $75.1 million of EBITDA generated in the period. As our activity and revenues declined during the first half, the group released $36.9 million of cash from working capital. This was broadly generated from the collection of accounts receivable from the higher sales in Q4 of last year. We continue to focus on improving our average working capital as a percentage of sales, but with the sales decline that we have experienced during the first half, our average working capital increased to 14.7%, the top end of our desired range of 11 to 15. CapEx of 23.2 million was 16 million lower than the prior year and includes investments at Millbrook of 5.1 million. This is lower than our original guidance as we have delayed certain investments in response to the current environment. And this then gives us our adjusted cash from operating activities of 88.8 million, which we divide into the adjusted operating profit to get our cash conversion metric of 201%. Interest and tax had a combined cash effect of 13.3 million. And as we announced in April, there was no dividend payment in the first half. They will now be paid in October and November, as discussed earlier. and we spent 8.2 million of cash in restructuring activities associated with the PIP program. 13.4 million of transaction-related cash income is the net of 24.4 million of cash received from business disposals, 7.1 million paid in respect of prior acquisitions, and 3.9 million transaction-related costs. IFRS lease payments were 9.8 million And an FX loss of £10 million gets you back to the balance sheet net cash income of £60.8 million for the period. The next slide is included to help you understand the moving parts between our adjusted operating profit measures and our statutory profit measures. I'm not going to go through each one as I think they're fairly self-explanatory. The big movement in H1 relates to the impairment at Millbrook. During the first half of 2020, Millbrook's business has been impacted by a number of factors. There's been reduced demand from automotive customers who have delayed development projects and therefore testing in response to the impact of the COVID-19 situation on their businesses. In March, a large customer decided to in-house all outsourced engine testing services from the period from April 2020 to April 2021. And Millbrook's events business has been largely shut down as a result of the COVID-19 restrictions. As a result of these factors, we have recognised an impairment of the whole of Millbrook's goodwill balance of £58.4 million that you can see on the bottom of this slide. And in addition, included in the £36.5 million of amortisation of acquisition-related assets is a further £17.4 million charge relating to Millbrook. These adjustments take us down to the statutory operating profit. And there are then some further adjustments which need to be considered to get to the profit before tax, which I will now cover on the next slide. You can see on this slide that we have removed the loss associated with our share of the EMS joint venture, as this was sold during the period. This sale generated a loss on disposal of 0.9 million pounds, which is offset by a profit of 6 million relating to the sale of our interest in the rheology product range out of multiple panelists. And this gives us the net 5.1 million of profit on disposal that you can see here. Deduction of finance costs then results in a statutory loss before tax of 65.5 million pounds. The next slide sets out primary movements in our return on gross capital employed. This is a rolling 12-month measure and is therefore the slide looks at H2 2019 and H1 2020 combined. Return on gross capital employed for the 12 months ended the 30th of June was 11.3% compared to 13.4% in the prior year. The reduction in adjusted operating profit has already been covered. And gross capital employed increased by 48 million, primarily due to a provision for the share buyback, which was in place in H1 2018. and is thus included in the opening capital employed, but not the closing capital employed. Before I hand back to Andrew, I thought it would be helpful to share some thoughts on how we see the remainder of 2020. As a reminder, due to market uncertainty, we withdrew our forward financial guidance for 2020 on the 6th of April. Visibility continues to remain low, and we therefore maintain this position. Nevertheless, there are some headwinds and tailwinds that are worth discussing. starting with a headwind. Back in February, I had coronavirus question mark on this slide as a headwind, as then it was unclear what impact COVID-19 would have. In reality, it is still unclear, and we are cautious around the impact of potential further lockdowns in all of our markets. We remain cautious of the impact of the current political and economic environment in which we operate. This includes the continuing US-China trade challenges, Brexit, and of course the outcome of the US presidential election. With respect to our cost base in H1, we benefited from around 20 million of temporary cost measures. And we anticipate that some of these will unwind in the second half. And as a result, we are expecting 10 million of temporary cost saves in the second half of 2020 compared to the second half of 2019. Looking now at the tailwinds, we anticipate a further 9 million benefit from the Profit Improvement Programme of the actions taken this year, and we continue to launch new products which will support revenue growth over time. We continue to anticipate benefits from the deployment of the Spectra's business system to help reduce waste and further build on our self-help activities. As I stated earlier in the presentation, overall, we are targeting around 50 million of cost saved in 2020 compared to 2019 on a life-like basis. In the appendix to the slides, I've also included a slide which shows our sensitivities to FX and confirms our guidance on tax and CapEx, which is around 22% for tax, and planned CapEx of 55 million for the year. We've got another 30 million in the second half, including 15 million relating to Millbrook. And with that, I'll hand back to Andrew.

