Imcd Group Nv U/Adr

Ladies and gentlemen, thank you for holding, and welcome to the analyst call Q1 2020 IMCD results. At this moment, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. I would like to hand over the call transcript to Charlie Flicker. Go ahead, please, sir.

Yeah, thank you very much, and welcome, everybody. As usual, I'm here with Hans Klooymans, our CFO, and we will answer your questions in a few minutes. First some remarks from my side, and then Hans will take you through the key financial numbers. When we spoke with each other on February 27, as we released our annual report 2019, the corona crisis was already there, but not yet in the unprecedented form we now experience. As you know, we as management of IMCD were always quite reluctant to give guidance on future profit development and these events show again how fast and unpredictable things can happen. You will appreciate that under these circumstances we are even less inclined to give an outlook. We already informed the market on April 7 that we did not observe a negative impact of the corona crisis in our Q1 results. These results are strong with revenue and EBITDA growth in all regions. Overall, revenue grew with 6% and EBITDA with 11% to 17.9 million. Cash earnings per share increased with 13%. We cannot rule out that in particular in March, stock building took place by part of our customer base, which in that case had a positive effect on our numbers. However, we can't verify whether this actually has happened and to what effect. During March, largely in the second half, lockdowns and restrictions were implemented in almost all countries where IMCD is active. IMCD has been designated in most of these countries as essential and our company therefore remains open for business. Of course, the health and safety of our staff is an absolute priority and we have adopted everywhere safe working practices. This means in practice that most of our people work from home. It is gratifying to see that this is made possible because of our robust IT and digital infrastructure. This situation continues for the time being and only our colleagues in China are back in the office. We are very proud of our staff worldwide. They have reacted magnificently on this unprecedented crisis. IMCB has not applied for any financial assistance offered by government programs anywhere in the world, nor do we intend to do so. Although Q1 was strong, we expect to see impact of the crisis in the coming months. In some of our business segments, a certain number of customers have closed or are affected by the crisis leading to cancellation or postponement of orders. We monitor this closely day by day. We expect that this will affect our revenue. Other business segments do not experience this and even see increased demand. It is impossible to predict how these effects will develop as it is largely dependent on government policy regarding lockdowns. In this respect, we see also differences per country and in some countries, government measures have been disruptive to the supply chain. Assuming that this crisis will not go on forever, we expect that we will get through this period with not too much harm and we then hopefully can resume our growth path. IMCD is strong and resilient and its diversified activities prove this again. We at IMCD are committed to ensure the continuity of the business for the benefit of our employees, our commercial partners, our customers, and our shareholders. Now Hans will take you through the Q1 numbers and after that we will answer your questions. Hans? Take your peace. Good morning ladies and gentlemen and as usual a short summary of the first quarter results that I would like to start on page 9 of the presentation. As mentioned by Peter, we are happy to report a 6% revenue and a 12% gross profit increase in the first quarter of this year. The gross profit increase was a combination of 7% organic growth and 5% as a result of the first time inclusion of acquired companies. Close profit in percentage of revenue improved from 22.4 to 23.6%. And this increase in percentage was a combination of product mix effects, changes in local market circumstances, currency changes, and growth margin improvement initiatives. Operating EBITDA increased 11% to 70.9 million. This increase was a combination of organic growth and the first-time inclusion of acquisitions. The operating EBITDA margin increased from 9% in the first quarter of 2019 to 9.5% in the same period this year. The conversion margin, calculated as operating EBITDA in percentage of growth profit, was 40.2%, which is slightly lower than the same period last year. In EMEA, we had a conversion margin just below QWAP last year, but much better than all other quarters in 2019. In Asia Pacific and the Americas, we were able to further improve this ratio. Net results before amortization and non-recurring items increased 13% to 15.2 million. Free cash flow and cash conversion ratio both decreased compared to the same period of last year. Substantial operating EBITDA growth in 2020 could not fully compensate the increase in working capital in the first three months. This working capital investment of about 36 million was mainly the result of increased business activities. Net working capital, translated in days of revenues, were 54 days, similar to the first quarter of last year. Year-to-date cash earnings per share were 94 euro cents, an increase of 13% compared to the same period of last year. And on the last line of this page, you could see a 9% increase in our number of employees. Most of this increase is the result of the first-time inclusion of acquisitions. On the next page, slide 10, you will find growth profit, EBITDA and conversion margin per operating segment. EMEA reported 7% forex-adjusted growth profit growth and 6% operating EBITDA growth. Operating EBITDA in percentage of revenue improved from 10.2% to 10.5%. The growth is a combination of organic growth and the impact of the acquisition of BCS and Cifroni. Further, Q1 includes a bit of startup cost of our new venture in Dubai. In the second column, the results of Americas. In Q1, Americas increased growth profit and operating EBITDA both with 15%. Most of the growth is organic and amongst others driven by an increased GM percentage. Asia Pacific in the third column reported 26% growth profit growth and 27% operating EBITDA. This was a combination of organic growth and the first-time inclusion of acquisitions. And operating EBITDA and percentage of revenue was comparable with last year, whereby the conversion margin further improved. And in the last column you will find the cost of the holding companies. And as you know, this includes all non-operating companies, including the head office in Rotterdam and the regional support offices in Singapore and the US. On page 11, a short summary of IMCD's free cash flow. Free cash flow and cash conversion ratio were both lower than the same period last year as a result of the increased working capital investment, as indicated before. And as mentioned, this working capital investment is mainly the result of increased business activities. Working capital translated in days of revenue remained stable. On page 12, a short update on net debt and leverage. And for information purpose, we separated the IFRS 60 net debt. And as you can see, reported leverage ratios and leverage based on the definitions in the loan documentation stayed at 2.8 and 2.6 times. The 2.6 times leverage ratio is well below the lowest 3.5 times leverage threshold in IMCD's loan documentation. And last but not least, on page 14, you will find our outlook for 2020. So far, the short summary of our year-to-date financials, and Peter and myself are happy to answer your questions. So, operator, you can open up the lines again.