Thank you, Derek. We'll now turn to our operational performance. Let's first look at sales by destination. And here we saw that all regions had lower life-like sales in the first half. In North America, sales were flat in the first three months, then moved notably lower in the second quarter as lockdowns were imposed, although the rate of decline has eased in June. In Europe, sales started the year lower, and then with lockdowns imposed from March, again saw greater declines. But again, the rate of decline has eased in June. In Asia, China had a weak Q1 before moving into positive territory in April and May, though June saw sales lower once again. Other countries such as Korea and India have improved in the latter part of Q2, but were still notably lower versus last year. Turning now to our end markets, similarly, these were all lower, with pharma and machine building faring better, and metals, minerals, and mining seeing the greatest decline. I'll talk to these in more detail as we discuss each of our businesses, firstly looking at each of the platforms, followed by the industrial solutions division. Starting with Morgan Analytical, sales declined 21% on a like-for-like basis, with all regions down, albeit North America less than Europe and Asia. On a like-for-like basis, adjusted operating profit ended 55% lower, with the margin down 420 basis points. Despite a favorable mix and lower overheads, these were not sufficient to offset the adverse volume impact. Looking at the end markets, pharmaceutical was lower, with only China and the UK of the key countries seeing growth. Decline reflected a shift in focus production from R&D and laboratories and academic research institutes being closed due to COVID-19. Sales into manufacturing and also quality control within pharma were down to a lesser degree. Equally, sales to the food sector were also more resilient within this area. Sales to primary materials customers were notably lower year on year, particularly in Asia, with lower oil prices impacting CapEx, resulting from Petrochem customers having declined revenue expected, and that's expected to carry on to be slow over the coming months. Within mining, some mines have been closed or placed on restricted operations to meet social distancing requirements, with many metal suppliers dependent on customers significantly impacted by COVID-19, such as auto and aerospace, demand was also lower. Sales to building materials customers were down to a lesser degree. Sales to advanced materials industries were also impacted by research institutes being closed, although we expect the weakness in demand here to be more temporary. Really sort of driven by battery technology supported by research and development, and also semiconductors driven by 5G and the Internet of Things. Moving on to HBK. Here, we saw HBK performing strongly in the first half with light-for-light sales down 8%, achieving flat sales in North America while Europe and Asia were both down. As a consequence of lower overheads from the profit improvement program and the temporary cost measures, adjusted operating profit was only 2% down on a light-for-light basis, with adjusted operating margin increasing 60 basis points. In our end market, there was a continued slowdown in the overall automotive sector, And here our light flight sales declined in both Europe and Asia, but rose in North America. The electric vehicle market remains a bright spot in this sector, with manufacturers competing to release newer electric models to capture market share. Equally, government support is expected to stimulate growth in electric vehicles. We are seeing increasing demand to test not only electric drives, batteries and power management, but also noise and vibration compliance. Like-for-like sales to machine manufacturing followed a similar profile, lower in both Europe and Asia, but grew strongly in North America, again reflecting the exposure to the automotive supply chain, which has held up better. The growth also reflected good onward demand for our weighing technologies from the process and medical markets. In aerospace and defense, like-for-like sales declined across all regions, although more modestly in Europe than in North America and Asia. HPK's exposure to commercial aviation is limited, and to date our aerospace and defence customers have kept large investment programmes running. In the defence and satellite markets, we expect spending to be impacted to a lesser degree. In consumer electronics and telecoms, light flight sales were lower, with underlying demand impacted by the weaker macroeconomic conditions and the resulting lower levels of customer spending. At Omega, light flight sales decreased 13%, mainly caused by business disruption from COVID in North America. Similarly, sales were lower in Europe. Asia did see growth, driven by strong performances in South Korea and Japan, due to the high electronics and semiconductor demand there, as well as market share gains. The resumption of growth in North America is not expected until 2021. However, in Asia, the outlook for semiconductor demand looks more positive, so we expect growth to recover here quicker. As a result of the lower sales, a relatively fixed cost base, and higher IT cost and amortization related to the new e-commerce platform, like-for-like adjusted operating profit declined 71%, and like-for-like operating margins fell 950 basis points. Following the launch of the new digital platform last year, the focus for 2020 has been to drive volumes through the website to deliver sales growth. We have seen online sales being more resilient over the past period, and further developments continue to be delivered to enhance the customer experience. Omega has also been concentrating on strengthening its existing product portfolio, launching a series of new products for the highest growth market. It has launched 65 new product lines this year, and a further 133 are planned for the remainder of 2020. Lastly, within industrial solutions, sales here declined 30%, primarily reflecting a light-for-light sales decrease of 13% and a 21% impact from the disposal of BTG. Light-for-light sales were down most markedly in Asia, despite growth in China. Light-for-light sales in Europe and North America were down by a similar amount. However, we did see increased sales in pharmaceutical and within food and beverage. On a light-for-light basis, adjusted operating profit declined 44%, and the margin contracted 440 basis points. reflecting the volume decline, as well as an adverse mix effect, which was partly offset by lower overheads. Turning to the end markets, in energy and utilities, the collapse in the oil price impacted sales at ESG, and also demand for Servimex gas analyzers for the likes of industrial and hydrocarbon processing and petrochem sectors. At BKV Ibro, sales to wind customers were strong, with good demand from major turbine OEMs. Pharmaceutical and life sciences industries saw good life-like sales growth, particularly in North America and in China, although sales declined in Europe. At PMS, there was strong demand in North America and also at Servimex, and we have seen significant increase in orders for the Servimex ParaCube oxygen sensor, as manufacturers have been ramping up the production of ventilators for the treatment of COVID-19. Life-like sales in the semiconductor and electronics industries did decline, although China and North America again posted growth in electronic sales. As you are well aware, the automotive industry has suffered a significantly negative impact from COVID-19 with the widespread closure of manufacturing plants, a collapse in new car sales, and also delays to new development projects, and therefore testing. However, light flight sales into automotive decreased only slightly in our industrial solutions division, reflecting the expansion in testing capacity and capability at Millbrook, That's in both Europe and the USA. In our other end markets, primarily served by NDCT, converting and film extrusion industries saw sales decrease, although plastics and packaging continue to hold up. Like flight sales, the food, drink and tobacco sector remained robust, with strong growth in Europe and Asia. Though demand for restaurant and fast food-related products have been impacted by COVID-related closures, there has been good demand from producers of snacks and frozen food products. So in summary, I'm pleased with how we have reacted and responded to the challenges presented. We have taken a balanced approach to managing our business, and I've seen strong support from our people, our customers, our suppliers, and our shareholders. Though the first half was challenging, we saw a better than expected performance in the second quarter than we originally anticipated. We rapidly implemented a number of short-term temporary cost reductions, which along with the benefits from our profit improvement program, delivered an 11% reduction in like-for-like overheads in the first half. As a result, our profit drop through impact was limited and cash conversion was strong, further strengthening our balance sheet and liquidity position. It does put us in a position where we can now reinstate our dividend, restore salaries, and bring as many people back to full-time work as possible. However, it is now evident that we are facing an extended recovery period, and therefore, must now move to implement sustainable cost actions. We have therefore announced a restructuring program, full details of which we are developing, but we expect to deliver £20 million in benefits in 2021. Whilst the lack of visibility means the near term is uncertain, our long-term end markets are still attractive and our strategic direction remains unchanged. We'll continue to focus on what we can control, investing in our business to deliver growth, implementing cost initiatives to drive operating margin expansion, and optimizing the portfolio to deliver long-term values to our shareholders. And with that, I'll happily open to questions.

Ladies and gentlemen, if you'd like to ask a question, please press star followed by one on your telephone keypad now. You may also submit a question on the webcast via the questions tab. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure that your phone It's unmuted locally. We have a question from George Featherstone from Bank of America. George, your line is open. Please go ahead.

Morning. Thanks very much for taking my question. Looking at the drop-through rate, H1 versus the guidance you've given for 2020, it suggests there'll be a reasonable cost increase in H2. Is that solely explained by the change in the temporary savings that you've identified? Or is there something else? Can you help us understand that, please?

Yeah, great. Thanks, George, for your question. Good to talk to you this morning. I mean, I'll let Derek go through the details. But I think, you know, in many ways, you need to look at our second half as a transitionary period. You know, as we approached, you know, our approach to the COVID back in sort of, you know, March, April timeframe was very much to sort of, you know, maintain our capability, protect as many jobs as possible in the face of, you know, what was really very, you know, uncertain time. We didn't know exactly how things would unfold. There was talk at the time of a, you know, V-shaped recovery. I mean, that's sort of, you know, clearly gone now. So we really want to sort of maintain our capability, protect jobs, keep people safe, in place on the basis that things might come back more quickly. But equally, on the other hand, to make sure we protect the company in terms of taking costs out. And you can see the benefits that we've achieved on that in the first half, both in terms of the profit drop through impact, also a cash generation. But as we go into the second half, I don't feel it is neither right nor sustainable or appropriate that we, you know, now that it is evident that we are facing an extended recovery period, that we keep our people, you know, under an extended period where they're having to make personal sacrifices and have a financial burden. So, you know, it is unfortunate, regrettable that we need to sort of now shift from temporary to permanent measures. But I think that just sort of direct, again, just sort of reiterate just how we see those moving parts in the second half.

Yeah, sure. Thanks, Andrew. And morning, George. Look, I think it's one of these classics where there are a number of moving parts. If you take H1 of 2020 and look into H2 of 2020, then we do have lower savings for the reasons Andrew's just described. And the biggest driver actually of the lower saving is that we don't have... We're not anticipating having any government income or any support in the second half, whereas we had 6.7 million in the first half. So there is... roughly a 10 million increase in cost, if you like, if you take H1 into H2. If you then look at it from the other way, though, but look at H2 last year to H2 this year, on a like-for-like basis, once you've taken out the 24 million relating to disposals, then there's a significant cost reduction. As we achieve the remaining 9 million of PIP, and achieve 10 million of savings when you look H2 on H2. So depending which way you want to look at it, sequentially in the year, it goes up a little bit. Year on year, it's still down. And remember as well, we do have cost increase typically in the second half relating to the level of activity that we have in the second half. It's obviously a big half for us year on year. So hopefully that makes sense.