Thank you, sir. Ladies and gentlemen, we will start the question and answer session now. To be registered for the question and answer queue, please press star 1. Press star 1 for your questions or remarks. The first question is coming from Rajesh Kumar, HSBC Bank Collector.

Hi, good morning, Jens. Thanks for taking the question. Just in terms of incremental discussions with your customers, what are the types of demand scenarios have you examined? Obviously, you are exposed to quite a lot of very defensive sectors as well. But there is a large segment of industrial exposure. I'm sure you must have had some discussions with your customers in terms of various outcomes in terms of economic growth in the second half of the year. If you could get some color, that would be very helpful. Second is just in terms of sourcing. Have you had discussions with your suppliers and customers about the level of inventory they require you to hold to assure them of some supply continuity?

Okay. Thank you, Rajesh. On your first question, this is Pete. On your first question with respect to customers, of course, as you indicated yourself, it's a wide area. it is clear that we are talking now about the current situation not on the first two months it is clear that of course certain customers have either closed or are postponing orders depending on the local situation In particular, the industries that are obvious, like in our case the coatings construction, advanced materials, industries that have a link to the automotive industry, sector have of course all these issues of lower demand or even closure. So there we will see the effects of that. On the other hand of course in the other segments like pharmaceuticals, food, and to a certain extent also in personal care, but to a lesser extent, I would say, because also there we see here their closures. We see, of course, increased demands. And so various wishes of customers, various situations of customers, and that's also what I indicated in my introduction As to sourcing or discussing the supplies, I would say that by and large there's no difference in terms of our relationships with what it was before. Also here, of course, you have suppliers who have full demand and are producing full capacity and others that are not. So in particular with those who are full capacity, we are discussing how to, you know, about the heat times, etc. but also hear differences in the way we interact with our suppliers. I hope this gives you some power.

Absolutely, this is very helpful. Just when you look at your portfolio of customer exposure, so you said what 55% or something like that are industrial customers, 45% in pharma and food. So then if you look at the exposure and the relative growth rates, I know you don't like to give a forecast and this time especially it's more difficult, but just in terms of looking forward, are you comfortable with you know, where the market expectations are coming out at the moment, or do you think people are still too optimistic?