Yeah, perfect. That's really helpful. Thank you very much. Maybe a second question then on on the trading activity you've seen so far in July, would it be possible for you to share with us the life-to-life growth that you've seen in July?

In terms of July, we clearly, you know, we are literally going through the flash numbers as we speak. But I think, you know, July is broadly in line with June, is what we're seeing over the past sort of four or five weeks. So, you know, we saw... Sales come off 21% in April, 20% in May, but then only 12% off in June. So we saw things starting to recover in June, and July is sort of broadly in line with how we saw June come back. And whether that's the start of a trend, we will clearly have to wait and see. Okay, brilliant. Thank you very much.

You have another question from Mark Davies-Jones from Stifle. Mark, your line is now unmuted. Please go ahead.

Thank you very much. Good morning, Andrew, Derek. A couple of things about China. It was interesting what you said about weakening again soon. I think you were talking about some bounce back, but you weren't sure how much of that was restocking. Can you talk about what was in there? Because some companies are reporting a very strong China trend.

Can we start with that? Yes, of course, Mark. Good morning. Nice to talk to you. So China, when we last spoke on this call, we'd seen quite a strong demand in China in April, and that continued. It was also up in May year over year. So when we were talking back in May on the April results in China, I think I said that, you know, we thought that might well be sort of due to sort of pent-up demand. I think that, you know, clearly, you know, was the case in April and May, and things have stabilized a bit again in June. I mean, June is, you know, was down year over year, but it was single digits down. So, you know, I don't know, you know, how much of this now is sort of, you know, we're going to sort of be, you know, we'll see sort of a month-to-month, you know, the numbers bouncing around a bit. But at least, you know, we have, you know, we've seen China, you know, saw the rebound in April or May. Yes, it dropped back a bit in June, but it wasn't anything like what we saw in the sort of, you know, February, March timeframe. Okay, great.

And then quite long-term, obviously, you're looking at what changes in the longer term and what your requirements are in terms of buildings, et cetera. Are there anything in your customer industries where you think there are going to be adverse effects from customers who'd be thinking their business models going more virtual? Are there other hardware products that have been substituted in software solutions? Is that a threat to Spectra in some of these segments?

Yeah, great question, Mark. I mean, there's nothing that I think has emerged that's certainly been sort of flagged or highlighted that would be a cause for concern. I mean, I think the flip side, though, is absolutely the case. As I said, we are seeing customers now being far more open to sharing data. We have, for instance, in Morgan Panelistical, we've been deploying remote monitoring capability for a number of pieces of our equipment, and the adoption rate on that has increased dramatically over the last few months. You know, we've clearly had to, you know, shift to sort of digital solutions in terms of, you know, actually helping customers install some of our equipment across a number of our businesses. You know, typically we've sent a service engineer to go and do the final installation and commissioning for a number of the instruments and test equipment we provide. That's just not physically been possible, and customers have either not wanted us on-site or there's been constraints about getting on-site, and we've seen a real heightened adoption of now of our remote installation capability, and we've innovated hard over the past months to be able to do that remotely and provide that support online. And, you know, I think in terms of our software sales, then, you know, our software sales generally held up, although it's not a particularly large part of the group. You know, sales overall sort of round about 10% within HBK sales, for instance. But, you know, so I think, you know, net-net, you know, we see that, you know, we see that the trends are moving in a positive direction for us rather than against us.

Thank you. And can I just push? A little harder on the cost question. Derek, as you said, we've got to move it apart. So can I ask a very simple one, which is the 32% drop through in the first half, would it be sensible to assume that that picks up a little bit through the second half of what we've taken out?

Yeah, and the guidance that we gave earlier in the year of 40 to 50, depending on what your sales reduction assumptions are, remains. So that drop three does pick up in the second half in order to net out to the range that we talked about. Sorry, I'm just clarifying, Mark. The real big driver of that is the income, the lack of income in the second half compared to the first.

We have a further question from Andrew Wilson of JP Morgan. Andrew, your line is now open. Please go ahead.

Hi, good morning, everyone. I just have a couple of questions, I guess, on the portfolio. I guess, Andrew, just as we've kind of gone through this last probably six months or so, I just wanted to get a sense of kind of how, if at all, you're thinking around the portfolio and your plans for the portfolio has changed or perhaps it's kind of cemented some of, I guess, the ideas that you had or plans that you had. And then I think, secondly, you touched a little bit in your comments, but just interested to dive into this a bit more, you know, the sort of ability to be able to continue to move forward with that portfolio reshaping, you know, even in the current environment. Just interested to get a sense of if I've contemplated that right and just kind of what you're seeing in terms of whether it be interest in your assets or, you know, a bit more proactively looking at some of the opportunities that might come along as a result of COVID. Just It's quite a broad question, but just interested in terms of how you think about the portfolio now versus maybe six months ago.

Yeah, of course. Thanks, Andrew. So, you know, clearly, as the sort of pandemic spread, really sort of, you know, the M&A activity on both the, you know, the buy and sell side slowed right up and, you know, to a stop pretty much. And, you know, I think we, in line with lots of, you know, other people, put our focus internally to protect, you know, protect our people, you know, protect our operations, support our customers. That was our primary focus. So, you know, activities absolutely sort of slowed right down. But, you know, we have looked again at sort of our assumptions and our planning scenarios around both the disposals and potential buy side. And on your question on disposals, You know, we, as I said earlier, you know, we're confirming that, you know, the candidates that we'd identified previously remain the same candidates. And then in terms of your question regarding timeframe, we are going to start moving again in terms of the disposal program. You know, clearly, you know, valuations, you know, have moved. But that's, you know, it's not just on the sell side. It's also favorable on the buy side. So, And we have aspirations, as we've said all along, to look at accretive M&A from an acquisitions perspective. And in this environment, the M&A landscape has shifted a bit, both in terms of valuations, but also potentially in terms of some targets. So, you know, we are actively, you know, continually screening that landscape and looking for suitable targets that we believe would be a great fit to scale up our platform businesses or potential platform businesses when looking for businesses that either fit directly on top of that or immediately adjacent where we can get strong cost synergies but also strong revenue synergies and expand our offerings to customers. So we remain active. disposal program will continue. I think the final part of your question was just on, you know, I think you were implying would we carry on with disposals if values were lower? Then, you know, the simple answer to that is, you know, yes. You know, it's about asset optimization. And, you know, whilst, as I say, you know, valuations may be down on the sell side, they're also down on the buy side. And that allows us to translate, you know, those assets still efficiently to deliver greater shareholder value, we believe.

Excellent. Thanks, Andrew. Appreciate it.

No problem.

We have a question from Andrew Douglas from Jefferies. Andrew, your line is open. Please go ahead.

Good morning, gents. Just following up a little bit from Andrew's question on M&A, has the way that the world has now evolved changed your thoughts really on what M&A is kind of needed? If you've excuse the word, either in terms of product, end market, division, I guess what the businesses may need in terms of M&A going forward. And then three short questions. Can you just remind us of the current carrying value from Millbrook? on the balance sheet. The £20 million of additional cost savings, I appreciate we'll get some detail later in the year, but can you just give us an idea of how you got to that number? Is that a bottom-up, top-down view of how the world's going to evolve over the next couple of years, or is there a bit more behind it? And Derek, can you just give us, please, a like-for-like drop through in 2021. I appreciate we've got cost savings coming in and temporary cost savings going out, but if we can just think about the organic growth and how that should be dropping through into next year, that would be really helpful.

Great. Thank you, Andy. So, I think it's four questions there. Let me take your one on M&A and then I'll pass on to Derek and hope he can remember the remaining three. So, So I think in terms of M&A and in relation to the sort of core characteristics of activities, businesses that we'd be interested in, our thesis, I think, really remains the same. So we are looking for M&A on the buy side where, as I said, we can scale up our platform businesses or potential platform businesses, both in terms of their product and service offerings. But clearly, we have a digital agenda as well that we are pursuing, both in terms of developing greater software solutions wrapped around our hardware product, data analytics, prognostics, predictive analytics, use of artificial intelligence. But it is very much built and based around our core hardware product offerings. It allows us to expand our, you know, our solution offerings to our customers. You know, we, you know, so, you know, yes, we can, you know, we want to, you know, continue to expand software and, you know, service activity as part of the M&A agenda. But, you know, to be clear, it's going to be very much linked to our platform businesses and to their core offerings, you know, not to get us into new software or service lines that, you know, that aren't, you know, immediately adjacent to what we're doing today.

Right, and Andy, on all of your other questions, so Millbrook carrying value following the impairment is £157.6 million as of June. On the cost saved, the £20 million, it's a combination of some specific areas that we all collectively feel we can get and some tasks and some challenges that that I think we can get, plus some offerings from the platform. So it's a kind of a combination of top-down, bottom-up. The reality is that this is an agile, moving situation. So as we've come through the first half, and particularly the second quarter, we really have, as you can see in the numbers, taken some swift, strong, temporary action. And as we now go through that pivot and say, okay, as we unwind these Say, for example, bring people back off furlough or increase hours. Then you're looking at headcount. Then you're looking at the footprint. Then you're looking at travel and those types of things. So it's a little bit of a blended mix at the moment. We're just trying to work it through. But there are targets set by platform that have an element of stretch plus an element of reality in them. And we will come back in October with clarity as to specifically when and how each of those are going to be hit. and a little bit more colour in terms of the cost of achieving that as well. Some of the cost saves are cheaper to obtain than others, depending on, say, for example, exiting a facility versus removing a conference or travel. So we'll have a bit more detail as we come through the third quarter ready to come out in October. And then... Drop through for next year is tricky. I mean, as I said, we're not giving guidance for 2020. So almost certainly don't want to be giving guidance for 2021 on that basis because it is difficult to see. And again, it kind of depends on what your view is on the top line into 2021. As a planning assumption, you know, 40% is probably a good number, as good as any. as a planning assumption. But I wouldn't necessarily be held to that when we get into 2021, because it really does depend on the shape and the speed of any kind of recovery out of 2020 as we go through the year.