I'm not sure what you refer to, what kind of expectations, and of course, and that's the difficulty, Rajesh, is how long will this let's say lockdown situation in the various countries take place and how much easing of that will take place and I think if you look at the various countries we see different outcomes also but there are certain areas where the restrictions have been becoming a little bit more less And I think the announcements have come in today also with certain countries. So it depends very, very much on how fast countries will ease the restrictions. And if this takes one or two months, then we will notice that. But I think that the harm is very relative. But I think you and I don't know how fast we're going back to opening up, as people call this, the economy. And that makes it, for all of us, I would say, impossible to predict. Other than that, We also work in many industries that are open now. So that is a positive. But I find it very, very difficult to predict what the next coming, how fast economies are opening up. I think if you look at certain countries like China, we see activities increase quickly, but that is of course for us not a major country in our portfolio. Other countries that are very restrictive, we see absolutely reduction in activity. So it is a very mixed picture and impossible to predict how fast we back on track. But I'm not very pessimistic if I hear the sounds of governments that we, you know, see in the next two months. May you resumption of activities.

Understood. Thank you. Thank you.

The next question is from Peter Olesen, Keprochev. How are you?

Yes, good morning, gentlemen. My first question is on the Ameritas, where the cross-profit growth and cross-margin was pretty strong. You mentioned a couple of factors, including product mix. To what extent is this the typical quarterly fluctuation in demand and mix? Or is there a structural element where you have been able to win new distribution rights have been able to add new products to your portfolio which have been helping your overall mix and then a question on working capital overall for the first quarter in terms of number of days it's pretty stable versus Q1 last year but looking specifically at inventories and receivables have you seen any weakening there in recent weeks where maybe it's become a bit more difficult to collect receivables or areas where you have seen some more buildup of inventories? Thank you.

Yeah, Peter, you remarked your question on the Americas. I think you're right, it is a mixed effect that we see there. We see also an effect of putting ET Horm into our global Americas organization. So some more visibility that helps us. And also a small change also relative to ETH in the way we account. So it's various factors, but I think we are positive about the direction of the margin. And that is of course also something that we really focus on. on working capital. I think that all of us are confronted in the economy with customers that will struggle or ask for extended payment terms. I think ICD has been very strict. We pay in time to our suppliers and we also expect payment in time from our customers. We will have to see how that develops, but it's obvious that of course this is an important point of attention, as are the inventories, as some of our supplies are also of full capacity. Is this giving your view?

Yeah, so basically it's not that it has dramatically weakened inventory turnover or DSL in recent weeks.

No, no, Peter Hansen. Now, we talk about exactly the same days translated in days of revenue.

And just going back on your answer on the Americas, I thought product notes, it's still not fully clear whether this is just the normal... volatility or fluctuations that you had from quarter to quarter or whether there is a structural element to that improved product nature. Is there a meaningful contribution from new products that have been added to the portfolio or new distribution rights that you have secured?

Well, we have to see how, let's say, the volatility issue or the mix has played a role in this. It certainly has because we see in certain segments of course increased demand and in others a bit less. But again, it's also part focus of the organization. But it's a bit early to say. So let's see what the next quarter will bring. We certainly, you know, if the situation goes back to normal, we probably will see maybe a slight reduction, but we will see. We will see.

Okay, then my final question on Asia-Pacific, which seems to have had quite a robust organic growth in the first quarter. Were there particular countries or end markets that broke that growth?

Peter, I think it's fair to say that, as Peter indicated before, we have of course a bit of a China impact in that region, but China is pretty small, they had a very weak first quarter, but other than that, most of the companies performed positive.

The next question is from Moodle Indochina, ABN AMRO, go ahead sir.

Yes, good morning Piet, good morning Hans and thank you for bringing the results forward. A few questions which I'd like to ask one by one. First, on your gross profit, you indicate that gross profit growth was 7% over the quarter. Can you share with us how the development was per month in the first quarter?