No, fully understand, and thank you to the guys. That was helpful. Thank you.

We have a question from Jonathan Hearn from Barclays. Jonathan, your line is open. Please go ahead.

Hey, guys. Good morning. Just a couple of questions for me, please. Firstly, just on Amiga, obviously there's a cost in terms of the new platform in the first half. Is there a subsequent cost coming through for the new platform in the second half for Amiga? That was the first question. And the second one was just coming back to sort of, I suppose, guidance to a degree, just looking at the seasonality of Spectre. So obviously there is a big H2. skew historically. How do we kind of think of that in terms of 2020, sort of H1, H2, both in terms of sort of revenue and in terms of profit, please?

Thanks. Okay. Yeah, Jonathan, thanks for your question. And again, good talk to you this morning. Just on Omega, the simple answer is the sort of second half, first half has unwound itself now. We implemented the new e-commerce platform in North America in April of last year. So the sort of depreciation costs and some of the increased IT license costs associated with that investment really only started kicking in towards the second half of the first half of 2019. So, you know, we've seen that, you know, the like-for-like impact has impacted the first half of 2020 but won't repeat in the second half. So hopefully that's clear. And then on the seasonality point, again, I'll let Derek add a little bit of colour here. I think, as I said right on the outset, I think the first question from George, the second half of this year is going to be a transition period as we shift from temporary to permanent measures. So some cost comes back in as we take cost out. Equally, as Derek has said, some of the government-related income that we did have in the first half won't repeat either. And clearly, you know, the shape of our year is typically weighted towards the second half. You know, we would expect to see that. Q4 is always an important quarter for us, but that's also the quarter where, you know, the winter starts to kick in and, you know, there are various scenarios or concerns around, you know, then what might be, you know, the lockdown scenarios, second waves, spikes, whatever. an epidemiologist, you know, that we might then see, you know, come the start of the onset of winter. So, you know, so clearly, you know, that's really why we have not reinstated our, you know, any guidance. You know, there is some clear dependency, you know, on that fourth quarter for our full year results. But, you know, we would certainly expect to see, you know, some uptick now, you know, and that we'd see Q2 really as being the dip in the cycle. But Derek, do you want to just add a little bit more colour?

Yeah, I mean, Jonathan, it's a great way to ask for guidance. We're drawing guidance in some ways. I mean, it's difficult to give a number in reality. I mean, if you look historically, you know, last year sales in the first half were about 46%, I think, as a full year number. And the profit was about 30% as a full year number. So, you know, that was the shape in 2019. Is that the right shape for 2020? For all the reasons Andrew's just described, it's hard to tell. We are anticipating Q3 to be sequentially better than Q2, and Q4 will be sequentially better than Q3. So that kind of underlying shape of our business, we don't anticipate being different. But the quantum of those moves, for all the reasons that we've identified with so many moving parts around us, It would be unfair, frankly, for me to give you guidance at this point because it would imply I know what's going to happen four or five months from now. And the reality is in this current macro environment, none of us know.

Thanks, guys. I appreciate that. Thank you.

We have a question from Michael Tindall from HSBC. Michael, your line is open. Please go ahead.

Good morning, gents. A couple from me, and they're like a slight twist on what you've already spoken about. If we just think about industrial solutions, given your view of the world now and the fact that we're talking about a slow recovery and potentially second wave, is there a better potential now with industrial solutions to maybe have some bolt-on acquisitions and find a fourth platform? Not naming names, but I mean, Servomex obviously had a pretty good first half. Does a changed view of the world potentially create more opportunities within industrial solutions? And then the second one, I'm just trying to get my head around the second half operating leverage because presumably your cost of bias to the second half, as well as your revenues, is the obstacle in terms of the speed at which you can take costs out, a function of consultation periods, Or is it identification? I'm just trying to understand. I get the whole temporary to permanent measures, but I'm just wondering what the restriction is in terms of the speed of how quickly you can take those costs out.

Thanks. Okay. Michael, thanks for your question. I'll talk about industrial solutions. I'll let Derek, again, come back and talk about the second quarter. You know, we've been at pains all along to sort of make it clear that industrial solutions is an important division to the group. It's still a third of our revenues and slightly more in terms of profit, made up of some high-quality niche businesses. There's clearly some candidates in there for disposal, and we've been clear on that. Equally, we've been clear that there are some candidates, some of those operating companies that we absolutely would very much like to grow into platforms in the future and certainly have potential through both on acquisitions, as you said. And I think what we've seen over the past month for a number of those businesses is the quality of them has shone through in terms of their products and the market they serve, particularly, I think, in terms of the census side of the business The demand there has held up because fundamentally we're providing very high accuracy, highly differentiated, important equipment to key customers who fundamentally rely on those sensors to be able to deliver the quality, the yield, and manage the demands of their processes. So to your point, has it sort of underlined how we see those businesses and the value of them? Yes. would we still wait to find Bolton acquisitions to scale them up? Absolutely we would. And as ever, it's finding the right ones at the right price at the right time. So that remains absolutely part of the strategy. And then Derek, I'll pass over to you for the second part of the question.

Yeah, sure. So I mean, I think when you think about cost saves, the nature of the cost save in the first half, and then going into the second half seems to be causing some sort of challenge, I guess. So let's just think about it if you step back. The guidance we gave for the full year remains, which is that flow through between 40% to 50% dependent on the revenue assumption you have. And when you look, therefore, at the first half at 32, I can see you're all kind of scratching your heads a little bit to say, well, how does that guidance still work? You've got to look absolutely at the nature of that first half saving to a point. So, as I said, there's 6.7 million in there of income that we've got from various furlough schemes and government schemes outside of the UK, which we won't get in the second half. And in Q2, there was, you know, almost a stopping of all forms of travel around the world, significant saving there, and, you know, a range of temporary measures on our working hours. So part of the outperformance, if you like, in the first half doesn't imply an underperformance in the second half. It's just a series of one-off actions or one-off measures cost saves in the second quarter that won't repeat in the second half, which is why that overall guidance remains. If you then look at the fundamentals of how do you take cost out of our business, we took 25 million out last year from PIP. We've got another 20 million this year coming out from PIP. So you get to sort of a 45 million there over that two-year period. And now we're going again with another 20 million. And some of the easier things you might have seen from cost saves, therefore, were captured. And the things that we now need to do is, for example, looking at our footprint. If you decide that you want to close a facility or an office building or whatever, you can't do that necessarily overnight. You have to think about how you're going to move the people or how you're going to set up or do the transition. So that's something that takes a little bit of time. If you are doing anything that involves people, you need to talk to them, you need to consult, you need to work through the different options. So those are some of the factors that mean that it takes a little longer than simply making the decision and taking the cost out on the ground. Nevertheless, as I said before, when you look at our second half cost in 2020 compared to the second half cost in 2019, there is still a material reduction that we're anticipating this year versus last, and then you end up with that broad range of flow-through that we talked about earlier in the year.

Perfect. Makes sense. Thank you.

Thanks. We have a question from Robert Davies from Morgan Stanley. Robert, your line is open. Please go ahead.

Yes, morning, folks. Thanks for taking my questions. Just a couple. One was just around some of the exit rates. I mean, you've provided some color of how the growth progressed through the back half of the quarter. But I guess just kind of coming into the most recent print, what are the end markets that are showing sort of most strength or most weakness relative to where we were a couple of months ago? I'd be just interested if you could add any more color around some of the end market trends. And then just on some of the sort of back office and payroll costs, just wonder how you were sort of thinking about that in terms of your industrial solutions business and the potential disposal. Does this, I guess, push out or delay potentially selling some of those assets change some of your aspirations around cost takeout around some of those things? But just be kind of interested to see how you kind of think about that sort of cost reduction trend. Thank you.

Okay. Thanks, Robert. I think it does take your first question first in terms of end markets and exit rates coming out of the first half. I mean, certainly the strongest markets have been sort of pharma. And, you know, over the past sort of few months, you know, we saw a dip in the early stages of the pandemic. But that's sort of come back, you know, reasonably strongly and is only sort of marginally off um at the end of the first half so you know sort of pharma life sciences uh generally you know is underpinned by you know good fundamental um growth drivers anyway so that so that's been good um i mean machine manufacturing and uh you know has helped you know held up initially quite well and that the half year was only sort of you know marginally down albeit you know some of that is later cycle you know it's a part of the HPK business, so it's harder to determine exactly where that might be going. I mean, auto, again, was dropped quite quickly, but has started to come back, and particularly North America has proved better than Europe and Asia. In terms of the markets that I think we're more concerned about would be certainly academia, which is 7-8% of our group turnover. A lot of research institutes, universities are closed. Certainly a number of our OEM customers, their research labs as well are still operating on reduced capacity or they've redirected activity in other areas. I mean, but, you know, we still believe that fundamentally, you know, that will come back. It will just be a bit later to come back. And then I think, you know, the other area I'd point to is sort of, you know, metals, minerals, mining and sort of, you know, oil and gas energy related activity. I mean, clearly, you know, those end markets, you know, quickly suffered and, you know, remain, you know, working at a slower pace.

We have no further registered questions on the phone line, Siobhan.

So we've got some questions on the webcast. You mentioned about academic research institutions being closed because of lower capacity. Have you got any signs of those reopening any time in the near future?

Okay, so apologies. We don't know what happened there, but for some reason the call dropped. So just in terms of academic research, I was just discussing that. So we certainly saw a large number of research institutes, universities, labs closed in the initial phases of COVID, mainly as a consequence of social distancing requirements being implemented. We are seeing those progressively coming back as the world unlocks, albeit a number of universities certainly remain closed, but typically the OEM facilities and the research institutes are progressively coming back and we're seeing that month over month. with more getting back up towards full capacity, albeit, you know, in certain areas, some customers have redirected activities, certainly in sort of pharma, away from sort of traditional drug development onto vaccine development. And it just depends on, you know, which part of that market we play in. So progressively, we're seeing it unlocking.