No, I don't think so. No, no. No, no. Before, you know, we start talking about weeks and working days and things like that. I already hate to talk about quarters. Quite frankly, I would even know at this moment. I mean, I have to look at that, but I don't. If you want to, let's say, infer that it is suddenly spiked, then I can say no in this order.

Okay, that was what I was getting at. And then, the million-dollar question, I mean, Q2. You don't want to talk about trading and you see pluses and minuses within your wide range of activities. So the net effect, I mean, I assume that is negative. I mean, can you at least confirm that you're seeing a negative organic growth, profit growth so far in April?

Let's say if you look at the positive effects that I indicated and the negative effects and the negative effects, how do you say, are stronger, positive ones.

Yeah, yeah, okay, thank you. And then, yes, as you said a few times, and I fully agree, I mean, no one knows what's going to happen. So maybe it's an idea to talk about scenarios. So you have various scenarios in place and your response to, let's say, a significant downturn in the economy. If we look back at 2008, 2009, I know that you were able to offset a large part of your organic growth profit declines. I mean, how are you looking at, I mean, obviously your business has changed, you're now in the Americas. So what kind of mitigating actions can you take, have you started taking to offset any negative organic growth, profit growth?

We have, of course, the usual, let's say on the cost side of our business, we have the, let's say, prudence in... in recruitment, so we won't do that unless absolutely necessary. We are not a company that would easily take drastic measures in cost cutting personnel. I think our people have done, again as I said, fantastic and we rely on them and they are We are one team and we will get through this. We have, of course, other operating costs like travel. I think we all experience that we can travel less, so that will save us. Other than that, there's not a lot that we can do or should do to overcome this. And it's of course clear that if the economy stays closed for another year, then all of us are in a totally new situation. But if this is a temporary thing, then I'm pretty confident that we will get through this in good shape. And so very, very drastic measures are absolutely not in our scenarios. We have made scenarios. These scenarios are also quite drastic in the sense of the downturn that we have models and we still feel comfortable and confident that we will also overcome that.

That's good to hear. Final question on those scenarios. What kind of organic growth, profit growth can you take or can you offset with lower cost before you start to see an organic EBIT A decline?

That is the nice thing of creating all kinds of Excel sheets with forecasts and models is that you can put in a lot of variables and we play of course with what will happen to revenue growth or decrease what will happen to the gross margin percentage the good news is that our third party cost as we outsource most our variable cost for us what will happen to the cost structure of P34 we are not in the mood to fire people or to scale down organizations but for sure there is some flexibility in there thinking for instance about bonus cost travel PR exhibitions and so on and so forth And what Pete said before, we can take quite an enormous hit before we run into real difficulty there.

Yeah. Okay. Okay. Thanks, guys.

The next question is from Mr. Steven Golden, Deutsche Bank. Go ahead, sir.

Hi there. Thanks for taking my question. So, just three questions to me. Firstly, Can you tell us what underlying volume growth was, roughly? I mean, if I'm just backing out the impulse of the margins on organic GP, obviously, there's a number of moving parts, but roughly, it looks like volumes are kind of flaccid. Is that basically sensible?

Yeah, let's say we look at it, but I would even say we don't look at it, because, I mean, if we look, for example, in our general chemical department, which are a bit more volume type of products, then we see, of course, they're more declined than elsewhere in pharma or with much less volume. So it doesn't say as a lot. to be honest. So I wouldn't look at that as an indicator for our business.

And the second question would be, obviously the conversion margins were pretty flat this year over year. I mean, given that the growth profit growth was kind of largely margin-driven, so you'd expect a reasonably high drop-through, Is there any reason for this? Were there other costs maybe that you saw, such as having to use more air freight, for example, or anything else? I'm just wondering why we didn't see more of an impact at the conversion margin level.

No, I think that is a valid question, Steve. I think if you look at the course base that we show, we show quite a prudent number here. You will see the four year impact of people that we added to the organisation in the course of last year. If you look at the outcome, of course, we provide it for things like full bonuses and these type of things. And then there are the usual swings if you look at third party costs. In a lot of cases we discuss with customers who will take care of transport, who will pay for it and where it ends up on the P&L lines. So I think the good news here is that if you look at the EBITDA margin, which is internally a more important indicator than conversion ratio, you see improvement on the EBITDA percentage, the percentage of revenue.

Okay, sure. Sorry, just to clarify, on those third-party customers, are you saying it very much depends contract by contractor for who pays those, or are you saying that that's often the problem of the end customers?

No, we have with a lot of customers full transparency about what our transportation costs as part of the cost price. And in some cases we also leave it to customers if they want to decide to pick it up themselves or if we deliver to them. And of course these are the usual fluctuations that we see in a quarter that every now and then it's more efficient for them to pick it up themselves. And they usually just change it in where it ends up in my P&L lines. And therefore, it sounds funny perhaps, but conversion margin is a ratio where internally we don't look at. We look at own cost versus added value. And then added value is the margin of the transportation cost. And there we see an improvement in Q1 versus last year. And that is reflected in the outside world in operating EBITDA margins improving compared to last year.

Right, okay. Okay, that's helpful. And this last question for me. You said at the start of the call that you had no intention to use government wage support schemes. Can you, I mean, if things clearly do slow and you're seeing significantly lower volumes... Might that decision change, and why is there clearly no intention at this point? Is it just to do with dividends or potential government interference in the business later on after the crisis? Can you just give us a bit more color there?

Yeah, it's a good question. I think, first of all, of course, we don't need it. secondly I think that as long as you are able you know to keep your own pants up then you should do that as a method for me and for us as management it's a method principle also I think that there are somewhere in the world not in the Netherlands but somewhere in the world possibilities but we don't do that Listen, if the world falls down or the sky falls down, then you have to look at that again. But I think that if we get into these problems, then I think many, many, almost everybody else as well. So I don't think that's a likely scenario. My feeling is as long as you are able, as a private company, to finance your own business then you should do that and I think that's an important principle because that's why we are private companies and yes that will also of course enable us to do what we intend to do with you know with our business dividends what have you

Okay, understood. Thank you. That's very helpful.

The next question is from Matthew Yates, Bank of America. Go ahead, sir.

Hey, good morning, everyone. I've got a couple, please. The first is just a practical question in terms of, you said, most of your staff are able to work from home. is there any impact on the business from less access to the formulation labs, not having the customers there, and how long would it take for that to come through into less revenue opportunities? The second question is just around the balance sheet. Obviously, last month you proactively increased and lengthened the size of your facility. Was that done with some ink in mind in terms of an opportunity you think there is to put capital to work? Thank you.

The first question, Matthew, is all labs. We have here and there still labs that are operational in the sense that people work in these labs with the proven distance or in shifts. but it is of course true that let's say the things that we do in these labs are also customer seminars and etc. have not taken place. What we have increased is webinars, formulation gatherings, digital etc. So we try to let's say replace that with digital means and I think so far it's going well. On the balance sheet I think what I can say is that we did this of course, prior to the crisis that we started this financing prior to the crisis. And yes, we continue to look for opportunities, but it has not been done with something very specific in mind. No, it was creating more flexibility in the balance sheet, making use of lower interest options to reduce the interest margins that we pay to the banks. And I am delighted to have a bit of flexibility there.

And while I've got the chance, let me squeeze one more in. He talked about opening up an office in Dubai. Can you just remind me what your Middle East footprint is today?

Well, it's very limited. We have a business in Egypt, which is, by the way, it's growing. It's growing very nicely. And we, other than that, Israel since a couple of months. But we are not active in the Gulf region, so that's why we opened this. We get a lot of requests also from our suppliers. We have started in Pharma. now in the region, both in Egypt and the Gulf. We will expand that also to other segments. And so it's a small footprint, but growing.

Very good. That's what I think you see, Tim.

The next question is from Kleren Mulder, IMG. Go ahead, sir.

Yeah, good morning everyone. On speech, maybe a question on the gross margin and EBIT in India. Gross margin was by 5 million, EBIT only by 1. Probably that's related to Dubai, but I think it's not the full reason if I take also into account that your integration of BLOX started, let's say, last year and it is probably not So can you give me some indication about how the development is there and what is the reason for the, let me say that the growth margin was not followed by the average A-margin?