Okay, thank you. And then this one is for Derek. So note bad debt provisions have increased to how much and is that concentrated in a particular market or racing company?

So they've gone up by just a couple of million in the first half and no, there's nothing specific. It's obviously an area of focus as we look into any issues with potential customers or some concerns. So we are We are seeing little bits and signs of strain, but nothing material at the moment as we look into the second half.

Okay, thank you. And then the last one, one more. You've talked in the statement about returning employee salaries. Can you just sort of go through the timing on that? And then can you go through the thought process behind that and the reinstatement of the dividend to shareholders as well, please?

Yeah, of course. Thank you, Siobhan. So, look, you know, all the way through this, we have absolutely tried to take a balanced approach to all our stakeholders, and in particularly, you know, prioritising the welfare of our employees and trying to minimise the impact of this whole COVID pandemic on them. Now, you know, as I said on the call, you know, I don't feel it is either right or appropriate that, you know, we ask our employees to carry on taking that financial burden and Not only have a number of our employees taken a pay cut or are on short-time working or on furlough, their take-home pay has gone down. Equally, spouses, partners, people they're living with have been in similar situations or worse. And as we've evaluated at the half-year our performance and also the outlook, then we think it is appropriate now to shift from the temporary measures to permanent measures which to some extent is regressible that we've got to go to permanent reductions, which means a resizing, but it is equally appropriate that we put our people back to full-time pay and full-time working as soon as possible. For many of our people, we will be looking to reinstate those salaries as of August and get people back as of August. depending on where some of our people are and which business they are and what we've agreed with certain of the representative bodies, et cetera, that will take us through into September in some of the businesses. But wherever we can, we're going to try and get people back to full salary and full-time working over the coming days and weeks in August. And that's very much our priority. And then clearly, we've been clear with our shareholders, but also our employees around decisions we took on dividends early in the year, which was very much in the face of a big unknown. We wanted to make sure we protected the company and therefore it was appropriate to cancel the special dividend, postpone the final dividend from last year. Given our first-half performance, it proves that we have been resilient, shows the strength of our business model, and allows us to put our people back to full-time salaries and full-time working. It also puts us in a position where we can pay dividends or reinstate dividends to our shareholders as well, given that we have commitments to them and they're equally an important stakeholder. We felt the time was now right to do that, and it also, I think, is a sign that you know, to all our stakeholders, our shareholders, our employees, our customer suppliers that, you know, we absolutely, you know, we think we've weathered, you know, what hopefully is the worst that COVID has thrown at us during the second quarter. We've weathered, you know, the situation well and come out of the position in a, you know, stronger from a balance sheet perspective with good cash generation. And that gives us the confidence to reinstate the dividends. So, you know, in doing so, I think that's just a you know, us reiterating to the market, you know, our ongoing confidence in the strength of our business model and the strength of our businesses.

Good to have a question from the webcast. What would you highlight in terms of progress on ESG issues this year, please?

All right, great. So, you know, I think as inevitably as, you know, as we've gone into this whole situation of the past month, it has really heightened our thinking around, you know, the environment, governance, but in particularly, you know, social responsibility. And that's the uppermost in our thinking as, you know, as we've gone through the past weeks and months and the actions that we've taken, the strategy that we've been developing to cope and manage the situation as we went through our sort of react, respond and reset thinking, very much sort of, you know, falling back and relying on the core values and culture of the spectrous people and business model. And hopefully, from what we've said and how we've acted, you can see that we've endeavored to be true to our values and our culture and also make sure that we've acted in as socially responsible a way as we possibly can. And equally, as we're going through this year, we are sort of, I think, you know, redoubling our efforts around the whole ESG agenda. Clearly, you know, it's not just COVID, but, you know, with things like Black Lives Matter, you know, it's made us stop and think on a number of fronts as to what's the right thing to do for a number of, you know, our people in the group as well and how we know we should run. going forward and as part of that overall focus on ESG I've also brought Rebecca Dunn onto the executive committee to champion that agenda on behalf of the executive to really make sure we put an even stronger focus on it going forward.

Okay, thank you. Would you like to close the call now then and your hand over to you?

Yes, of course. So, again, apologies that we had that interruption. I'm not sure exactly what happened, but apologies all the same. But, you know, thank you for joining us today. As I said, I'm pleased with how we've responded in the first half of the year. The response from the Spectra team has truly been exceptional. But with the outlook that we're facing, it does mean that we now need to move to reset the business in the face of the new economic reality that was spoken about this morning. In the near term, we'll be developing the detailed plans around our restructuring program and, of course, focusing on executing our strategy. We look forward to sharing more details with you in October. We're changing our reporting periods, just so you know, and we'll now move to quarterly reporting. So we'll be publishing a trading update in October on the three-month period, July to September. With that, I'd just like to say thank you again for joining, and I wish you all the very best. Take care and stay safe. Thank you.