In absolute numbers, yes. So I try to say that in more general terms in one of the previous questions, because then your next question could be how is it then possible that you're operating EBIT margin in percentage of revenue goes up, but you then also need to look at the lines in between, and that is third party cost, wages and salaries, provision for doubtful debtors and so on and so forth, other operating income. So what we see in AMEA is on the one hand we benefit from what you rightly said, cost savings as a result of the integration of VLogs. At the same time we added a few acquisitions, we added staff during the year, last year. We did full bonus provisions and other things. There were some changes between how we present things on gross margin and on third party costs, just due to operational changes as a result of the integration of the VLOX activities. And that all played a role on how the numbers in Q1 came out.

Okay, and with regard to the Far East, is it correct to assume that your organic growth was about 50% in the first quarter?

Yeah, we don't give a split in the quarters, in the regions between organic and M&A. But what we have in the M&A side in Q1 in Asia Pacific is... for sure the one warm acquisition, a pharma business that did pretty well in the first quarter. And we had some activities in India and Singapore that were for the first time in the numbers. I don't know out of the top of my head if we had the split between organic and acquisitions, but we had a substantial organic growth as well in this region.

Okay. Okay, that's all my questions for now.

The next question is from Edward Tunnelew, One Invest. Go ahead, sir.

Morning, gentlemen. A few on my side, if possible. I apologize if I missed the opening presentation comments. I was a bit late getting in. Could you just talk about the trends during the quarter with regard to, you know, order frequency and any particular divergence within the various sectors that you alluded to earlier in the presentation, just to get an idea of how you were exiting the quarter. I know you don't like to give detailed detail, but some sort of momentum would be useful to know. Thanks.

Well, it's obvious, of course, that, let's say, during the quarter, there were changes. I mean, we started normal, as we all did in January. to a large extent also in February with the exception of China where of course then the business more or less stopped more or less equal to Chinese New Year and it didn't resume and I think in March we for everywhere or in many places. In Europe, first and foremost, in Italy, of course, a lockdown situation. Strangely enough, or maybe also thanks to the creativity of the Italians, business went on from home. We had a very, very good result also in Italy and what I said in my introduction was that It is possible, but very difficult to verify for us that in the last month of this quarter also some stock building took place, which means increased orders. We saw, of course, in the United States later in the month also the COVID crisis having an effect, closure of businesses. And I think let's say the fuller implications will be felt in the next one or two months. And differences of course as I said also in the introduction on the more industrial businesses and the more life science businesses which showed very good activity.

Okay, and then just going back to your point earlier, you were talking about, on the question, scenario planning. Assuming you're, I mean, I'm just making this up, but you have scenarios one to five of level of intensity. I mean, are you staying within the parameters of the early scenarios? Are you the less drastic? I mean, looking at the numbers so far would imply you're at the lower end of a scenario planning. Are they staying within with what you would have expected, or are you saying actually divergence is plus or minus within that scenario?

No, I think that we will stay within, let's say, the scenarios that you indicate. So I think that even in a more drastic situation, we will continue in the way we do.

Okay, and just a final question. If you look, I guess you made a comment on personal care. Was that, again, something that you expected, a slightly better performance coming out of that area, or what?

Well, the performance is still very satisfactory, but I think we all saw that some of the manufacturers have closed in certain countries, I think in particular in the makeup industry. And secondly, that has to do with demand. China is an important market also for products that are produced elsewhere, in particular also in Europe. And that market also decreased, so that is also an effect that you will see. And that is what happened. Notwithstanding that, we still have, let's say, good results in that segment. But it's a segment that is, let's say, a bit more vulnerable for demand and also in this particular crisis than the other life science segments.

And just on that life science, did you have the ability to scale up as the demand rose? Okay, so no bottleneck issues there at all. Okay, I'm going to be very green and take a last question, I promise this is. Everyone talks about the situation with the virus, which is logical, but could you just give an idea of how, you know, I know you just said, you know, January, February were okay, but how were they tracking versus budget planning put in the end of last year, just to get an idea of the upside and positive. That's a positive note.

Yeah, but what I don't want to do is now try to split the quarter in most. We were doing okay, and the whole quarter has been okay. So let's keep it with that.

Okay. All right. Thank you very much indeed.

The next question is for Hakan Eliana, APGAN.

Go ahead, ma'am. Yes, hi. Hi, good morning. Thanks for taking the question. Can you hear me?

Yes, I can.

Oh, super. Yes, most of my questions have been answered, but I have just two left. The first one is, if you could please confirm to me what was your cash position? at the end of the quarter and your RTF utilization, and if that has changed a lot through the first four weeks of April, please, that would be my first question.

I think what we can see on the leverage levels that we report that the cash position should be more or less similar as what we reported at year end. And your next question is what happened in the first two weeks?

Yeah, well, basically what you're talking about, you have like a hundred million cash position at the end of the first quarter, and what is the utilization of the revolver at the end of the first quarter, and if that changed a lot during the first three weeks of April.

No, there were no major changes there. And I think that is reflected in the number of working capital days and the leverage levels that we disclosed.

And what was the RCS utilization, please?

I don't think we are debt specific in the press releases. I think if you look back at our annual accounts last year, I think we reported an undrawn position of around about 200 million. We added 100 million. And then I think it's easy to do the math.

Okay. And that's something that the economic environment has done a lot more uncertain. Have you considered substituting the reliance on ICF for more long-term debt?

No. Sorry, I missed your question there, to be honest. As you look at the loan structure that we have in place, we have a combination of long-term debts and RCFs. We created a bit more flexibility in the loan structure by adding RCFs. And for sure the long-term debts are fully drawn. Because it's, what is it, it's shield shine, it's the percentage of debts that we have in the market. And the only flexibility that you then have is on the RCF.

Yeah, well, basically that's the question. If you have considered to substitute RCF with another bond, potentially.

There is no need to make that change at the moment.

Yeah, and my last question would be on M&A. I know it's like a core part of your strategy. Is there a budget that we can, that you have in mind this year of transactions where the due diligence is already quite in a late stage?

Yeah, well, I don't want to get specific on that, but we are, as we always say, we have a pipeline of possibilities. We are working on some of them. It's also clear that some of the others are, let's say... hampered by this crisis because sometimes you need to travel also. So some of them will be postponed, some of them we will continue.

Okay, thank you. Those were all my questions.

Ladies and gentlemen, for any additional questions or remarks, you can still press star 1. So I'll start one for any additional questions or remarks. Go ahead, please. There is an additional question coming up from Claire-Hein Miller, ING. Go ahead, sir.

Yeah, guys. On last year, first water was quite strong related to, in my view, the Brexit, for example, as that was originally planned for the 29th of March. And then you have an idea about what's on stock, stock building then. This time it looks like that you are not so certain about stock building. And it has probably to do with your policy to be very carefully operating with regard to certain clients. Can you give me an indication about the whole story with regard to the stock building?

Yeah, and it's very difficult. I mean, if you have 40,000, 50,000 customers, you cannot look behind their warehouses and see how much stock they have. It's impossible. So it's not a willingness, but it's just impossible to do that. And then this is all across the world in all kinds of different market segments. And we can't see that. In countries like, and you refer now to the UK, that's one country with a very specific set of circumstances, we had a bit more of a feeling. But now generally, over all these markets in all these different regions, it's very, very difficult for us to... to understand that if we see of course in certain segments significant growth then that is a little bit our deduction but it is not something that we can verify okay so okay this is a deduction and not let me say that there's not a real proof of that stop building no okay no no that's that's thank you for clarifying that okay

So for any additional questions or remarks, you can still press star one. Gentlemen, then also the questions at this moment, please proceed.

Thank you. Then I wish you, oh yeah, sorry, I have to close. Thank you all very much. I hope you stay healthy. And I speak to you. We speak to you next time. So enjoy the song. Goodbye.

This concludes the IMCD event call. Thank you for attending. And you may be able to make your line now.